VentureBeat

Updated

Google has started laying off employees at recently acquired web advertiser DoubleClick, according to Vanity Fair and Silicon Alley Insider. Vanity Fair identifies “the entire finance department” as part of the cuts.

We’ve already reported that the layoffs would start today, although we got a “no comment” when we asked Google’s press office about it yesterday. After the search giant finally completed its $3.1 billion DoubleClick acquisition last month, chief executive Eric Schmidt acknowledged that Google would probably eliminate some of the web advertisers’ staff.

From a business perspective, at least some reductions probably make sense — Schmidt says Google spent too much on hiring even before the DoubleClick deal, and click-throughs on Google ads are flat. That’s probably no consolation to employees who are getting shown the door, but at least Silicon Alley Insider has already found other companies who want to hire them.

[Update: The New York Times reports that 300 of DoubleClick's 1,200 American employees are being laid off. Google will also plans to sell off DoubleClick's Performics Search Marketing unit. Ellen Siminoff, chairman of search marketing company Efficient Frontier, told the Times she isn't surprised by the proposed sale: Performics' goal is to help clients get the most value out of their ads, while Google's goal is to get the most money out of its ad clients. Those goals may not be compatible.]

Display ads may be better left offline — Much of the internet’s growth in ad revenue is fueled by banner ads, but eye-tracking studies have shown that people tend to avoid even glancing at ads, according to Ad Age. The implication isn’t that the internet is a bad place for brand promotion. Rather, it’s that advertisers need to think about how to engage users, the real force behind the internet. Much more from Ad Age’s long article.

Will Microsoft finally start its surrender to the cloud? — Microsoft is gearing up to “re-pivot the center” of its business away from software and toward services that mesh with the growing online computing cloud, and is readying itself to lose its dominant position in the computing world, says Phil Wainewright in a lengthy ZDNet piece that quotes several interviews with Microsoft’s chief strategy officer. That view is consistent with Microsoft’s moves to diversify and grow its position in the online advertising space, in part by acquiring Yahoo.

Sixth-largest ad network may go for $800M — Tribal Fusion, which stands as being about the sixth largest ad network on the internet, may be on the block for $800 - $900 million, according to the Valleywag rumormongers.

More antitrust problems for Microsoft — The U.S. Supreme Court has turned down a Microsoft appeal to put Novell’s case against it to rest, which alleges that the software giant intentionally destroyed WordPerfect and Quattro, two once-popular programs made by Novell.

Nickelodeon to pay $100M for 600 branded games — Not satisfied with the popularity of Dora the Explorer and other children’s shows, cable giant Nickelodeon is going to shell out $100 million, in part for a network of websites and 600 games branded with its most popular franchises. Some parents, however, are worried about exposing their children to even more advertising. More at the New York Times.

Google intent on finding most annoying way to fire DoubleClick employees — Now that Google has managed to fully acquire DoubleClick, it’s pondering what to do with the smaller company’s employees. The lastest idea: Make them apply for their own job all over again, so that Google can determine whether they’re Google material, according to the Silicon Valley Insider.

Green buildings could cut greenhouse emissions quickly — A report released late last week suggests that making buildings green with better construction materials and techniques could be the most cost-effective way of lowering greenhouse gas emissions, although only a small percentage of new construction is considered green. [via London Free Press]

California democrats pondering Internet taxes — If Assemblyman Charles Calderon has his way, songs sold on iTunes may be taxed the same way that CDs are. Lawmakers have been grappling with the question of how to tax online interstate commerce for several years, but they’ll first have to assess the economic impact and prove, at least in California, that a tax won’t hurt innovation. [via KPBS ]

China’s Great Firewall still quite active — Concomitant with unrest and civil problems in its territory of Tibet, China has once again clamped down on YouTube, proving that the country, which now has the world’s largest population of internet users, is still willing to actively censor the internet.

Big media is getting into widget advertising, in order to reach people on sites across the web. One example: Media conglomerate CBS is launching a local widget ad network today, with the goal of drawing more traffic to its own web sites — and making money from partner sites in the process. Another example: DoubleClick, the advertising giant (that Google has just gotten final approval to purchase), has announced its own widget ad network today.

Widgets are small snippets of code that web publishers can embed on their sites, that feature live, interactive information from other sites. But many have wondered how widgets — and more complex versions, such as Facebook applications — can make money. The answer is emerging now, as companies like CBS and DoubleClick start running more ads within widgets — and make money for themselves, for their widget-technology startup partners, and for publishers.

CBS is offering a local widget ad network where a third-party site located in the same geographic area as a CBS television station can run a widget that features news clips from the station as well as CBS’s own ads. Local blogs and other social media sites are new competitors to local television. This is a way for CBS to make money and gain traffic through these sites at the same time, turning them into partners, not just competitors, with CBS at the center. CBS has been one of the big media companies to aggressively experiment with widgets and social media, such as its widget that shows sports scores, here.

Sites that run the ad widgets will get a share of the revenue from CBS — and must be approved first. CBS, in turn, will make money from the ads on its partner sites. Since the widgets are designed to drive local users back to CBS, its local station web sites themselves will also presumably see an uptick in online traffic and online advertising.

CBS itself isn’t creating the widgets — it has partnered with a company called Syndigo Networks to administer the technology (more information here).

San Francisco-based SFBayStyle is one local site running the widget already (see screenshot, above). Other cities with CBS local stations offering the ad network include: Boston, Dallas-Fort Worth, Denver, and Chicago. Other stations that will soon offer the ad network include New York, Los Angeles, Philadelphia, Minneapolis-St. Paul, Miami, Sacramento, Pittsburgh, and Baltimore.

Meanwhile, Doubleclick will offer a more general form of widget advertising. It has partnered with widget distribution technology company Gigya (our coverage), with DoubleClick offering widget creation services within its existing interface for ad creation and management. Gigya already offers an ad-widget service to site publishers (more here), where you can grab a widget featuring an ad and put it on your site. The DoubleClick deal makes it easier for DoubleClick’s large base of advertisers to try their hand at widget ads and increases the inventory of ads that Gigya users can run on their sites.

Numerous startups have already been experimenting with running ads within widgets on web sites, including Clearspring (our coverage) and Widgetbox (our coverage), and so have numerous Facebook application ad networks such as RockYou, Slide, Social Media, Lookery and others. But it hasn’t been clear how these companies could find large amounts of advertising revenue — the answer may be brand advertising, because the large advertisers that companies like CBS and DoubleClick serve are hungry for better ways to reach users. John Battelle of Federated Media (which VentureBeat uses for some of its advertising) has more thoughts on the evolution of brand advertising here.

Note: Applications on Facebook and other social networks are essentially more complex versions of widgets, because they’re able to incorporate data and features of social networks using the social networks’ developer platforms. Google and other large advertisers have also been experimenting with ads that run within Facebook applications (our coverage), but neither CBS nor DoubleClick are getting into that game — at least they haven’t yet.

The European Commission has approved Google’s $3.1 billion acquisition of web advertiser DoubleClick.

The deal was already approved in the United States, but the decision is still very good news for Google. European regulators have been tough on other U.S. tech companies, such as Microsoft, and Google’s falling stock price has taken away some of the company’s air of invincibility.

In addition to large display ads, DoubleClick deals with “ad serving,” which helps advertisers target potential customers, and which sends those customers to ad networks like Google’s AdSense.

Microsoft and Yahoo complained that the deal would make it difficult or impossible for other ad networks to compete. Privacy advocates said the merger would allow Google to collect an uncomfortable amount of information about web users.

The European Commission, however, ruled that DoubleClick’s competitors “would continue to exert sufficient competitive pressure after the merger.”

The news confirms Bloomberg’s report last week that the commission would side with Google, and that the ruling could come as early as today (our coverage).

The Federal Trade Commission today approved Google’s $3.1 billion acquisition of DoubleClick, a ruling that was necessary to allay fears the merger may pose a risk to competition.

Now that the merger has been cleared in the U.S., attention turns to the European Commission. Google can’t close the acquisition until it gets Europe’s approval, given the extensive operations of both companies in that region.

The acquisition was approved earlier this year by Australia, but hasn’t been approved yet anywhere else.

Google, in a statement, said the FTC’s ruling supports its case elsewhere:

…the FTC explicitly rejected any current or potential competition concerns. Google and DoubleClick are complementary businesses and do not compete with each other. Google’s current business primarily involves the selling of text-based ads, while DoubleClick’s core business is delivering and reporting on display ads. DoubleClick does not buy ads, sell ads, or buy or sell advertising space. Rather, it provides technology to enable advertisers and publishers to deliver ads once they have agreed to terms, and to provide advertisers and publishers statistics relating to those ads.

Google also pointed to other big players and their deals lately, suggesting there’s no need for anti-trust action: Yahoo’s acquisition of Right Media; AOL’s acquisition of ADTECH AG and TACODA; WPP Group’s acquisition of 24/7 Real Media; and Microsoft’s $6 billion acquisition of aQuantive and acquisition of AdECN Inc.

Here’s the latest action:
–Jajah gets shut out of eBay
–German cell-phone software vendor buys iPhone game maker
–Verizon secretly pressuring FCC Chairman to renege on wireless opening?
–Facebook advertisers are “selling shovels to other miners”
–Ballmer: Ads to make up quarter of Microsoft business
–Research firm Gartner predicts continuing chip-industry slowdown
–Google’s DoubleClick acquisition may face still more hurdles

Jajah gets shut out of eBay — This was pretty predictable. As reported earlier, Jajah released a button aimed to give small businesses the equivalent of a free 1-800 number. eBay vendors could use it to let customers call them for free from their eBay page. However, eBay owns Skype, a competing service to Jajah, and quickly stripped Jajah’s buttons from the site within 24 hours.

German cell-phone software vendor buys iPhone game maker — The German company, Shape Services, has bought New York-based iPhone Applications List, showing how the iPhone has generated a platform of its own that’s creating quite a bit of excitement, and could eventually rival the iPod ecosystem. There’s an estimated $1 billion in sales annually of iPod add-ons, according to Dow Jones.

Verizon secretly pressuring FCC Chairman to renege on wireless opening? — News reports suggest Verizon is lobbying behind the scenes, perhaps even in violation of FCC rules, to have the FCC water down provisions that would open up the 700 MHz spectrum to competition. The FCC has opened the spectrum to bidders in an auction, where the highest bidder gets to offer services over the spectrum, but must also let other service providers access the spectrum too. Verizon, a carrier worried that regulation would let Google or others encroach on its wireless turf, apparently is seeking to make the FCC ease up on a key requirement: that the winner of the bid (Verizon presumably thinks it can win the bid) must open up devices and applications if they use the spectrum. Now Google is crying foul.

Quote of the day: Facebook advertisers are “selling shovels to other miners” – You’ve got to like the analogy by the New York Times’ Brad Stone in his piece about Facebook. He likens Facebook application hype to the 1849 gold rush: “Some [Facebook] developers report earning tens of thousands of dollars in advertising with the applications they have created. Yet their applications are mostly running ads promoting other Facebook applications — a situation that recalls the earliest Gold Rush miners, who earned a living selling shovels to other miners.” Overall, very few people found significant amounts of gold.

Microsoft’s chief executive Steve Ballmer says advertising will make up a quarter the company’s business within a few years — Details here. “Over time, all ad money will go through a digital ad platform,” Mr. Ballmer told a gathering of European ad agencies and clients. “All media goes digital; all advertising goes digital.”

Google remove all ads from its social-networking service, Orkut – This is just the latest sign that social networks are having a much harder time being monetized than people appreciate. Users post pornographic images, and advertisers don’t want anything to do with this. Google said advertising appeared on only 1 percent of Orkut pages. The site is popular in Brazil, but has been accused of containing child pornography among other illicit material. According to research firm comScore Inc., Orkut attracted visits from about 25 million people in August. Perhaps never before has there been such a disjunct between a site’s popularity and such a depressing amount of money that can be made from it.

Research firm Gartner predicts continuing chip-industry slowdown — Already down 4.3 percent from predicted levels, chip equipment orders will stay at their current low levels until late next year, according to Gartner. The research revised capital spending forecasts for the semiconductor industry, trimming off $4.7 billion for a predicted total of $54.6 billion next year. Slowdowns in the chip industry have, in the past, foreboded a slowing of the entire tech industry.

Google’s DoubleClick acquisition may face more hurdles — Not just one, but two committees in the House of Representatives are considering holding hearings over Google’s proposed buyout of DoubleClick. The House Energy and Commerce and House Judiciary committees are reviewing the case, following a hearing last week by the Senate Judiciary’s Antitrust, Competition Policy and Consumer Rights Subcommittee. The hearings may have been sparked by rivals including Microsoft and Yahoo, who are actively making arguments against the acquisition to Washington’s lawmakers. It’s a good thing for Google that the company has already been busy hiring lawyers and lobbyists in Washington; it’s got some catching up to do.

Here’s the latest (updated) action:

Six Apart’s headaches — The blogging software market is highly competitive, so small differences in quality can make a difference in user adoption. Six Apart, a Silicon Valley start-up that offers several blogging software platforms, including Movable Type, has released a product after acknowledging internally it could make developers mad. [Six Apart's Anil Dash has since responded in comments, saying the company took time to fix the bugs for the release. The references in an internal memo before the release that caused concern were the following: The need for "PR to stay ahead of the curve" with people who say "we rushed the release" and to developers who "will be very mad" for not having the resources to upgrade their plugins.] Moreover, chief architect Brad Fitzpatrick has left the company. We asked Six Apart for comment, but they did not respond. Frankly, the various bugs are one reason VentureBeat moved to embrace Wordpress, dropping Movable Type. Wordpress, owned by Automattic, also seemed swifter and more flexible. Separately, Wordpress’ hosted version (Wordpress.com) is more secure than Six Apart’s hosted versions. Wordpress has three different data centers, so you wouldn’t see it crash like Six Apart did when an SF data center melted down several days ago. Wordpress is run by a Swiss named Toni Schneider, who is obsessed with scaling the company without hitch or server meltdown. Lead developer Matt Mullenweg goes to bed thinking about scaling problems, Schneider adds. Related: I cited Toni in a piece I just did for Forbes about “when to hire an IT guy.”

Clicktale records what happens when a user hits your Web site — Today, Clicktale launched to show things like the number of mouse hovers over a link (in other words, showing how a link may be attractive, but not enough for people to click), how many mouse hovers eventually convert to mouse clicks and other interesting behavior measures. Techcrunch has a good review here. The Israeli start-up has competitors, including RobotReplay and TapeFailure.

Zhanzuo.com, a Facebook clone in China, has acquired Yoolin.com, a campus social networking site targeted at Chinese students abroad — Yoolin was founded in June 2006 by Chinese students from Stanford, UC Berkeley, Harvard and MIT, but according to Alexa data cited by this blog (which reported the acquisition), their traffic didn’t grow much.

Another news site, Newser.com — Journalist Michael Wolff has started a news Web site called newser.com that aggregates news articles for convenient reading. New York Times has the story. We don’t understand the company’s model. The cater-to-all destination site is a dead horse fairly beaten.

Non-profit music industry agent conflicted? — Wired reports that Sound Exchange, a nonprofit that administers copyright licensing and license-fee collection is funding a group called musicFirst, which is lobbying for the enforcement of extra broadcasting fees on terrestrial radio stations. According to Wired: “Whether or not SoundExchange’s lobbying efforts prove to be illegal, its presence as an advocate in this debate undercuts its role as neutral administrator of royalty fees set and approved by the Copyright Royalty Board.”

GoFish’s acquisition of Bolt, dead in water — Details here.

Microsoft testing ad supported Microsoft Works — Details at Ars Technica.

Advertisers in UK yank ads from Facebook when they realize the ads are posted next to the group page of a far-right-wing political party — Details here. Slowly but surely, advertisers are beginning to realize how dangerous it is to run campaigns in social networking sites. Tod M. Sacerdoti, founder of BrightRoll, which inserts advertising into videos for clients, told us recently he has all but abandoned serving social network sites, after seeing multiple examples of advertising networks exposing major advertising brands to lewd, quasi-porn video content.

Answers.com loses 28 percent of its viewers due to a change by Google’s algorithm — GigaOm points to the story.

IAC bags Google, chooses Microsoft - It will use Microsoft’s aQuantive’s ad network over Google’s Doubleclick.

Thomson Financial finally releases VC data — Like the data released last week by VentureOne, it shows venture capitalists are investing at the highest levels since 2001. VCs poured $7.1 billion in 977 deals in the second quarter of 2007 - the largest number deals since the third since Q3 2001. A Thomson spokeswoman said the week’s delay in the survey was caused by a server crash, and then a week’s worth of verification with its partners in the quarterly MoneyTree Survey: PricewaterhouseCoopers and the National Venture Capital Association. We asked whether a reported 61 layoffs at Thomson in recent months had anything to do with the snafu, since some of the VC reporting department has been replaced by outsourced labor in places like the Philippines. Or perhaps caused by distraction caused by Thomson’s pending merger with Reuters? A spokeswoman did not address the layoffs, but said the Reuters deal hasn’t closed yet, and so that played no role.

Vibrator maker Jimmy Jane might get real VC? — Individuals such as Tim Draper have backed Jimmy Jane, the sex-toy company, with about $1 million, but now the New York Times’ Matt Richtel says the company is about to get a real VC round. We contacted Jimmy Jane for comment, but no response thus far. Draper, for his part, suggested something is coming: “I don’t think I am allowed to answer that,” he said, when asked about a pending round. “We don’t make comments on financings until they are done.”

Yahoo advised to… go after social networking — An analyst report by Bear Stearns recommends that Yahoo more aggressively pursue social networking, saying it is a high growth opportunity, and noting that Facebook could be worth $6 billion or so. Yahoo had reportedly sought to buy Facebook last year for $1 billion.

Yahoo advised to… pursue open source — Tim O’Reilly says Yahoo is grasping open source as a competitive advantage and commends it, writing off the news Yahoo is now supporting something called Hadoop.

WiMax notebook computers coming by late next year — So says Intel, a leading provider of the technology, which will operate many times faster than WiFi technology used by most laptops. (Mercury News story)

Silicon Valley’s WiFi network project shifts from free, to paid — A Mercury News story shows the Silicon Valley Joint Venture Wireless Project looks shakier than ever.

Google has agreed to buy DoubleClick, a company that sells display advertising on Websites, for $3.1 billion in cash.

Google’s growth story continues. This extends Google’s reach to banner and other online ads, where Google has so far been weak.

DoubleClick’s software is used by large publishers to manage advertising, and it gives Google a direct channel to these publishers and to advertising agencies that buy ads through DoubleClick. It puts Google on a more even footing with Yahoo in display ads, and it is a blow to Microsoft, which reportedly had been negotiating to buy DoubleClick.

The deal is a huge win for DoubleClick-owner Hellman & Friedman, the private equity firm that bought DoubleClick for $1.1 billion in 2005. Google has paid a premium and its stock was hit, predictably, in after-hours trading Friday. What do you think? will Google’s stock resume its fall Monday, or will Google’s journey excite investors and prop it back up?

From the Mercury News story:

Based in New York City, in the same building where Google has an office, DoubleClick has more than 1,500 customers. Its top competitors are aQuantive and 24/7 Real Media…

..Before the deal was announced, Google had been rumored to be developing a free ad-serving tool that it had hoped would compete with the product that was DoubleClick’s bread and butter…In a conference call with analysts and reporters, Schmidt said Google decided to make a bid for DoubleClick after a strategic review revealed that the opportunity to sell display advertising was larger than Google’s executives previously had imagined, and that DoubleClick had done an exceptional job at entering the market.

The latest action

Apple to release EMI music without anti-piracy technology — In agreement with music label EMI, Apple is making EMI songs available without digital rights management (DRM) through its iTunes music store. The music will be higher quality, and tracks will cost $1.29, or 30 cents more than the standard 99 cents. This means you can take those songs and put it on any device you want to, a significant development.

Google allegedly joins Microsoft in bid for the major online ad company, DoubleClick — DoubleClick is an online site that lets advertisers deliver ads to Web sites, and is considered a sort of middleman between advertisers and publishers. Without owning such a property, Google remains perceived as more heavily dependent on advertisers, who make up most of its business, and thus more likely to favor their interests. At this stage, the talks are rumors. Bankers generally try to drum up support for a deal, and have an interest in generating speculation. The latest, reported by the WSJ, is that the sale price is $2 billion.

InfoWorld closes print edition, and recriminations begin — IDG has shut the print edition of InfoWorld, and there’s a good interview here with IDG’s leader Pat McGovern about the future of news. He gets into a scuffle with former Industry Standard chief exec John Battelle about the failure of that magazine. McGovern blames Battelle for not selling during the bubble, and gunning for a billion dollar IPO. Battelle responds, saying McGovern’s got it wrong. Others support him. In comments to the interview, McGovern fires back, saying he doesn’t have it wrong, etc. Who cares? The Standard’s advertising base would have disappeared anyway, whether or not it was sold.

Photobucket worth $300 to $400 million? — At least, that’s according to rumors reported by Techcrunch, which says investment banker Lehman Brothers is trying to sell the private Palo Alto, Calif./Denver, Colo. company. We’d caution against taking these numbers at face value, given that bankers always push for a high value (they generally get a 7 percent or so cut of the transaction). The site’s success stems from its convenient storage of photos, and the ability to easily link to those stored photos from other sites, such as MySpace (see story in Fortune). Photobucket has a whopping 36 million registered users and adds another 85,000 per day, according to leaked data. Note that only positive data was released, such as skyrocketing revenue predictions ($4.35M in 2005, $9.34 million in 2006, and more than $32 million predicted this year). Nothing about the company’s costs.

Iminlikewithyou, the latest dating site with buzz — This site lets you flirt with your prospective date, but also makes you compete in an auction-like system. You start with 500 points, and lavish points on the girl you like, in an attempt to outbid rivals. If you lose the bid, you lose your points. This is meant to discourage you trying for a girl who is out of your league. You can stock up on points by filling out questions, which lets the site find out more about your tastes. This site was originally nurtured by YCombinator, and subsequently has received more money from undisclosed angels. The site lets you see who is logging in. We saw Digg co-founder Kevin Rose logging in over the weekend, for example.

Yahoo opens its popular email program to outside developers — Shortly after announcing unlimited storage for its email service, the company has opened up its Yahoo Mail API, to let developers build applications on top of the service. Now it has stepped ahead of Google’s Gmail in most respects. Yahoo Mail has more users, has more storage, and more a friendly API policy.

Search Physics raises angel round — The San Francisco is building search engine technology that extracts information from Web sites, but hasn’t launched yet. (Thealarmclock)

Cisco buys Mountain View-based SpansLogic for around $6M — See story here, and why this is bad for another company, NetLogic. SpansLogic was backed by ATA Ventures.

Freedom-2 removes tattoos — Go ahead and get your tattoos. Freedom-2 offers technology that allows you to get tattoos that are permanent, yet removable if you change your mind and want to get rid of them. Apparently Freedom2Ink uses pigments and dyes that are encapsulated in a polymer bead. They are absorbed in the skin but can be removed easily with laser treatment — which breaks the beads and lets the dye spill out. The New York company has just raised $1.5 million in a first round of capital, led by Brightleaf Capital and other individuals.

Openfloodgate, another YouTube for docs — Like Scribd, this site makes it easier to post documents online than say, via your blog. Tina Seelig, an adjunct professor of entrepreneurship at Stanford, who owns the site, said it offers more control over content than Scribd, because it gives you the option to limit viewing to private groups. However, the content available for public viewing is easily copied. She has self-funded the site. The works, from art to poems, are stored as PDFs, but are turned into images on the page. Here’s a tour.

Finally, see the latest deals — A reminder to check here daily for the latest news about investments in start-ups. Today, we’ve got Vyatta, Mimosa, Sana and more, and also an overview of the lastest on IPO activity.