Bits Blog: Tech Rivals Lay Down Arms for Youth Coding

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Bits: PayPal Refreshes Mobile App to Woo Shoppers and Fight Off Rivals

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Hulu Owners Call Off Sale, Instead Pledging to Invest to Take On Rivals

The three companies that mutually own Hulu — 21st Century Fox, the Walt Disney Company and NBCUniversal — said Friday that instead of selling the pioneering streaming video Web site, they would make a new investment of $750 million and use Hulu’s technology to compete against other online distributors like Netflix. The announcement represented an anticlimactic end to months of sale speculation and disappointed bidders like DirecTV, that were prepared to pay about $1 billion for the site.

The Web site’s owners concluded, according to a person with close ties to the negotiation process, that the “equity value in the long run outstrips the sale value.”

“The future of Hulu is bright, and if the future of Hulu is bright, then we should hold onto it,” Robert A. Iger, the chief executive of Disney, told reporters at the Allen & Company media and technology conference in Sun Valley, Idaho. Mr. Iger said that the decision had nothing to do with the bids for the video service, calling them “good, solid offers.”

Speculation about the fate of Hulu has hung over the conference, an annual gathering of top media and technology companies normally known for the deals that emerge from lunches and quiet meetings held at the mountain resort. Mr. Iger had been seen huddling with Chase Carey, the president of 21st Century Fox, during the conference.

Mr. Carey checked out of the resort shortly before the Hulu decision was made public. But the company’s chief executive, Rupert Murdoch, was still there, and he told reporters afterward that he was “very pleased.”

The decision to stick together was made, he said, after getting Hulu’s operators — meaning Fox and Disney — on “the same page.” Seemingly casting some blame in Disney’s direction, Mr. Murdoch added, “I was always on that page.”

The companies have clashed repeatedly over Hulu for years; meanwhile, the third owner, NBCUniversal, has been a silent partner since being acquired by Comcast in early 2011. (At that time the government barred Comcast from being involved in Hulu’s business affairs, for fear that it would try to impose restrictions on Hulu to protect its core cable business.)

Hulu’s board explored a sale once before, after receiving an unsolicited bid in mid-2011, but decided to call off that sale a few months later.

For 21st Century Fox and Disney, holding onto Hulu keeps them intimately involved in the future of streaming video, a field dominated by Netflix and Amazon. The companies had little to say on Friday about how their decision to keep the site will affect the site’s tens of millions of monthly users. Currently, Hulu has a free Web site, with streams of TV episodes supported by advertisements, and a subscriber-only part of the site, called Hulu Plus, with a greater number of episodes.

While the free site is not going anywhere anytime soon, the companies might further emphasize Hulu Plus, according to people at the companies who spoke on the condition of anonymity while discussing confidential conversations. Its owners have visibly started moving down that path by placing limits on the number of shows that are streamed free the day after they are shown on television.

What the companies are almost certain to do, these employees said, is seek to turn Hulu into an industrywide “TV Everywhere” service. “TV Everywhere,” the concept that cable and satellite subscribers should be able to stream shows and channels whenever and wherever they want, has been talked about for years as a way to retain subscribers — and counter the threat from Netflix — but programmers like Fox, and distributors like DirecTV, have struggled to make it a reality.

The owners believe Hulu could help by becoming a hub for “TV Everywhere,” perhaps by adopting a login system that verifies cable and satellite subscribers’ identities and then serves up programming for them. This would be bad news for households that use the site to avoid paying for cable, but potentially good news for the people who do pay, because it would provide broader on-demand access to the hundreds of television shows that are hard to find online now.

Hulu will also continue to increase the number of original shows that it commissions, in a strategy similar to that of Netflix, which has gained attention for expensive shows like “House of Cards.” Skepticism abounded on Friday about how competitive Hulu can really be, given Netflix and Amazon’s deep pockets. But much of the $750 million infusion of cash announced by Hulu’s owners on Friday will be spent on program acquisition and program development, according to people at the companies. The money will also be spent on marketing and technology.

Some participants at the Allen & Company conference this week questioned whether Disney and Fox ever truly intended to sell Hulu, and instead used the sales process to establish a value for the video service.

DirecTV, believed by some to have been the front-runner in the bidding this summer, declined to comment on the owners’ decision not to sell. So did Time Warner Cable, which had proposed that it become a minority owner of the site alongside the other owners. Bloomberg reported late Friday that the cable company remained in talks with the owners about acquiring a stake, and said that a deal could be reached by the end of July.

Michael J. de la Merced contributed reporting.

Apple’s Rivals See an Edge in Using Wireless Accessories

Hotels outfitted guest rooms with alarm clocks containing a telltale wedge of 30 tiny pins that could play music from Apple’s devices and charge their batteries. Retail stores were thick with sound docks and other speaker systems meant to work with Apple gadgets.

But Apple’s iron grip on the digital accessories in hotel rooms, store shelves and living rooms is starting to slip — potentially risking the royalties it earns from accessory makers and, more significant, giving Apple customers more freedom to switch to rival products. That could be an issue for a company whose stock has been shaken in recent months as investors worry that the iPhone business is slowing.

Jeremy Horwitz, editor in chief of iLounge, a Web site devoted to Apple accessories, said Apple’s aggressive control over accessories for its products drove many makers to more open means of connecting devices, which helped feed the success of mobile devices made by other companies.

“At some point Apple’s obsession with having control over everything that is associated with its products may wind up biting it,” Mr. Horwitz said.

The Bluetooth standard for wireless connections has allowed accessory makers to build products that can work with many kinds of devices because they no longer have to worry about a physical hook. Other phone makers like Samsung and tablet-computing device makers like Amazon have become strong alternatives in the eyes of gadget shoppers.

And Apple itself provided an opening for competitors when it changed the way its phones connect to other devices, aggravating both its business partners and consumers.

Now accessory makers are eager, even obliged, to think beyond Apple.

“We’ve had to adapt to new technology, support more devices and meet the growing demands of consumers looking for accessories that can accommodate multiple devices,” said Ezra S. Ashkenazi, chief executive of iHome, one of the biggest makers of iPhone clock radios and other Apple audio accessories. This year, iHome is releasing more products with Bluetooth than ever before, he said.

Apple says it is fine with the wireless direction in which accessories are headed. “Apple provides users with the best wired and wireless connectivity options to work with the broadest range of accessories,” said Tom Neumayr, a spokesman for Apple. “As a result, iOS users have access to the world’s largest ecosystem of options and the most seamless integration with our products.”

Apple expected some grumbling from customers and partners last fall when it introduced in the iPhone 5 a new way for the mobile phone to connect to other devices. But its executives defended the connector, Lightning, because the new, smaller design allowed for slimmer phones and tablets.

While the 30-pin connector can be plugged into an old iPhone in only one way, a Lightning cable works even if it is flipped over.

Apple did not tell accessory makers about the change ahead of time, which is normal for a company known for its secrecy, but it was painful for many of its partners.

“You really don’t know where Apple is going to go next, if they’re going to change to something else down the road,” said Kyle Thompson, director of marketing for Cambridge SoundWorks. “They’ve made a lot of companies like us really nervous.”

That change frustrated partners whose customers had invested in products that used Apple’s old 30-pin connector. Those older devices are incompatible with the latest Apple products without an adapter that Apple sells for $29 to connect to the latest Apple products. Also, the new Lightning connectors are more expensive to license and manufacture than the old ones, electronics makers say.

“A lot of us were bitten pretty badly by the connector transition,” said Ian Geise, senior vice president for marketing and product development at Voxx Accessories Corporation, which makes audio products under RCA, Acoustic Research and other brand names.

Rivals Invited to Review Proposed Google Antitrust Settlement

The European Commission said that it had begun so-called market testing to see whether the remedies addressed complaints that Google favors its own products in search results.

The step also signals that Google, having avoided antitrust charges in the United States, has offered concessions that are acceptable to the commission and that would allow the company to avoid a guilty verdict and a huge fine in Europe.

“Now we have concrete proposals on the table which meet the necessary standards for us to submit to the public and to seek feedback on,” said Antoine Colombani, a spokesman for the European Union’s competition commissioner, Joaquín Almunia.

The testing would last a month, and a final settlement — which both sides have been working toward since late 2010 — could be agreed upon after the summer in the best case, Mr. Colombani said.

Google could still face a fine of as much as 10 percent of its global annual sales, which were nearly $50 billion last year, if it broke its promises. But the deal would allow Google to escape the long, expensive antitrust battles that Microsoft fought in Europe over its media player and server software. It paid large fines and agreed to regulatory oversight and changes in products.

A major element of Google’s offer to settle the case is to show links to the Web sites of competitors who offer specialized search services. In cases where Google sells advertising next to results for specific industries like restaurants and hotels, Google would provide a menu of at least three options for non-Google search services.

In addition, Google would label results pointing to its own services — like Google Maps, if they display local businesses — as Google properties and separate them from general search results with a box, though they would still appear in the normal list of results.

Before it reached a deal with the commission, Google was under pressure to make more concessions. A prominent consumer group and groups with links to Microsoft condemned Google for not making sufficient changes, and some companies asked for a longer period of market testing.

Some complained that the new rules would apply only to Google’s national domains because Google users in Europe can also use the company’s global Web site, which ends in .com, rather than .fr in France. Google does not plan to make any of the changes to the site ending in .com, so users in the United States will not see them.

Asked whether the current offer by Google was final, Al Verney, a spokesman for the company, said only, “We continue to work cooperatively with the commission.”

Google’s agreement would be legally binding for five years, and a third party approved by the commission would be put in place to ensure compliance.

During market testing, other companies in the industry will be permitted to comment on the proposal. Google’s rivals, including Microsoft, are expected to submit comments. Any settlement can be appealed to the commission. Some major technology rivals have demanded a longer period of market testing before the commission closes the case.

“Google has taken a year to develop the proposal released today,” said Thomas Vinje, chief lawyer for FairSearch Europe, a group of Google competitors including Microsoft, Nokia and Oracle. “We think it’s only fair that outside experts have more than a month to help the commission market test the long-lasting effects of Google’s proposal on consumers and innovation.”

Mr. Vinje said the changes did not go far enough. “Google’s own screen shots in its proposal shows it seeks approval to continue preferential treatment for its own products,” he said.

Other rivals took an even tougher line, and seemed likely to demand more concessions.

“Instead of promising to end its abusive practices, Google’s proposal seems to offer a halfhearted attempt to dilute their anticompetitive effects by labeling Google’s own services and throwing in some token links to competitors’ services alongside them,” said Shivaun Raff, a co-founder of Foundem, a British comparison-shopping site that was one of the original complainants in the case. “Neither measure will make a dent in Google’s ability to hijack the traffic and revenues of its rivals.”

Claire Cain Miller contributed reporting from San Francisco.

Mobile Revolution Buffets Taiwan PC Rivals

TAIPEI — Two computer-making neighbors in the technologically inclined economy of Taiwan seem headed in opposite directions.

Personal computer sales have slumped worldwide as smartphones and tablets have proliferated and gained in popularity. One Taiwan heavyweight, Acer, has shared in the suffering: It is expected to report a second straight annual loss in 2012 after losing 6.6 billion Taiwan dollars, or $223 million at the current exchange rate, in 2011.

But another Taiwan-based PC company, Asustek, which sells computers under the Asus name, grew 43 percent in the quarter that ended in September, to 6.7 billion dollars in net income. The company’s PC sales rose 6.4 percent even as industrywide PC shipments declined 4.9 percent in the last three months of 2012, according to the research firm Gartner.

The companies’ divergent fortunes expose both the mistakes and the opportunities for PC makers in an epic shift in the way consumers use technology.

For more than a decade, with no serious alternatives for consumers, Acer, Dell and Hewlett-Packard treated the PC as a commodity: All of their machines used the same Intel chips and Microsoft software and even looked similar, analysts said. In that environment, PC makers made money by focusing on marketing and by cutting costs.

For Acer, much of that strategy was driven by the former chief executive, Gianfranco Lanci, who led the company from 2004 to 2011. During his tenure, the company focused only on marketing and distribution, while gutting research and development and outsourcing design and production, analysts said.

The spread of smartphones and tablets has challenged that business model. Consumers have more choices and increasingly focus on how their devices look and feel, how mobile they are and what content they can provide access to.

“At the moment, the PC market is saturated,” said Tracy Tsai, an analyst at Gartner. “When most users have a PC already, they are not looking for just a cheaper notebook. They want something better.”

That has meant meager profits or none for global PC brands. H.P. reported a $12.7 billion loss in the business year that ended in September 2012, while Dell’s poor performance has resulted in an effort to take the company private.

It is a problem that has manifested itself on the street as well. Stam Chuang, a manager at a retail shop in the Guanghua Digital Plaza in Taipei, said notebook sales at his store had dropped 10 percent during the past year.

“There’s only a set amount of demand for computing out there,” Mr. Chuang said. “So if consumers decide they want a tablet or smartphone, that share will get taken out of PCs.”

Because of its research and development cuts, Acer has struggled to produce smartphones and tablets that can compete with the sleek products from mobile powerhouses like Amazon.com, Apple and Samsung, analysts said.

Asustek, however, followed a strategy that emphasized design and innovation. Its personal computer growth in 2012 was driven by the Zenbook, an ultrathin laptop with a metallic finish, stereo speakers and backlit keys.

Jonney Shih, the chairman of Asustek, said he had foreseen the mobile revolution and wanted his company to differentiate itself from the competition.

“Even 10 years ago, I knew I had to be prepared,” Mr. Shih said.

He added that with computer architecture and chips shrinking, he had recognized that “the ‘phone computer’ was going to happen.”

Mr. Shih has become a cheerleader for what he calls “design thinking,” pushing his employees to be creative about building products that enrich the experience for consumers. Asustek incorporated a design and artistry category into its employee evaluation system.

The two companies’ revenue numbers are similar: In the third quarter of 2012, Acer brought in 87.4 billion dollars in revenue, compared with 96 billion dollars for Asustek, according to Bloomberg data.

Google’s Rivals Say F.T.C. Antitrust Ruling Missed the Point

But some critics of the inquiry now contend that the commission found no harm in Google’s actions because it was looking at the wrong thing.

Instead of considering harm to people who come to Google to search for information, Google’s competitors and their supporters say that the government should have been looking at whether Google’s actions harmed its real customers — the companies that pay billions of dollars each year to advertise on Google’s site.

In its reports, the F.T.C. did not detail how it defined harm or what quantitative measures it had used to determine that Google users were better off.

But interviews with people on all sides of the investigation — government officials, Google supporters, advocates for Microsoft and other competitors, and antitrust experts and economists — show that many of the yardsticks the commission used to measure its outcomes were remarkably similar to Google’s own. Not surprisingly, they cast Google in a favorable light.

At issue were changes that Google made in recent years to its popular search page. Google makes frequent adjustments to the formulas that determine what results are generated when a user enters a search. Currently, it makes more than 500 changes a year, or more than one each day.

Users rarely notice the changes in the formulas, or algorithms, that generate search results, but businesses do. If a change in the formulas causes a business to rank lower in the order of results generated by a search, it is likely to miss potential customers.

What customers are now seeing reflects changes in the format of Google results. For certain categories of searches — travel information, shopping comparisons and financial data, for example — Google has begun presenting links to its own related services.

People close to the investigation said that Google had presented the F.T.C. with the results of tests with focus groups hired by an outside firm to review different versions of a Google search results page. After Google acquired ITA, a travel search business, in 2011, it began testing a new way to display flight results.

The company asked test users to compare side-by-side examples of a results page with just the familiar 10 blue links to specialty travel sites with a page that had at the top a box containing direct links to airlines and fares.

People who reviewed the Google data said tests with hundreds of people showed that fewer than one in five users preferred the page with links only. Users said they liked the box of flight results, so Google reasoned that making the change was better for the consumer.

“There is a deep science to search evaluation,” Amit Singhal, a senior vice president who oversees Google’s search operation, said in an interview on Friday. “A lot of work goes into every change we make.”

But the changes were not better for companies or alternative travel sites that were pushed off the first page of results by Google’s flight box and associated links. By pushing links to competing sites lower, Google might be making things easier for people who come to it for free search. But it also is having a negative effect on competitors, shutting off traffic for those sites.

Drawing fewer customers as a result of Google’s free links, those competitors are forced to advertise more to draw traffic. And advertisers who aren’t competitors have fewer places to go to reach consumers, meaning Google can use its market power to raise advertising prices.

“There might be no consumer harm if Google eliminates Yelp,” said one Microsoft advocate, who spoke on the condition of anonymity because of the likelihood of further interactions with the F.T.C. “But advertisers certainly are harmed.”

Hurt by Rivals From Asia, Dell Profit Falls 47%

The company, once the world’s top PC maker and a pioneer in computer supply chain management, is struggling to defend its market share against Asian rivals like Lenovo. It is trying to bolster growth by focusing on products and services to corporations.

The company, founded by its chief executive, Michael Dell, said that it saw “the challenging global macroeconomic environment continuing in the fourth quarter.”

Net income was $475 million, or 27 cents a share, compared with $893 million, or 49 cents a share, in the period a year earlier. Excluding certain items, it earned 39 cents a share, compared with an average forecast of 40 cents.

Revenue fell 11 percent, to $13.7 billion, slightly less than the average analyst estimate of $13.89 billion, according to Thomson Reuters.

Dell’s chief financial officer, Brian T. Gladden, said in an interview that corporate customers continued to postpone technology spending.

“It’s not clear what’s going to cause them to increase their spending in the short term, given the uncertainty in the economy,” he said.

Dell’s enterprise solutions revenue rose 3 percent to $4.8 billion, while server and networking revenue climbed 11 percent. In contrast, consumer revenue plummeted 23 percent to $2.5 billion, underscoring the plight of the broader PC market. And sales to large corporations declined 8 percent to $4.2 billion.

The consumer market is improving with the introduction of the Windows 8 operating system from Microsoft, which has been designed with touch-screen devices and Internet-based computing in mind, Mr. Gladden said.

Part of the spending weakness among corporate customers comes from worry over early next year, when trillions of dollars in tax increases and automatic spending cuts will begin to go into force unless lawmakers agree on legislation to reduce the budget deficit, Mr. Gladden said.

The cuts could take a toll on consumer and government spending and cause the economy to stall.

“I would tell you that the behavior we are seeing from our customers today is actually driven by that uncertainty,” Mr. Gladden said. “It’s not like it’s all going to happen overnight. It’s affecting our business today.”

Dell is ensuring that it has access to cash in case there is no Congressional action.

“I would say there are several things we are doing from a planning standpoint,” Mr. Gladden said, “to ensure that we are in a position to have appropriate access to liquidity.” He said Dell was making sure it would have access to lines of credit and commercial paper.

Dell shares fell around 2 percent in late trading from their close of $9.56. The shares initially rose after the release of the results.