“The cost of smart phones is considerably higher than feature phones for which the early termination fees were created years ago at $175,” said Verizon spokesman Jim Gerace. He added that the new $350 ETF declines by $10 per month through the life of the contract and customers can avoid it by buying their devices off contract and paying full retail price.

An interesting move for Verizon (VZ), which just last year agreed to pay $21 million to settle a class-action lawsuit filed by California consumers over the very early-termination fees it is now increasing. The plaintiffs in the suit alleged that Verizon’s ETFs were illegal under California law and that they were designed to unfairly lock consumers into long-term contracts and prevent them from switching carriers. When Verizon settled the suit, it denied any wrongdoing, insisting that early-termination fees are simply a means of recovering legitimate costs. And to some extent Verizon does have a point.

Full retail price for the Motorola’s (MOT) new Droid is $559.99. With a two-year contract, Verizon sells the handset for $199.99. Theoretically, that’s a $359.99 subsidy (I have no idea at what price Verizon purchases Droid from Motorola). So if Verizon allowed subscribers to break their contract after a month without paying an early-termination fee, the company would stand to lose money. And subscribers who did so could subsequently sell the device online and potentially make a profit, though a small one.

So it’s certainly understandable that Verizon and other carriers want to protect the subsidies they dole out for these new smart phones. And as noted earlier, Verizon’s new ETF drops by $10 each month a subscriber remains under contract. But at this rate, subscribers are still bound to pay a $110 termination fee in the 23rd month of a two-year contract. The contract is nearly over, the subscriber obligation to Verizon almost fulfilled, yet the company can still slap its customers with nearly a third of the full ETF if they break it at that time.

By month 23 of a two-year contract, does Verizon really stand to lose $110 if subscribers decide to switch carriers? Doesn’t seem likely if subscribers can walk away just a month later without consequence, taking their handsets with them.

Since Verizon is pro-rating the ETF, why isn’t it doing so in such a way that it zeroes out by the end of the contract?

And isn’t the fast pace of innovation in the smart-phone sector such that prices–for both component and device–are dropping so quickly that high ETFs aren’t really justified? Remember, you can get Apple’s (AAPL) iPhone for $99 today. When the iPhone debuted in 2007, it commanded a price of $499/$599, depending on model.

I’ve put those same questions to Verizon and will update here when I hear back. In the meantime, here’s what Consumers Union policy analyst Joel Kelsey has to say on the matter: “When people want to switch wireless services, the biggest cost they face is early termination fees. These fees are designed to lock people into long-term contracts and stop them from getting better deals. Early-termination fees make the marketplace less competitive. Verizon’s move is painful proof that it’s time for lawmakers to crack down on these fees.”

UPDATE: Verizon Wireless spokesperson Nancy Stark offers the following answers to the questions I posed above:

Your first question regarding the balance at month 23 or 24 assumes that, at that point, we have recovered all of our subsidy and up-front costs for every device. That simply is not so.

On your second question, while the pace of innovation plays a role in prices coming down somewhat, it also plays a role in driving up costs as more and more complexity that customers want is added to phones–from premium HTML browsers to high-resolution MP cameras with optical zoom; videoplayers; music players; dual processor chipsets; WiFi; very high display resolution, operating systems such as BlackBerry, Windows Mobile, Palm, Android–ALL with the added value (vs a desktop) of mobility, and ALL in one tiny device that ALSO allows you to talk to anyone from anywhere. phew! (by comparison, I recently paid $200 for a camera and all it can do is take pictures, and it has only middle of the road capabilities.)

But getting back to ETFs specifically. The most important point is that Verizon Wireless customers do not have to have an ETF at all if they do not want to. ETFs allow customers to have it either way: They can have no ETF and pay full retail for their device. OR, they can get a greatly discounted device by having an ETF.

“I don’t think John McCain could run a major corporation. I don’t think Barack Obama could run a major corporation. I don’t think Joe Biden could, either. But it is not the same as being the president or vice president of the United States. It is a fallacy to suggest that the country is like a company. To run a business, you have to have a lifetime of experience in business, but that’s not what Sarah Palin, John McCain, Barack Obama or Joe Biden are doing.”

– Former Hewlett-Packard CEO Carly Fiorina

Her dreams of heading up the World Bank dashed, former Hewlett-Packard (HPQ) CEO Carly Fiorina, the architect of one of the worst tech mergers in history, has turned her attention to the U.S. Senate.

After months of speculation, Fiorina officially announced her candidacy today. She’ll run as a Republican against Sen. Barbara Boxer (D., Calif.). Of course, to do that, she must first win the Republican primary. Fiorina broke the news in an op-ed in the Orange County Register.

“Admittedly, I have not always been engaged in the electoral process, and I should have been,” she wrote. “For many years I felt disconnected from the decisions made in Washington and, to be honest, really didn’t think my vote mattered because I didn’t have a direct line of sight from my vote to a result. I realize that thinking was wrong.”

Reflecting on her personal history, Fiorina continues: “As I grew throughout my career, beginning as a secretary and eventually becoming a CEO, I saw how government impacted business. I learned more as a member of advisory boards at the State Department, the Pentagon and the CIA. I now understand, in a very real way, that the decisions made by the Senate impact every family and every business, of any size, in America. This is what motivates me to run for the U.S. Senate. And so today I am announcing my candidacy to serve the people of California as your next U.S. senator….Together we can turn things around.”

Together we can turn things around? Not if Fiorina’s performance at HP is any indication. Before she was forced out of the company by its board of directors, she was so at odds with the uniquely Californian “HP Way” that her corner office could have been powered solely by Bill Hewlett spinning in his grave.

UPDATE: Here’s another Fiorina op-ed from earlier this year in which she discusses executive pay. Unsurprisingly, she is against President Obama’s efforts to restore “common sense” to CEO compensation. And why wouldn’t she be? After all, she walked away from HP with a $21 million severance package.

UPDATE: For those of you just joining us over at CNet, the headline is a joke referring to HP’s ill-starred merger with Compaq.

Sewell joined Intel (INTC) in 1995 as a senior attorney and was named general counsel in 2004. In that capacity, he managed Intel’s antitrust battles in Japan, Korea, the United States and now, the European Union as well. At Apple (AAPL), he succeeds Daniel Cooperman, who will retire at month’s end.

“We are thrilled to have Bruce join our executive team, and wish Dan a very happy retirement,” Apple CEO Steve Jobs said in a statement. “With Bruce’s extensive experience in litigation, securities and intellectual property, we expect this to be a seamless transition.”

It would seem, then, that Sewell’s decision to leave Intel for Apple is more train-hopping than anything else. And while it certainly comes at a lousy time for Intel, it’s not likely indicative of some upset within the company’s legal department.

As Insight 64 analyst Nathan Brookwood told me this morning, “Some personnel changes result from the circumstances of the individuals involved, rather than high level machinations within the organizations to which they belong. Cooperman’s retirement created the opening at Apple, a position Sewell is well qualified to fill. My bottom line: Bruce’s move has more to do with Apple’s need for a top notch lawyer than with Intel’s current legal situation.”

The official announcement, below.

Bruce Sewell to Join Apple as General Counsel & SVP

Daniel Cooperman to Retire

CUPERTINO, Calif., Sept. 15 /PRNewswire-FirstCall/ — Apple today announced that Bruce Sewell, formerly senior vice president and general counsel of Intel Corporation (INTC), will join Apple as the company’s General Counsel and senior vice president, Legal and Government Affairs, reporting to Apple CEO Steve Jobs. Daniel Cooperman, who has served in these roles at Apple for the past two years, will be retiring at the end of September.

“We are thrilled to have Bruce join our executive team, and wish Dan a very happy retirement,” said Steve Jobs, Apple’s CEO. “With Bruce’s extensive experience in litigation, securities and intellectual property, we expect this to be a seamless transition.”

At Intel, Sewell has been responsible for leading all of Intel’s legal, corporate affairs and corporate social responsibility programs, managing attorneys and policy professionals located in over 30 countries around the world. He joined Intel in 1995 as a senior attorney assigned to counsel various business groups in areas such as antitrust compliance, licensing and intellectual property. In 2001, Sewell was promoted to vice president and deputy general counsel, managing Intel’s litigation portfolio, and handled corporate transactions including M&A activities.

Prior to joining Intel, he was a partner in the litigation firm of Brown and Bain PC. Sewell was admitted to the California Bar in 1986 and to the Washington D.C. Bar in 1987. He received his J.D. from George Washington University in 1986, and a Bachelor of Science degree from the University of Lancaster, in the United Kingdom, in 1979.

The week that took us from August to September was one for the books over at BoomTown, especially if you’re 12.

Kara spent Monday morning at Activision Blizzard (ATVI), where they are pushing forward with the entire Guitar Hero line, even as the game industry faces a nearly 50 percent decline in U.S. sales this year. Kara got to play hero to several of the forthcoming releases, including previewing the much anticipated DJ Hero console.

The youth movement continued with the fancy bar graph from Forrester Research’s annual “State of Consumers and Technology,” which drove home an important fact of life for media outlets. All the money being spent on new media expansion is a fight for the young; older consumers are sticking to more reliable fare.

BoomTown wasn’t just about the kids though, as 23andMe co-founder Linda Avey announced her exit from the gene-juicing business to focus on a foundation related to Alzheimer’s research. Avey co-founded 23andMe with Anne Wojcicki in 2006 with early money from Genentech (DNA), Google (GOOG) and New Enterprise Associates, as well as Wojcicki’s husband, Google co-founder Sergey Brin.

While BoomTown was keepin’ it real with the kids, Digital Daily was abuzz with a spate of iPhone news. John started Monday off on the topic of the Sept. 9 iPod event with confirmation that music, indeed, will be center stage. In the Apple world, that means iPods and iTunes, though Beatles fans are keeping their fingers crossed.

Readers got a compare-and-contrast of Apple’s (AAPL) foreign and domestic policy when John covered a potential two-carrier system in China and the long-awaited stateside activation of MMS features in the iPhone OS3. Meaning that while China may get the iPhone carrier flexibility so far absent in the U.S. market, American consumers are just about to get a new feature that’s been standard on every smartphone for a year or more.

MediaMemo covered a fluid week in the world of media giants and Top Chefs. Disney (DIS) went off to the mines and instead of seven dwarfs, found Marvel and the rights to its 5,000-character portfolio. Disney CEO Bob Iger didn’t think $4 billion was too much to pay to bring Iron Man and friends to the happiest media empire on earth and is sure the company will benefit from such “rich intellectual property.”

If the Disney vault got 5,000 new friends this week, eBay said goodbye to one long-time partner. Peter reported that the long, difficult breakup between eBay and Skype was finalized when eBay sold a 65 percent stake in the VOIP juggernaut to the internationally mixed bag of Silver Lake, Index ventures, Andreessen Horowitz and a Canadian pension fund.

Peter rounded out the week of motion with lots of changes in Google’s ranks. The search giant shuffled the chairs with David Fischer moving out of the self-serve ad business with no sign yet of a replacement. Google China saw the big chair turn upside-down when Kai-Fu Lee announced that he’d leave the company this month to begin his own venture. Lee will be replaced by the tag team of Boon-Lock Yeo and John Liu, who will oversee engineering and business, respectively.

Not all Google’s shifts were outbound though. “Charlie’s Café” at the main campus got its Top Chef back after Preeti Mistry failed to make the cut on the Las Vegas iteration of the popular TV show. Regular fans of the show weren’t surprised by her dismissal, but at least Google can put one in the plus column this week.

Over at The Mossberg Solution, Katie took aim at a possible answer to a question plaguing all image-conscious technophiles: Yea or nay to the omnipresent Bluetooth earpiece. Plantronics (PLT) and Aliph, maker of the Jawbone, both say yea and are upping the ante on the recently reviled symbol of cellphone userdom. Katie reviewed the fashion-forward Discovery 975 and Jawbone Prime, each designed to separate its users from $130. In exchange, they’ll get redesigned outsides and some new features that might even put one back in Brad Pitt’s ear.

That might seem an inane question, coming from the FCC, but when you think about it, it has never really been answered, not even by broadband carriers, which would undoubtedly prefer that the term be ambiguous enough to allow for all manner of throughput/delivered speeds, usage caps, and latency. So it’s a good time to ask it. As senior adviser Carlos Kirjner explains in a post to the FCC blog today:

• If we want to decide who has and who does not have broadband, we actually need to agree on what we mean by broadband.
• If we want to decide who can take advantage of one type of application or another, we need to know what they are actually getting today, and what is the gap between that and what they actually need to get.
• If we need to know how much it would cost the country to enable all or a subset of its households and businesses to take advantage of one application or another, we need to know what the gap is between where we are and where we want to be.
• If we want to ensure that consumers have a clear and accurate view of what they are getting for their money, we need to decide what are the important metrics, and how to measure them.

Good points, all. But allow me to suggest one more:

• If we’re going to start handing out $7.4 billion in federal grants for broadband improvements, we should make damn sure that broadband is improved.

Because the last time we invested in our broadband future, we didn’t see much return on that investment.

In the run-up to the Telecommunications Act of 1996, the incumbent telecoms promised to provide fiber-optic connections to millions of households across the country. In exchange, they were given some $200 billion in tax cuts and higher service rates to pay for it. But the telecoms didn’t spend that money on fiber upgrades; they spent it on long distance, wireless and inferior DSL services.

“By 2005, if the Bell companies had actually delivered on their broadband promises, approximately 86 million households would have had fiber-optic-based services,” Bruce Kushnick, executive director of New Networks Institute, explains in “The $300 Billion Broadband Scandal.” “These state commitments also would have rewired schools and libraries, hospitals and government offices. And in most states, the plan called for ALL customers to be rewired equally, whether they were in rural or urban areas, rich or poor. Universal broadband was to be accomplished state-by-state because customers were, in essence, de facto investors funding these network upgrades.”

But that’s not what happened (click on image below to enlarge). Know anyone in California who had Pac Bell fiber in 1996? How about 2000? Yeah, didn’t think so. And that’s something worth mulling today.

“Our channel checks suggest sales of the Pre have indeed slowed. Store traffic at Sprint stores has declined since mid-June,” Harris wrote. “The Pre, which initially was not available for online purchase from Sprint’s website, became available last week. We believe a majority of the Pre sales have been made either to existing Palm users or Sprint subscribers. It also appears not to have been as successful as the iPhone in terms of winning subscribers from other carriers.”

Harris notes that even Sprint (S) CEO Dan Hesse seems uncertain of the device’s true impact in the market. Speaking at Fortune’s Brainstorm: Tech conference in Pasadena, Calif., last week, Hesse said of the Pre: “You won’t know if we have a real hit on our hands until its been out three months, four months, five months….It’s too early to tell….We’re just getting it rolled out in decent quantities for direct distribution.”

An interesting admission. That said, the Pre did set record first-day and weekend sales for Sprint, And according to the channel checks of some other analysts, sales are not slowing. Fact is, we won’t know for sure until Palm (PALM) and Sprint go on record with real sales metrics–as Sprint may do later this week when it reports earnings.

One last point worth noting here: CL King’s note arrives amid widespread reports this morning of a Best Buy promotion that cut the Pre’s price to $99 with a two-year contract. Though the retailer dismissed the cut as an “unintentional pricing error” and promptly withdrew it, a number of Pres appear to have been sold at that price across the country.

Odd that such an accident would occur nationwide complete with in-store pricing sheets, isn’t it? Makes you wonder if someone jumped the gun on a forthcoming promotion and if we’ll see the Pre at $99 before the end of summer. And if we do, at what price will the Eos/Pixie–the Pre’s rumored little brother–be sold? $49.99?

The Palm (PALM) Pre officially went on sale this morning, and judging from initial reports–and my experience at a local Northern California Sprint store–neither demand or supply was particularly overwhelming. Certainly, lines for the device were far shorter than those that extended from Apple (AAPL) stores for the launches of the iPhone and the iPhone 3G.

Arriving outside my local Sprint (S) store about an hour after they first opened, I found not a queue of eager Pre-buyers, but two kids making forts out of a few Pre shipping boxes left outside the store. Inside the store, I found a group of nine people waiting in line to add their names to a waiting list for the device, which was already sold out at this location. A Sprint rep refused to tell me how many Pres had been sold this morning, but admitted that the shipment had been a small one.

The situation is apparently the same across the country. The Boston Globe reports that Sprint’s Back Bay store sold out of its 55 Pres by 11 AM. An informal survey by 24/7 Wall Street reveals sell outs or fast-dwindling supplies of the device at Sprint and Best Buy stores in Chicago, Houston, San Francisco and Los Angeles. Four of the five Best Buy stores I contacted reported selling out of the Pre very quickly; one representative told me his store had just four of the devices and he believed that to be the case at many other locations.

Sprint stores I spoke with in LA, Chicago and Boston told me they’d sold out by late morning.

Q: How many names on the list? A: “We’re not allowed to say.” A reader tells me that the line outside the W. Division Street in Chicago was at least 50 people long, and that the store started wait-listing people somewhere around #36. Another reader reports a line of about 20 people outside an Emeryville, CA Sprint store. That same reader claims a clerk told him the store had 60 Pres on hand. Still another reader reports that the line outside Sprint’s Market Street store in San Francisco started at 6 AM this morning. There were a dozen or so folks in line by about 7:30 AM. Finally, another reader reports that a Sprint store in San Francisco’s Castro district had a line of about 40 people when she showed up to get in line at 7 AM. That location, too, sold out quickly.

Four phones at the local Best Buy? Stores in Marin, LA and Chicago sold out within hours? Makes you wonder if Palm and Sprint are purposely constraining supply to foster an image of overwhelming demand.

Apple (AAPL) rolled out updates to QuickTime and iTunes on Monday, presumably as preface to iPhone 3.0. Both iTunes 8.2 and QuickTime 7.6.2 include support for the next iteration of the iPhone’s firmware, which is expected to debut at Apple’s Worldwide Developer Conference (WWDC), which kicks off next week in San Francisco, Calif. Also addressed in iTunes 8.2 are “many accessibility improvements and bug fixes.”

Just what Apple means by that is unclear, although one wonders if it might be a clever euphemism for the Palm (PALM) Pre’s recently disclosed Media Sync feature, which allows the device to synchronize seamlessly with iTunes, essentially by masquerading as an iPod. Certainly, it seems unlikely that Apple would allow this to persist.

As Daring Fireball’s John Gruber notes, “If you’re still holding out any sort of hope that Palm is using some sort of heretofore sanctioned, semi-sanctioned, or even maybe-sorta-kinda-sanctioned-if-you-squint-your-eyes means for a third-party smart phone to sync with iTunes via USB, note that the Pre, when connected to iTunes, is labelled as an “iPod.” If you think Apple would ever allow the use of “iPod” to describe anything other than an actual iPod, you’re nuts.”

In advance of its shareholder meeting today, Google is holding a press event at its Mountain View, Calif., campus with CEO Eric Schmidt presiding. Also on hand: Dave Drummond, senior vice president of corporate development; Susan Wojcicki, vice president for product management, Kent Walker, general counsel, and Marissa Mayer, vice president, search products and user experience.

Hot topics of the day: Google’s and Apple’s interlocking boards, YouTube and the company’s thoughts on the econalypse, AOL and netbooks.

This liveblog paraphrases most questions and answers. It is not, in other words, a verbatim transcript of the event.

A theme of the meeting is the just-opened inquiry by the Federal Trade Commission into Apple’s and Google’s interlocking boards. Schmidt gets right into the topic with a joke: Looks like we’re at a legal deposition. He adds that he doesn’t believe Google (GOOG) views Apple (AAPL) as a primary competitor. If there are issues that are competitive during a board meeting, he will recuse himself, he says, just as he has regarding the iPhone.

Would Schmidt consider resigning from the Apple board?

Schmidt: “Hasn’t crossed my mind.” Ken Walker adds: “The law is clear that there is safe harbor for companies that don’t have overlapping revenues, and we’re comfortable with that position.”

Regarding the recession, are there any signs that we’re at the bottom?

Schmidt: “We don’t yet see a change.”

As Google gets bigger and faces more antitrust scrutiny, does this change how the company approaches partnerships?

Schmidt: Information is incredibly important, and we should expect governments around the world to pay attention to what we do and hold us to the principles we’ve articulated. Internally we tell our employees to pay attention, there are consequences to mistakes they make.

In the last few years, we’ve worked harder to anticipate the concerns of people affected by the power of the Internet. In my biased judgment, we’re getting better at anticipating those concerns.

We are more careful about when and how we do things that are raising the concerns of any party, but that care doesn’t stop us from doing those things.

Is there anything you haven’t done because of that?

Schmidt: I can’t think of a specific.

What do you think of the long-time monetization potential of social networks?

Susan Wojcicki: “We’ve been learning a lot about monetizing social inventory. And we believe there are ways to monetizie it over time, but those ways are different from search.”

Why did Google decide to sell its stake in AOL?

Schmidt: “We love AOL….We also like money… and look, we sent our best guy over there to run it,” he says referring to Tim Armstrong who recently left Google for AOL.

When will YouTube be profitable?

Schmidt: YouTube will eventually be a successful product and business. We don’t know how long that will take. But YouTube is a huge traffic phenomenon. (Wojicki jumps in to note that that traffic is attracting a lot of advertiser interest, so there is monetization going on. She adds that Google is adding new ad formats to the site, prerolls and click-to-buy ads on music videos.)

How does Google continue innovating given the cost-cutting measures it recently implemented?

Schmidt Innovation is a cultural value at Google, so this hasn’t really been an issue. Cutbacks were more efficiency-related, a move to stay lean but nimble in the midst of a recession.

What’s your take on the balance between Android being an open platform and the trade-offs the company needs to make with handset makers?

Schmidt: “On the one hand, you benefit by having free access; on the other hand there is some sacrifice of stability. We are doing our best to achieve stability without exercising too much control.”

What about China?

Dave Drummond: It’s an “ongoing challenge” to operate there. YouTube is blocked. There is a government preference for local business that makes things very difficult. That said, “we think we’re doing well there.”

Schmidt: “We will continue to do business in China….We would like YouTube unblocked.”

How do you respond to critics who argue that Google is the new Microsoft (MSFT)?

Schmidt: “They obviously don’t remember the old Microsoft.”

In recent public forums you’ve been asked about acquisitions and you’ve said the price isn’t right right now. Has there been any change in that opinion?

Schmidt: No change. There’s simply just not a lot of activity out there now.

What are your thoughts on netbooks?

Schmidt: “The netbook phenomenon looks very real. It looks like it will be a significant element of growth in the PC industry over the next few years.” Schmidt further notes that Google is obviously interested in the market given its business. “Watch the space,” he concludes.

Tragically, that’s not the case.

The Metrolink engineer responsible for the worst U.S. train crash in the last decade sent and received 45 text messages while helming his train the day of the deadly collision in California last month–including one just moments before running a red signal and crashing head-on into a freight train. According to the National Transportation Safety Board, the last message the engineer received was at 4:21:03, more than a minute before the accident. The last one he sent was at 4:22:01, just 22 seconds before the trains, traveling at some 40 miles an hour, collided.

Rail experts were aghast at the news. “For me, it just gives me heart palpitations thinking about it,” said Tim Smith, California chairman of the Brotherhood of Locomotive Engineers and Trainmen. “The last thing you want to be doing is something that takes your eyes off the road.”

“We are deeply concerned that the Department of Justice may be considering a preemptive lawsuit to block Yahoo’s nonexclusive online advertising agreement with Google,” the letter says. “If such action were taken, we believe such an unprecedented [lawsuit] would detrimentally affect the online advertising market and electronic commerce. … We believe that robust competition serves the public interest but if the DOJ blocks this agreement we fear that the threat of additional scrutiny may chill future agreements. Similar agreements are commonplace in many industries and standard among Internet companies.”

Well, not exactly, as Norman Hawker of the American Antitrust Institute points out. “Contrary to the letter, similar agreements are not commonplace because industries with this level of concentration are not commonplace,” Hawker said. “If you ignore the economic text when you read the words, you can easily be misled into thinking the agreement is harmless. Read in context, however, the words of the agreement explain how Google could easily acquire Yahoo’s paid-search business.”

The last time the unemployment rate was this high was in July 2004, following the dotcom bust. Seems even the high-tech world is becoming more fiscally cautious as the economy crumbles around us. We’ve seen layoffs at Yahoo (YHOO), Motorola (MOT), Applied Materials (AMAT), Hewlett-Packard (HPQ), Sun (JAVA), Nortel (NT) … even Google (GOOG), which announced the first major cuts in its 10-year history.

What was it Mark Twain once said? “By the Law of Periodical Repetition, everything which has happened once must happen again and again and again–and not capriciously, but at regular periods, and each thing in its own period, not another’s, and each obeying its own law.”

Google (GOOG), for its part, continues to claim its pact with Yahoo (YHOO) is beneficial to competition, and seems prepared to go through with it. “While there has been a lot of speculation about this agreement’s potential impact on advertisers or ad prices, we think it would be premature for regulators to halt the agreement before we implement it and everyone can judge the actual impact,” the company said after the Association of National Advertisers sent a letter to the Justice Department opposing it. Of course, the flip side of that is that it might be premature for Google to move ahead with the agreement before regulators say they’re comfortable with it. Said Stifel Nicolaus analyst Blair Levin, “it would be risky … to proceed if they are getting signals that the agency has serious concerns.”

It’s taken nearly a year, but the inevitable class-action fallout from Facebook’s ill-starred Beacon advertising system has finally begun. Filed in California, the suit claims Facebook and its ad partners violated online privacy and computer fraud laws by collecting and publicly disclosing information about users’ online activities without proper consent. Facebook’s “Beacon” advertisements, as you may recall, transformed member transactions on third-party partner sites into product/service endorsements and inserted them into their friends’ “news feeds.” Facebook members, or should I say “fansumers,” were automatically opted-in to the program. Worse, Beacon collected information about member actions on affiliate sites even if they’d opted out of the service and logged off from Facebook. As the suit notes, “By the time any user was notified that Facebook was (at a minimum) an observing party to the transaction, and that Facebook was asking for an approval to publicly broadcast identifying information regarding the event, personally identifying information had already been communicated to Facebook.”

Given that, it’s surprising this suit, which demands the deletion of any ill-gotten data and some form of restitution, wasn’t filed earlier. Certainly, it seems a sure thing after Facebook’s acknowledgment of these issues.

[Image credit: FSJ]