April 2012

Companies risk fines over new UK data rules

Most British companies have failed to prepare for new data protection rules due to come into force next month amid fears the measures will make it much harder for websites to secure commercially valuable information about their users.

About 95 per cent of UK companies have yet to comply with the regulations, which require websites to get permission from consumers to use the tracking “cookies” that monitor people’s internet habits, according to KPMG, the consultancy. Companies risk fines of up to £500,000 if they fail to fall into line with the rules but critics say compliance could put some e-commerce websites out of business. The law, which stems from a European Union directive, was supposed to come into effect in Britain last May, but confusion over the measures led to companies being given an extra year to comply.

From the Desk of Michael Copps: Real Disclosure for Real Democracy

[Commentary] America, we have a problem: billions of anonymous dollars pouring into a tsunami of negative TV advertising aimed at distorting political campaigns and manipulating election outcomes. Our civic dialogue -- the prerequisite of successful self-government -- is being short-circuited by deep-pocketed individuals, corporations and other groups operating on the smug premise that elections should be bought by the power of money rather than fought by the power of ideas. With visions of sugarplum profits dancing in their heads, big media companies are snapping up more and more stations around the country. That’s bad news for smaller, independent broadcast and cable companies and even worse news for localism, diversity and competition. Thirty years of rampant consolidation have decimated newsrooms, destroyed the muscle of investigative and accountability journalism, and stunted our civic dialogue. How much more damage has to be inflicted before we understand the necessity to say “No!” to more media consolidation and “Yes!” to some honest-to-God public interest oversight?

Analyst Cuts Apple Rating on Prospect of iPhone Subsidy Revolt

Now here are two words you don’t often see in the same sentence: Apple and downgrade.

Yet here they are in a note from BTIG Research’s Walter Piecyk, who this morning cut his rating on the company’s shares to “neutral” from “buy.” A shocker of a call, coming as it does when Apple shares are so ascendant that some analysts have slapped a staggering $1,001 price target on them. But Piecyk has his reasons, and they’re worth considering, even as AAPL shrugs them off in midday trading. Top among them: He believes Apple’s carrier partners are tired of offering such high subsidies on the iPhone, which eat into their own margins while delivering huge ones to Apple. And soon they’re going to begin reining them in. “Subsidies by post-paid wireless operators have fueled the growth of Apple’s $600 iPhone since its inception,” says Piecyk. “Wireless operators have been happy to subsidize smartphones to new and existing customers in order to provide a lift to the average monthly bill (ARPU) of their customer base, a metric which had been falling for the past three decades.” But now that the pace of the smartphone upgrade cycle has quickened, subsidizing iPhone upgrades only one year into a two-year contract is becoming a costly proposition.

Netflix Says Its PAC Is Not About SOPA

From the “yes, sometimes big companies like to influence the way government works” file: After a day of not commenting about its newly formed political action committee, Netflix has come out with a statement about FLIXPAC, after all.

In short: The company, which has been steadily ramping up its lobbying presence in Washington, says the PAC — which allows them to make contributions to individual races — is a logical next step. But it says it is primarily interested in topics like video privacy laws, which prevent it from integrating with Facebook. And not with hotbutton issues like SOPA/PIPA.

Behind the Netflix PAC: a broadband power play

Netflix has formed its own political action committee called Flixpac, and my sources indicate that the biggest issues it plans to tackle will be how to let folks share their movies on social networks and the more nuanced issues of broadband competition, network neutrality and what defines television in an IP age.

The first issue requires straightforward lobbying to change the Video Protection Privacy Act (VPPA), while the second issue is one that will require the strategic planning of a continental invasion. In conversations with insiders in DC and at Netflix, the video streaming service’s agenda has become clear. Get rid of the Video Protection Privacy Act and help push an agenda to keeps content flowing across the web. Issues such as Comcast not counting video streamed via the Xbox against its cap and the Verizon deal to buy spectrum from the cable companies all have implications for Netflix’s business model. In the first example it brings up the issues of creating what essentially becomes a private version of the Internet to sling Comcast video on demand content around in a manner that won’t penalize the consumer for streaming.

Facebook to Acquire Photo-Sharing Start-Up Instagram for $1 Billion

Facebook has just announced that it will acquire Instagram, the popular mobile photo-sharing service, for $1 billion in cash and shares. The social networking giant posted on the acquisition, its biggest yet, on its site, as well as on CEO and co-founder Mark Zuckerberg’s Timeline on Facebook.

Photos are critically important for Facebook, which has been slow to innovate in the fast-growing mobile arena in the important consumer space. By contrast, Instagram has taken the arena by storm, with its delightful and elegant app and the motto, “Fast beautiful photo sharing.” Consumers have responded. The San Francisco-based company — with only 13 employees — had 30 million Apple iPhone users before it came to Google’s Android last week, where it got more than a million new users in just 12 hours. Still, despite all the usage, Instagram had not articulated a plan for, you know, making money. Now, that will presumably be Facebook’s problem to solve.

Here is why Facebook bought Instagram

[Commentary] A few days ago Instagram was rumored to be valued at $500 million. A few months ago it was $300 million. Its last round — just a year ago – valued the company at $100 million. The rising valuation of the company was reflective of the growing audience it has been garnering, despite being just on the iPhone. It had reached nearly 30 million registered users before it launched an Android app, a turbo-charging event for the company.

So the question is: Why did Mark Zuckerberg, Facebook’s level-headed but mercenary founder, buy Instagram at twice the valuation that professional venture investors were putting on it? The answer is found in Zuckerberg’s own blog post: “This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users. We don’t plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.”

My translation: Facebook was scared and knew that for first time in its life it arguably had a competitor that could not only eat its lunch, but also destroy its future prospects. Why? Because Facebook is essentially about photos, and Instagram had found and attacked Facebook’s Achilles heel — mobile photo sharing.

New security flaws detected in mobile devices

Findings of two recent examinations of mobile devices highlight how designers of smartphones and tablet PCs failed to fully account for security and privacy implications.

"Today's smartphones and tablet devices perform the same functions as a PC," says Dan Hoffman, chief of mobile security at Juniper Networks. "However, the vast majority of devices lack security software and mistakenly rely upon the operating system to keep people safe." In one study, security firm Cryptography Research showed how it's possible to eavesdrop on any smartphone or tablet PC as it is being used to make a purchase, conduct online banking or access a company's virtual private network. The process used to encrypt data can be deciphered, enabling a criminal to use them to access a financial account or a company network, says Benjamin Jun, Cryptography Research's chief technology officer. "These type of attacks do not require the device to be modified, and there is usually no observable sign that an attack is in progress," Jun says. Cryptography Research is "working with one of the major smartphone and tablet companies right now to put countermeasures in," Jun says. No known actual attacks have occurred, he says. In another demonstration, researchers at security firm McAfee, a division of chipmaker Intel, highlighted several ways to remotely hack into Apple iOS, the operating system for iPads and iPhones.

Consumer group urges Senate to probe Apple and e-book publishers

A consumer group sent a letter to the top senators on the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, urging the lawmakers to probe Apple's agreements with e-book publishers.

The Consumer Federation of America said they believe Apple and the publishers are guilty of price-fixing, and antitrust regulators should take action against the companies. "We also believe that the committee should give close attention to the e‐book price fixing case. When it does, we are confident the Committee will find that vigorous action to stop this abusive practices is in order," the group wrote in a letter to subcommittee Chairman Herb Kohl (D-WI) and ranking member Mike Lee (R-Utah). Although the Senate does not have the power to take action against individual companies engaging in anticompetitive conduct, the antitrust subcommittee often probes business deals and practices.

Memo highlights Obama strategy on making government data usable

A new draft paper from President Obama’s budget office reveals the Administration’s strategy to making government information more accessible and usable. The strategy, titled "Building a Future-Ready Digital Government" and circulated for discussion among federal agencies last week by the White House Office of Management and Budget, is intended to make it possible for citizens, private-sector businesses and government agencies to access high-quality digital government information on computers, cellphones and other platforms, something that now can be exceedingly difficult to do.

The “Future-Ready” strategy laid out in the draft has two overarching goals: to enable citizens and an increasingly mobile workforce to access high-quality digital government information and services anywhere, anytime on any device; and to ensure that the government procures and manages devices, applications and data in smart, secure and affordable ways. Upon examination, the strategy appears to build upon a foundation of several highly publicized executive orders signed by President Obama in his first days after taking office, including the "President's Memorandum on Transparency and Open Government" and OMB's own "Open Government Directive."

Benton

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