All Things Digital

Apple’s Safari browser has offered “private browsing” since 2005, Firefox since 2006 (via the Stealther extension), and Microsoft’s Internet Explorer may soon offer it as well. Earlier this week, Natya Nadella, senior VP of Microsoft’s search, portal and advertising platform group, said the company is planning to give IE 8 a privacy feature for erasing search histories and the other data that browsers often log automatically. Now iStartedSomething has discovered two trademark filings that may apply to the new feature. The first, for “Cleartracks,” describes a program for deleting search history after accessing Web sites. The second, “InPrivate,” disables a browser’s history and file-caching features, notifies users when their browsing is being monitored and controls access to the details of their browsing sessions.

Handy tools for when you’re researching a medical condition at work, shopping online for family Christmas presents, or you know, SURFING PORN, which is, after all, what the Internet was designed for. …

In the past year, Microsoft has spent $1.2 billion to acquire enterprise search outfit Fast Search & Transfer. The company spent more than $100 million on Powerset and its natural language search. And it spent untold millions on search-related R&D. Microsoft (MSFT) has even taken the rather extraordinary step of paying people to use its MSN/Windows Live search (”The Search That Pays You Back!”).

None of this has helped. None of it has bolstered Microsoft’s laggard search service, which continues to toddle along behind Google (GOOG) and Yahoo (YHOO)–a very distant third in the search market. In fact, MSN/Windows Live seems to be suffering from the company’s efforts. According to Nielsen Online’s MegaView search ranking for July, searches on MSN/Windows Live declined 2 percent month-over-month and 10 percent year-over-year. Its July 2008 share of the search market: 11.9 percent. Meanwhile, Google gained a share point from June to July, claiming 60 percent of the eight billion searches conducted during the month. And it posted 16 percent year-over-year growth, more than five times the overall growth in search.

Clearly, Microsoft’s efforts to draw users to MSN/Windows Live has yet to make much of a difference in the search share race. Nor have the efforts of other companies. Searches on Yahoo dropped 11 percent year-over-year, leaving the company with a 17.4 percent market share. AOL’s (TWX) fell 9 percent over the year, leaving it with 4.6 percent market share. And Ask.com’s (IAC) rose 13 percent, leaving it with 2 percent share, Nielsen said.

Well, it’s about time. On Aug. 1, four top members of the House Committee on Energy and Commerce sent letters ordering 33 cable and Internet companies, including Google (GOOG), Microsoft (MSFT), and Yahoo (YHOO), to explain in detail their privacy standards. Of particular concern to the Committee was “the growing trend of companies tailoring Internet advertising based on consumers’ Internet search, surfing or other use,” i.e., behavioral targeting.

To date, 27of the 33 have responded, among them Google and Yahoo, whose replies are of particular interest given the proposed advertising deal between them. In response to the Committee’s query, Yahoo admitted it did engage in some form of behavioral targeting, but volunteered that it would henceforth allow users to turn off targeted advertising on its Web sites.

Yahoo claims it had been planning this revision to its policy for months. What a happy coincidence that it was enacted in time to be included in the company’s letter to the Committee.

Google also acknowledged using targeted-advertising technology without explicitly informing customers–hence, its $3.1 billion acquisition of DoubleClick. And it too suddenly offered its users a way to opt out of targeted advertising. Another happy coincidence, I suppose, in the works for months and entirely unrelated to the company’s pact with Yahoo, which would reportedly grant Google control over more than 80 percent of the search market.

Still, it’s good news for consumers–or rather those consumers who actually pay attention to such things. And for those who don’t, a word of advice: It might be time to start. Because Google, which already controls more than 70 percent of the search market in the states, clearly sees quite a bit of behavioral targeting in all our futures. “Though it is not the focus of our business today, we also believe that behavioral advertising can be done in ways that are responsible and protective of consumer privacy and the security of consumers’ information,” Google wrote in its letter to the Committee. “To ensure the continuation and proliferation of responsible behavioral targeting practices, we are supportive of efforts to establish strong self-regulatory principles for online advertising that involves the collection of user data for the purpose of creating behavioral and demographic profiles.”

According to the International Federation of the Phonographic Industry, 99 percent of all digital music distributed via the Internet in China is pirated. But that doesn’t mean it can’t be monetized, as Google hopes to prove. Today the company launched a new music search service that allows Internet users in China to legally download music–for free. Developed in partnership with Chinese music company Top100.cn, the service will be supported by advertising revenue, to be split between the two companies and participating music labels. If successful, the new service will be a boon to the recording industry, which has been frustrated to the point of aneurism by China’s piracy issues.

Obviously, it will be a boon to Google (GOOG) as well. The company’s arch rival in China, Baidu.com has long dominated the country’s search market, thanks in large part to the access it offers to free, unlicensed music downloads–access with which the global recording industry has repeatedly taken issue. Today, Baidu controls about 65 percent of China’s Internet search market. Google controls just 26 percent. But that might change very quickly if Google’s free, legal, music industry-supported service wins over users.

Cuil’s David and Goliath battle with Google in 14 seconds.

Google CEO Eric Schmidt says the world would be “better off” if Yahoo were to remain independent. And perhaps it would be–assuming you define “world” as “Google,” as Schmidt and the rest of Google’s executive leadership almost certainly does.

Speaking at the annual Allen & Co media conference in Sun Valley, Idaho, Schmidt said Yahoo did the right thing in rejecting Microsoft’s bid. “The moment we saw the offer from Microsoft (MSFT) we saw it as anti-competitive,” he said. “ … We absolutely support the decision that Yahoo made. There is no question in our view that an independent Yahoo is better.”

Of course there isn’t. Google (GOOG) controls an estimated 70 percent of search advertising. Microsoft and Yahoo together control an estimated 20 to 24 percent of the global search advertising market and 30 percent of the online display market. Were the two to combine, they might have a reasonable chance of narrowing Google’s runaway lead in online advertising. And the search giant doesn’t want that. It would much prefer its own partnership with Yahoo (YHOO), which, according to May data from comScore, would give it control of 83 percent of the U.S. search market. Now who could possibly call that anti-competitive?

Nothing indicates a job well done better than outsourcing your own job to the competition, a nameless Yahoo employee recently said of the company’s deal with Google. And having done that with advertising, Yahoo is now doing it with search as well. Today Yahoo (YHOO) announced BOSS (Build your Own Search Service), an open platform for building and launching Web-scale search products. Why open your core search technologies to anyone who cares use to them? Because, according to Prabhakar Raghavan, Yahoo’s chief strategist for search, there are thousands of companies that might revolutionize search if they only had access to Yahoo’s technology and infrastructure.

Sadly, Yahoo doesn’t appear to be among them. Which is why the company is where it is today, risking cannibalization of its own search business for the chance to grab a sliver of market share with the help of a certain Web search giant based in Mountain View. (Too bad Yahoo didn’t acquire Google for $3 billion when it was still an up-and-comer back in the day, huh?)

“We believe that being open is core to Yahoo!’s future success. Opening our network, opening our own search experience via SearchMonkey, and now, opening our search infrastructure via BOSS will lead to innovation both on Yahoo! and powered by Yahoo!,” the BOSS team said in a post to Yahoo’s Search Blog. “For BOSS, we see a virtuous circle in which partners deliver innovative search experiences. As they grow their audiences and usage, we have more data that can be used to improve our own Yahoo! Search experience, and as a result, improve the quality of results our BOSS partners and their users get. [And] we do see new revenue streams from BOSS. In the coming months, we’ll be launching a monetization platform for BOSS that will enable Yahoo! to expand its ad network and enable BOSS partners to jointly participate in the compelling economics of search.”

“Good for competition.” That’s how Omid Kordestani, Google’s (GOOG) senior VP of Global Sales and Business Development, described the advertising deal it struck last month with Yahoo (YHOO). “Why did we make this agreement?” he asked. “Quite simply, we think it is good for users, advertisers and publishers. By offering Google’s industry-leading technology to Yahoo, the whole system becomes more efficient, and everyone benefits.”

A reassuring profession of altruism, but one that the Justice Department isn’t buying. The agency has opened a formal antitrust investigation into the deal and will soon begin issuing civil investigative demands to the companies’ competitors, customers and potential partners in the hopes of determining whether it will further tighten Google’s near-monopoly grip on the search advertising market. “This is a complicated situation, but one of the key questions is very simple,” said David Balto, an antitrust lawyer who was competition policy director at the Federal Trade Commission during the Clinton administration. “What is Yahoo’s incentive to continue to compete?”

Good question.

Helpfully, Google and Yahoo have already agreed to delay implementing their new alliance for three and a half months so the DOJ can answer it.

Much as Yahoo would like to believe otherwise, Microsoft’s not done with the company yet. Just as BoomTown suggested it might, Microsoft (MSFT) has circled back for another run at Yahoo (YHOO) and, if it’s successful, it will seize Yahoo’s search business and sell the rest of the company off for parts. The Wall Street Journal reports that Microsoft has approached Time Warner (TWX) and News Corp. (NWS) (owner of Dow Jones and this site) about joining it in a deal that would effectively lead to to the company’s breakup (see “Murdoch-Blocked?” and “MSFT/YHOO/AOL/ NWS/WTF?“). Seems Steve Ballmer is unwilling to abandon a deal that would more than triple Microsoft’s share of U.S. Web searches.

Yahoo, for its part, is said to be skeptical of a deal that would essentially dismember it, but people close to the company tell the Journal that Yahoo is still open to discussing any proposal from Microsoft. Perhaps even one that would see the software giant acquire Yahoo for $33 to $34 a share. After all, this is exactly the deal Yahoo proposed to Microsoft on May 17–two weeks after the company officially dropped its bid for Yahoo. That’s right, Yahoo CEO Jerry Yang and Co.–after insisting Microsoft’s offer “substantially undervalued” the company, tried to resuscitate a deal after Microsoft CEO Steve Ballmer scrapped the bid. From the Journal:

[On] May 17, two weeks after Microsoft officially dropped its pursuit of Yahoo … Yahoo CEO Jerry Yang, director Ron Burkle and chairman Mr. Bostock met with Microsoft’s Mr. Ballmer. Messrs. Bostock and Burkle told Mr. Ballmer they were prepared to sell Yahoo for $33 to $34 a share, the price range Microsoft had offered before talks broke down, according to people familiar with the meeting. That would have valued the deal at about $47 billion, or $6 billion less than Yahoo’s previous asking price of $37 a share.”

Flash content on the Web may be slow-loading and occasionally nonintuitive, but at least now it’s searchable.

Adobe (ADBE) has conceived of a way for search engines to index Flash content, even pre-existing Flash content, without the need for developer intervention. It’s made content encoded in the Flash file format (SWF), which was previously undiscoverable to search engines, discoverable–and it’s given Google (GOOG) and Yahoo (YHOO) the tools necessary to discover it.

As Ryan Stewart, an Adobe evangelist, explained: “We are giving a special, search-engine optimized Flash Player to Yahoo and Google, which is going to help them crawl through every bit of your SWF file. This Flash Player will act just like a person would in some cases. It will click on your buttons, it will move through the states of your application, get data from the server when your application normally would, and it will capture all of the text and data that you’ve got inside of your Flash-based application. We’ve basically provided a very powerful looking glass into SWF files so Google and Yahoo can pull out meaningful information.”

Google will begin doing that today; Yahoo, whenever it manages. A big change for both companies, especially Google, which has long advised Webmasters concerned about their PageRank to use Flash sparingly. “In general, search engines are text based,” the company explains in its “Creating a Google-friendly site” FAQ. “This means that in order to be crawled and indexed, your content needs to be in text format. This doesn’t mean that you can’t include images, Flash files, videos and other rich media content on your site; it just means that any content you embed in these files should also be available in text format or it won’t be accessible to search engines.”

Today that changes. And now, developers can use Flash to their hearts’ content, without mucking about with workarounds to ensure the dynamic content it makes possible is properly indexed and ranked.

Rumors of renewed talks between Microsoft (MSFT) and Yahoo (YHOO) are as inevitable and persistent as “Friday the 13th” sequels–and not nearly as entertaining.

Shares of Yahoo spiked this afternoon on rumors that Yahoo is back in merger or partial acquisition talks with Microsoft. YHOO rose 5.2% to $22.56 in afternoon trading before falling to its knees again after a source close to Microsoft told CNBC there are no new negotiations between the two companies. “There is no deal for the whole company, and nothing has changed as of today,” the source said.

But as BoomTown notes, perhaps it should.

“Microsoft’s hostile bid for Yahoo raises troubling questions,” Google chief legal officer David Drummond wrote back in February.

Troubling indeed. Almost as troubling as the questions raised by Google’s (GOOG) partnership with Yahoo (YHOO), as Kevin Johnson, president of Microsoft’s (MSFT) Platforms and Services Division, pointed out during a panel discussion at the Cannes Debate today. Commenting on a Yahoo exec’s description of the deal as a “win-win,” Johnson had this to say:

If win is consolidating around 90% of the paid search with Google, you can say, OK, Google would do that as a win. I don’t think that from an industry perspective that supports having choices and having a number of strong players in the advertising business.”

And who better than Microsoft to point this out, given the company’s monopolistic past?