Daily Tech Snippet: Monday January 19

• "The toll road into China": Customs pre-approval, forex handling part of Alibaba's major push to connect American retailers with Chinese consumers: Anchored by Alipay, the dominant Chinese electronic payments system that works closely with Alibaba and is controlled by its executives, the world's largest Internet retailer is using the calling card of China's consumers to attract U.S. partners, two sources close to the company told Reuters. Long seen as the most potent threat to Amazon.com Inc (AMZN.O) with $300 billion in global sales, the moves add up to a conservative approach to expanding in the United States, contrary to industry speculation that the company may be plotting a direct assault on U.S. soil. At the heart of its push are Alibaba's and Alipay's trial deals to handle Chinese sales, payment and shipping for some of the biggest names in U.S. retail from Neiman Marcus Group [NMRCUS.UL] to Saks Inc. Both confirmed the agreement but would not talk about how the pilots are faring. The Chinese companies will also work with U.S. startup Shoprunner, an online mall for U.S. retailers in which it owns a stake, and retail services provider Borderfree Inc (BRDR.O) to court Chinese consumers. And Alibaba is preparing a marketing campaign to raise awareness among U.S. businesses of its global business-to-business wholesale platform, Alibaba.com, so they can buy and sell to and from global suppliers. Alipay and a logistics-partner network that took years to assemble are central to Alibaba's U.S. effort. Major brands, such as Nike, that have a large physical presence in China already sell directly on Tmall. But Alipay's effort directly connects American merchants with China, without the need for investment in a physical presence. It also allows U.S. retailers and Chinese consumers to avoid difficulties associated with foreign exchange. Chinese consumers pay in yuan; U.S. companies get paid in dollars. Alibaba's and Alipay's program for U.S. companies is called ePass. It includes a customs pre-approval process, a sort of "fast lane" that shaves days off delivery. Daiwa analysts John Choi and Alex Liu call that capability Alibaba's biggest advantage over rivals such as JD.com (JD.O). Alibaba and Alipay have made pilot agreements to handle payments and shipping to China for department stores Neiman, Saks, Macy's Inc (M.N), Macy's Bloomingdale's chain, Ann Taylor, luxury fashion site Gilt, and apparel label Aeropostale (ARO.N), according to Borderfree. The companies declined to comment, although Neiman, Saks and Ann Taylor confirmed the deal. If a Chinese consumer bought a pair of shoes from Saks, for instance, Alipay would handle the financial transaction. The shoes go to a U.S.-based Alipay facility that handles the transfer to China. After clearing customs, a local partner typically would handle final delivery. "They own the toll road into China"

• Verizon's "supercookies" - injected into customers web traffic - are being used by an ad targeting firm that works with Google and Facebook on audience targeting: Back in November, privacy experts warned that a new kind of tracking technology called "supercookies" could allow Verizon Wireless customers to be monitored wherever they went on the Internet -- even if they took steps to protect their anonymity. Verizon downplayed those concerns. But now privacy researchers say they've uncovered an advertising company that is using the supercookie to help track the online activities of Verizon Wireless customers. Turn, an online advertising company that works with Google and Facebook, uses a unique identifier Verizon Wireless injects into its customers' Web traffic to collect data that makes it easier for advertisers to place targeted online ads, according to the researchers. Verizon, which developed that supercookie, a string of characters known as "Unique Identifier Header" or UIDH, to use for its own online advertising program, said it was looking into the issue. "We are evaluating how third parties are using the UIDH in this evolving ecosystem and considering any appropriate response," Verizon Wireless spokesperson Adria Tomaszewski told The Post in a statement. Turn says it is "reevaluating" its methods and will suspend the respawning cookie. Verizon began tracking its retail customers -- those not on government or business contracts -- with this supercookie in November 2012. Customers can opt out of having their demographic data shared with Verizon's advertising partners, but they cannot opt out of having the supercookie attached to their Web traffic. Turn's use of the identifier highlights how data about someone's online tracking practices can sometimes be deployed beyond its original intent -- making it harder than ever for consumers to control who has knowledge about their online activities. According to research by Jonathan Mayer, a Stanford graduate student and privacy expert, Turn uses Verizon's identifier as a signal to "re-spawn" or bring back traditional cookies that customers have taken steps to remove. That conclusion was confirmed by ProPublica. Turn's general counsel and chief privacy officer, Max Ochoa, confirmed Mayer's analysis of how its program worked in an interview with The Post. In a blog post, Ochoa defended the company's practices, arguing that clearing cookies does not necessarily indicate that users did not want to be tracked. Verizon defended the supercookie in the face of criticism, posting a message on its Web site saying "it is unlikely that sites and ad entities will attempt to build customer profiles for online advertising" and noting that the identifier "changes frequently." Researchers and privacy advocates weren't convinced. Unique codes that are associated with consumers online activity often get shared in the larger advertising ecosystem in a process known as "de-anonymizing" which allows Web sites, advertisers and data brokers to piece together more complete portraits of the users they hope to target, experts say. "A tracking technology like this could be used to build a comprehensive list of everywhere an individual is going online," said Moy. That could reveal information about a person's health, religion, family status, sexual preferences, and other highly intimate aspects of your life, Moy said.

• Seed funding is stagnant, but Series A and later rounds are still hot, analysis of VC funding data indicates: New data published today by Mattermark CEO and co-founder Danielle Morrill concerning the venture capital industry paints a relatively stiff picture: Seed rounds are taking it on the chin. More precisely, according to Mattermark, the number of seed rounds in 2014 fell compared to 2013, and the trend is accelerating. Bear in mind that the total dollar amount of money flowing into seed deals barely declined, so, of course, we are seeing the average seed deal increase. All this should square with your gut. It has felt for some time that the number of yahoos picking up a million dollars to build flipmeat for Yahoo has been declining. At the same time, the seed round your friend raised was almost a Series A. The data agrees. So has the seed bubble popped? I think it’s fair to say that it has despite the only slight decline in the total dollar amount that is being invested at the level. That’s due to the fact that we’ve become too loose with what counts as a seed round. So if we used an older measuring stick, the downtick would be more accelerated.

• Facebook releases pattern recognition software to open source; potential applications include inferring the intent behind an internet search: Facebook said Friday that it was donating for public use several powerful tools for computers, including the means to go through huge amounts of data, looking for common elements of information. The products, used in a so-called neural network of machines, can speed pattern recognition by up to 23.5 times, Facebook said. The tools will be donated to Torch, an open source software project that is focused on a kind of data analysis known as deep learning. Deep learning is a type of machine learning that mimics how scientists think the brain works, over time making associations that separate meaningless information from meaningful signals. Companies like Facebook, Google, Microsoft and Twitter use Torch to figure out things like the probable contents of an image, or what ad to put in front of you next. “It’s very useful for neural nets and artificial intelligence in general,” said Soumith Chintala, a research engineer at Facebook AI Research, Facebook’s lab for advanced computing. He is also one of the creators of the Torch project. Aside from big companies, he said, Torch can be useful for “start-ups, university labs.” Certainly, Facebook’s move shows a bit of enlightened self-interest. By releasing the tools to a large community of researchers and developers, Facebook will also be able to accelerate its own AI projects. Mark Zuckerberg has previously cited such open source tactics as his reason for starting the Open Compute Initiative, an open source effort to catch up with Google, Amazon and Yahoo on building big data centers. Torch is also useful in computer vision, or the recognition of objects in the physical world, as well as question answering systems. Mr. Chintala said his group had fed a machine a simplified version of “The Lord of the Rings” novels and the computer can understand and answer basic questions about the book. “It’s very early, but it shows incredible promise,” he said. Facebook can already look at some sentences, he said, and figure out what kind of hashtag should be associated with the words, which could be useful in better understanding people’s intentions. Such techniques could also be used in determining the intention behind an Internet search, something Google does not do on its regular search.

• Palantir raised money at $15B recently, and is looking for more: Palantir Technologies Inc. raised money at a $15 billion valuation late last year and is now looking for more funding, according to people with knowledge of the situation, as the data-analysis software startup seeks to expand its business. Palantir raised the money in late 2014 because investors were eager to invest, said one of the people with knowledge of the matter, who asked not to be identified because the details are private. The round totaled $500 million and was completed in November, said another person, who added that Palantir is currently raising even more financing. A Palantir representative declined to comment. The Wall Street Journal earlier reported Palantir’s $15 billion valuation and current funding plans. The new valuation is up from the $9 billion that Palantir was valued at in late 2013 and underscores the soaring values of startups across Silicon Valley. Uber Technologies Inc., a San Francisco-based mobile car-booking company, reeled in two financings exceeding $1 billion each last year and was valued at $40 billion last month. Investors have been pumping money into U.S. startups, to the tune of $48.3 billion last year, the most since 2000, according to the National Venture Capital Association and PricewaterhouseCoopers. Palantir got its start building software that helped tie disparate databases together to make it easier to search and analyze information. The technology was a hit among police agencies and intelligence services that wanted to illuminate patterns of behavior among individuals and manage large volumes of data more efficiently. Wall Street firms have since emerged as Palantir’s biggest customers, using the company’s software to detect fraud and evaluate loans, among other things. Last March, hedge fund SAC Capital Advisors LP hired Palantir to boost surveillance.

• GoPro's stock dropped 12% after Apple patent, possibly because past Apple patents foretold gamechangers: Patents are granted all the time, but when Apple gets one, companies often shudder at the prospect that the tech giant may try to muscle into their industry. GoPro's stock dropped 12 percent after the iPhone maker got a patent for a remote control system to take photos. In 2005, Apple filed a patent for "hand held electronic device with multiple touch sensing devices." About two years later, the company unveiled its first iPhone, and people walking down the street never looked up again. In May 2005, the U.S. Patent and Trademark Office granted Apple a design patent vaguely titled "electronic device." But the images clearly resembled what would be revealed five years later: the iPad. If there was any doubt that Apple was going to replace Google Maps with its own app on the iPhone, that should have been put to rest in May 2012, when the Cupertino, California, company filed a patent for "system and method for navigation guidance with destination-biased route display." As you might have guessed, about two weeks later, Apple announced at the Worldwide Developers Conference that it was kicking Google's app to the curb in favor of its home-cooked alternative. Before Apple Pay was announced last September, a number of the company's patents had pointed to its interest in providing a mobile payment service. One of them, filed in March 2011, was for a "method and system for payment and/or issuance of credits via a mobile device." Apple's interest in biometric security is an example where companies in that industry didn't shudder. Instead, they were elated by the attention paid to them by Apple and its rivals. Other phone makers, some of which had rudimentary fingerprint sensors predating the iPhone 5S, were less enthused. Apple showed its interest in incorporating an embedded authentication system back in this patent filed in 2008. In 2013, the iPhone 5S came with a fingerprint scanner on the device's home button.

• Virtual reality goggles, drones and data centers are all driving a hiring spree at Facebook Inc (FB.O) that is set to swell its ranks as much as 14 percent in the near term, according to a review of job listings on the company's website. Oculus Rift, the maker of virtual reality headsets that Facebook acquired in a $2 billion deal last year, is among the key areas slated for growth, with 54 jobs listed on its website, according to a review by Reuters of listings. Among the roles that Facebook needs to fill for the Oculus business are managers to oversee logistics, procurement and global supply chain planning - a sign, some analysts say, that the product is nearing its commercial release. Facebook’s ambitious effort to build its own satellites and drones capable of delivering Internet service to remote regions of the world is another important area for hiring: the program has Facebook searching for specialists in areas such as avionics, radio frequency communications and thermal engineering. Atlas, the online advertising technology that Facebook acquired in 2013, is another big area of hiring, with more than 20 open positions listed. Facebook had 8,348 full-time employees at the end of September, far fewer than Google’s roughly 55,000 employees or Microsoft Corp’s (MSFT.O) roughly 127,000 (Microsoft announced in the summer that it plans to cut 18,000 jobs). At the same time, Facebook gets more out of each employee, according to calculations using company revenue figures. Facebook’s revenue works out to roughly $384,000 per employee in the third quarter of 2014, versus $300,000 for Google and $183,000 for Microsoft.

• Uber plans to introduce background check procedures for its drivers in India, the company said Thursday evening, in a move that comes weeks after a driver was charged with rape there. The episode prompted wider scrutiny of the ride-hailing service that is now banned in some parts of the country. The company started operating in the Delhi region of India in late 2013, but has not screened those drivers, according to local Uber executives. Previously, Uber accepted new drivers if they presented proof of insurance, a driver’s license and a commercial permit to drive a taxi. That will soon change. Uber will run a series of more stringent checks on its drivers, which include a formal background check, verification of character by the local police and checks to detect fraud in driving and vehicle permits. Since the rape, Uber has pointed out the difficulty of screening drivers in hundreds of cities across the world, an argument that the company has also used in the United States to support its background check procedure. “This unfortunate incident has highlighted challenges in the systems due largely to nondigitized record-keeping and the lack of a centralized database for criminal offenders,” Ms. Delivala said. “To ensure verifications are legitimate and reliable, more needs to be done at the ground level.” In the United States, background checks for Uber are conducted by Hirease, a third-party service, which checks city, state and federal records. Lawmakers in many states, including California, Colorado and Illinois, have contested this approach, citing the more stringent checks required of taxi and limousine drivers.

• Evernote's new app turns smartphones into scanners via image-to-text conversion software: Scannable, an app from the note-taking service Evernote, turns your smartphone or tablet into a scanner by simply taking a picture of the document you want to record. Using recognition software, the app can then identify the words on the documents you’re scanning, so that you can search for keywords later. It will scan business cards and let you create new contact cards on the iPhone or iPad straight from the app — no typing required. The app doesn’t pick up every thing on a document, particularly if papers have been folded or crumpled. If you’re working on something for an official application or document, you may still want to opt for the old-fashioned scanner. But if you’re looking to keep quick notes or add contacts to your address book in a pinch, it’s reliable, free and easy to use. Free, for iOS devices.