Ajax Girl

How much are your friends worth? That is the question behind the big debate going on around social networks and data portability. In the last ten days, Facebook, Google, and MySpace have all announced ways to let people access their data (including friends lists) from other sites, except that what they are really trying to do is erect new walled gardens by positioning themselves as the primary repository of that personal and social data. This is valuable data and none of the big players want to cede any more of it than is necessary, which is why Facebook banned Google from tapping into its members’ social data.

But here’s a little secret. All of this data is already leaking out in ways that Facebook and other social networks can hardly control. Startups are finding ways around their official APIs to get the data consumers want into their own systems. For instance, Zude, a personalized Webpage service, recently launched a feature called SocialMix that lets people import friends lists, photos, profile information, status updates, comments, and other data from Facebook, MySpace, Bebo, Orkut, and hi5. (See the screen shot below, which shows my Facebook friends on Zude). “What we are doing is taking the information and normalizing it and making it available in any manner you want,” claims Zude CTO Steve Repetti. He was tired of waiting around for true data portability to arrive, so he figured out a hack to offer it on his own (and it doesn’t involve screen scraping).

Taking a different approach, Minggl has found a way to access your social data through a browser plug-in. And Media6° is placing cookies through the ads themselves on Facebook to collect social data for advertisers. If you click on an ad with one of its cookies, then the same ad will be shown to all of your friends, who supposedly are two to ten times more likely to click on the ad than other people. Media6° also should be able to target Facebook members as they wander across the Web (as long as a cookie has been placed in their browsers and they come across an ad with the Media6° Javascript code embedded in it).

I’ve come across other startups who claim to be able to pull profile and friend data from Facebook. Facebook can go after them and shut them down, but it is rightly more concerned about Google gaining free and unfettered access to that data. Google is the bigger competitor and the bigger threat. But in the meantime, all of these little startups are finding ways to get at the same social data being so ferociously guarded by Facebook. In fact, they already have it, and Facebook is going to have a hell of a time trying to put it back in the barn.

(Photo by Larry Wilder).

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Even as Carl Icahn rallies angry shareholders to try to force Yahoo back to the bargaining table with Microsoft, one of the “strategic alternatives” Yahoo may still be trying to work out in the background is a search advertising deal with Google. There is a 60 to 70 percent gap between what Google collects for search ads and what Yahoo collects, so simply handing over a portion of its search advertising inventory to Google would boost its cash flow and profits considerably—perhaps adding as much as $1 billion or more in cash flow.

But how could such a deal pass muster with antitrust authorities, who are already investigating the test run Google and Yahoo did last month with only 3 percent of Yahoo’s search ads?

It would all depend on how a deal is structured.

One line of thinking is that Yahoo and Google could get away with a deal that only hands over 10 to 20 percent of Yahoo’s search advertising inventory. This would need to be on a non-exclusive basis, meaning that if somebody else could come in and beat Google’s revenue-per-search-query Yahoo would be free to hand them the ad inventory instead. The assumption was that this would be the 10 to 20 percent of keywords that bring in the highest revenues for Yahoo. (We discussed this point in our interview with Citi analyst Mark Mahaney last month, for instance).

But there is another way Yahoo could get a lot more bang for its buck in a deal with Google. Instead of handing over the most valuable search terms, it would be better off handing over the ones with the biggest delta in profitability (the difference between what Google makes on those terms and what Yahoo makes). Yahoo does not have any trouble getting decent ad rates for the most desirable search terms. Call those the head keywords that bring in the most revenues. What it has trouble making money on are the keywords in the long tail and torso of its advertising inventory. And that’s exactly where Google excels at squeezing out relevant matches and clickthroughs.

If Yahoo can identify which basket of search terms represents the biggest profitability gap compared to what Google makes, it can maximize what part of its ad inventory to outsource to Google. These terms will likely turn out to be the ones that are currently the least valuable ones to Yahoo. Picking the 10 to 20 percent of keywords where the delta is the greatest between what Yahoo and Google are able to charge would effectively multiply the impact of the deal. After all, there is no point in handing over high-revenue search terms that Yahoo is already matching Google on in terms of profitability.

If the numbers work out and antitrust can be avoided, such a deal would certainly be a way to appease (or at least answer) Yahoo’s increasingly irate shareholders. But if Yahoo is serious about striking a deal with Google, it should do so before the proxy battle with Icahn comes to a head.

(Photo credit:Jack Versloot).

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Celebrities are starting to take notice of Seesmic, a “Twitter for video” service that lets people have asynchronous video conversations on the fly (see my disclosure, I am an investor).

First was Deepak Chopra, who made a whole series of videos for this site. And yesterday things got even more exciting, when Steven Spielberg, Harisson Ford, George Lucas, Shia Laboeuf, Karen Allen and Cate Blanchett came on the site and had discussions with other users. Here’s one of the exchanges, between Jemima Kiss and Steven Spielberg.

So that’s all really great, and I’m happy as an investor. But Seesmic made some terrible judgment calls yesterday around this promotion that has resulted in us removing it from our sites (we installed Seesmic video comments on all TechCrunch Network blogs last month).

First, we didn’t know about the promotion until reading about it this morning along with every one else. All we knew is that our sites all simultaneously went down three times yesterday. After the first time we identified the likely problem as Seesmic and contacted the company. They assured us there was no way the plugin could take the site down. When it happened a second time we disabled the Seesmic plugin and the sites went back up. We identified the problem - the plugin was loading an external Javascript file, and when Seesmic’s servers were down, we just sat and waited for it for up to two minutes before timing out.

Seesmic said they’d patch the problem in the next version (which will pull the Javascript call into the footer instead of the header, so TechCrunch can mostly load even if they are down), and said they shouldn’t be going down again in the meantime. We re-enabled the plugin.

Then we went down a third time late last night, and we disabled the plugin for good (until the new version is available).

This morning we heard from Seesmic that the reason for the downtime yesterday was due to multiple server reboots around the Spielberg promotion.

What They Should Have Done

A simple email to us telling us that they would need to be rebooting their servers periodically over the day would have let us prepare for this and disable the plugin as it was happening. That way, Seesmic video comments would have disappeared from the site for periods of time, but TechCrunch would not have gone down. Of course, as Seesmic grows, having properly architected plugins and server redundancy will also help ensure that this problem doesn’t occur again.

I understand that young startups need a little wiggle room to get things right, and I don’t mind testing that raw software on TechCrunch. Even if that means we go down occasionally during their growing pains.

But never withhold information from your partners and tell them that you have no idea what is causing downtime when you know exactly what the problem is. As exciting as getting Steven Spielberg on your site to talk to your users is, it is not worth being dishonest to partners.

I understand that Seesmic may have been hesitant to tell us about the promotion because they wanted to keep it quiet. But all they had to do was tell us before the downtime that it was going to occur, and we would have been happy. And Seesmic would still be an active plugin on TechCrunch.

Some of you may wonder why I’m calling out a company that I’ve invested in so harshly. The reason: I’m calling them out because they deserve it, and the fact that I invested in them means I need to be careful before giving them any kind of break.

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Facebook finally has a real problem to deal with - an exceptionally rational and well-thought-out strategy by Google that puts the leading social media cloud in the path of a wave of angry users. The only thing Facebook has going for it is that said users don’t yet know they’re angry.

With its denial of service attack on Google’s Friend Connect, Facebook is serving notice that it feels threatened. By what? Users leveraging their Friend data to form communities outside of the Facebook moat? Forget for a moment that we tell Facebook who our friends are, and those gestures are created and owned by us. If Facebook insists on freezing our data as a condition of using their service, the company is essentially recommending we go elsewhere.

Google is smart enough to realize it doesn’t need to win here to help Facebook lose. Friend Connect does more to incentivize OpenId usage than to sell Google services; OpenId proliferation amortizes the complexity of that solution across multiple cooperating Web sites, particularly those that can make money on harvesting social synergies in conjunction with Adsense. It’s a Pay-Me-Now or Pay-Me-Later offer to Facebook: Play along and leverage your social equity or raise your hand and let your customers know how clueless you are.

Facebook insists it is preserving user privacy by neutering their API for its only stated purpose: “[E]nabling users to share their information with the third party websites and applications they choose.” Instead, in a Casablanca-like statement that gambling is going on (Your winnings, sir) one Charlie Cheever notes Friend Connect “redistributes user information from Facebook to other developers without users’ knowledge, which doesn’t respect the privacy standards our users have come to expect and is a violation of our Terms of Service.”

I love many parts of this, but none more than the part about privacy standards our users have come to expect. The API enables users to share their data with site and apps they choose but somehow Friend Connect does its dirty work without users’ knowledge. If the API enables user control, then what part of its use is without the users’ knowledge? Is there an Alzheimers standard that somehow slipped in here?

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