All Things Digital

Growth is primary, revenue is secondary.”

– Facebook CEO Mark Zuckerberg

Good thing Facebook is committed to growth over profits because according to the latest metrics from Hitwise Intelligence, growth is slowing. While traffic to the site in the United Kingdom did increase by 4 percent between August and September this year, growth is down from 50 percent over the same period last year. Facebook’s annual growth rate is slowing as well. The site grew 88 percent in the UK between September 2007 and 2008–a strong showing, but quite a bit weaker than the 2,905 percent growth Facebook managed in the year prior.

Could it be that Facebook, like other social networks that have gone before it, is nearing its saturation point? Is enthusiasm for the ironically named “Funwall” and the endless conga-line of “You’re A …!” widgets finally wearing off?

As predictable as day following night, litigation has followed the Federal Communication Commission’s sanctions against Comcast. In a long-expected action, Comcast sued the commission today, claiming the FCC had no legal grounds on which to punish it for throttling file-sharing traffic on its network, as David Cohen, Comcast’s executive vice president, explained in a statement:

We filed this appeal in order to protect our legal rights and to challenge the basis on which the Commission found that Comcast violated federal policy in the absence of pre-existing legally enforceable standards or rules. We continue to recognize that the Commission has jurisdiction over Internet service providers and may regulate them in appropriate circumstances and in accordance with appropriate procedures. However, we are compelled to appeal because we strongly believe that, in this particular case, the Commission’s action was legally inappropriate and its findings were not justified by the record.”

As legally inappropriate and unjustifiable as Comcast (CMCSA) might find it, the cable company will abide by the FCC’s order during the appeal. And it will forge ahead with plans to develop more net neutrality-friendly network management techniques by the end of the year. Said Cohen, “We will follow through on our longstanding commitment to transition to protocol-agnostic network congestion management practices by the end of this year. We also remain committed to bringing our customers a superior Internet experience.”

Superior Internet experience until you hit that 250GB broadband cap, that is.

Comcast is apparently too busy drafting its “P2P Bill of Rights and Responsibilities” to bother attending the daylong hearing into its dubious “network management” practices. An odd decision for a company so intent on “clarifying” the practices ISPs should use to manage P2P applications running on their networks. But according to a company spokesperson, Comcast (CMCSA) “felt the issues specific to us were well covered at the first hearing, and the focus of this event should be broader than any individual company’s issues.”

Broader issues? Like reasonable network-management practices? The responsibility to deliver traffic fairly? Service disclosures? The sort of issues that might figure prominently in a “P2P Bill of Rights?”

Guess not.

Anyway, Comcast has already scrapped its policy of deliberately slowing some traffic flowing over BitTorrent and other P2P networks, so there’s really no need for Federal Communications Commission Chairman Kevin Martin to bust its chops anymore. As Mitch Bowling, Comcast’s senior vice president and general manger of its Internet service, told the New York Times, Comcast’s new policy is to slow traffic based on usage pattern, not application. “[Our new technique] will be based purely on individual consumption by consumers,” Bowling said. “Anything in addition to that is outside the scope of what our network management goal is.”

So the company plans to throttle traffic to the customers that use the most bandwidth. Hmmm. I wonder who those might be? The folks who use the Internet for email and Web browsing or those who use it for downloading digital media?

Yahoo (YHOO) isn’t letting the looming threat of a Microsoft (MSFT) acquisition ruin its own acquisitive appetite. This morning the company announced plans to purchase Web analytics outfit Tensa Kft, better known as IndexTools. Yahoo expects the purchase to bolster its current analytics offerings, which haven’t evolved much since it inherited Keylime Software’s paid-search management tools as part of its 2003 acquisition of Overture.

IndexTools “will give our customers tools for monitoring and analyzing Web sites and marketing campaigns, providing valuable insights into key metrics, traffic patterns and performance,” Bassel Ojjeh, head of Yahoo Strategic Data Solutions, wrote in a post to Yahoo Anecdotal. “And that means consumers are more likely to see marketing content that’s engaging and relevant.”

One would hope so. Because at this point, Yahoo doesn’t need to simply distinguish itself from Google (GOOG) Analytics. It needs to catch up to it.

Compete must have used a fair bit of the $43 million in VC funding it’s raised since 2000 on marketing, because market research outfit Taylor Nelson Sofres is acquiring it–despite the “digital intelligence” company’s reputation for inaccurate Web site traffic measurements and its loss of $4.5 million on $14.9 million of revenue in 2007.

Under the terms of the deal, TNS will purchase Compete for $75 million in cash and another $75 million in performance-based earn-outs over the next two years.

Compete, which has long been overshadowed by metrics verterans like comScore and even newcomers like Quantcast, was overjoyed to be among the early acquisitions in the consolidation beginning in the Web-traffic analysis sector. After all, TNS might have bought Alexa. “Why are we excited about becoming part of the TNS family,” Compete execs wrote in a post to the company blog. “Because it means joining our click-stream data with TNS’s massive consumer panel operations, consumer research capabilities and ad-measurement databases on a global scale. Marrying online and offline consumer data with media spending and exposure is the holy grail of marketing. All of our marketer, agency and media partners will benefit from access to new consumer, brand and media research that will revolutionize how they plan and measure their performance. It’s a big, exciting vision that neither company could do on its own.”

We compete with Comcast with delivery of content over the Internet. What we have here is a horse race and in this contest, Comcast owns the race track, in fact, the only track in town. They also own a horse. We are being told they are only slowing down our horse by a few seconds.”

–Gilles BianRosa, CEO of video provider Vuze

The network-management hearing at Harvard University this morning is turning out to be something of a comcastrophe for Comcast (CMCSA). Called before the Federal Communications Commission today to explain why it has been “throttling” or limiting BitTorrent traffic on its network, Comcast was criticized out of the gate for the practice.

Seems some folks don’t buy the company’s claim that throttling is necessary to prevent file-sharing traffic from consuming too much bandwidth. And others–specifically, advocates of Net neutrality–feel it’s outright discriminatory. “The Internet is as much mine and yours as it is Verizon’s and AT&T’s and Comcast’s,” said U.S. Rep. Edward Markey (D-Mass.) in his opening remarks to the commission. “The commission should be wary of the need of a significant network management position. Perhaps if we had competition, this wouldn’t be such an issue.”Such intercession into a user’s access to the Internet should not result in … the transformation of BitTorrent into BitTrickle. That’s a problematic result … whether it is purposeful or purely circumstantial.”

Comcast, for its part, insists results like those described by Markey aren’t problematic at all, but necessary. The company must “shape” file-sharing traffic to ease the strain on its network. “Independent research has shown that it takes as few as 15 active BitTorrent users uploading content in a particular geographic area to create congestion sufficient to degrade the experience of the hundreds of other users in that area,” David L. Cohen, an executive vice president of Comcast, explained in written testimony. “Bandwidth-intensive activities not only degrade other less-intense uses, but also significantly interfere with thousands of Internet companies’ businesses. Far from managing our network in a discriminatory way to benefit our own offerings–other than managing our network to make our high-speed Internet service faster and better–our limited network-management practices ensure that everyone else’s applications and services, even those that may compete with our services and use P2P protocols, work.”