Daily Tech Snippet: Friday January 30

• China is cracking down on long-tolerated VPN workarounds, making internet censorship even more pervasive: China has long had some of the world’s most onerous Internet restrictions. But until now, the authorities had effectively tolerated the proliferation of V.P.N.s as a lifeline for millions of people, from archaeologists to foreign investors, who rely heavily on less-fettered access to the Internet. But earlier this week, after a number of V.P.N. companies, including StrongVPN and Golden Frog, complained that the Chinese government had disrupted their services with unprecedented sophistication, a senior official for the first time acknowledged its hand in the attacks and implicitly promised more of the same. The move to disable some of the most widely used V.P.N.s has provoked a torrent of outrage among video artists, entrepreneurs and professors who complain that in its quest for so-called cyber-sovereignty” — Beijing’s euphemism for online filtering — the Communist Party is stifling the innovation and productivity needed to revive the Chinese economy at a time of slowing growth. Multinational companies are also alarmed by the growing online constraints. Especially worrisome, they say, are new regulations that would force foreign technology and telecom companies to give the government “back doors” to their hardware and software and require them to store data within China. Like their Chinese counterparts, Western business owners have been complaining about their inability to gain access to many Google services since the summer. A few weeks ago, China cut off the ability to receive Gmail on smartphones through third-party email services like Apple Mail or Microsoft Outlook. The recent disabling of several widely used V.P.N.s has made it difficult for company employees to use collaborative programs like Google Docs, although some people have found workarounds — for the time being. By interfering with Astrill and several other popular virtual private networks, or V.P.N.s, the government has complicated the lives of Chinese astronomers seeking the latest scientific data from abroad, graphic designers shopping for clip art on Shutterstock and students submitting online applications to American universities.

• Alibaba Q4 earnings disappoint: revenue $4.2B (+40% Y/Y), net income $964M, (-28% Y/Y), GMV $126.4B (+49% Y/Y), stock down 8%: Alibaba said that in the quarter that ended on Dec. 31, its net profit jumped to $2.1 billion, above the $1.9 billion estimated by 23 analysts polled by Reuters, using figures derived from nonstandard accounting rules. Alibaba’s revenue rose to $4.2 billion from a year earlier but missed the $4.5 billion estimate of 27 analysts polled by Reuters. Alibaba also reported net profit using generally accepted accounting principles of $964 million, a drop of 28 percent from a year earlier. The company cited costs related to stock awards before its listing, taxes and fees. 

• Amazon Q4 earnings: revenue $29B, +15% Y/Y; surprise $214M profit sends stock up 13%: Amazon reported a quarterly profit of $214 million Thursday, besting its own estimates and surprising investors. The news was enough to send the company's stock up more than 13 percent to about $350 in after-hours trading. Revenue was up 15 percent to $29.33 billion. But analysts were expecting $29.67 billion. Analysts were anticipating 17 cents a share in profits, according to Thomson Reuters. When the retailer earned nearly three times that — 45 cents — on improved margins, it was a sign that maybe the sizable profits that all true believers in Amazon expect are on the way at last. Profits, however, were down from the fourth quarter of 2013, when Amazon earned 51 cents a share. Prime is surging: Amazon’s delivery service, Prime, is surging. Amazon said its worldwide paid membership in Prime rose 53 percent in 2014. A price increase for Prime to $99 apparently discouraged few customers. Analysts say they think Prime has around 40 million members, although the company declined on Thursday to give a number or offer any hard facts about how much a new Prime member increases his shopping. India was called out at the Amazon earnings call: Among the big e-commerce battlegrounds in the near future will be India. Amazon said on Thursday that it was already India’s largest e-commerce operation, just two years after opening. “We think it’s very, very early,” Mr. Szkutak said. “We are investing.”

• Google Q4 earnings: revenue $18.1B, +15% Y/Y; net income $4.76B, shares flat on indifferent results: In the last three months of 2014, Google’s net revenue growth slowed to 10 percent when compared with the same quarter a year ago, according to an earnings report released Thursday. While impressive for a company with more than $60 billion in revenue, it is well short of the recent results of other tech industry standard-bearers, like Apple and Facebook. Google’s search business would still be the envy of most companies. Revenue from Google’s own sites, which includes things like its search engine and YouTube and accounts for a little more than two-thirds of the company’s business, increased 18 percent compared with a year ago. Indeed, Google’s share of search ad spending in the United States, including desktop and mobile devices, was 71.6 percent in 2014, according to eMarketer. In a conference call with Wall Street analysts, Google executives declined to answer questions about the company’s lesser-known businesses. But there were some indications of progress. Google said revenue in the “other” category — including the Play Store, where people can buy digital goods like mobile applications or streamed movies, and other services Google sells to businesses — increased 19 percent from the same quarter of last year, to $1.95 billion. The company reported revenue of $18.1 billion in the fourth quarter of 2014, a 15 percent increase from the same period last year. Net revenue, which excludes payments to Google’s advertising partners, was $14.5 billion. Net income was $4.76 billion in the quarter, compared with $3.38 billion in the fourth quarter of 2013. Earnings per share, not including certain charges, were slightly below analyst expectations. Analysts had also expected net revenue — the figure excluding advertiser payments — to be $14.8 billion, according to Bloomberg. Notably, research and development costs rose to $2.8 billion from $2.1 billion in the same quarter a year ago, stoking fears that efforts Google executives like to call “moonshots” — like investing in a private rocket company — are adding to expenses with no hope of a financial return in the near future.The report comes at a rough time for Google’s stock. Shares in the company, as of Thursday morning, were down about 10 percent since April 2014, a period in which the Standard & Poor’s 500-stock index has increased and peers like Facebook have rallied 25 percent. Google shares were up a little more than 1 percent in after-hours trading after the results were announced.

• Chinese government seems to back down on report criticized Alibaba: Hovering over the results was a white paper about Alibaba issued on Wednesday by the State Administration for Industry and Commerce, or S.A.I.C., a Chinese regulator. The letter said the agency had discovered “the long-term existence of illegal problems regarding the management of transaction activity and other issues.” The agency said that it presented findings to Alibaba executives in a July 17 meeting at the company’s headquarters in the eastern city of Hangzhou, but that it had kept the results confidential at the time so as “not to affect Alibaba’s preparations for a stock market listing.” Alibaba began trading on the New York Stock Exchange in September. Though the end result of the S.A.I.C. investigation is not yet clear, by Thursday afternoon Alibaba appeared to have scored a victory against the regulator when the white paper was removed from the agency’s website without explanation. In New York trading on Thursday, the company’s shares closed more than 8 percent lower.

• More Alibaba Stats: GMV Taobao marketplace reached RMB 494 billion (US$79.3 billion) in gross merchandise volume (GMV), That’s up 43 percent from the same period in 2013. Sister site Tmall hit RMB 293 billion (US$47 billion) in GMV, up 60 percent from 12 months ago. In total, Alibaba’s China estores saw RMB 787 billion (US$126.4 billion) in spending (GMV) in Q4, which is up 49 percent from the same period a year before. Annual active buyers on Taobao and Tmall grew to 334 million, up from 231 million the year before. Mobile GMV rocketed to RMB 327 billion (US$53 billion) in Q4, up 213 percent annually. Mobile GMV accounted for 42 percent of total GMV in Q4 2014, compared to 20 percent in Q4 2013. Mobile monthly active users (MAUs) grew to 265 million, which nearly doubled from the 136 million figure 12 months prior.

• AWS results will be broken out separately going forward; AWS will continue to dominate capex: One question investors always have about Amazon will soon be solved. The company said it would start breaking out numbers for its cloud computing platform, AWS, after the current quarter. AWS is growing much faster than Amazon as a whole, although price wars with other leading players are presumably cutting into profitability. Revenue in the “other” category, which is dominated by AWS, was $1.74 billion in the fourth quarter, up 41 percent. AWS is likely Amazon's most profitable division, some opine: Still, the shift is a good sign for investors, who have been clamoring for Amazon to disclose more about its fastest-growing and likely most profitable division that some analysts say accounts for 4 percent of total sales. The change seemed unlikely until AWS made up 10 percent of Amazon's net sales, the threshold at which U.S. securities regulators require disclosure. Szkutak also added that a large portion of Amazon's capital expenditure will go toward AWS, which has stepped up its efforts to win over lucrative contracts with large, corporate clients.

• Worryingly the gap between Amazon’s growth rate and that of the North American e-commerce industry narrowed to a sliver last year. The Seattle-based company’s growth is decelerating even as Chief Executive Officer Jeff Bezos invests in speedier delivery and gadgets. In 2014, Amazon’s sales in North America -- its biggest region by revenue -- rose 23 percent, compared with 16 percent for the e-commerce market in the U.S. and Canada, according to researcher EMarketer Inc. The seven percentage point difference is the smallest since at least 2009, the earliest that EMarketer started keeping track of such data. In 2011, Amazon’s North American sales grew at 41 percent, about 2.5 times the 17 percent pace of the e-commerce market. The diminishing gap highlights just how much Amazon’s once breakneck pace of growth has slowed. The online retailer is confronting challenges, including a large size that makes moving the needle on sales more difficult, as well as more competitors stepping up their online efforts.

Daily Tech Snippet: Thursday January 29

• In an unusual move, a Chinese government agency slammed Alibaba, sending its stock down 4%: Alibaba hit back, personally criticizing a government official. More coverage here: In unusually blunt criticism, a Chinese government agency on Wednesday took aim at the e-commerce giant Alibaba Group for what it said were unlicensed merchants, fake goods and other illegal practices on its hugely popular shopping websites. The news sent Alibaba’s shares down more than 4 percent in New York China’s main corporate regulator, the State Administration for Industry and Commerce, released a report summarizing its findings of the deficiencies on Alibaba’s sites, including Taobao Marketplace and Tmall.com. In a statement on its website, the regulator said that after a thorough review, it had discovered “the long-term existence of illegal problems regarding the management of transaction activity and other issues.” The agency said that it had presented the findings to unidentified top Alibaba executives in a July 17 meeting at the company’s headquarters in the eastern city of Hangzhou, but that it had kept the results confidential at the time so as “not to affect Alibaba’s preparations for a stock market listing.” Alibaba went on to raise a record $25 billion in September in an initial public offering in New York. The regulator’s report, first made public on Wednesday, said it had found 19 problems in five main areas on Alibaba’s sites. Those included a number of unlicensed or unregistered vendors selling items, including knockoffs and goods that were improperly imported or banned from sale in China. Such items included fake cigarettes, wine and mobile phones; knockoff handbags; gambling equipment; wiretapping devices; and restricted types of knives. In a response on its verified account on the social messaging service Weibo, Taobao on Wednesday said that it had been a victim of fakes and had gone to great lengths to prevent them from being sold on its site. At the same time, the company took issue with the regulator’s approach, saying that it “welcomes fair and just supervision” but that the agency had not been objective. Taobao went further still, and in a rarely seen public criticism of a government official, it accused Liu Hongliang, a bureau chief at the administration for industry and commerce, of using inappropriate procedures in carrying out his investigation. The company said it would file a formal complaint to the agency.

• "Secure and controllable": Chinese rules on technology have significant and worrying implications for technology firms: China will force companies which sell computer equipment to banks to hand over secret source code, undergo sensitive audits and set up research and development centers in the country, the New York Times reported on Thursday. Beijing wants 75 percent of technology products used by China's financial institutions "secure and controllable" by 2019, the paper reported, citing an official document expected to be circulated to businesses in the next few months. The new rules have aggravated concerns among foreign companies that Chinese authorities are trying to force them out of the country, the Times said. Approved by authorities late last year, the rules do not specify what is meant by "secure and controllable", the paper added. Source code - the usually tightly guarded commands that create programs - for most computing and networking equipment would have to be turned over to officials, according to the incoming regulations. Firms planning to sell computer equipment to Chinese banks would have to set up research and development centers in the country, get permits for workers servicing technology equipment and build "ports" which enable Chinese officials to manage and monitor data processed by their hardware. It quoted a letter sent on Wednesday to a top-level Communist Party committee on cybersecurity from foreign business groups, including the U.S. Chamber of Commerce, accusing them of protectionism.

• Facebook earnings: Q4 revenue $3.85B, +49% Y/Y; net income $701M, +34% Y/Y; sharply higher expenses send stock down 2%: When Mark Zuckerberg warned investors three months ago that Facebook’s expenses were going to rise sharply, he really meant it. The company reported on Wednesday that revenue increased 49 percent in the fourth quarter compared to the previous year, exceeding Wall Street’s expectations. But expenses rose even faster, up 87 percent from the same quarter a year ago, driven in part by a huge increase in stock payouts to employees. The social network, which makes most of its money by including advertising in the news feeds of its users, said about 69 percent of its advertising revenue came from mobile devices, which have become the most common way people tap into the service. Facebook reported that it had 1.39 billion monthly users worldwide in December, up 3.2 percent from September. Facebook said that it had revenue of $3.85 billion in the fourth quarter, compared to $2.59 billion a year ago. Net income was $701 million, or 25 cents a share, up from $523 million, or 20 cents a share, in the previous fourth quarter. After excluding certain expenses, the company’s profit was 54 cents a share. On that adjusted basis, Wall Street had expected the company to earn 49 cents a share on revenue of $3.77 billion. Facebook’s share price was down about 2 percent in after-hours trading after the results were announced. The stock is up more than 40 percent over the last year. The company said it brought in an average of $9 in revenue per American and Canadian user during the quarter. European and Asian users are much less lucrative, while newer areas of focus for the company, like Africa, bring in virtually no revenue. Over all, the average Facebook user was worth $2.81 to the company in the quarter. Video, which Facebook began highlighting last summer, was particularly strong in the quarter, the company said, with users viewing three billion videos a day. Ms. Sandberg said the company still anticipated huge opportunities to sell more ads, and was investing heavily in measurement technology to prove to advertisers that the platform delivers results. At the same time, Facebook is in no rush to make money from the separate services it owns, including Instagram, a photo-sharing service which has 300 million users, and WhatsApp, which has 700 million.

• Facebook ad targeting has led to spectacular monetization improvements in the US and Europe: Facebook’s been a quest to improve its ad measurement, and it’s definitely paying off. In Q4 2014, Facebook’s user count in the US & Canada only grew by a tiny 0.97% from 204 million to 206 million, but the average ad revenue it earns from each of those users grew 24% from $6.64 to $8.26. It means that through better ad targeting to connect customers to the brands they’re likely to buy from, and improved online and offline sales measurement to track those purchases, it’s been able to grow ad revenue about 25X faster than user count. That’s not just in North America. In Europe, average ad revenue per user was up 21% on just 1.3% user growth. Now the question is whether can figure out how to do the same in the developing world. In the “Rest Of World” region that includes many developing nations in Africa and South America, user count grew 3% from 423 million to 436 million users, yet average ad revenue per user there only grew 12% from $0.82 to $0.92. That’s strong, but not like it is in the US and Canada.

• Facebook video is on fire: Facebook Now Has Over 3B Video Views Per Day: If it’s starting to feel like every visit you make to Facebook these days is full of videos, you are not alone. Facebook today reported in a strong set of Q4 earnings that there are 3 billion videos viewed on its site each day. With the company also reporting daily active users of 890 million, this works out to more than 3 videos per day. Facebook more specifically later noted that over 50% of people in the US who come to Facebook daily watch at least one video per day. It doesn’t break out how many of those are auto-played but did noted that over 65% of Facebook video views occur on mobile. CEO Mark Zuckerberg pointed out in the call that while usage of Facebook has shifted over the last ten years, from primarily text through to “primarily photos with some text and video,” he may be understating things a bit. As a point of comparison, he noted that there are 2 billion photos each day shared across Facebook sites — or, put another way, 1 billion less photos than videos posted to Facebook daily. And as a sign of just how much Facebook is pushing video growth, it was only in June 2014 that the company passed 1 billion video views per day. Facebook said that in the last year, the number of video posts per person on Facebook increased 75% globally and 94% in the U.S. Facebook reported $3.6 billion in advertising sales on overall revenues of $3.85 billion but did not break out how much of that came from video advertising versus other formats.

• Amazon Web Services on Wednesday announced Amazon WorkMail, an email service that adds a new front to the fierce competition in the cloud. WorkMail, which works behind existing interfaces like Microsoft Outlook, is being promoted as safer and cheaper than other systems. “Customers have repeatedly asked us for a business email and calendaring service that is more cost-effective and simpler to manage than their on-premises solution, more secure than the cloud-based offerings available today, and that is backed by the same best-in-class infrastructure platform on which they’re reliably running so many of their current (and future) workloads,” said Peter De Santis, vice president of AWS Compute Services, said in a news release. More here: Amazon.com accelerated its efforts to win over corporate clients on Wednesday by announcing an email and scheduling service that will compete with Microsoft Corp (MSFT.O) and Google Inc (GOOGL.O). The service, dubbed WorkMail, will launch in the second quarter and has been developed by the company's cloud computing unit, Amazon Web Services (AWS). It highlights Amazon's efforts to convince deep-pocketed companies, called enterprises in tech parlance, to shift more of their work to AWS. Launching an email and scheduling service is likely the first step toward a broader suite of Amazon tools to gain corporate clients, analysts said. For example, Google's Gmail offers many other services beyond email and calendars including file-sharing and video conferencing. AWS has spent the last couple of years trying to get corporate clients on board because big businesses spend more on data centers than startups, who were the initial focus of its business. But there are concerns that Amazon is spreading itself too thin, given its other sizeable investments in areas like Hollywood-style production and consumer devices. "Email is a Trojan Horse into the enterprise," Baird analyst Colin Sebastian said. He added that email is a $1 billion opportunity for Amazon given the popularity of AWS and Amazon's willingness to sacrifice margins for volume.

• Samsung Electronics reported its lowest annual profit since 2011 as its smartphone sales continue to suffer from increasing competition. In 2014, the company’s profit was 25 trillion won, a 32 percent drop from a high of 36.8 trillion won in 2013. Its 4Q2014 net profit fell 27 percent to 5.3 trillion won year-over-year, in-line with Samsung’s earning guidance earlier this month. The Korean tech giant reported that its mobile unit’s earnings dropped 64 percent year-over-year to 1.96 trillion won, marketing its fifth quarterly decline in a row. Mobile sales accounted for just 58 percent of Samsung’s total operating profit last year, a significant decrease from 70 percent in 2013. The company said smartphone shipments fell in 4Q2014 and will continue to decline this quarter. Samsung’s semiconductor business helped buoy up its profits, even though it didn’t make up for shortfalls in its mobile unit’s performance. The unit posted 4Q2014 operating profit of 5.3 trillion won and said its performance will continue to improve as more smartphone and tablet manufacturers order chips from Samsung, especially for high-end devices. The performance of Samsung’s mobile unit stands in contrast to its arch-rival Apple, which yesterday reported that it had sold a record-breaking 74.5 million iPhones during the first quarter of its fiscal 2015 year. Apple gained ground thanks to the popularity of the iPhone 6 and 6 Plus, especially in China, where it competes with Samsung as well as domestic smartphone makers like Xiaomi and Lenovo. In fact, research firm Canalys reported that Apple topped smartphone shipments in China for the first time last quarter. This means that Samsung is now in third place, behind Apple and Xiaomi.

Daily Tech Snippet: Wednesday January 28

• Apple Earnings: revenue $74.6B +30% Y/Y, profit $18B: Apple Just Had The Most Profitable Quarter Of Any Company Ever: Apple quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history. The company sold 74.5 million iPhones in its fiscal first quarter ended Dec. 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier. Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to S&P analyst Howard Silverblatt. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American. Shares rose about 5 percent to $114.90 in after-hours trade.

• Apple Pay is “doing exceptionally well,” Steve Weinstein, an analyst at ITG Investment Research Inc., said in an interview before the earnings. “Once somebody uses it, it becomes a little over 5 percent of transactions that they were doing. It’s a lot. It’s really surprising, because you can’t even use Apple Pay in that many locations.” Twenty percent to 30 percent of people who buy the new iPhones activate Apple Pay, Weinstein said. A smaller percentage uses the service regularly. “It seems that Apple Pay was a motivating factor for people buying the iPhone,” Nick Holland, an analyst at financial-services consultant Javelin Strategy & Research, said in an interview. A “double-digit” percentage of about 2,000 consumers Javelin surveyed last year after the service debuted said Apple Pay was part of the reason for their decision to buy a new Apple device.

• Apple is now the No. 1 smartphone maker in CHina: Apple is famous for setting trends. In China, though, Apple has found success by following one. For years, Apple rivals like Samsung offered large-screen smartphones. Although the bigger phones sold well in China, Apple held off on releasing a similar model, and the country remained a weak spot. But Apple introduced its own versions last September, and now the sales spigot is wide open. The company on Tuesday reported $16.1 billion in revenue from “greater China” — which includes mainland China, Hong Kong and Taiwan — in its first fiscal quarter, up 70 percent from the same period a year ago. Canalys, a research firm, estimates that Apple is now the No. 1 smartphone maker in China. The success in China helped push Apple to a blockbuster first quarter, increasing overall profit to $18 billion and revenue to $74.6 billion. In the same quarter a year ago, the company had profit of $13.1 billion and revenue of $57.6 billion. 

• Apple is increasingly reliant on the iPhone however, as Macs and iPads become less important: Overall sales of iPhones shattered analysts’ predictions. Apple said it sold 74.5 million iPhones in the quarter, as many as 12 million more than expected. The company’s overall revenue, almost $75 billion, easily beat analysts’ average estimates of $67.7 billion, according to a poll by Thomson Reuters. The company’s shares, which have gained more than 50 percent in the last year, rose more than 5 percent in after-hours trading. Strong sales of Macs also contributed to the company’s growth. The company said it sold 5.5 million of the computers in the quarter, up from 4.8 million in the same quarter of last year. But iPad sales continued to shrink. The company sold 21.4 million iPads in the quarter, down 18 percent from 26 million in the quarter a year ago. Increasingly, though, the company’s fortunes rely on the iPhone. Sales of iPhones accounted for 69 percent of the company’s revenue in the quarter, up from 56 percent in the same quarter a year ago. “A bet on Apple is increasingly a bet on the iPhone,” said Toni Sacconaghi, a financial analyst for Sanford C. Bernstein & Company. “The good news is, iPhones are great. The bad news is, right now that’s driving over 100 percent of the revenue growth of the company.”

• Apple is getting consumers to pay more for phones even as industry trends move in the other direction: Apple's sales figures are all the more impressive because they come at a time when the worldwide market for expensive smartphones is dropping. According to research from the Consumer Electronics Association, the average selling price of a smartphone has fallen from $440 to an expected $275 in just five years. The full price of the cheapest iPhone is $649. In fact, the average price of an iPhone actually went up, thanks to the popularity of the iPhone 6 Plus, which starts at $749. That's right; Apple's actually getting us to pay more for our phones. (Of course, most are purchased at subsidized prices through wireless carriers).

• Yahoo reports weak earnings (revenue $1.18B, -1.8% Y/Y), but tax-efficient spin-off of Alibaba stake sends shares up 7% despite weakness in the rump of Yahoo: Marissa Mayer, chief executive of Yahoo, said on Tuesday that the Internet company would spin off its 15.4 percent stake in Alibaba, China’s leading e-commerce company, into a separate company. The decision, which Wall Street has been waiting for since Ms. Mayer joined the company in 2012, cheered shareholders because they will directly reap all the remaining profit from Yahoo’s prescient investment, which cost almost nothing a decade ago but is now worth about $39.5 billion. In the process, Yahoo will avoid any taxes on the transaction but will be stripped of its single most valuable asset. The Alibaba stake alone now makes up nearly 85 percent of Yahoo’s market value. Ms. Mayer delivered a report card on her turnaround plan on Tuesday, noting that overall revenue and profit fell in the fourth quarter. But the company’s mobile businesses, as well as other newer initiatives, like so-called native ads, showed rapid growth. Still, the immediate reaction to the Alibaba announcement was positive, with investors driving Yahoo’s stock up about 7 percent in after-hours trading after disclosure of the plan. Yahoo reported revenue of $1.25 billion and adjusted profit of 30 cents a share in the quarter, slightly exceeding Wall Street’s expectations. Analysts had on average expected the company to report revenue of $1.18 billion and adjusted earnings of 29 cents a share, according to data collected by S&P Capital IQ. The company’s net income was $166 million, or 17 cents a share, in the fourth quarter, compared with $348 million, or 33 cents a share, in the same quarter a year ago. Yahoo sold a hefty chunk of its stake in Alibaba in September when the Chinese company sold shares in an initial public offering. Yahoo had a $10.3 billion gain from the sale, but nearly 40 percent of that was eaten up by taxes. Yahoo executives promised shareholders that they would find a way to dispose of the rest of the Alibaba stake in a way that incurred a much lower tax bill. Their solution — a spinoff of the Alibaba stake and a Yahoo operating business — avoids $16 billion in corporate taxes that Yahoo would have owed if it had simply sold the stake, executives said. Investors will receive shares in the spun-off company in proportion to their stakes in Yahoo, and will pay taxes on their capital gains when they sell those shares. But the plan will not give Yahoo a new pile of cash with which it could make big acquisitions. The spinoff is expected to be completed in the fourth quarter.

• Remarketing goes offline with beacon technology: By now you've probably heard of "beacons," and how they allow advertisers to send targeted messages and offers to shoppers' smartphones as soon as they enter a physical store. Today a deal has been struck which is about to make beacons a whole lot more interesting - and useful - for advertisers for when the shopper steps out of that store. Norway-based startup media platform and ad server Unacast and California-based Total Communicator Solutions (a company that specializes in location-based marketing and claims to have more beacon installations than any other company. It counts P&G among its clients.) have today announced a global partnership to launch what they claim is an industry first: The ability for brands to "re-target" online and mobile ads to shoppers based on the actual items they have been looking at in-store. Here's how it will work: A shopper with a retailer's app installed on their phone and Bluetooth turned on walks into a shoe store. If they've opted in for beacon messages, they're greeted with a personalized message on their phone's display. They walk over to the men's shoe department and are then served with a new message about the new line of designer brogues that have just arrived in-store. And here's the new bit: A day, a week, or a month later when that same customer goes online to have a look at a YouTube video. They are served a pre-roll video ad for that very same brand of brogues they were looking at in-store. They check the headlines on a newspaper website: Again, the very same shoes he was looking at appear in an ad, which says they're available to buy now. That's huge. Until now, the utility of beacons has been limited to allowing retailers and brands to communicate with shoppers whilst they are in the store. Now beacons are acting as the data collector to inform post-shopping ad campaigns. Unacast is looking to sign up more beacon companies (known as proximity solution providers/PSPs) to create a global network to anonymously group and standardize beacon data to allow advertisers and retailers to retarget consumers online, based on their offline interactions.

• Twitter adds video, group messaging features: Twitter on Tuesday introduced a feature that lets you record up to 30 seconds of video to share on its micro-blogging site. You can shoot, edit and share video from within the app. The feature complements Twitter's Vine video app, which lets users make looping six-second clips to share. The social network also announced that users will be able to send direct messages to more than one person at a time, making it more useful for setting up dinner plans or group movie dates without letting the whole world know about it. The features are rolling out to all users over the next few weeks, the company said in an official blog post. Both moves better position Twitter to take on the growing number of messaging apps that let users communicate privately -- one of the most popular app categories on the market right now. They also follow a number of product improvements in recent months that are aimed at attracting an audience beyond the super-plugged-in, constantly updating crowd that it has right now. For example, last week the company introduced a "while you were away" digest-like feature that offers summaries of messages users may have missed while not logged on to Twitter. The practical features are being called the brainchildren of Twitter's new product manager, Kevin Weil, who was appointed in October with the mandate to give Twitter a wider appeal in the face of new social competitors such as WhatsApp and Snapchat.

• Facebook and Instagram were inaccessible for about an hour Tuesday, but cause was an internal malfunction rather than a cyberattack. Facebook users began reporting problems in gaining access to the social media site on Tuesday morning, Hong Kong time. On Twitter, users posted images of an error message from Facebook that read: ‘‘Sorry, something went wrong. We’re working on it and we’ll get it fixed as soon as we can.’’ Both Facebook’s mobile application and its website were inaccessible. Facebook owns Instagram. ‘‘Earlier this evening many people had trouble accessing Facebook and Instagram,’’ Facebook said from its California headquarters. ‘‘This was not the result of a third party attack but instead occurred after we introduced a change that affected our configuration systems. We moved quickly to fix the problem, and both services are back to 100 percent for everyone.’’

Daily Tech Snippet: Tuesday January 27

• Microsoft Q4 earnings: revenue $26.5B, +8% Y/Y, profit $5.86B, shares fell 3% on earnings miss: (more coverage here, here and here): Microsoft reported profit of $5.86 billion, or 71 cents per share for the latest quarter, compared with $6.56 billion, or 78 cents per share, in the year-ago quarter. Sales rose 8 percent to $26.47 billion, largely due to the acquisition of Nokia's phone handset business last year. Analysts had expected revenue of $26.3 billion and earnings of 71 cents per share, on average, including some restructuring costs. Shares of the world's largest software company, which have surged to 14 year highs in the past few months, fell 3 percent in after-hours trading, to $45.63. The company ended the quarter with $90.25 billion in cash and equivalents. According to Microsoft, its commercial cloud revenue grew 114 percent compared to the year-ago period. In the sequentially preceding quarter, the company noted a 128 percent rise. It ended the current quarter on a $5.5 billion run rate.

• Long overshadowed by its rival Alibaba, JD has emerged as China’s other online goliath by carving out its own distinct identity: While Alibaba’s marketplace serves as a platform to connect buyers and sellers, JD buys goods from manufacturers and distributors and holds the inventory in its own warehouses, in a model that echoes Amazon’s. It then arranges for quick delivery of virtually everything from television sets and refrigerators to socks and T-shirts, using motorbikes that weave in and out of traffic in some of the country’s biggest cities. Like Amazon, JD has invested heavily in infrastructure, pumping more than $1.5 billion into building and leasing warehouses and order-fulfillment centers around China. But JD has gone even further, venturing into home delivery with its own fleet of trucks and more than 20,000 couriers, all in the hope of capturing what is projected to be a $1 trillion Chinese e-commerce market by 2020. JD, which is publicly traded in the United States, is now China’s biggest direct-sales retailer, with 46 million active users and an estimated $20 billion in revenue last year. “This isn’t a business model for everyone, but they were smart to build it,” said Elinor Leung, a Hong Kong-based Internet analyst at CLSA, an investment bank. “Now, their traffic is exploding.” And yet this costly approach to building an online retailer has worried some analysts, who say that JD could be weighed down by its physical assets and mounting debt. Several analysts say the company won’t turn a profit before 2017. Competitors like Jack Ma, chairman of Alibaba, have even disparaged the company’s business model, calling it tragically flawed. “It’s not that we are better,” Mr. Ma said in a recently published interview. “It’s an issue of direction. So, I tell my people: Definitely do not get involved with JD.com. Don’t come blaming us if you die one day.” He later apologized for his comments. Executives at JD, which is based in Beijing, insist they are building a company that will eventually have a commanding advantage in e-commerce, with strong customer service, speedy delivery and assurances that the products it ships are authentic, not counterfeit. Among the biggest challenges now, they say, is keeping up with an enormous volume of online orders, which have doubled in each of the last three years. “If we wanted, we could be profitable right now,” said Shen Haoyu, chief executive of JD Mall, the company’s biggest division. “But our immediate goal is to grow our customer base.” the company boasts seven fulfillment centers and 118 warehouses in 39 cities. There are also 1,045 smaller pickup centers in about 500 cities. And since 2010, the company has pledged that most online orders placed before 11 at night will be delivered by 3 p.m. the next day. Morgan Stanley calls JD’s business model a combination of Amazon and UPS; other analysts say the company is beginning to look like Walmart, steeped in logistics and infrastructure and backed by a website.

• Verizon’s mobile ‘supercookies’ show how telcos are monetizing user data: Verizon is now at the forefront of telecommunications companies selling intelligence about their customers to advertisers. AT&T experimented last year with a similar ad-targeting program, which involved inserting a unique numeric code into a subscriber’s web requests. But after scrutiny in the news media, AT&T said it was halting its program, at least until it came up with a better approach. The ad-targeting experiments by Verizon and AT&T are striking examples of the data-mining opportunities open to phone carriers now that they have become the nexus of the information universe, providing a connection to the Internet for people anywhere they go, at any time. Verizon’s marketing efforts are part of a high-frequency digital ad trading system called real-time bidding, in which many kinds of players track and analyze users’ online activities to identify the characteristics of those who would be most receptive to certain ads. A Verizon service called Relevant Mobile Advertising, for instance, combines details obtained from information resellers like Acxiom and Experian with the wireless carrier’s own data to classify its mobile subscribers by gender, income, interests or other criteria; the company allows its subscribers to opt out of receiving ads customized through this program. Another service, called Verizon Selects — which consumers can opt in to in exchange for reward points — segments subscribers based on their web browsing and use of apps. Verizon says its customer categorization programs offer an advantage to advertisers because the company has a direct relationship with subscribers and it can understand their general location based on the places from which they make calls or send texts. The services use a unique alphanumeric code for each subscriber, rather than real names or contact information, to group them into ad clusters. Mr. Atreya, the Verizon director, says the company changes these customer codes every few days.

• Microsoft buys R startup Revolution Analytics to boost the data analytics offering of its cloud suite: Microsoft bought Revolution Analytics which makes tools to sift through data, to help the company build up its cloud-services business. Terms weren’t disclosed. The deal was driven by the growing volumes of data that companies are contending with and the need for more software that can help analyze the information, Microsoft said in a blog post on Friday. Revolution Analytics, based in Mountain View, California, makes a statistics programming language called R that helps analyze data. David Smith, chief community officer at Revolution Analytics, said in a blog post that the deal will spread the usage of advanced analytics within Microsoft products, including the Azure cloud service. Revolution Analytics counts financial companies such as American Century Investments and Northern Trust as customers, according to the company’s website. The R programming language is widely used by statisticians and scientists and has surged in popularity as people have turned to it to manipulate large pools of data. R was the world’s 18th most popular programming language in January, according to a study conducted by Tiobe Software, compared to 44th a year earlier. In a separate study, researcher RedMonk put R as the world’s 13th most popular programming language in January, up from 15th in 2014.

• The line between eCommerce and messaging is blurring, as messaging apps are increasingly becoming distribution and moneymaking platforms: Developers have been expanding the uses of the apps, making new functions possible. And investors, seeing huge potential, have driven the apps to ever-higher valuations. “The most popular apps that sustain themselves day after day, month after month, at the top of the leader board, are messengers,” said Fred Wilson, managing partner at Union Square Ventures and an investor in Kik, a messaging app popular with young users. “That’s a reflection of what people do on their phones.” He added, “Once they become full-blown ‘portals’ for mobile content and mobile commerce, we will really see how massive this opportunity is.” The initial appeal of the apps is simple. They are faster to use than email, and they generally allow you to send text, links, video and photos to friends more cheaply than traditional texting services offered by wireless carriers like Verizon or AT&T. The uses are multiplying, though. On the app KakaoTalk, for example, people can discover other new smartphone apps and share them with their friends. On Snapchat, users can send money to one another inside the app. And Line, a messaging app popular in Japan, lets people pay for things at brick-and-mortar retail stores using Line Pay, the company’s payments service. Soon, media outlets like ESPN, Vice and CNN will be publishing original content directly to a new editorial section in Snapchat, according to people familiar with the matter who spoke on condition of anonymity because they were not authorized to speak publicly. “Media and communication are converging,” said Jonah Peretti, chief executive of BuzzFeed. “Some of what we’re all creating now will be a huge part of these messaging apps over the next one or two years.” Some of the most popular options are Viber, which says it has more than 200 million monthly visitors; Line, Japan’s most popular messaging app, with 170 million users; and WhatsApp, the leading service, which has more than 700 million regular visitors. For now, though, not all of the apps are generating big revenue. WhatsApp, which is owned by Facebook, reported just $10.2 million in sales in 2013. The revenue came from the small fraction of users who paid $1 to use the app. Still, the valuations of many messaging start-ups continue to rise. In February, Rakuten, the big Japanese online retailer, bought Viber for $900 million. The next month, the Chinese e-commerce behemoth the Alibaba Group led a $280 million investment in Tango, valuing the nearly six-year-old start-up at about $1 billion. Facebook paid $21.8 billion for WhatsApp in February. For investors, the thesis is a Silicon Valley adage: Get millions of people to use the service first, and eventually it will find a way to make money. Many entrepreneurs see WeChat, the hugely popular Chinese service run by the Internet giant Tencent, as the ideal model for building a business in messaging. Released four years ago, the app now claims nearly 500 million monthly active users — who not only send image-laden messages, but play games and book car rides and plane tickets. The rapid growth in messaging apps, some say, has been a response to the more public nature of popular apps like Twitter and Facebook, where status updates and posts are visible to the many rather than the few. “It’s a much more intimate experience,” said Marissa Campise, a partner at SoftBank Capital, the venture arm of Japanese telecom giant SoftBank. “Messaging apps are smaller and less visible than the public networks and far more engaged and trusted. It often feels like a more controlled, real-time replacement for email,” she said. Messaging users tend on average to pick up their phones several times an hour, Talmon Marco, the chief executive of Viber, noted in an interview late last year. That makes messaging apps an ideal place to introduce other offerings like games, virtual stickers or even physical goods. Asia has been a particularly fertile breeding ground for expanding the uses of the apps. In 2013, for example, WeChat joined Xiaomi, the Chinese smartphone giant, to offer a limited quantity of the company’s newest phone for purchase on the chat app. Users could reserve and then buy the new smartphone entirely inside the WeChat app using Tenpay, the payments service owned by Tencent. Xiaomi said it sold 150,000 phones in less than 10 minutes.

• Online Storage Company Box Has Strong Debut in First Day of Trading: Although questions had arisen about how Box’s initial public offering would fare, public investors gave the company a warm welcome on Friday, its first day of trading. Shares in Box, the online file storage company, opened at $20.20 on Friday morning, 44 percent higher than its I.P.O. price of $14 a share. The stock continued to surge to close the day at $23.23, up nearly 66 percent, giving the company a market value of $2.7 billion. At that level, the start-up has surpassed the $2.4 billion valuation that it fetched in its most recent private financing round last summer. Its strong first-day performance may ease some concerns among investors that highflying Silicon Valley start-ups were looking overvalued. Now that it has gone public, nearly a year after kicking off the process during a period of market upheaval, Box can focus on a more pressing issue: standing out in an industry that has quickly filled with competition, particularly from much bigger rivals like Google and Microsoft.

• Yahoo likely to announce plans to avoid huge tax hit on Alibaba windfall - two possible structures considered plausible: Yahoo on Tuesday is expected to reveal something most companies usually try to keep secret: how it plans to avoid a multibillion-dollar tax bill. The Web portal has spent more than a year figuring out how to cash out a chunk of its $40 billion stake in China-based Alibaba Group Holding Ltd. Typically, a U.S. company faces a federal tax bill of about 35 percent when it sells stock in another enterprise for cash. Yahoo took a $3 billion tax hit last year when it sold about $10 billion in Alibaba shares. This time around, activist investors are leaning on the Sunnyvale, California-based company to be more savvy. Marissa Mayer, Yahoo’s chief executive officer, probably will maintain at least part of the Alibaba holding to keep a finger in China’s fast-growing Web market. Were Yahoo to sell the entire stake, it could face a federal tax bill of as much as $14 billion.Here are some of Yahoo’s options to avoid capital-gains tax, both legal: Option One: Last summer, John Malone’s Liberty Ventures wanted to avoid taxes on selling its stake in travel website TripAdvisor Inc. Liberty did so by transferring that stake, as well as online costume-retailer BuySeasons, to a new unit created specifically for the deal. Under the plan, the new unit took out a $400 million bank loan. Most of that cash was destined for Liberty and the new unit’s stock spun off to Liberty shareholders. The expectation was that TripAdvisor would acquire the new unit in exchange for the travel site’s own stock. TripAdvisor also agreed to repay the $400 million loan. When it’s all wrapped up, Liberty Ventures gets cash and exits TripAdvisor -- without incurring the tax bill a straight sale would trigger. Liberty’s shareholders get stock in TripAdvisor as though Liberty had distributed its holding in the site to its own investors. Liberty’s investors also don’t face taxes on the deal. In Yahoo’s case, it would spin off its stake into a new entity, which would borrow money and distribute the cash to the Internet company. “The tax savings sort of gets carved up between the two parties and they each get a chunk,” Option Two: Another option is to follow Warren Buffett’s lead, with what’s known in tax circles as the cash-rich split. Berkshire Hathaway Inc. and Graham Holdings Co. last March agreed to a deal that lets Buffett’s company unload its stake in the former Washington Post Co. while avoiding capital-gains tax. That deal called for Graham to transfer cash and a Miami television business -- combined, roughly equal to Berkshire Hathaway’s investment -- into a new subsidiary. Graham then shifts stock in that new unit to Berkshire Hathaway, while Buffett’s company moves its Graham stake back to the media company. Economically, it’s as though Berkshire Hathaway sold its Graham stake for cash -- and a TV station. But because the deal is structured as an exchange of shares, not a straight-up sale, it gets tax-free treatment. Were Yahoo to follow this route, it would exchange Alibaba shares for a stake in a new unit that would consist mostly of cash. Alibaba would have to shed some assets for Yahoo to get the advantage of such a deal; a cash-only transaction probably would trigger a tax bill. Accounting experts say it shouldn’t be difficult to find something to throw in the pot.

• As Alibaba and Chinese investors pour into Israel, the nation's high-tech startups scored big exits in 2014: With nearly $15 billion in exits through mergers and acquisitions and public offerings, 2014 was an all-time record year for the Israeli hi-tech industry, compared with a mere $1.2 billion raised in 2013, according to a PwC report for 2014. The exits were spread out between a variety of tech industries, including Internet, IT, life sciences, communications and semiconductors. Semiconductors had a 38% of the share, but just one semiconductor IPO out of the 18 in total. The road accident avoidance technology developerMobilEye raised $1.023 billion in its August IPO, a record an Israeli company. As for new giant exits emerging, most argue that Israel’s hi-tech diversity is its strength. “While there seems to be a general hype around IoT, security and fintech, I find Israel to be a very unique place in the fact that entrepreneurs don’t tend to have group think and as such, we are seeing ventures tackling a very wide array of industries.” said Yaron Carni, the founder of two Israeli VC fundsMaverick Ventures and Tel Aviv Angel Group. And more international companies are beginning to take notice of Israel’s technological strengths. In fact, 2014 ended with a news item that might indicate China’s increasingly hefty presence in the Israeli hi-tech sector. Last year might be remembered as the time when Chinese technology companies embraced Israeli startups in a big way. On December 20, The Chinese eCommerce giant Alibaba invested in Visualead, a company that specializes in QR code generation. Based in Herzliya, the Israeli equivalent of Silicon Valley, the 15-person start-up was Aliababa’s first Israeli acquisition. Last September, China’s Yuanda Enterprise Group bought AutoAgronome, a maker of smart irrigation and fertilization systems for $20 million in order to move into high-tech agriculture.

Daily Tech Snippet: Friday January 23

• Amazon buys an Israeli chip startup for $350-370M; Annapurna Labs makes chips optimized for the cloud business: (More coverage here and here) Amazon agreed to acquire Israeli semiconductor company Annapurna Labs, seeking to improve performance within its Amazon Web Services cloud unit. A deal has been reached but hasn’t yet closed, said Mary Camarata, a spokeswoman at Amazon Web Services. She declined to comment on the terms. Acquisition talks were reported earlier by Israeli newspaper Calcalist, which said the purchase price could be as much as $370 million. Annapurna Labs develops microprocessors that allow fast data traffic for power-efficient computing and storage servers, according to the newspaper. Seattle-based Amazon, the world’s largest online retailer, is constantly seeking to improve the cost and performance of the equipment in its data centers and has been hiring more semiconductor engineers to add to its capabilities, James Hamilton, a vice president of Amazon Web Services, said in a November interview. The unit rents out computing power on its servers to businesses for access through the Web.

• Google is gearing up to sell wireless service directly to customers as a mobile virtual network operator (MVNO), by acquiring excess network capacity from Sprint and T-Mobile and reselling it to customers under its own brand. This is the same approach used by Cricket Wireless, MetroPCS, Pure Talk, Republic Wireless and many others in the U.S., but Google’s arrangement apparently required special consideration, according to The Wall Street Journal, given the potential threat network providers perceived in giving the search giant and Android maker too much control. Sprint built a volume clause into their agreement with Google, per WSJ, which triggers if the Google wireless service acquires a large number of users and lets Sprint renegotiate the terms of the deal. There’s no word on how T-Mobile’s arrangement works, but given comments about the U.S. carrier by its parent company Deutsche Telekom, the provider is probably looking for ways to shore up the sustainability of its prolonged “Uncarrier” campaign. More analysis here: What is Google planning? The company hasn't confirmed anything, but reports suggest that Google wants to offer its own brand of cellular service by partnering with Sprint and T-Mobile, the nation's third- and fourth-largest carriers, respectively. This means you'd buy minutes and data from Google, but it would all ride over the other two companies' pipes. Is this like Google Fiber for cellphones? Not quite. With Google Fiber, Google is connecting homes to high-speed fiber-optic infrastructure that, in many places, the search giant laid down itself. But in this case, it doesn't appear that Google is building its own cell towers; it would simply resell Sprint and T-Mobile under the Google banner. Would this shake up the wireless industry? Google probably hopes so, but unlike the wired broadband industry that Google Fiber has been so successful at disrupting, the wireless industry is actually fairly competitive already. You have four major national carriers that are engaged in a major battle over pricing and customers right now. You also have dozens if not hundreds of smaller carriers who operate on the same basis as Google's rumored plan — paying the national carriers a wholesale rate and then repackaging the service into a different product. These piggyback carriers are called MVNOs, short for mobile virtual network operators. Why would Google want to become a wireless provider? If there's one thing driving Google, it's a thirst for your commercial data. Think about all the data generated by your Google searches that gets scooped up and used for advertising. Now think about all the data you generate when you place a phone call: whom you're calling, for how long, what time of day and so on. This information is incredibly personal and can be used to help build a profile of you — which, if you'll recall, is partly why everyone was so outraged when they found out about the National Security Agency's snooping into phone records. Then there's the business information Google can collect about which data plans people find most attractive and how they use those plans. And naturally, all of Google's handsets would likely run on Android, so there's that software integration.

• Box prices IPO - implied valuation of $1.6B, 33% discount to last funding as Box struggles to rise from storage play to platform play: (More here) Box Inc. is set to price its initial public offering at a discount to its latest financing round, as stiff competition overshadows the cloud-storage company’s plans to expand into new areas. The IPO comes almost a year after Box, which lets businesses manage, store and have access to data over the Web instead of through onsite computers, first filed to go public. The company’s financials in its March prospectus underwhelmed some investors just as deep-pocketed competitors including Microsoft Corp. (MSFT) were entering the fray, and the IPO was delayed. Ten months later, Box’s losses have narrowed as revenue surged 70 percent in the most recent quarter, and the company is offering new services that could help it retain and increase its customer base. The company, led by 29-year-old Aaron Levie, is still valuing itself below the level it fetched in a July private-financing round, betting the combination of its turnaround plan and cheaper price will lure buyers. “Investors are either going to have to buy into that story that they can diversify their business, or that this is coming cheap and that there will be consolidation,” said James Gellert, the president and chief executive officer of Rapid Ratings International Inc., which uses quantitative models to grade securities. Box, based in Los Altos, California, is seeking as much as $163 million from the IPO, scheduled to price Jan. 22. It is offering 12.5 million shares for $11 to $13 apiece, according to a Jan. 9 filing with the U.S. Securities and Exchange Commission. Those terms indicate a valuation as high as $1.6 billion, reflecting a 33 percent discount to the $2.4 billion Box was valued at during a private round by investors including TPG Capital and Coatue Management LLC. The market for file sharing and synchronization software is forecast to grow 23 percent a year on average to $2.3 billion in 2018, market researcher IDC said in a report looking at 2013. The enterprise side of the market, where Box fits, is growing slightly faster at 27 percent a year. Box had 14 percent share in the overall market, behind Dropbox Inc. with 27 percent and Microsoft with 17 percent. The challenge for Box, said IDC’s Maureen Fleming, is that Microsoft has been dropping prices for its OneDrive and including it free for customers who are signing up to use its Office apps online. That means many corporate customers decide to at least try OneDrive, curbing Box’s growth rates. Fleming regards Box as superior to OneDrive for companies looking for cloud-based systems but said product quality doesn’t always matter to chief information officers in the market for software. In response to those price wars, Box has created ancillary services on top of storage to differentiate its offerings. They include programs to help companies to build custom applications as well as security features that can be customized. The company also has a consulting arm, which helps customers navigate its services. Said Eli Lilly CIO Mike Meadows: “They are doing the right things and saying the right things,But we haven’t come across the use case that would drive us using them in more of platform mode rather than just a storage mode.”

• Reddit's Pick for New Ad Leader Shows the Site Is Getting Serious About Mobile Hires Zubair Jandali away from Google. The company hired Zubair Jandali from Google, who started this month as Reddit's first vp of sales. Jandali had been with Google since 2009 when the company bought ad network AdMob, where he also worked. His hiring is yet another sign Reddit is serious about developing a mobile advertising presence. Reddit recently bought Alien Blue, the app that lets readers access Reddit on mobile, to hone a more sophisticated approach to smartphones and tablets. Alien Blue is Reddit's first in-house app. Now, it has a vp of sales with experience in mobile advertising to go along with the product. "Mobile is definitely one big area of investment for the company, so my background certainly plays into that," Jandali said in a phone interview this week. Reddit offers brands two ways to advertise on its site, which reaches 150 million people a month: banners and sponsored headlines. Headlines are the items that users and brands post to Reddit, and users can vote up or down on whether they like them. The user-submitted headlines that accumulate the most positive votes rise to a higher position on the page, but brands pay for top placement. There are over 8,000 "active" user-generated groups on the site called subreddits dedicated to different categories; they can attract fans of brands, movies, science fiction or just about any interest you can imagine. Advertisers can target a subreddit or buy ads on the front page of the site, which gets 50 million views a day, Jandali said. For instance, on Wednesday TBS promoted a headline on reddit.com at the top of the page for the show King of the Nerds. Jandali said visitors who click on sponsored headlines can spend up to five minutes in the posts. Jandali reports to CEO Ellen Pao, who took the role after a shake-up late last year that saw the exit of the former CEO and the return of co-founder Alexis Ohanian to board chairman. The ad sales teams are based in New York, Los Angeles and San Francisco.

• Twitter pleads with power users not to use Instagram: Twitter appears to be sending out a message to a group of very high-profile users suggesting that these users post photos directly to Twitter instead of sharing through Instagram. Mashable secured a screenshot of the prompt, which shows the aesthetic differences between sharing an Instagram link and posting a photo directly through Twitter. In 2012, Instagram shut off Twitter Cards integration, meaning that the images would no longer appear in-line on the Twitter feed. Instead, Instagram photos shared out to Twitter would simply show as an Instagram.com link and push the user to the website for viewing. At the time, many people were upset that Instagram would interfere with the user experience for Twitter. It’s also worth noting that parent company Facebook has always displayed and still proudly shows Instagram images right in the feed. The original backlash over Instagram shutting down Twitter integration has long been forgotten, and in many ways, Instagram has won. In December, Instagram announced that it had surpassed 300 million active users, surging past Twitter’s 284 million active users. Twitter, which is older than Instagram, has struggled to keep up with the young gun in the media department. Twitter has released countless updates to the web product and the mobile apps to try to bring more attention to images and videos. It added a tab under user profiles to view media only, and put more focus on images that are used on profiles, like the addition of the Facebook-style header image and the now-larger profile photos. The company also added photo filters and editing tools long ago to deal with Instagram’s exodus from the feed in 2012. This latest message from Twitter to its mega-users, asking them to post photos from the app itself, only shows the severity of that struggle as consumers hungrily consume more and more multimedia content.

• Button, a mobile start-up, looks to deep link apps with commerce: It took years for the web to become what it is today: a sprawling, interconnected network of sites endlessly linking back and forth to one another. It will likely take years for the same thing to happen to smartphone applications, which are mostly stuck in silos, disconnected from one another. One New York-based start-up believes it can help speed that process. “The mobile app world is so very fragmented that for users, it makes interactions between apps much more difficult than they should be,” said Michael Jaconi, chief executive of Button, which announced a $12 million round of venture financing on Thursday morning. “Our thesis is, can we connect the mobile economy in a smarter way?” Button’s value proposition is largely technical: The company wants to create the plumbing behind what’s known as deep-linking between apps that make sense to be connected. So for example, if a customer books a table at a restaurant using Resy, a restaurant reservation app, Button could suggest you book a ride to the restaurant using Uber, the ride-hailing service, and link the customer directly to the Uber app to request a ride. That connection may come with a commerce-based incentive — say, a $30 credit toward an Uber ride. Button makes its money based solely on the amount of traffic it drives to its app partners. The idea, Mr. Jaconi said, is similar to what Google did for search more than a decade ago. When a user wants to find something specific, they type in a search query and Google serves up a list of suggestions, along with a series of advertisements. Google has made billions capitalizing on what technologists call the moment of intent — that is, the exact time when a person wants to see a paid advertisement. Button believes it can pinpoint that moment of intent inside apps, a problem that Google has yet to crack. “The future, we think, is one where we’re no longer living in a world of typing, but rather in a world of taps,” Mr. Jaconi said. “Using your phone, we’ll be able to infer what you want to do next based on your location, the time of day, the context of the other apps you’re using.” “It’s increasingly difficult for app developers to rise above the noise and acquire users, and then re-engage these users over time,” said Chris Moore, a partner at Redpoint Ventures, a venture capital firm that led Button’s recent funding round. “Button enables a new channel for user acquisition and engagement.” Button is not the only company taking on deep app links. Facebook wants its deep-linking solution, announced last year, to become the standard for developers. And start-ups like Branch Metrics, URX and Quixey offer different approaches to the same problem as well.

Daily Tech Snippet: Thursday January 22

• A big day for Microsoft, which unveiled lots more about Windows 10, a new browser named Spartan, and Windows Holographic, an augmented reality headset: the next generation of its operating system, including how it will work across mobile, tablet, desktop and other platforms. The biggest surprise was probably the new HoloLens augmented reality headset Microsoft created, and the Windows Holographic software it built to support said gadget: Microsoft Reveals Windows Holographic, An Augmented Reality User Interface For The World. Microsoft To Bring Xbox One Game Streaming to Windows 10 Devices Later This Year. Microsoft Previews Windows 10, Unveils New Internet Browser: Microsoft Corp. (MSFT), seeking to use the next version of its Windows software to win back consumers and keep business customers happy, gave a detailed look at the new operating system and took the wraps off a revamped Web browser. At an event Wednesday to preview Windows 10, the new iteration of its flagship personal-computer software, Microsoft showed the browser that will succeed Internet Explorer, code-named Project Spartan. The update to Windows, coming later this year, will also bring Cortana, the voice-activated digital assistant, to PC desktops, and will have touch-enabled Office applications such as Word and Excel built-in for smartphones and tablets. Chief Executive Officer Satya Nadella, who took the helm almost a year ago, is trying to resuscitate Windows even as mobile computing continues to surge, PC demand sputters, and Microsoft focuses on versions of its Office applications for rival software platforms. He’s also tasked with overhauling the product little more than two years after the last update -- Windows 8 -- failed to jump-start consumer demand while alienating corporate customers. Microsoft also announced Windows Holographic, and a headset with glasses called HoloLens that will enable users to see holograms while tracking a user’s voice, motion and surroundings. The glasses will be available “in the Windows 10 timeframe,” said Alex Kipman, a technical fellow in Microsoft’s operating system group. The company also showed HoloStudio, software tools for creating holograms, 3-D printing them and sharing them. The new browser showed today lets users annotate websites using a stylus and touch or mouse and keyboard, and then send and share comments through e-mail and social media. The company also announced a new device called the Surface Hub, an 84-inch touch-screen computer designed for workplace collaboration that will run Windows 10.

• Uber closes $1.6 Billion in convertible debt that incentivize Uber to IPO in less than 4 years; also in talks to raise $600M in Series E; valuation at $41.2B: Uber, the popular ride-hailing start-up, has closed $1.6 billion in financing from clients of Goldman Sachs’s private wealth arm, the investment bank confirmed on Wednesday. The new round of financing comes just months after the company raised $1.2 billion from big institutions. Including that investment, the company is valued at some $41.2 billion, one of the richest-ever valuations for a private start-up. Moreover, Uber may still raise an additional $600 million in stock from hedge funds and strategic overseas investors, according to two people briefed on the matter, who spoke on condition of anonymity because the talks are ongoing. The funding adds to Uber’s already overflowing war chest; to date, the company has raised upward of $4 billion. With the new cash, Uber has more incentive to take on a new life as a publicly traded company. The securities sold to Goldman’s clients — in what was one of the biggest-ever sales of convertible debt — can be converted into shares in the start-up once it begins trading on a stock exchange, at a discount of 20 percent to 30 percent of the price set in an initial public offering, people briefed on the matter have said. Should the company not stage an I.P.O. within four years, however, the interest rate on those securities will rise.

• Vessel, a YouTube competitor launched by ex-Hulu execs went live to the public today; several big brands have signed on, and terms are more favorable to content producers than YouTube's: Vessel, the much-awaited online video startup founded by ex Hulu executives Jason Kilar and Richard Tom, finally opened its service to the public today. It may take time to see if users are willing to pay to watch Web videos that are usually free, but the company says brands like Chevy, Corona Extra, Land Rover and Jaguar, as well as Unilever's Axe, Dove, Suave and St. Ives, have signed up as advertisers. Kilar wrote in a blog post that Vessel is now welcoming sign-ups for an invite-only beta version of its service. To access content, users can choose to pay $2.99 per month or watch ad-supported videos. Vessel ads come in two forms: Five-second pre-rolls or interstitial units, which appear as branded "motion posters." The latter pops up as users scroll through the site. The platform offers creators a more favorable revenue share than YouTube, which splits ad revenue 45/55 in favor of the Google-owned video platform. Creators get 70 percent of all ad revenue made from their content on Vessel. Plus, the site earmarks 60 percent of its subscription revenue to divvy up among creators—if a creator's videos make up 10 percent of platform views, he or she would get 10 percent of that allotment. A referral program also pays creators who attract new subscribers. (The company estimates that creators will make $50 per 1,000 views.) To qualify for the subscription-based revenue, creators agree to post new content on Vessel for at least 72 hours before offering it elsewhere for free. After the early access period, the content then moves to Vessel's free, ad-supported service and can be posted on other non-subscription-based platforms.

• EBay's disappointing earnings: Q4 revenue $4.92B, Y/Y +9%, net income $936M, Y/Y +10%; will cut 2,400 positions and explore listing its warehousing & logistics unit: EBay reported earnings of $936 million in the last quarter, a 10 percent increase from the same period a year ago. Overall revenue rose 9 percent, to $4.92 billion, nearly in line with analysts’ estimates of $4.93 billion. But other numbers foretell the reasoning behind the company’s drastic restructuring. EBay’s revenue growth in the company’s marketplaces division rose just 1.3 percent, to $2.3 billion, signaling the slowest growth of its auction sites in years. Mr. Swan said the company planned to reinvest in its marketing efforts to promote its auctions arm to encourage repeat business. It will also heavily promote PayPal and Braintree, the payments start-up eBay acquired in 2013, as competition from rivals like Apple, Google and other start-ups begins to heat up. Facing stiff competition and the declining growth of its auctions business, eBay announced a shake-up of the company on Wednesday, saying it planned to cut 2,400 positions, or 7 percent of its global work force. “It’s going to get a little bit worse before it gets better,” said Bob Swan, chief financial officer of eBay, citing declines of traffic and repeat customers in the company’s online auction business. “Our ecosystem has simply been disrupted.” The layoffs come in advance of a planned spinoff of PayPal, the company’s payments arm, set for later this year. EBay said it would also explore a sale or a possible initial public offering of eBay Enterprise, the company’s warehouse and logistics unit for third-party eBay sellers. eBay announced an agreement with activist investor Carl Icahn that will give investors a greater say in its PayPal payments unit once it is spun off and said it exploring a sale or public offering of its enterprise unit. The moves could lay the groundwork for a future acquisition of eBay and PayPal by companies looking to gain a foothold in the e-commerce and online payments markets. Wall Street analysts have identified Alibaba (BABA.N), Google (GOOGL.O) and Amazon (AMZN.O) as potential acquirers. EBay also said it plans to cut its workforce by 7 percent, or 2,400 jobs, in the current quarter. EBay shares were up 2.6 percent at $54.75 in after hours trade.

• Shazam, a smartphone app that identifies songs playing on TV/radio, raised $30M at ~$1B valuation: Shazam, a smartphone application that can identify songs, announced on Wednesday that it had raised $30 million in new funding round that valued the company at roughly $1 billion. The start-up, which was founded in London and has around 100 monthly million users worldwide, has been rumored to be moving toward an initial public offering. It is expected to join other fast-growing technology companies that have tapped the public markets in recent months. Shazam uses audio-recognition technology to allow people to identify songs by holding their smartphone or other mobile device next to a television or radio. The company’s technology typically identifies the song within seconds, and Shazam generates revenue from taking a percentage of sales from music found through its app and mobile advertising. As tech giants like Google and Amazon move aggressively into Shazam’s core music market, the company has reached a series of deals to expand its core business. Among them is an agreement with the Warner Music Group to create a label imprint for new artists who are discovered through Shazam. Shazam has also made deals with a number of brands and blue-chip advertisers allowing individuals to view additional content on cellphones or tablets about products when they use Shazam’s app with certain television commercials.

• India internet/digital usage stats from a global report released by 'We Are Social': Social marketing agency, We Are Social, released a whopping 376 page report on the latest digital numbers around the world. Here is a summary of the India stats: India has 242 million active internet users (China boasts of 642 million).75 percent of the population has mobile subscriptions, a total of 946 million.95 percent of the Indian mobile subscriptions are on prepaid plans. Only 11 percent of the mobile users have accessed 3G and 4G. A deeper look into the web traffic in the country reveals, 72 percent of all online activity in India is done on mobile, up by 9 percent rise from last year. Laptops and desktops account for 27 percent of the activity, a drop of 19 percent. India has 118 million active social media accounts, of which 100 million of which are mobile users. Facebook, Google Plus, and Twitter top the list as the most popular social networks in India. Interestingly, LinkedIn is more popular than Pinterest and Instagram. Also 14 percent of Indians shopped online via a PC, while 9 percent made purchases from a mobile phone last month.