Withdrawal concerns ease; Google starts hiring in China
February 25, 2010
Source: Bloomberg

Google’s China business is hiring and advertisers are returning, as concerns ease that the government will shut the company’s operations after it threatened to defy censorship rules.

“Things have stabilised,” said Vincent Kobler, managing director at EmporioAsia Leo Burnett in Shanghai, which buys advertising on behalf of clients on Google and Chinese market leader Baidu Inc. Still, the owner of the world’s most popular internet search engine needs to resolve its future in China quickly to avoid falling further behind its rival, he said.

Six weeks after Google said it planned to stop censoring its website in the world’s largest internet market, the company is recruiting engineers, managers and sales staff. The prospect of an exit, which Kobler said initially boosted advertisers’ spending at Baidu, has receded as executives negotiate ways to keep the company’s business in the country.

“Customers are considering Google for future ad campaigns again,” said Steven Chang, chief executive officer for China at ZenithOptimedia Group, which buys advertising on Google’s site on behalf of companies. Clients are returning after Chang said more than 20% of Google’s customers in the Asian nation probably switched to alternative paid-search providers in the wake of the US company’s January 12 announcement that it may withdraw from the Chinese market.

Beijing-based Baidu this month forecast its first-quarter sales will rise more than analyst estimates as Chief Executive Officer Robin Li said clients became more confident about the company following Google’s announcement.

Some Google sales agents said China advertising orders fell 50% after the Mountain View, California-based company threatened to close its local Web site, China Business News reported on January 29, citing unidentified agents.

Google fell $7.73 to $535.07 at 4 pm New York time on Tuesday in Nasdaq Stock Market trading. The shares have declined 14% this year.

“It’s business as usual in Google’s China offices, including hiring,” the company said in an e-mailed response to Bloomberg News on Wednesday. Google is recruiting for more than 30 posts in China, according to its website.

“The hirings are the first since Google’s announcement,” said Li Zhi, a Beijing-based analyst at research company Analysys International.

“The hirings show things are returning to normal.”

The search engine operator started offering travel information for mobile-phone users in China and introduced new messaging services for the Chinese New Year festival earlier this month, according to the company’s blog.

Life at Google’s Beijing office settled back to normal a couple of weeks after the pullout threat, said a female employee who didn’t want to give her name. She said workers had initially panicked when they heard the news in January.

Google’s share of the Chinese paid-search market is expected to remain stable this quarter, Li said. The company’s market share in China increased to 35.6% in the fourth quarter from 31.3% in the previous three months, according to Analysys. Baidu’s share fell to 58.6% from 63.9% in the same period, according to the researcher.

Google said January 12 that it was subject to ‘highly sophisticated’ cyber attacks from China aimed at obtaining proprietary information and personal data of human rights activists, sparking calls from the US for an investigation. The company said it may have to pull out of China pending censorship talks with Chinese authorities.

Cyber Attacks

The Chinese government has said it doesn’t engage in cyber attacks and is itself a victim of breaches of internet security.

Google has started talks with the Chinese government and will be “making some changes” in its operations in China in “a reasonably short time from now,” chief executive officer Eric Schmidt said on January 21. The company was still following Chinese laws and censoring its search results locally, he said at the time.

China censors online content it deems critical of the government or a threat to public order and morals by shutting down websites based in the nation and blocking access to overseas sites including those of Facebook, Twitter and Google’s YouTube. Authorities also censor media through state ownership of all newspapers, television and radio stations.

The New York Times reported on February 18 that the cyber attacks on Google and other American companies had been traced to hackers in Shanghai Jiaotong University and Lanxiang Vocational School in eastern China’s Shandong province. The reports are “totally groundless,” said Qin Gang, a spokesman for China’s foreign ministry.

“Many people, especially some foreign media, used it to attack China’s investment environment,” Wang Chao, China’s assistant minister of commerce, said at a briefing in Beijing on Wednesday.

An exit from China would cost Google, whose revenue growth slowed during the US recession, $600 million in annual sales, JPMorgan Chase & Co said in January.

China may have close to 840 million internet users, or 61% of the population, by 2013, according to EMarketer Inc in New York. The country had 384 million users at the end of last year, according to government data.

Google rejects German criticism of Street View
February 25, 2010
Source: ET AGENCIES

BERLIN: US internet giant Google on Tuesday defended its Street View application, a compendium of photographed city streets, from privacy concerns in Germany, where criticism of the company has mounted.

Minister Ilse Aigner, who is responsible for consumer affairs, again accused the US company of privacy invasion by photographing Germans' homes without asking each householder in advance for permission.

For historical reasons, Germany has strict privacy laws, and despite launching Street View in the US and other European countries, it has yet to go public in Germany - despite a fleet of camera cars already having taken the photos.

"We take privacy very seriously," said Arnd Haller, Google's chief legal counsel in Germany, at a Berlin news conference. He said Germans could request that their premises not be depicted before the pictures went online.

Germany's chief privacy commissioner, Peter Schaar, called for an anti-monopoly inquiry into Google with an option to forcibly break up the US firm into parts that would then compete with one another.

The company has faced growing hostility from the French and German governments after demands by the newspaper and book publishing industries that Google pay to display news and books on the internet.

Schaar said controversy over Street View was scratching the surface of a much bigger privacy issue.

"Google Street View is just one piece of the jigsaw. All the other Google services are issues. The main issue is the inter-linking of personal data, not whether some car number plate get to be masked out or not."

He called for a full-scale regulatory review.

"I'm not accusing Google yet of actually abusing market dominance," he said. "But what has to be investigated is how they handle the data." He said regulation of Google had been too lax. Proposed changes to German competition law provided a means.

"In extreme cases it will enable the break-up of a company," he said.

Some Germans have defended Google, welcoming its digital libraries as useful.

Parliamentarian Hans-Peter Uhl rejected Aigner's call for the onus to be on Google to obtain consent before taking pictures. Uhl said buildings did not possess a legal right to privacy.

But Aigner said, "One can use such services to see where someone lives, how they live, what their tastes are, what lock they have on the front door and that's just the start. Private things are being yanked before a global public with no means of protection.

"Nobody has ever properly checked out this development."

Aigner appeared to back off from her demand for advance permission from homeowners and referred to a 13-point code of practice agreed last year between Google and regional privacy commissioners.

"I insist Google abide by its promise to process every objection before it publishes this service on the internet," she said.

Helga Naujoks, a Hamburg privacy official overseeing the code of practice, said Google's compliance had been satisfactory so far.

Apple bans some apps for lascivious content
February 25, 2010
SOURCE: New York Times

Apple has started banning many applications for its iPhone that feature sexually suggestive material, including photos of women in bikinis and lingerie, a move that came as an abrupt surprise to developers who had been profiting from such programs.

The company's decision to remove the applications from its App Store over the last few days indicates that it is not interested in giving up its tight control over the software available there, even as competitors like Google take a more hands-off approach.

When asked about the change, Apple said it was responding to complaints from App Store users.

"Whenever we receive customer complaints about objectionable content we review them," Trudy Muller, a spokesperson for Apple, said in a statement. "If we find these apps contain inappropriate material we remove them and request the developer make any necessary changes in order to be distributed by Apple."

Among the victims of the purge was a game called SlideHer, a puzzle that challenged users to reassemble a photograph of a scantily clad actress. Another, Sexy Scratch Off, depicted a woman whose dress could be whisked away at the swipe of a finger, revealing her undergarments. Such programs often appeared on the store's list of most-downloaded apps, which are a common way for iPhone and iPod Touch owners to discover new ones.

Analysts said the apparent change in policy may have been prompted by the planned release late next month of the company's newest device, the iPad.

The company is hoping that the iPad will be a hit with families and as an educational tool in schools - which could be a hard sell if the catalog of programs available for the device is cluttered with racy applications.

"At the end of the day, Apple has a brand to maintain," said Gene Munster, an analyst at Piper Jaffray who keeps a close eye on the company. "And the bottom line is they want that image to be squeaky clean."

The iPad will run the same applications that work on the iPhone and iPod Touch, which demonstrated that consumers were willing to pay for software that turned their devices into gaming machines, e-readers and navigation systems. The Touch has been especially popular with children and teenagers.

"The reality is that the iPad is going to be a big platform for apps," said Munster. "It raises the bar for Apple in terms of policing what goes into the App Store."

Last June, Apple introduced parental controls and ratings to help keep sex-themed applications away from children. But Munster said that the volume of such apps - which he estimated made up as much as 5 percent of the more than 140,000 apps in the App Store - might have surpassed a level Apple was comfortable with.

Many software developers have long complained about Apple's strict screening process and, at times, seemingly arbitrary decisions about what was acceptable in the App Store. The company's latest move, which was first reported by TechCrunch, did little to change their minds.

Fred Clarke, co-president of a small software company called On the Go Girls, which made Sexy Scratch Off, said that as of Monday all 50 of his company's applications were no longer available. They included an application in which a woman wearing a swimsuit appeared to wipe finger marks from the iPhone's screen with a rag and spray bottle.

"I'm shocked," said Clarke, who said the company had not had a problem with its applications since the first one went on sale last June. "We're showing stuff that's racier than the Disney Channel, but not by much."

Clarke said his company had been earning thousands of dollars a day from the App Store. "It's very hard to go from making a good living to zero," he said. "This goes farther than sexy content. For developers, how do you know you aren't going to invest thousands into a business only to find out one day you've been cut off?"

Clarke said the company would still continue to develop applications for the iPhone and iPod Touch, but would explore alternative platforms, including Google's Android.

Chris Camacho, director of Giant Mobile, which created iPhone and iPod Touch applications including SlideHer, said his company was "trying to get a little more guidance about what would constitute compliance" with the rules.

Camacho said the company would probably not shift significant resources to other mobile platforms, like Android. "We haven't had much success on that platform," he said. "The Apple model is working for us, so we would prefer to continue working with them."

Not everyone was critical of Apple's stance. Wally Chang, founder of Donoma Games, which does not make sexual applications, said he welcomed the changes. He said he hoped the culling of the catalog would improve the visibility of lesser-known applications.

"There just seems to be too many of these really simple applications that do nothing but show pictures of girls in bikinis or in suggestive, adult poses," he said. "It's cluttering up the App Store."

Chang acknowledged that Apple's policies for what it deemed acceptable seemed a little opaque at times.

"Apple needs to be more transparent in how they are applying their policies and communicate that to developers," he said. "Sports Illustrated still has an application available. How come that hasn't been pulled?"

Indeed, a Sports Illustrated application tied to its annual swimsuit issue was still available for download on Monday, as was one from Playboy. A Sports Illustrated spokesman, Scott Novak, declined to discuss its app.

Some developers and analysts wonder if the Android Market, Google's version of the App Store, will end up becoming a refuge for sexually themed applications. The store's programs work only on phones running Android, which so far are much less popular than Apple's products.

A Google representative said the company wanted to "reduce friction and remove barriers that make it difficult for developers to make apps available to users." To that end, Android applications are treated similarly to YouTube videos, which are not screened before they are posted. Apps can be removed if they violate various policies, and users can flag material that they deem inappropriate, giving guidance to others.

Daniel Klaus, who recently co-created a multimillion-dollar fund to foster the development of applications for the iPad, said Apple had challenges ahead of it.

"It's an incredibly fine line they have to walk to keep the developers happy and at the same time grow the ecosystem," Klaus said. "It's going to be very interesting to see how they continue do that while clamping down on some of the areas that are not in line with the direction they want to go."