VentureBeat

1. EBay CEO Meg Whitman prepare to retire
2. Open Source revolution continues, with Intel
3. Microsoft purchases virtualization co., Calista
4. Cleverset, software recommendation co., sold
5. Yahoo has some small layoffs coming
6. Facebook-branded Nokia handsets?
7. LifeLock, anti-credit fraud co., gets $25M
8. Online ad co., Spotrunner, draws buzz
9. Jobs snubs both Amazon and Google
10. Coventi Pages gives up the ghost
11. Singapore opens search engine contest

EBay chief exec Meg Whitman is preparing to retire — Whitman, the most visible female chief executive of Silicon Valley (where there aren’t many great female role models), could step down within weeks, according to the WSJ. John Donahoe, 47, president of eBay’s auction business unit, has emerged as the leading succession candidate.

Open Source revolution continues, with Intel — In case you haven’t noted, the open source software industry is on fire. We’ve covered a series of investments into open source companies over the past few days, and last week was punctuated by the acquisition of open source MySQL by Sun for $1 billion. Now Intel is crowing about its open source investments. News today emerges that it has backed REvolution Computing, creator of an open source parallel computing software for computational statistics. The amount of the funding round, the New Haven, Connecticut company’s first, was undisclosed

Microsoft purchases Silicon Valley virtualization start-up Calista Technologies – Microsoft is trying to catch up with VMWare, which has opened up a lead in the hot virtualization industry, which lets companies reduce the number of servers they use by letting them run multiple operating systems on a single machine. So it has acquired Calista (see WSJ story for good summary). The acquisition price wasn’t disclosed, but the San Jose, Calif. Calista was backed with an undisclosed amount by Greylock Partners, Lightspeed Venture Partners and others (we mentioned the secretive company more than a year ago).

Cleverset, software recommendation service, sold to ATG for $10 million — Cleverset, like many other companies we’ve covered, offers software that presents users of e-commerce sites with relevant recommendations and information. Press release here.

Yahoo has some small layoffs coming — The past few days have featured rumors that Yahoo will be laying off thousands of employees, as it tries to become a leaner, more efficient organization. The actual cuts may not be so drastic, counters reporter Kara Swisher, who has followed Yahoo closely: “[E]xpect the changes to be less bold than has been reported, much in the same way [chief executive and founder] Jerry Yang has been handling other changes at Yahoo–slow and decidedly non-dramatic,” The company will move to places where Yahoo has an advantage — “mobile, communications, like email, and its graphical ad network” — she says.

Facebook discussing Facebook-branded Nokia handsets — If Google is going to have a cellphone strategy, well, by golly, so is Facebook. PaidContent has the report about a possible partnership. The arrangement may also include Nokia buying a small stake in Facebook, according to the report.

LifeLock, the anti-credit fraud company, gets $25M more — This is the controversial Tempe, AZ company co-founded by Robert Maynard, who himself has been accused of deceptive practices, and where CEO Todd Davis publicly discloses his social security number (457-55-5462) to prove his company’s fraud protection product works. AlleyInsider first reported, and the company now confirms that the company has raised $25 million more in a round led by Goldman Sachs, and including Bessemer and Kleiner Perkins. The company previously has raised close to $13 million in round led by the latter two firms.

Spotrunner action — There’s lots of buzz around Spotrunner, the online advertising company. First, large advertising company WPP is looking at possibly acquiring SpotRunner along with another online ad company, VideoEgg, according to the NY Post. Meanwhile, Spotrunner has acquired GlobeShooter, a network of more than 1,200 independent filmmakers, videographers, producers and production companies across the U.S. Spotrunner is backed by venture firms Battery and Index (see our earlier coverage ).

Online word processor Coventi gives up the ghost — Despite actively soliciting users and press attention for much of 2007, online word processor Coventi Pages has apparently failed to gain enough users to continue competing with Google Docs, Zoho and scads of other, lesser-known rivals. The startup sent out an email to users, reported by Web Worker Daily, stating that it will close its doors on February 1st.

Singapore opens search engine contest — Singapore’s Agency for Science, Technology and Research has opened a competition, with a $100,000 prize, for a new online search engine. Rather than just fostering yet another competitor for Google, the agency is looking for an engine that can search through text, audio and video. Contestants will have eight months to build their engine following the February 29th registration deadline. [via Physorg].

Jobs snubs both Amazon and Google — Apple’s Steve Jobs wants to own the hot mobile device market, and he takes a shot at both Google and Amazon’s latest efforts in that area. Of the Amazon Kindle reader, he says: “It doesn’t matter how good or bad the product is, the fact is that people don’t read anymore,” he tells the NYT. “Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.” He’s also critical of Google’s Android project, to develop open cellphones that could compete with the iPhone: “We’ll see how good their software is and we’ll see how consumers like it and how quickly it is adopted.” In seeking not to get locked out of the mobile phone world, “I actually think Google has achieved their goal without Android, and I now think Android hurts them more than it helps them. It’s just going to divide them and people who want to be their partners.”

Links to the latest action:

Our post about the 13-year-old CEO founder and chief executive of Elementeo, Anshul Samar, attracted an impressive number of outside links, briefly crashing VentureBeat’s site. Take a look at the additional video after the jump below to see him articulate his idea on stage under questioning. He says he is from Silicon Valley, and doesn’t want the adults to have all the fun. :)

Electronic Arts, the Redwood City video game publisher said it is investing $167 million in cash to buy a 15 percent stake in The9 Limited, a Chinese video game company — The9 gets exclusive license to publish EA’s “FIFA Online” soccer game in China.

Google, Salesforce reportedly in talks. Merc story here.

Google submits spectrum auction plan to FCC. We’ve written about the new rules being designed to auction of radio spectrum, which could allow more dynamic wireless offerings. Google is now proposing what it calls a “real-time” airwaves auction model,” which would allow a spectrum license holder to auction off unused spectrum to bidders on a wholesale basis. Just like Google’s own online advertising auction.

Meg Whitman said she’ll never leave eBay for another company. See VentureBeat’s coverage of her address at TiECon, if you missed it.

Zhou Hongyi, chairman of Chinese search engine start-up Qihoo, defended himself Sunday against allegations that he may have embezzled from or defrauded Yahoo China before leaving that company last year.

In a phone interview, Zhou (pictured here) responded to VentureBeat’s article on Friday that reported Yahoo China is about to file a lawsuit against him. That article was based on an interview with a source close to Yahoo China familiar with the suit preparations.

Zhou dismissed news about the suit, saying it was yet another behind-the-scenes effort by Jack Ma, the chief executive of Yahoo China’s parent company Alibaba, to tarnish Zhou’s reputation. Ma’s motivation, Zhou said, is to make Zhou a scapegoat for Ma’s own failures. Ma has made several missteps since taking over Yahoo China last year, Zhou said, which have resulted in declining market share.

The skirmish is significant because the stakes are high in China’s fast growing Internet economy. The red-hot search engine market is still wide open, by most accounts, even if Baidu enjoys a significant lead — because millions of new Chinese are coming online each year.

Jack Ma is one of the most respected figures in China, because he embodies the successful Chinese entrepreneur — able to hold his own against US competitors such as eBay. He is revered in China like Bill Gates and Steve Jobs are here in the U.S. Some say pissing him off is like committing political suicide.

Zhou formed Qihoo, a competitor to Yahoo China, last year after he was ousted from Yahoo China by Ma (pictured left). The ouster came after Yahoo paid $1 billion to Alibaba to take over its China operations last year. Yahoo, in turn, negotiated a 40 percent stake in Alibaba.

Since leaving, Zhou has hired about 100 employees from Yahoo China.

VentureBeat’s article on Friday outlined the legal complaint being prepared by Yahoo China and Alibaba. The complaint will allege Zhou fostered a poor business culture while at Yahoo China, and that he became defensive as pressure mounted from U.S headquarters, according to the source. It says he built a moat around his China operations and started cutting his own deals on the side • taking kickbacks and making strategic investments for his own good - in preparation for his exit. It says he paid Yahoo China employees to leave the company.

Zhou said that Ma has no proof of any of these allegations. He said Ma is resorting to a desperate media campaign, knowing the charges won’t hold in court. “They’re all lies,” said Zhou, adding he wasn’t surprise to hear about them because Ma had spread other allegations about him for some time. A spokesman for Alibaba declined comment on Zhou’s comments.

Ma has come under increasing pressure from Yahoo, Zhou said, because of flip-flop decision-making. As Zhou explains it, in August 2005, Ma declared a new single focus on search. For example, Ma said Yahoo China would stop operating Yisou, a separate search engine Zhou had built up within Yahoo China’s portal offerings. Ma also said he’d discontinue the brand of 3721, which was the search engine Zhou had built years earlier (Yahoo bought 3721 in 2003.). Ma further said he’d change Yahoo china’s homepage (Yahoo.com.cn) from a portal into a simple search page; he eliminated Yahoo China’s portal staff. He also cut Yahoo’s wireless division, even though it was bringing in sizeable revenue and had cut deals with Chinese providers like China Mobile, Zhou said. (Chinese report on all this is here).

But then in Sept of this year, Yahoo resumed its homepage strategy, and began promoting a separate search engine page, Zhou said. “Now he [Ma] has completely flipped back and wants to rebuild Yahoo China into a portal. As a result, there’s no search strategy,” Zhou said. “He continues to lose market share. There’s brand ambiguity. No one’s sure whether its a search engine or a portal.”

Alibaba has already filed suit against Qihoo in a separate case, claiming Qihoo has inappropriately been labeling Yahoo china’s toolbar as malware and prompts deinstallation • and has hurt Yahoo china’s market share.

Zhou, meanwhile, has sent VentureBeat several documents, translating Chines media and other third-party research reports that say Yahoo China’s toolbar is spyware and deletes applications that try to remove it.

Yahoo China has lost more than 150 employees since Alibaba took over last year, Zhou said. They went to several companies beside Qihoo, including Google, Zhou said. He said such a significant exodus shows the problem is at Yahoo, and the defections to Qihoo testify to Zhou’s credibility and integrity. Many of them have worked with Zhou for years, he said.

Yahoo’s $1 billion investment is the largest in China’s Internet industry, Zhou notes. This had meant “a tremendous amount of pressure placed on Jack Ma’s shoulders to prove he’s doing the right thing,” Zhou said. “He needs to find a scapegoat.” Zhou said he had “huge respect” for Yahoo’s co-founder Jerry Yang, who has helped oversee Yahoo’s China strategy. However, “Jerry backed the wrong person, Jack ma. Willingly or unwillingly, Jerry is being held hostage, he’s being used as a tool.”

Zhou said Yahoo China had even resorted to taking an anonymous report critical of Qihoo from a Chinese online forum, translated it into English, and sent it to Yahoo’s Yang. Yang, in turn, forwarded it on to Michale Moritz, a venture capitalist who is backing Qihoo. These efforts are designed to persuade Moritz and other investors to forsake backing Qihoo, Zhou said. “Ma has truly become irrational abuot this campaign.”

Zhou said Qihoo’s reference to Yahoo China’s toolbar as a malware is justified by third-party reports • such one performed by Russian company Kaspersky — consistently listing Yahoo’s toolbar at the top of the list of about 200 popular malwares. “It’s in the top three, Zhou said. Qihoo is not unfairly targeting Yahoo, he said.

Zhou disputed allegations that he waged an anonymous public relations campaign in an effort to hurt Yahoo China’s contracts with companies like MSN. On the contrary, he helped Yahoo China renew contracts with companies before he left, he says. The contracts were terminated a year later because Yahoo China’s good-will has run out, and because MSN was launching its own search efforts, Zhou said.

Zhou rejected claims he’d taken kickbacks or used Yahoo resources to enrich himself or create a competitor to Yahoo China. He’d helped form partnerships with more than 20,000 Web sites while running Yahoo China, he said. Qihoo was one of those. Only after his exit did he become chairman of that company, he said.

(VentureBeat also spoke with Fan Zhang, a partner at Sequoia’s China operations. Zhang said he was puzzled by Alibaba’s use of the anonymous online forum posting, and was dismayed that Alibaba was also spreading untrue rumors about Sequoia • i.e, that it unfairly coerces entrepreneurs to work for its companies.)

Finally, Zhou said that Jack Ma has used a similar personal strategy against eBay’s Meg Whitman. He cited reports that show Ma has tried to shake the confidence of eBay employees in China. (See reports here and here for example, where Ma is declaring victory, and where rumors are circulating about eBay’s departure, even though Whitman says she’s committed to China). “He spread false rumors about Meg Whitman,” Zhou said. “It’s his strategy. He thinks, if he does this to someone long enough, they’ll self-destruct.”