Internet Firms Step Up Efforts to Stop Spying

Ordinary users asked Ms. Mayer why Yahoo was not doing more. Privacy activists were more blunt. “Even after today’s announcement, Yahoo still lags far behind Google on web security,” said Christopher Soghoian, a technology analyst at the American Civil Liberties Union.

For big Internet outfits, it is no longer enough to have a fast-loading smartphone app or cool messaging service. In the era of Edward J. Snowden and his revelations of mass government surveillance, companies are competing to show users how well their data is protected from prying eyes, with billions of dollars in revenue hanging in the balance.

On Thursday, Microsoft will be the latest technology company to announce plans to shield its services from outside surveillance. It is in the process of adding state-of-the-art encryption features to various consumer services and internally at its data centers.

The announcement follows similar efforts by Google, Mozilla, Twitter, Facebook and Yahoo in what has effectively become a digital arms race with the National Security Agency as the companies react to what some have called the “Snowden Effect.”

While security has long simmered as a concern for users, many companies were reluctant to employ modern protections, worried that upgrades would slow down connections and add complexity to their networks.

But the issue boiled over six months ago, when documents leaked by Mr. Snowden described efforts by the N.S.A. and its intelligence partners to spy on millions of Internet users. More than half of Americans surveyed say N.S.A. surveillance has intruded on their personal privacy rights, according to a Washington Post-ABC News poll conducted in November.

The revelations also shook Internet companies, which have been trying to reassure customers that they are doing what they can to protect their data from spying. They have long complied with legal orders to hand over information, but were alarmed by more recent news that the N.S.A. was also accessing their data without their knowledge.

“We want to ensure that governments use legal process rather than technological brute force to obtain customer data — it’s as simple as that,” said Bradford L. Smith, Microsoft’s general counsel, in an interview.

Mr. Smith said his company would also open “transparency centers” where foreign governments can inspect the company’s code in an effort to assure them that it does not plant back doors for spy agencies in its products.

Already, the Snowden revelations threaten to erode the market share of American technology companies abroad.

In India, government officials are now barred from using email services that have servers located in the United States. In Brazil, lawmakers are pushing for laws that would force foreign companies to spend billions redesigning their systems — and possibly the entire Internet — to keep Brazilian data from leaving the country.

Forrester Research projected the fallout could cost the so-called cloud computing industry as much as $180 billion — a quarter of its revenue — by 2016.

“The world is quickly being divided into companies that are secure and companies that are not,” said Bhaskar Chakravorti, a dean of international business and finance at the Fletcher School at Tufts University.

One by one, technology companies have been scrambling to plug security holes.

The best defense, security experts say, is using Transport Layer Security, a type of encryption familiar to many through the “https” and padlock symbol at the beginning of Web addresses that use the technology. It uses a long sequence of numbers — a master key — that scrambles sensitive data like passwords, credit card details, intellectual property and personal information between a user and a website while in transit.

Banks and other financial sites have used such security for years, and Google and Twitter along with Microsoft’s email service made it standard long ago. Facebook adopted https systemwide this year. And Ms. Mayer said Yahoo would finally allow consumers to encrypt all their Yahoo data in January.

N.S.A. Said to Have Collected Data From Internet Firms

Senators Dianne Feinstein and Saxby Chambliss spoke to reporters Thursday about the National Security Agency’s collection of millions of Verizon phone records.

WASHINGTON — The federal government has been secretly collecting information on foreigners overseas for nearly six years from the nation’s largest Internet companies like Google, Facebook and, most recently, Apple, in search of national security threats, the director of national intelligence confirmed Thursday night.

The N.S.A. and other government agencies declined to comment about the disclosures.

The confirmation of the classified program came just hours after government officials acknowledged a separate seven-year effort to sweep up records of telephone calls inside the United States. Together, the unfolding revelations opened a window into the growth of government surveillance that began under the Bush administration after the terrorist attacks of Sept. 11, 2001, and has clearly been embraced and even expanded under the Obama administration.

Government officials defended the two surveillance initiatives as authorized under law, known to Congress and necessary to guard the country against terrorist threats. But an array of civil liberties advocates and libertarian conservatives said the disclosures provided the most detailed confirmation yet of what has been long suspected about what the critics call an alarming and ever-widening surveillance state.

The Internet surveillance program collects data from online providers including e-mail, chat services, videos, photos, stored data, file transfers, video conferencing and log-ins, according to classified documents obtained and posted by The Washington Post and then The Guardian on Thursday afternoon.

In confirming its existence, officials said that the program, called Prism, is authorized under a foreign intelligence law that was recently renewed by Congress, and maintained that it minimizes the collection and retention of information “incidentally acquired” about Americans and permanent residents. Several of the Internet companies said they did not allow the government open-ended access to their servers but complied with specific lawful requests for information.

“It cannot be used to intentionally target any U.S. citizen, any other U.S. person, or anyone located within the United States,” James Clapper, the director of national intelligence, said in a statement, describing the law underlying the program. “Information collected under this program is among the most important and valuable intelligence information we collect, and is used to protect our nation from a wide variety of threats.”

The Prism program grew out of the National Security Agency’s desire several years ago to begin addressing the agency’s need to keep up with the explosive growth of social media, according to people familiar with the matter.

The dual revelations, in rapid succession, also suggested that someone with access to high-level intelligence secrets had decided to unveil them in the midst of furor over leak investigations. Both were reported by The Guardian, while The Post, relying upon the same presentation, almost simultaneously reported the Internet company tapping. The Post said a disenchanted intelligence official provided it with the documents to expose government overreach.

Before the disclosure of the Internet company surveillance program on Thursday, the White House and Congressional leaders defended the phone program, saying it was legal and necessary to protect national security.

Josh Earnest, a White House spokesman, told reporters aboard Air Force One that the kind of surveillance at issue “has been a critical tool in protecting the nation from terror threats as it allows counterterrorism personnel to discover whether known or suspected terrorists have been in contact with other persons who may be engaged in terrorist activities, particularly people located inside the United States.” He added: “The president welcomes a discussion of the trade-offs between security and civil liberties.”

The Guardian and The Post posted several slides from the 41-page presentation about the Internet program, listing the companies involved — which included Yahoo, Microsoft, Paltalk, AOL, Skype and YouTube — and the dates they joined the program, as well as listing the types of information collected under the program.

The reports came as President Obama was traveling to meet President Xi Jinping of China at an estate in Southern California, a meeting intended to address among other things complaints about Chinese cyberattacks and spying. Now that conversation will take place amid discussion of America’s own vast surveillance operations.

Reporting was contributed by Eric Schmitt, Jonathan Weisman and James Risen from Washington; Brian X. Chen from New York; Vindu Goel, Claire Cain Miller, Nicole Perlroth, Somini Sengupta and Michael S. Schmidt from San Francisco; and Nick Wingfield from Seattle.

Firms Brace for New European Data Privacy Law

Facebook, Apple, Google, Amazon and I.B.M., individually and through industry groups, have all sought to actively participate in a legislative process that could give half a billion consumers the right to withhold basic personal details while using the Web, putting a major crimp in the financial model that makes those business run.

On Monday, their European counterparts showed up in force at a conference in Berlin to discuss the potential law, which is expected to come to a vote sometime next year. Representatives from European Aeronautics Defense & Space, BMW, Daimler and Rovio Entertainment, the creator of mobile apps like Angry Birds, filled a hotel meeting room and tried to figure out how new rules would affect them.

Even nontech companies like UBS, the Swiss bank, were among the 70 attendees at the Pullman Hotel Scheizerhof near the Tiergarten central park, as the new regulations are expected to affect virtually every type of business.

The effort to create strict new online privacy protections in Europe is motivated by a desire to rein in the data use of social media companies like Google and Facebook, said Ian Walden, a professor of information and communications law at the University of London and a speaker at the conference.

“But the problem is this proposal is going to create a whole new layer of regulation for the vast majority of businesses that have nothing to do with social media,” he said. “They are going to see their compliance loads increase greatly with very little benefit.”

The measures would prohibit the use of a range of standard Web tracking and profiling practices that companies use to produce targeted advertising, unless consumers gave their explicit prior consent. The bill would also grant European consumers a fundamental new right: data portability, or the right to easily transfer an individual’s posts, photographs and video from one online service site to another.

The measures, as well as the creation of an E.U.-wide data privacy regulator, were originally proposed last year by Viviane Reding, the European justice commissioner.

They are now contained in a bill sponsored by Jan Philipp Albrecht, a member of the European Parliament from Hanover. But the fate of the bill, meant to revise an 18-year-old statute, remains murky.

The lead parliamentary committee for the bill is struggling to schedule more than 3,000 amendments to the proposal and has already pushed back a vote from the end of this month until June. Negotiators in the upper house of Parliament are at odds over basic concepts, like the requirement for businesses to obtain prior consent before collecting Web data and proposed penalties for violators, which would be set at up to 2 percent of a company’s annual sales.

“I think at this point, there will be a set of new rules, they will be uniform, and they will raise the level of data protection from where it is now,” said Thomas Lehnert, the director of data protection for EADS Deutschland, who participated in the conference.

EADS, which employs eight full-time data protection officers in 17 countries, may have to hire many more such officers in almost all of its jurisdictions, he said. “I think we are talking about a multiple of what we have now,” Mr. Lehnert said.

U.S. interest in the European deliberations remains significant. About a third of the data-protection officials attending the conference were representatives of U.S.-based companies. Exxon Mobil, Aon, Amway and Procter & Gamble were present, as were the global law firms of Hogan Lovells, Taylor Wessing and Latham & Watkins.

Other countries are watching as well. Lawmakers in South Africa are in the final stages of completing a six-year effort to create the country’s first comprehensive data protection laws, which will be tailored to the new E.U. rules, said Robby Coelho, a lawyer at Webber Wentzel, a law firm in Johannesburg.

“South Africa wants to have internationally recognized data protection standards to attract businesses to the country,” Mr. Coelho said.

Likewise in the Middle East, the overseers of international free trade zones in Qatar and Dubai plan to adopt data protection laws that mirror European rules, said Justin Cornish, a lawyer at Latham & Watkins in Dubai, who also attended the Berlin conference.

“There is an expectation that data protection laws around the world are going to become more stringent, and Europe is leading the way,” Mr. Cornish said.

F.T.C. Warns Data Firms on Selling Information

WASHINGTON — The Federal Trade Commission said on Tuesday that it had sent warning letters to 10 data brokerage firms, telling them that their practices, which involve gathering and selling consumer information, could violate federal privacy laws.

The companies, most of which market their services online and through toll-free phone numbers, appeared to be offering to sell consumer data for use in screening job candidates, determining eligibility for insurance or making offers of credit, the F.T.C. said.

Such practices could violate the Fair Credit Reporting Act if the sellers are legally considered “consumer reporting agencies” and they fail to verify that customers buying the consumer information have a legitimate purpose for receiving it.

Last month, the F.T.C. similarly warned six companies that they might be violating the act by offering to share tenants’ rental histories with landlords.

The letters issued by the commission are not formal complaints and do not necessarily mean that the companies are subject to the credit reporting act. Rather, the F.T.C. said, “they serve to remind the companies to evaluate their practices to determine whether they are ‘consumer reporting agencies,’ ” and how the act pertains to them.

The 10 companies were part of a group of 45 organizations that were contacted in an undercover test-shopping operation, the F.T.C. said. Members of its staff posed as individuals or company representatives and asked for help in gathering certain types of consumer data.

Six companies were warned by the F.T.C. about their apparent willingness to sell consumer information for employment screening. Those companies are Crimcheck.com of Strongsville, Ohio; 4Nannies of West Hills, Calif.; U.S. Information Search of Pomona, N.Y.; People Search Now of Sacramento, Calif.; Case Breakers, based in Coral Springs, Fla.; and USA People Search of Rocklin, Calif.

The companies either did not respond to a request for comment or could not be reached.

Two companies were found by the F.T.C. investigators to appear to offer consumer data for use in making insurance decisions: the US Data Corporation of Agoura Hills, Calif.; and Brokers Data of Columbia, S.C.

Latest Product From Tech Firms: An Immigration Bill

But most who watched the commercial, sponsored by a new group that calls itself Americans for a Conservative Direction, may be surprised to learn who bankrolled it: senior executives from Silicon Valley, like Mark Zuckerberg of Facebook and Reid Hoffman of LinkedIn, who run companies where the top employees donate mostly to Democrats.

The advertising blitz reflects the sophisticated lobbying campaign being waged by technology companies and their executives.

They have managed to secure much of what they want in the landmark immigration bill now pending in Congress, provisions that would allow them to fill thousands of vacant jobs with foreign engineers. At the same time, they have openly encouraged lawmakers to make it harder for consulting companies in India and elsewhere to provide foreign workers temporarily to this country.

Those deals were worked out through what Senate negotiators acknowledged was extraordinary access by American technology companies to staff members who drafted the bill. The companies often learned about detailed provisions even before all the members of the so-called Gang of Eight senators who worked out the package were informed.

“We are very pleased with the progress and happy with what’s in the bill,” said Peter J. Muller, a former House aide who now works as the director of government relations at Intel. “It addresses many of the issues we’ve been advocating for years.”

Now, along with other industry heavyweights, including the U.S. Chamber of Commerce, the technology companies are trying to make sure the law gets passed — which explains the political-style television advertising campaign, sponsored by a group that has revealed no details about how much money it gets from its individual supporters.

The industry also hopes to get more from the deal by working to remove some regulatory restrictions in the proposal, including on hiring foreign workers and firing Americans.

Silicon Valley was once politically aloof before realizing in recent years that its future profits depended in part on battles here in Washington. Its effort to influence immigration legislation is one of its most sophisticated.

The technology industry “understands there’s probably not a tremendous amount of resistance to their part of the bill,” Mr. Rubio said in an interview last week, saying he welcomed the industry support. “But their future and getting the reform passed is tied to the overall bill.”

The bill has a good chance of winning passage in the Senate. The hardest sell will come in the House, where many conservative Republicans see the deal as too generous to immigrants who came to this nation illegally.

Rob Jesmer, a former top Republican Senate strategist who helps run the new Zuckerberg-backed nonprofit group that sponsored the Rubio ad, insisted that his organization’s push is based on the personal convictions of the executives who donated to the cause and who believe immigration laws need to be changed. Those convictions just happen to line up with what their corporations are lobbying for as well, he said.

“It will give a lot of people who are educated in this country who are already here a chance to remain in the United States,” Mr. Jesmer said, “and encourage entrepreneurs from all over the world to come to the United States and create jobs.”

The profound transition under way inside Silicon Valley companies is illustrated by their lobbying disclosure reports filed in Congress. Facebook’s lobbying budget swelled from $351,000 in 2010 to $2.45 million in the first three months of this year, while Google spent a record $18 million last year.

That boom in spending translates into hiring of top talent in the art of Washington deal-making. These companies have hired people like Joel D. Kaplan, a onetime deputy chief of staff in the Bush administration who now works for Facebook; Susan Molinari, a former House Republican from New York who is now a Google lobbyist; and outside lobbyists like Steven Elmendorf, a former chief of staff to Richard A. Gephardt, a former House majority leader, who works for Facebook.

The immigration fight, which has unified technology companies perhaps more than any other issue, has brought the lobbying effort to new heights. The industry sees it as a fix to a stubborn problem: job vacancies, particularly for engineers.

“We are not able to fill all the jobs that we are creating,” Brad Smith, Microsoft’s general counsel, told the Senate Judiciary Committee late last month.

Chief executives met with President Obama to discuss immigration. Venture capitalists testified in Congress. Their lobbyists roamed the Senate corridors to make sure their appeals were considered in the closed-door negotiations among the Gang of Eight, which included Mr. Rubio and Senator Charles E. Schumer, Democrat of New York, who have been particularly receptive.

In the many phone calls and hallway asides on Capitol Hill this year, those lobbyists realized that they had to give a little to get a lot of what they wanted. At the top of their wish list was an expansion of a temporary visa program called the H-1B, which allows companies to hire foreigners for jobs in the United States. There are a limited number of H-1Bs available each year, and competition for them is fierce.

Companies like Facebook and Intel use them largely to bring workers to their own offices. Consulting companies like Tata, based in India, use them to supply computer workers at American banks, oil companies and sometimes software firms.

Eric Lipton reported from Washington, and Somini Sengupta from San Francisco. Neha Thirani contributed reporting from Mumbai, India.

Tech Firms Push to Hire More Workers From Abroad

Mr. Sankhla got a master’s degree in electrical engineering nine years ago from the University of Southern California, followed by a job at Cisco, then at a start-up that attracted $4.5 million in financing from Silicon Valley investors. There was only one wrinkle: he was in the country on a temporary work visa, with no idea whether or when he would get permanent residence.

He remains in limbo, which preoccupies him almost as much as running his business. “It’s a constant distraction,” said Mr. Sankhla, who is 32. “You can’t really settle down because your visa status is uncertain.”

Silicon Valley is battling in Washington to make the immigration process easier for thousands of people like Mr. Sankhla, many of them Indian engineers, while also pushing to hire many more guest workers from abroad.

Rarely has the industry been so single-mindedly focused on a national policy issue, with executives like Mark Zuckerberg of Facebook and John T. Chambers of Cisco personally involved. Its efforts seem to be paying off, as a group of eight senators negotiate details of a comprehensive immigration deal to be announced early next week.

Several lobbyists and advocates who have spoken to Senate staff members say they are optimistic about at least two items high on their wish list: a fast-track green card line for math and science graduates like Mr. Sankhla, no matter which country they come from, and a near doubling of the visas for temporary workers.

“I think we are going to get a balanced outcome, which takes advantage of the value that immigrants bring to the economy and be protective of U.S. workers,” said Scott Corley, director of Compete America, an industry coalition that includes Google and Intel.

The contentious piece of this is the potential increase in temporary workers from abroad. Critics fear that is a ruse for lowering wages. Those critics are likely to get at least one boon from a revamped law: a requirement that companies try to find qualified American workers before hiring from abroad. The law may also make it more expensive to bring in guest workers.

The new immigration measure will almost certainly fix a situation that keeps people like Mr. Sankhla stuck in limbo for so long. The current law limits how many green cards can be issued to people from any single country, no matter how populous.

That effectively means that applicants from countries like India and China, with a large supply of young engineers often educated in American universities, wait far longer for permanent residence than those from almost every other country. The temporary employment visa, usually an H-1B, has become a kind of way station for them.

The Senate is considering eliminating the per-country quotas for those who graduate from United States universities with math, science and engineering degrees. The debate in Congress perfectly illustrates how immigration law, codified in 1965 and last revamped substantially in 1990, has lagged behind the demands of a rapidly changing economy. Unemployment in the technology industry hovers below 4 percent, far less than the national average.

In that climate, temporary visas are in such heavy demand that the total number available for the coming year — 65,000 for skilled workers and 20,000 for those with a master’s degree or higher — were snatched up in less than five days. The United States Citizenship and Immigration Services said Monday that it had received 124,000 applications in that time and had resorted to a lottery to make the final cut.

The measure being considered by lawmakers could nearly double the H-1B visas allotted yearly and possibly admit more temporary workers during periods of high demand, said several advocates who have discussed the matter with Congressional staff members and who declined to be named because the final language has not yet been released.

“If you were the human resources vice president of the United States, you would want to have a rule that says if things get busy and you need skilled people you can bring in people,” said Dan Siciliano, a law professor at Stanford. “At the same time you would want a way to bring highly skilled people in and perhaps at your choosing convert them to status that lets them stay much longer.”

Survey Details Data Theft Concerns for U.S. Firms in China

BEIJING — A quarter of companies that are members of a leading U.S. business lobby in China have been victims of data theft, a report by the group said Friday, as ties between Beijing and Washington have become increasingly strained over the threat of cyberattacks.

Twenty-six percent of the members who responded to an annual survey said that their proprietary data or trade secrets had been compromised or stolen at their China operations, according to the report from the business lobby, the American Chamber of Commerce in China.

“This poses a substantial obstacle for business in China, especially when considered alongside the concerns over I.P.R. enforcement and de facto technology transfer requirements,” the chamber said, referring to weak enforcement of intellectual property rights.

Mandiant, a U.S. computer security company, said in February that a secretive Chinese military unit was likely behind a series of hacking attacks that targeted the United States and stole data from more than 100 companies.

That set off a war of words between Washington and Beijing.

Representative Dutch Ruppersberger, Democrat of Maryland, said last month that U.S. companies had suffered estimated losses in 2012 of more than $300 billion due to the theft of trade secrets, much of it the result of Chinese hacking.

China says the accusations lack proof and that it is also a victim of hacking attacks, more than half of which originate from the United States.

Hong Lei, a spokesman for the Chinese Foreign Ministry, called the survey a “completely irresponsible action.”

“We hope the relevant side doesn’t politicize financial and trade problems, does not exaggerate the so-called issue of online leaks and does more conducive things for China and the United States,” Mr. Hong told reporters Friday.

The survey by the chamber, commonly known as AmCham, was conducted among 325 members across China late last year, before the release of the Mandiant report.

Only 10 percent of companies in the survey said they would use China-based cloud computing services, with most citing security concerns. Blocked Internet searches in China had impeded business for 62 percent of respondents.

U.S. officials have pressed China to address Internet attacks and cyberspying against U.S. companies. President Barack Obama raised hacking concerns in a phone call with President Xi Jinping of China earlier in March.

A recent assessment by U.S. intelligence leaders said that for the first time, cyberattacks and cyberespionage had supplanted terrorism as the top threat.

Most companies in the AmCham survey expressed optimism about the business outlook in China, with many reporting higher profit margins for their China units. But companies gave lower expectations for future investment and cited rising labor costs as a top concern. Perceptions that China’s investment environment is stagnating are increasing, according to the survey.

Member companies “have not felt over the last four or five years that there have been commercially significant positive changes in the business environment or the investment environment,” Christian Murck, president of AmCham China, told reporters.

“When you have an economy which is making a transition to a market economy, but which is not yet there, there is a feeling that if you are not moving forward with an indicated path of future policy that you are effectively moving backward,” he said at a briefing on the survey.

The survey also cited a steep increase in concerns over the protection of intellectual property, like copyrights and trademarks, with 72 percent of respondents saying enforcement in China was ineffective or totally ineffective, an increase of 13 percentage points over last year.

Perceptions that technology transfer was increasingly a requirement for access to China’s market also jumped 10 points to 37 percent, the chamber said, with higher rates of concern reported in the aerospace, automotive, chemical in information technology sectors.

Ad Blocking Raises Alarm Among Firms Like Google

PARIS — Xavier Niel, the French technology entrepreneur, has made a career of disrupting the status quo.

Now, he has dared to take on Google and other online advertisers in a battle that puts the Web companies under pressure to use the wealth generated by the ads to help pay for the network pipelines that deliver the content.

Mr. Niel’s telecommunications company, Free, which has an estimated 5.2 million Internet-access users in France, began last week to enable its customers to block Web advertising. The company is updating users’ software with an ad-blocking feature as the default setting.

That move has raised alarm among companies that, like Google, have based their entire business models on providing free content to consumers by festooning Web pages with paid advertisements. Although Google so far has kept largely silent about Free’s challenge, the reaction from the small Web operators who live and die by online ads has been vociferous.

No Internet access provider “has the right to decide in place of its citizens what they access or not on the Internet,” Spiil, an association of French online news publishers, said in a statement Friday.

The French government has stepped into the fray. On Monday Fleur Pellerin, the French minister for the digital economy, plans to convene a meeting of the feuding parties to seek a resolution.

Free’s shock to advertisers was widely seen as an attack on Google, and is part of the larger, global battle over the question of who should pay to deliver information on the Web — content providers or Internet service providers. An attempt to rewrite the rules failed at the December talks of the International Telecommunication Union in Dubai, after the United States and other nations objected to a proposal that, among other measures, would have required content providers to pay.

Mr. Niel declined to comment on Sunday, through a spokeswoman, Isabelle Audap.

But he has often complained that Google’s content, which includes the ever expanding YouTube video library, occupies too much of his network’s bandwidth, or carrying capacity. “The pipelines between Google and us are full at certain hours, and no one wants to take responsibility for adding capacity,” he said during an interview last year with the newsmagazine Nouvel Observateur. “It’s a classic problem that happens everywhere, but especially with Google.”

Analysts said that French regulators would probably not oppose an agreement between Free and Google aimed at smoothing traffic flows and improving the quality of the service, as long as competitors were not disadvantaged. But they said regulators would probably not allow an Internet access provider to unilaterally block content.

When it comes to blocking ads, though, disgruntled consumers do not have to rely on their Internet service providers. Consumers already have the option of downloading software like Adblock Plus to do the job for them.

Free is the second-largest Internet access provider in France, behind Orange, which is operated by France Telecom and has 9.8 million Internet customers. Because Free seeks to be a low-cost competitor, the company may feel itself particularly vulnerable to the expense of providing capacity to meet Internet users’ ever-growing demand for streaming and downloading videos, music and the like.

Ms. Pellerin, the digital economy minister, expressed sympathy for Free’s position in an interview with Le Figaro, published Saturday. “There are today real questions about the sharing of value between the content providers — notably in video, which uses a lot of bandwidth — and the operators,” she said.

“In France, and in Europe,” Ms. Pellerin added, “we have to find more consensual ways of integrating the giants of the Internet into national ecosystems.” And in a subsequent Twitter message, she said she was “no fan of intrusive advertising, but favorable to a solution of no opt-out by default.”

This article has been revised to reflect the following correction:

Correction: January 7, 2013

Because of an editing error, an earlier version of this article misstated Iliad’s third-quarter revenue. It was €819 million, not €819 billion.

Venture Capital Firms, Once Discreet, Learn the Promotional Game

Sequoia Capital, the prominent firm behind such tech behemoths as Apple and Google, and several other top venture firms stopped accepting investments from public institutions like the University of California system just to avoid having their financials disclosed to the press.

Self-promotion was shunned by venture capitalists as crass. Eyes rolled when Timothy C. Draper, a founder at Draper Fisher Jurvetson, graced a 2006 cover of the Thomson-Reuters Venture Capital Journal in a Captain America costume.

Investment partners at Sequoia even used a disparaging name for venture capitalists who promoted themselves to the press: “parade jumpers.”

Now, Sand Hill Road in Silicon Valley is one long parade route. Venture capitalists are hiring full-time public relations experts to tell bloggers and reporters of their investing prowess. They publicize their every doing and thought on Twitter and in blog posts.

In the last year, several top firms have hired people to handle marketing, branding and public relations full time. Among them: Kleiner Perkins Caufield & Byers, Lightspeed Venture Partners and True Ventures. Many others, like Benchmark Capital, New Enterprise Associates and Greylock Partners, keep public relations firms on retainer.

A number of V.C. firms ranging from some of the oldest, like Bessemer Venture Partners, to some of the youngest, like Peter Thiel’s Founders Fund, are now seeking full-time marketing experts.

Even Sequoia, which sniffed at the notion when the trend began, has hired P.R. staff.

The self-promotion, branding and race to build an admiring Twitter following, people here say, is a symptom of the stresses on the consolidating venture capital industry. Fewer venture firms are trying to raise money from pension funds, universities and others institutions.

There are now 526 venture capital firms actively investing in the United States, down from 1,022 firms in 2000, according to the National Venture Capital Association. In the last 10 years, venture firms returned, on average, an abysmal 4.6 percent to investors. Institutional investors are looking to scale back on the asset class and reallocate funds just to top firms, where the competition to raise money and invest in hot technology start-ups is fierce.

Ten years ago, entrepreneurs needed some kind of insider advantage to get a meeting with a firm. Now the most promising entrepreneurs do careful due diligence — on Twitter, in blogs and in the media — before agreeing to take coffee with a V.C. The best entrepreneurs are courted by the venture capitalists, not the other way around.

But the biggest catalyst for the attention-seeking atmosphere, venture capitalists say, has been the rise of Andreessen Horowitz. The speed with which the venture firm — started by Marc Andreessen, the co-founder of Netscape, and Ben Horowitz, a former executive there — has rocketed to the top ranks has served as a case study in successful self-promotion.

The two men started their firm in 2009, when Silicon Valley was still reeling from the financial crisis. It was the era in which seasoned investors at Sequoia Capital had just delivered a PowerPoint presentation to entrepreneurs at their portfolio companies titled: “R.I.P. Good Times.”

Mr. Andreessen and Mr. Horowitz based their firm’s strategy on a simple investment thesis: each year 15 deals account for 97 percent of all venture capital profits. To be successful, they would have to pursue those 15 companies. And they would do it by aggressively marketing their expertise to the reporters and bloggers who follow start-ups. And they would appeal directly to entrepreneurs in blogs and on Twitter.

It worked right from the outset. In July 2009, Fortune announced the firm in a cover article. The debut was widely covered in popular technology blogs like TechCrunch, VentureBeat and All Things Digital.

Then in 2010, the firm hired Margit Wennmachers, a founder of the Outcast Communications P.R. firm who had built it into the top adviser of tech start-ups. She was far from being just a hired gun. Ms. Wennmachers was instrumental in the firm’s initial coverage and she was made a full partner, sitting at the table at the earliest stages of investment decisions.

“To be a top five firm, you have to brand yourself,” Ms. Wennmachers said in an interview. “We didn’t want entrepreneurs to say, ‘Who are these people?’ We didn’t want to start a fund by ‘the tall guy who invented a browser,’ so we pushed for press and set up a direct communication channel with blogs.”

Venture Capital Firms, Once Discreet, Learn the Promotional Game

Sequoia Capital, the prominent firm behind such tech behemoths as Apple and Google, and several other top venture firms stopped accepting investments from public institutions like the University of California system just to avoid having their financials disclosed to the press.

Self-promotion was shunned by venture capitalists as crass. Eyes rolled when Timothy C. Draper, a founder at Draper Fisher Jurvetson, graced a 2006 cover of the Thomson-Reuters Venture Capital Journal in a Captain America costume.

Investment partners at Sequoia even used a disparaging name for venture capitalists who promoted themselves to the press: “parade jumpers.”

Now, Sand Hill Road in Silicon Valley is one long parade route. Venture capitalists are hiring full-time public relations experts to tell bloggers and reporters of their investing prowess. They publicize their every doing and thought on Twitter and in blog posts.

In the last year, several top firms have hired people to handle marketing, branding and public relations full time. Among them: Kleiner Perkins Caufield & Byers, Lightspeed Venture Partners and True Ventures. Many others, like Benchmark Capital, New Enterprise Associates and Greylock Partners, keep public relations firms on retainer.

A number of V.C. firms ranging from some of the oldest, like Bessemer Venture Partners, to some of the youngest, like Peter Thiel’s Founders Fund, are now seeking full-time marketing experts.

Even Sequoia, which sniffed at the notion when the trend began, has hired P.R. staff.

The self-promotion, branding and race to build an admiring Twitter following, people here say, is a symptom of the stresses on the consolidating venture capital industry. Fewer venture firms are trying to raise money from pension funds, universities and others institutions.

There are now 526 venture capital firms actively investing in the United States, down from 1,022 firms in 2000, according to the National Venture Capital Association. In the last 10 years, venture firms returned, on average, an abysmal 4.6 percent to investors. Institutional investors are looking to scale back on the asset class and reallocate funds just to top firms, where the competition to raise money and invest in hot technology start-ups is fierce.

Ten years ago, entrepreneurs needed some kind of insider advantage to get a meeting with a firm. Now the most promising entrepreneurs do careful due diligence — on Twitter, in blogs and in the media — before agreeing to take coffee with a V.C. The best entrepreneurs are courted by the venture capitalists, not the other way around.

But the biggest catalyst for the attention-seeking atmosphere, venture capitalists say, has been the rise of Andreessen Horowitz. The speed with which the venture firm — started by Marc Andreessen, the co-founder of Netscape, and Ben Horowitz, a former executive there — has rocketed to the top ranks has served as a case study in successful self-promotion.

The two men started their firm in 2009, when Silicon Valley was still reeling from the financial crisis. It was the era in which seasoned investors at Sequoia Capital had just delivered a PowerPoint presentation to entrepreneurs at their portfolio companies titled: “R.I.P. Good Times.”

Mr. Andreessen and Mr. Horowitz based their firm’s strategy on a simple investment thesis: each year 15 deals account for 97 percent of all venture capital profits. To be successful, they would have to pursue those 15 companies. And they would do it by aggressively marketing their expertise to the reporters and bloggers who follow start-ups. And they would appeal directly to entrepreneurs in blogs and on Twitter.

It worked right from the outset. In July 2009, Fortune announced the firm in a cover article. The debut was widely covered in popular technology blogs like TechCrunch, VentureBeat and All Things Digital.

Then in 2010, the firm hired Margit Wennmachers, a founder of the Outcast Communications P.R. firm who had built it into the top adviser of tech start-ups. She was far from being just a hired gun. Ms. Wennmachers was instrumental in the firm’s initial coverage and she was made a full partner, sitting at the table at the earliest stages of investment decisions.

“To be a top five firm, you have to brand yourself,” Ms. Wennmachers said in an interview. “We didn’t want entrepreneurs to say, ‘Who are these people?’ We didn’t want to start a fund by ‘the tall guy who invented a browser,’ so we pushed for press and set up a direct communication channel with blogs.”