Microsoft Rattles Yahoo, AOL Twists in the Wind, eBay Becomes a Battleground

Microsoft is dangling a US$44.6 billion hostile bid in front of Yahoo investors in what is widely pegged as a move to thwart Google from overtaking it as the biggest and most powerful tech company in the world. The proposed price would be a healthy premium over Yahoo’s stock price before the bid was announced, and the news itself was enough to send shares of the struggling Internet giant sharply higher. The irony of Microsoft saving the world from a monopolistic monolith was not lost on many tech observers, and the blogs were abuzz for days after the announcement with critics weighing in on every possible angle of the story. It probably won’t be lost on the governments of the world either — and their scrutiny is widely expected as the proposal develops. Yahoo is keeping its hand close to the vest, although CEO Jerry Yang sent out an e-mail to the entire staff basically saying that the company was looking at other options. Top advisers have been brought in, Yang said, and all avenues are being explored. Maybe the exclamation point in its logo means Yahoo won’t go quietly.

Advertisers and software companies are constantly innovating to find ways to get you to pay attention to the commercial messages that subsidize all that free content you love so much. Microsoft’s latest effort is a new set of AdCenter tools that aim to hike the relevancy quotient. One is a content analysis algorithm that tries to match ads with the text, audio or video you’re looking at. Another is a touch-screen unit designed for high-traffic areas like shopping malls, which would allow you to virtually try on a pair of sunglasses, for example. The timing of the announcement is somewhat curious, considering Microsoft’s recent offer to buy Yahoo, which has its own highly successful advertising platform, not to mention a huge stable of existing clients who may or may not want to switch to AdCenter. This message brought to you by the E-Commerce Times. Because e-business means business.

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New iPhones, iPods

Apple finally rolled out a new version of the iPhone, though it isn’t exactly iPhone 2.0. It’s got all the same specs as the previous version, except it holds 16 GB of data instead of just eight. Apple also showed off a 32 GB version of the iPod touch. Each costs $499 — $100 more than the previous versions, which are still available. What this means, of course, is that users can store more music, TV shows, applications and movies on the devices. These beefed-up versions showed up just a few weeks after Apple revealed that iTunes will be renting videos that can be viewed on the iPod. And they come just a few weeks before the first few applications made possible by the iPhone software developer kit will start to trickle in. Now that this step has been taken, we can all start predicting when the real iPhone 2.0 will make its debut. My guess: Three months from now — Cinco de Mayo!

One thing you need to have if you’re going to do business on eBay is thick skin. It’s no place for wimps. People who are normally nice enough in real life often turn into complete jerks the moment they go online. It’s called “Internet Toughguy Syndrome,” and anyone who’s done more than a little business on eBay has probably run into it. It happens every day: A buyer has a bad experience with a seller, so he’ll give her account negative feedback, which hurts her seller rating. So she’ll retaliate by giving him a bad buyer rating. Or sometimes it’ll be the other way around, with the seller claiming the buyer is trying to defraud her, then receiving retaliation from him. Meanwhile, the task of mediating each individual scuffle taxes eBay’s resources to their limits. So eBay decided that if you can’t say anything nice about the buyer, you can’t say anything at all. The virtual auctioneer will cease to allow sellers to give negative or even neutral feedback ratings to buyers, regardless of how they’re treated. eBay believes this will break the vicious cycle, but a lot of sellers — and even some buyers — are furious.

Time Warner’s AOL Changes

The Industry Standard is rising again. The publication, one of the dot-com era’s most prominent magazines, has relaunched as a Web-only, community-driven Web site. Besides offering news and analysis from outside contributors and profiles of prominent people in the technology sector, it offers users the opportunity to participate in its predictive market — betting on, say, which quarter Apple will ship 10 million iPhones, or when the Nasdaq will sink below 2,000. The Industry Standard originally launched as a magazine in 1998, just as the Internet dot-com boom began. The magazine grew by leaps and bounds, both in terms of subscribers and advertisers. In 2000, it ranked among the top 20 revenue-generating publications. However, the economic crash in 2001 hit the magazine hard and fast. Within a year, it dropped from a high of 300 pages to a low of 90 pages before fading away in August of that year.

AOL is pretty much dead weight for Time Warner, so the media giant reportedly is considering putting the division on the block. In the near-term, it plans to radically restructure the fallen Internet icon. The news came as Time Warner announced its fourth-quarter results, which included solid earnings that hit analysts’ marks. Overall, the company’s revenues grew slightly, spurred on by its cable, film and network units. However, the company saw a sharp drop in both its publishing and AOL divisions, with revenue declines of more than 30 percent for each. The diminishing returns — particularly with AOL — prompted Time Warner CEO Jeff Bewkes to announce plans that may include splitting AOL into three parts: the online advertising division, an online Web portal and the ISP service. AOL, once the premier ISP and the driving force behind the $164 billion merger between the two companies in 2000 — has seen its fortunes decline in recent years as broadband cable and DSL services lured subscribers away.

Also in this episode: Microsoft unleashes Vista SP1 to computer makers; Microsoft lowers the price of its HD DVD add-on for Xbox 360; Microsoft opens a research lab in New England; CheckFree’s Remote Deposit Capture lets consumers deposit checks from home; Google reports fourth-quarter results; Swedish prosecutors target Pirate Bay; FDA says iPods are safe to use near pacemakers; Facebook users organize protests against FARC.

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