All Things Digital

Ask.com (IACI), the little search engine that can’t, but someday hopes to, is committed to becoming a viable competitor in a market overwhelmingly dominated by Google (GOOG) and Yahoo (YHOO).

It has not, as CEO Jim Safka vehemently points out in an interview with Forbes today, ceded the search battle to anyone. “It’s horses–t,” he told Forbes.com. “It’s categorically not true. We’re more committed to our algorithm and engineers than ever. While Yahoo and Microsoft are paralyzed by trying to figure out what’s happening to their companies, we’re trying to figure out what’s next in search. You’re going to see more innovation coming out of Ask then ever before.”

The first evidence of that “innovation”? Ask’s acquisition of that paragon of innovation Lexico Publishing Group LLC, the owner of Dictionary.com, Thesaurus.com and Reference.com. With Lexico’s properties in its pocket, Ask expects to expand its audience to more than 145 million unique monthly users–an increase that the company claims would make it the ninth-largest Web property globally. Whether the company means among all users or just married women primarily living in the South and the Midwest remains to be seen …

The leadership of CNET Networks Inc. (“CNET” or the “Company”) has presided over massive value destruction, with CNET’s shares declining (21)%, (52)% and (25)% in the one, two and three year periods ended March 28, 2008, respectively, compared to (1)%, 6% and 39% returns, respectively, for its stated benchmark peer index. CNET has also consistently underperformed numerous peers in profitability and growth, ranking last among these peers in key metrics, as set forth herein. This underperformance comes despite CNET’s premiere assets, including the tenth largest collection of Internet sites in the world and strong brands and content.”

–Jana Partners, CNET: Value-Unlocking Change for All Shareholders

“The Stars’ Address is CBS.” And now it is CNET Networks’ (CNET) as well. CBS this morning said it agreed to buy the Internet news and entertainment laggard for $1.8 billion in cash. The deal values CNET at about $11.50 per share–a 44.6% premium to yesterday’s closing price of $7.95. That’s $.50 more than the $11 Jana Partners, the investment management firm plotting a proxy fight for control of the company’s board, had hoped to squeeze out of CNET, so presumably even dissident investors are glad to see CBS (CBS) stepping in here.

The deal, expected to close in the third quarter, will vault CBS into the top 10 Internet companies in the United States, with a combined 54 million unique visitors monthly, and about 200 million visitors worldwide. CBS CEO Les Moonves says he expects interactive revenues to hit $1 billion by 2010. “I think the ability of this company to grow together with us just made sense for right now,” Moonves told paidContent. “We’ve stated our goals are to expand in three areas: content, Internet and outdoor. This accomplished two of the three.”

Google calls its latest data portability effort Friend Connect, but a better name might have been AdWords Connect. Because, like most Google (GOOG) initiatives, that’s really what it’s all about, isn’t it? Connecting people to ads? And there’s a lot more opportunity for that when the Web itself becomes a social network. Which is exactly the sort of thing you hope for when those unobtrusive little contextual ads you sell are as ubiquitous as street signs on the Web.

Designed to help Web publishers easily add social-networking features to their sites, Friend Connect requires just a snippet of code to bring social features to a site along with a means of coordinating them with other social networks like Facebook, Plaxo and Google’s Orkut. It’s another in a recent string of data-portability efforts that hope to apply the distributed model to social networking and put an end to its so-called “walled gardens.”

“The distributed model has worked well for the Web,” David Glazer, Google director of engineering, told Outside the Lines’ Dan Farber. “That is what the Web does–many points of light loosely coupled and massively distributed, allowing users to connect to pages of information. Now it is working to connect people to other people.”

And all of them to Google AdWords, of course. More Internet usage. More ad revenue.

AOL’s ad revenue may be “falling off a cliff,” according to CNBC’s David Faber, but its traffic’s not half bad. AOL (TWX) said today that page views to its Web sites hit an all-time high in March, according to comScore (SCOR) Media Metrix. Page views grew 28% during the month, and are up 35% year-over-year. Unique visitors rose 11% year-over-year to 56.5 million.

AOL attributes the double-digit growth to a year-long redesign and rebranding effort, which ironically included a de-emphasizing of the AOL brand. “If I call a hip-hop site AOL Hip Hop,” said Bill Wilson, executive vice president of AOL Vertical Programming, “that just won’t resonate with consumers.”

Microsoft’s chief software architect Ray Ozzie has finally published the sequel to “The Internet Services Disruption,” the 2005 potboiler of a memo that charted Microsoft’s (MSFT) better-late-than-never software-as-a-service strategy. It’s called, intriguingly, “Services Strategy Update April 2008” and it describes in numbing detail Live Mesh, Microsoft’s ambitiously late entry into a rapidly growing cloud-computing market.

Live Mesh, though it takes Ozzie five pages to describe it, is essentially a “software-plus-services” platform that uses the Web to synchronize and share data among devices, applications and people (you’ll find a walk-through here and a good overview here).

“Over the past ten years, the PC era has given way to an era in which the Web is at the center of our experiences–experiences delivered not just through the browser but also through many different devices including PCs, phones, media players, game consoles, set-top boxes and televisions, cars, and more,” Ozzie writes. “It is our mission in this new era to create compelling, seamless experiences that combine the power of the Internet, with the magic of software, across a world of devices. … the Web is the hub of our social mesh and our device mesh.”

“The Web is the hub of our social mesh and our device mesh.”

Wait.

Does Bill Gates know that? Because last year he told CNN’s “American Morning,” “We’re making the PC the place where it all comes together.” Clearly, in the ensuing year, Gates and Microsoft noticed that Google (GOOG) et al. are fast shifting computational relevancy to the Web, away from the desktop and, more importantly, away from Microsoft.

Live Mesh, if it’s successful, will change that. Because, as Joe Wilcox notes over at Microsoft Watch, “Live Mesh is Microsoft’s attempt to turn operating system and proprietary services platforms into hubs that replace the Web. Microsoft is building a services-based operating system that transcends and extends Windows and also the function of Web browsers.” Adds Wilcox, “It’s bold, brilliant and downright scary.”

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?

Get this: A new report from the Standish Group claims that FOSS–free and open source software–is decimating the software market. To wit:

Open Source software is raising havoc throughout the software market. It is the ultimate in disruptive technology, and while to it is only 6% of estimated trillion dollars IT budgeted annually, it represents a real loss of $60 billion in annual revenues to software companies.”

Quite a claim. A contentious one too, since, according to research outfit IDC, Linux software actually contributed $10 billion to the market and is expected to contribute $31 billion by 2011. The 2011 forecast for spending on the entire Linux ecosystem? More than $49 billion.

Oh, and in case you were wondering, a Web search for “Standish Group”+Microsoft+”sponsored by” didn’t return any documents.

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.

Here’s a clever way of streamlining the acquisition process: Become a platform-as-a-service provider and encourage developers to create Web applications using your proprietary database and your APIs (application programming interfaces).

That seems to be what Google (GOOG) has done with App Engine, a new service for developers who’d like to write and run their Web applications on the company’s infrastructure. With App Engine developers can establish their own little Google Labs outposts, building Google-friendly applications using Google’s own building blocks on the Google File System and Google will handle the scaling and fail-over issues.

That’s a compelling proposition–assuming you want Google to control your entire end-to-end development environment. And who wouldn’t these days? What better way to pique the search giant’s acquisitive interests than building a great big Web 2.0 sandcastle in its very own Web 2.0 sandbox? Who knows, you may be the next YouTube or, at the very least, the next Zingku or Jaiku. And if it turns out that you are, how convenient would it be for Google to acquire you, as Dave Winer noted a while back at Scripting News:

How much would it be worth to buy companies without having to transition their technology to their platform? There would be no retraining either, all the programmers in the companies they acquire would know how to work in the environment. Further, can you imagine that they’d charge universities to teach comp sci using their cloud?

“Given the cost of acquisitons, recruiting and training they can afford to blow a lot of money on free bandwidth, storage and CPU to make the buying and hiring process more efficient and increase the hit rate (the percentage of programmers who work out).”

If the major search engines took the privacy of their users as seriously as they claim, they wouldn’t hold onto their personal search data for so long. That’s the opinion of Europe’s Article 29 Data Protection Working Party, which today recommended that the European Union require search engine providers to “delete or irreversibly anonymize data once they no longer serve the specific and legitimate purpose they were collected for.” The Working Party figures that ought to be about six months.

That will no doubt come as a shock to Google (GOOG), Yahoo (YHOO) and Microsoft (MSFT), who all retain search data for a year or more. But it can’t be nearly as shocking as the Working Party’s recommendation that IP, or Internet Protocol, addresses be protected as personal information, a requirement that, were it to be implemented, could interfere with their ability to deliver relevant ads.

From the Working Party document:

A key conclusion of this opinion is that the Data Protection Directive generally applies to the processing of personal data by search engines, even when their headquarters are outside the EEA, and that the onus is on search engines in this position to clarify their role in the EEA and the scope of their responsibilities under the Directive.

“This Opinion concludes that personal data must only be processed for legitimate purposes. Search-engine providers must delete or irreversibly anonymize personal data once they no longer serve the specified and legitimate purpose they were collected for and be capable of justifying retention and the longevity of cookies deployed at all times. The consent of the user must be sought for all planned cross-relation of user data, user-profile enrichment exercises. Web site editor opt-outs must be respected by search engines and requests from users to update/refresh caches must be complied with immediately. The Working Party recalls the obligation of search engines to clearly inform the users upfront of all intended uses of their data and to respect their right to readily access, inspect or correct their personal data.”