Bits Blog: 2 E-Mail Services Close and Destroy Data Rather Than Reveal Files

Bits Blog: Google Close to Acquiring Waze, a Rival in Maps

Nir Elias/Reuters Waze, an Israeli mobile satellite navigation application, seen on a smartphone.

Google, which dominates the market for online maps, is close to a deal to acquire Waze, a largely Israeli company that has developed a social mapping service that is popular with drivers seeking to find the best route given actual traffic conditions.

The proposed acquisition, for a price of more than $1 billion, could be announced early this week, according to three people with knowledge of the discussions who spoke on the condition of anonymity because the deal was not final.

Waze, which was previously in discussions to sell itself to Facebook, attracted the interest of the bigger technology companies because of the social nature of its maps. Waze’s technology, which is available only on mobile devices, uses voluntary GPS tracking of its users and their live reports about accidents and other road hazards to dynamically adjust routing to get users from point A to point B in the shortest possible time.

Waze is officially based in Palo Alto, Calif., but has extensive operations in Israel. It is particularly strong outside the United States, claiming to have about 47 million users globally. In Israel, nearly 9 in 10 registered drivers have used the service, according to the company.

Many of Waze’s maps have been created by passively tracing the routes of its users via GPS, but about 70,000 volunteers also submit edits to improve its maps, much the way volunteer editors contribute to the online encyclopedia Wikipedia.

Google also uses volunteers to improve its maps, but real-time traffic and route adjustments have been a weakness. At Google’s annual developers conference last month, the search giant unveiled a new version of Maps that includes more real-time traffic information.

Still, Google is far and away the leader in online mapping, and its interest in Waze could be a defensive move, to keep mapping expertise to itself. Facebook, for example, already has an extensive partnership with Waze, and had been interested in the company’s technology and rabid fan base as a way to extend its mobile presence.

It’s unclear whether the deal would face antitrust problems, given Google’s already strong presence in online maps.

Waze, a tiny company with about 100 employees, has struggled to generate revenue from its maps. It has experimented with ads for gas stations and fast-food restaurants that are along the route, but has found no reliable source of income.

“Their biggest issue is to grow their active user base,” Marc Prioleau, a strategic consultant in the navigation industry, said in an interview last week as rumors of a potential sale of Waze were swirling. “The technology could really be leveraged inside Google, or Facebook’s one billion users, or Apple’s iPhone.”

News that a Google deal was close was first reported by Globes, an Israeli business news publication.

Waze had recently signaled that it needed to raise capital in some fashion to expand its operations, either through another round of venture financing or a sale of the company.

Waze’s previous venture investors included Kleiner Perkins Caufield & Byers, BlueRun Ventures, Magma Venture Partners and Vertex Venture Capital.

Get Well? Fidel Castro Suffers Massive Stroke, Doctors Say He’s Close To Death And Give Him Weeks To Live!

Is this the end of an era?

Via TMZ reports:

Fidel Castro has reportedly suffered an embolic stroke … and his health is so bad, the 86-year-old former leader of Cuba can barely eat, speak or recognize people.

The news is being reported by El Nuevo Herald, which says it spoke with Jose Marquina — “a respected doctor” who assured the paper he has firsthand sources and information about Castro.

The doctor told the Herald, “[Castro] could last weeks like that, but what I can say is that we’ll never again see him in public.”

The last time Castro was seen out in public was back in March — when Pope Benedict XVI visited Cuba.

Who knows what kind of power struggle Castro’s death will bring about, but for the sake of the people of Cuba we hope the transition is a peaceful one.

Japanese Companies Close Facilities in China as Tensions Rise

China’s worst outbreak of anti-Japan sentiment in decades led to demonstrations over the weekend and violent attacks on well-known Japanese companies, like the carmakers Toyota and Honda, forcing frightened Japanese into hiding and prompting the Chinese state news media to warn that trade relations could be in jeopardy.

Hong Lei, a Chinese Foreign Ministry spokesman, said the government would protect Japanese companies and citizens and called for protesters to obey the law.

China and Japan, which generated two-way trade of $345 billion last year, are arguing over the uninhabited islets in the East China Sea, a longstanding dispute that erupted last week when the Japanese government decided to buy some of them from a private Japanese owner.

In response, China sent six surveillance ships to the area, which contains potentially large gas reserves. On Monday, a flotilla of 1,000 Chinese fishing boats was sailing for the islands. The islands are called the Senkaku by Japan and Diaoyu by China.

The protests over the weekend mainly targeted Japanese diplomatic missions, but they also occurred at shops, restaurants and car dealerships in at least five cities. Toyota Motor and Honda Motor said arsonists had badly damaged their dealerships in the eastern port city of Qingdao.

Toyota said its factories and offices were operating as normal Monday and that it had not ordered its Japanese employees home.

Honda said it would suspend production in China starting Tuesday for two days. Fast Retailing, largest apparel retailer in Asia, said it had closed 7 of its Uniqlo outlets in China and may close 19 more.

The top Japanese general retailer, Seven & I Holdings, said it would close 13 Ito Yokado supermarkets and 198 of its 7-Eleven convenience stores in China Tuesday. Sony is discouraging nonessential travel to China.

Mazda Motor will halt production at its Nanjing factory, which it jointly operates with Chongqing Changan Automobile and Ford Motor, for four days. Nissan Motor suspended China production for two days, starting Monday.

“I want to leave,” said a Nissan executive, who declined to be named, in the southern Chinese city of Guangzhou. “Protests near my home were horrifying over the weekend.”

The electronics maker Panasonic said one of its plants had been sabotaged by Chinese workers and would remain closed through Tuesday.

Canon, the camera and copier maker, will stop production at three of its four Chinese factories Tuesday, Japanese news media reports said, while All Nippon Airways reported a rise in cancellations on Japan-bound flights from China.

The dispute also hit the shares of Hong Kong-listed Japanese retailers on Monday, with the department store operator Aeon Stores (Hong Kong) falling to a seven-month low.

“All Japan-related shares are under selling pressure,” said Andrew To, a research director from Emperor Capital.

Prime Minister Yoshihiko Noda of Japan, who met visiting U.S. Defense Secretary Leon Panetta on Monday, urged Beijing to ensure Japan’s people and property were protected.

Mr. Panetta said the United States would stand by its security treaty obligations to Japan but not take sides in the dispute, and urged calm and restraint on both sides.

The overseas edition of The People’s Daily, the main newspaper of the Chinese Communist Party, warned that Beijing could resort to economic retaliation if the dispute festered.

“How could it be that Japan wants another lost decade, and could even be prepared to go back by two decades?” asked a front-page editorial. China “has always been extremely cautious about playing the economic card,” it said. “But in struggles concerning territorial sovereignty, if Japan continues its provocations, then China will take up the battle.”

EA ‘Keeping a Very Close Eye’ on Wii U

During its first quarter earnings call today, EA commented on its plans to support Nintendo’s upcoming Wii U. According to EA chief operating officer Peter Moore, the publisher is interested in the console and has plans to make announcements in the future.

“We’re keeping a very close eye on the platform,” Moore said before acknowledging the “lackluster response” Nintendo received coming out of E3. He added that EA has learned to “never underestimate Nintendo, as proven by the last generation.”

Moore noted that EA has “great franchises poised to be on that platform,” but that no announcements are ready to be made at this time. “We’ll probably announce more in the future,” he said.

During E3, EA announced that Mass Effect 3 is headed to Wii U. Since then, BioWare confirmed that the Wii U version will integrate Mass Effect 3’s extended cut endings.

The publisher is expected to make additional announcements leading up to Nintendo’s launch of Wii U later this year.

DealBook: Alibaba Is Said to Be Close to Raising $8 Billion

Nelson Ching/Bloomberg NewsEmployees at the headquarters of the e-commerce Alibaba.com subsidiary in Hangzhou, Zhejiang Province, in February.

Some American Internet companies may be unpopular with investors these days, but a Chinese one is finding plenty of takers.

The Alibaba Group, a Chinese e-commerce giant, is close to completing a more than $8 billion round of financing that will value it at as much as $43 billion in equity, according to two people briefed on the matter. Alibaba plans to use the bulk of that new money to buy back a 20 percent stake in itself from Yahoo for $7.1 billion. Yahoo owns 40 percent of Alibaba.

One Yahoo executive who signed off on that deal with Alibaba, Ross Levinsohn, announced on Monday that he was leaving the Internet company. The departure of Mr. Levinsohn, who served as Yahoo’s interim chief executive for three months, was expected after the company’s board hired Marissa Mayer from Google as its new leader.

With its financing nearly in place, Alibaba is prepared not only to solidify its position as the most valuable privately held Internet company but also to take a big step toward separating itself from Yahoo, which has struggled to revive its brand and stock price.

Alibaba’s financing round includes a $1.5 billion sale of convertible preferred shares, based on a $43 billion equity valuation for the company, and the sale of $2.6 billion in common shares, at a roughly $35 billion valuation, the people briefed on the matter said. They requested anonymity because the discussions are private. Alibaba is also close to borrowing $4 billion.

The agreement with Yahoo stipulated that Yahoo could receive more than $7.1 billion if its Chinese partner raised money at a significantly higher valuation than it is expected to. Yet because the sale of preferred shares and common shares are subject to certain discounts, Alibaba is still expected to pay close to the original amount.

Still, that price represents a big return on Yahoo’s investment.

Yahoo invested $1 billion in Alibaba about seven years ago, gaining a 40 percent stake in what was then seen as a promising Chinese start-up company.

Now the Alibaba 40 percent stake makes up more than half of Yahoo’s $20 billion market value. Under the agreement hashed out in May, Yahoo will sell back another 10 percent of Alibaba shares when the Chinese company goes public and divest itself of the rest at later date.

Shares of Yahoo fell nearly 1 percent on Monday to close at $15.98 per share.

The two companies have butted heads a number of times in recent years. Alibaba’s decision in 2010 to spin off its Alipay online payment business prompted protests from Yahoo that it had not been properly consulted. The dispute was not settled until last summer.

Alibaba has long sought to buy back Yahoo’s interest in itself, though attempts to reach an agreement fell apart many times. Irritated that Yahoo was considering selling a minority stake in itself to investor groups last year, Alibaba threatened to wage a hostile takeover attempt to try to forestall such a possibility. The American company eventually abandoned the idea.

Alibaba is raising billions of dollars from a patchwork of international backers. Nearly a dozen investors, including hedge funds, sovereign wealth funds, mutual funds and private equity firms, will buy the preferred shares, these people said. The China Investment Corporation, that country’s sovereign wealth fund, will participate in the purchase of the common shares. The China Development Bank, is expected to provide a substantial portion of the loan to Alibaba.

Joseph C. Tsai, Alibaba’s chief financial officer, who has led the company’s fund-raising efforts, tried to limit the financing round to a small group of investors to restrict access to Alibaba’s financial information, one of the people briefed on the financing matter said.

The rapid rise of Alibaba, a collection of Chinese consumer and business-to-business e-commerce sites, illustrates how quickly momentum can shift on the global Web. Seven years ago, the company was eager for a capital infusion amid intensifying competition from domestic and international rivals like eBay, which owned an online auction site named Eachnet. In 2004, the year before Yahoo’s investment, Alibaba recorded just $68 million in revenue.

Since then, Alibaba’s sales have swelled.

In the first half of this year, Alibaba recorded a little more than $1.8 billion in revenue, more than 60 percent more than in the year-earlier period, people with knowledge of the matter said.

In contrast, Yahoo has fallen nearly as swiftly. In early 2008, Yahoo spurned a takeover offer from Microsoft — a bid that valued it at roughly $45 billion. Since then, Yahoo’s slumping advertising sales have slumped and it has lost market share to companies like Google and Facebook. Its shares, since its Alibaba investment, have lost more than half their value.

In an effort to appease investors, Yahoo has said the proceeds of Alibaba’s purchase will be returned to shareholders, possibly through a share buyback program.

Alibaba is expected to complete the repurchase of the 20 percent stake in the beginning of the fourth quarter.

British Close Case on Climate E-mails, With No Suspects

The investigation by the unit, the Norfolk Constabulary, into the data leak concluded that the hacking was a “sophisticated and carefully orchestrated attack” on the university’s digital data files by an unknown outsider operating remotely online. The police put to rest speculation that the release was the work of a mischievous or disgruntled insider at the university’s Climatic Research Unit.

The leak in November 2009 set off a battle over the integrity of some of the world’s leading climate scientists and their research. Some of the e-mails contained provocative language about those who question the prevailing scientific view that the global climate is heating up because of the burning of fossil fuels and other human activities.

Climate change doubters called the release Climategate and demanded an investigation into the academic honesty of the e-mails’ authors and their research. A half-dozen such inquiries, in Britain and the United States, largely cleared the scientists of wrongdoing, but in some cases chided the authors for an intemperate tone.

The senior police investigator, Detective Chief Superintendent Julian Gregory, said that despite an exhaustive two-and-a-half-year inquiry, the police did not have a realistic prospect of finding the offender or offenders.

“The international dimension of investigating the World Wide Web especially has proved extremely challenging,” Chief Gregory said. “The offenders used methods common in unlawful Internet activity to obstruct inquiries.”

Edward Acton, the vice chancellor of the university, said he was disappointed that no one had been brought to justice for the hacking, which he said “did real harm to public perceptions about the dangers of climate change.”