While it might be a dream of publishers–hard hit by the digital tsunami and blaming Google for the crisis–Microsoft is not likely to fork over the big bucks they’d need for exclusive indexing of their content.

“Microsoft isn’t the monopoly guy anymore,” joked one source close to ongoing talks between Microsoft and publishers, especially News Corp. (NWS) and Associated Press. “So, it’s not going to be the bank for publishers.”

While a spate of reports has Microsoft (MSFT) execs girding the globe offering gobs of cash to content companies to block Google (GOOG) and favor its Bing search service, sources close to the situation caution that it is extremely unlikely that the software giant would pay giant sums for that pricey privilege, which many inside the company think will not help it gain much search share.

“While there is a lot of mutual interest, it’s doubtful Microsoft is going to pay to ‘rent’ a corpus of content that it does not own,” said one source close to the situation. “The economics are not there for anyone.”

Nonetheless, that has not stopped AP and News Corp. from aggressive public agitating recently about how their content has been treated online, accusing Google of a wide range of crimes against them and threatening to “de-index” their content from the search giant.

For example, News Corp. CEO Rupert Murdoch–who has been on what seems like a televised campaign against the search giant–accused Google of pilfering stories from his publishing properties.

Presumably, by yanking Google’s access to them and offering them to Microsoft, balance will be restored in The Force.

Except, not so fast, since such a deal would end up costing Microsoft a fortune, which is why several sources said its execs don’t seem to be keen on doing that without getting a lot in return.

The swirl of chatter about it, these sources said, is coming from publishers–who initiated the very early-stage talks–who are keen on playing Microsoft and Google against each other in hopes the warring tech titans will loosen their fat wallets to battle each other.

News Corp., for instance, has been looking for ways to replace the three-year, $900 million (or less) Google/MySpace search deal that expires next year. The publisher has been talking to Microsoft about some sort of exclusivity since this summer, but News Corp. executives also say they’re happy to work with Google if Google is willing to pay up. But what would either company really be buying?

Another source used YouTube as an example of Google getting a mass of videos, when it paid $1.65 billion in 2006 for the online video company.

“That made sense, since Google got all that content to use,” said the source. “But it is hard to see publishers getting the advertising economics and revenue they want from Microsoft for lending their content out, even exclusively.”

Still a third source noted that the only way such a deal could be envisioned by Microsoft is if a majority of publishers was able to band together to block Google from indexing their sites.

“If it was everyone, that might become interesting,” said the source. “But even that has issues, since Microsoft is not interested in having exclusive news for a temporary period of time by overpaying for it.”

Added the source, noting how much money Microsoft has lost in its online efforts so far:

“It’s essentially a marketing expense, and there are a lot better ways to spend that money to win market share than giving it to publishers.”

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)

Please see this disclosure related to me and Google.

It’s well known that Google doesn’t do much in the way of marketing around its search service.

While you will catch advertising for the Chrome browser or for Android smartphones on the Web, given Google’s huge 70 percent market share in search, it hardly needs to attract users.

So, then, what is one to make of a series of new videos, which look suspiciously like commercials, that Google (GOOG) launched late last week on its blog and posted on a new channel on YouTube?

Called “Search Stories,” there are a half-dozen of the short videos, some more adorkable than others, which star the main search box.

One thing they have in common is that they have the look and feel of a marketing campaign, with the tag line “Search on.”

They also stress a variety of Google products, such as mapping, video, price comparisons, email and more.

One imagines what pre-Batman Bruce Wayne would look for, complete with ominous music, including search terms such as “coping with loss,” “flexible kevlar” and “gotham city crime statistics.”

Another video, called “Newbie,” has a grandmother searching on “keeping in touch with grandkids” and–in a clever dig at the MySpace and Facebook social networking services–“what is myfacebook,” which gets corrected by Google to “what is facebook.”

Could it be that the $100 million marketing push Microsoft (MSFT) launched for its Bing search service, which seems to be slowly gaining share, is starting to get on the nerves of those Spocks in Silicon Valley?

Not that Google would admit this, instead simply saying it was feeling all warm and fuzzy and so decided to make some kids-let’s-put-on-a-show videos.

Wrote Robert Wong of Google Creative Lab in a blog post, in part:

Because while we’re proud of the innovations we’re making in search, we’re proudest of the things people use search to accomplish. In other words, the best search results don’t show up on a webpage–they show up in somebody’s life.

So in that spirit, we made a bunch of videos. There’s one about grandma dipping her toe into technology. One about friends taking a Kerouac inspired road trip. And yes, there’s even one about Bruce Wayne.

Judge for yourself–here they all are:

Parisian Love

Mad to Live

Batman

Newbie

Potholes

High School

Please see this disclosure related to me and Google.

Greg Nelson (pictured here), who has had the thankless job of running MSN for Microsoft, has left that position and been given the even more thankless task of running the integration of the complex search and online advertising partnership struck by the software giant and Yahoo.

Microsoft (MSFT) sent out an internal email to staff about the move for the GM of MSN’s Global Media Group, which has already taken place.

MSN U.S. head Scott Moore is now reporting directly to MSN Corporate VP Erik Jorgensen. So will Brett Wayn, who has been working under Nelson on international coordination and who has taken over MSN’s international business on an interim basis.

Nelson’s counterpart at Yahoo (YHOO), according to sources, will be Mark Morrissey (pictured here), who is currently SVP of Products at the Internet giant.

The pair will have their hands full in what will ultimately be a two-year effort, sources estimate, to try to improve their competitive edge against Google (GOOG) in the search arena.

BoomTown’s title for the relationship: A Couple of White Geek Guys Sitting Around Arguing!

The role includes coordinating a massive shift of engineering talent from Yahoo to Microsoft, making sure ad systems are copacetic and most of all, smoothing over what is likely to be a number of bumps in the partnership.

To help make the frustrations less frustrating, there is a $50 million annual payment to Yahoo by Microsoft for three years, for unspecified “transition and implementation costs.”

At least 400 Yahoo employees will be hired by Microsoft, which will also provide funds for retention packages to keep 150 more Yahoos motivated during the transition.

The “Definitive Agreement” between the Silicon Valley company and the Redmond, Wash.-based Microsoft, which had been slated to be signed by Oct. 27, 2009, is about to be completed.

Then, as soon as regulatory approvals are in place, it will be showtime for Nelson and Morrissey.

Yesterday, BoomTown wrote about AOL’s efforts–including hiring investment bankers–to sell its ICQ instant-messaging unit.

But that’s probably not going to be the end of the shedding of assets at the online site.

In fact, according to sources inside and outside AOL, one of the next candidates for sale could be its MapQuest online map service.

Purchasers of the service that provides mapping and directions, sources said, are likely to be other mapping giants, especially Microsoft (MSFT).

But it is not clear if the software giant or anyone would fork over a huge sum of money for MapQuest.

That would include the $1.1 billion in stock that AOL paid for MapQuest in 1999.

AOL is set to spin itself off in less than a month from corporate owner Time Warner (TWX), and sources said selling off peripheral properties is part of becoming a smaller, more focused company.

MapQuest, like AOL’s Bebo social networking site, fits this description.

While it does have widespread distribution across the Web, reaching over 40 million users monthly, MapQuest lags well behind aggressive efforts being pushed by both Microsoft and Google (GOOG).

Earlier today, BoomTown reported that Yahoo was poised to name a few new top execs at its Silicon Valley HQ.

But the company has also hired a new director of public affairs in the nation’s capital.

After I queried the company, Yahoo (YHOO) confirmed that it has tapped Amber Allman, a vice president at 463 Communications, for the job. She has extensive tech experience.

“We are very pleased that she is coming on board,” said Nina Blackwell, senior director of global public affairs, who will be Allman’s boss. “She will be a very valuable member of the team.

Yahoo’s last public affairs rep in D.C. was the most excellent Tracy Schmaler, who left Yahoo earlier this year.

At Yahoo, she worked on everything from human rights issues in China to the failed takeover attempt by Microsoft (MSFT) to Yahoo’s also-botched effort to do a search and advertising deal with search giant Google (GOOG).

Ironically, Schmaler is now deputy director, Office of Public Affairs, at the Justice Department, which is currently scrutinizing Yahoo’s search and ad partnership with Microsoft.

Ah, the revolving doors of Washington, D.C.!

AOL has hired a pair of New York investment bankers, Morgan Stanley and Allen & Co., to manage the sale of its ICQ instant-messaging unit.

Sources familiar with the situation said interest in buying the asset from two major non-U.S. companies prompted execs at the online service to put a process in place for a deal that will likely occur after AOL becomes an independent company in December.

AOL is set to spin itself off in less than a month from corporate owner Time Warner (TWX), and sources said selling off peripheral properties likes ICQ is part of becoming a smaller, more focused company.

Sources added that AOL now wants about $300 million for the property.

ICQ, which was once of the most explosive online communications tools, has lagged since AOL bought its popular software for $287 million in 1998, with another $125 million in earnouts for the team then. It was part of an Tel Aviv, Israel, start-up called Mirabilis.

While ICQ has about 40 million to 50 million unique monthly visitors and is the No. 1 messaging service in Germany, Russia, Ukraine, Israel and other small countries, its has less traction in the U.S. than bigger rival services from Microsoft (MSFT), Yahoo (YHOO) and Google (GOOG). In addition, Facebook and Twitter have also become major players in the status-update space.

AOL’s AIM service, in contrast, is quite strong, typically clocking as one of the top instant-messaging properties.

Said one source about the sale of ICQ, which is still based in Israel with about 100 employees and is moderately profitable: “AOL now has to be asking the hard questions.”

Those hard questions include massive layoffs, which BoomTown reported last week will take place soon. AOL then formally acknowledged the cuts, noting in a regulatory filing that Time Warner would take a $200 million charge for them.

Other AOL properties are also likely to be getting the once-over for sale, including its Bebo social networking site, which AOL bought for $850 million in 2008. But that is not imminent.

For those who don’t know him, Chester is the executive director of the Center for Digital Democracy, a nonprofit consumer advocacy group that works to promote privacy and protection online.

In other words, a professional–and much needed–thorn in the side of Facebook, Google (GOOG) and these days, MicroHoo.

That’s because, while advertisers and publishers are supportive of the massive search and online advertising deal between Microsoft (MSFT) and Yahoo (YHOO)–which now looks close to being launched–Chester has a more whoa-nelly attitude.

“There are questions that must be answered regarding the collection and sharing of consumer data by the two companies,” said Chester right after the deal was announced. “While the rationale for the deal is to provide some much needed competition to Google (and income for Yahoo), the further consolidation of the global digital advertising system should be a concern to Internet users, privacy advocates, online marketers, and competition regulators.”

Violations of consumer privacy by such unions or by Facebook’s efforts to use data to better deliver online ads or by any of the myriad ways such companies are honing their behavioral targeting skills worries Chester.

Thus, in patented D.C.-style, he hectors government agencies, politicians and the media to look more closely at such practices.

Here is my video interview with him about all this, which is well worth listening to, especially in an era when online powerhouses like Google are learning more and more about you, and not in a good way:

]]> http://kara.allthingsd.com/20091118/center-for-digital-democracys-jeff-chester-talks-about-microhoo-and-more/feed/ 0 http://kara.allthingsd.com/20091118/exclusive-yahoo-and-microsoft-poised-to-finally-sign-definitive-search-and-ad-agreement/ http://kara.allthingsd.com/20091118/exclusive-yahoo-and-microsoft-poised-to-finally-sign-definitive-search-and-ad-agreement/#comments Wed, 18 Nov 2009 08:01:27 +0000 Kara Swisher http://kara.allthingsd.com/?p=20743

Yahoo and Microsoft are poised to finally sign the definitive agreement that will govern the complex and far-reaching search and online advertising partnership they struck in late July, said sources close to the situation.

If all goes well, the various Microsoft and Yahoo execs–who have been ferreted away over the last weeks, busy dotting all the i’s and crossing all the t’s in the massive document–could even turn in their deal homework to their bosses for signature by the end of the week.

Yahoo (YHOO) officials declined to comment, while Microsoft (MSFT) has not gotten back to BoomTown as yet.

In any case, getting the definitive agreement in place is critical to making the high-profile MicroHoo deal a reality and, of course, getting the anti-Google (GOOG) party started.

So when the pair blew through a deadline to complete it in late October, there were eyebrows raised all over Wall Street and Silicon Valley.

When Yahoo filed an 8-K with the Securities and Exchange Commission in August, it noted that the “Definitive Agreement” between the Silicon Valley Internet company and the Redmond, Wash., software giant needs to be sketched out by Oct. 27, 2009.

But it is a monster document, which is why MicroHoo did not complete it in time. After that whiff, Yahoo said as much in another filing with the SEC:

“The Letter Agreement specified that the parties would execute definitive agreements by October 27, 2009, but given the complex nature of the transaction, there remain some details to be finalized.”

Added Microsoft similarly:

“We have made good progress in finalizing the definitive agreements. Given the complex nature of this transaction there remain some issues that need some additional clarity and definitive details.”

Nonetheless, both companies have consistently said that they would be able to close this deal by early 2010.

Yahoo and Microsoft had already done a pretty hefty binding-agreement letter (here is a picture of Yahoo’s CEO Carol Bartz and Microsoft CEO Steve Ballmer holding it, in fact).

Also key: Getting approval for the deal from regulators in Washington, D.C., which, sources said, also seems to be on track.

With little opposition, Yahoo and Microsoft policy types have been chipping away on regulatory issues with federal regulators in Washington.

And, several sources said, those government approvals are now nearing completion at the Justice Department, even though the Federal Trade Commission might still ask for more assurances on privacy issues related to online advertising and consumer data.

International regulatory approval is another story, especially in Europe, which could further delay the implementation of the partnership, since it is unlikely the pair would move forward without clearance globally.

When that is done, the real game begins, as MicroHoo faces its the much more critical Tim Gunn acid test for the deal:

Making it work.

]]> http://kara.allthingsd.com/20091118/exclusive-yahoo-and-microsoft-poised-to-finally-sign-definitive-search-and-ad-agreement/feed/ 0 http://kara.allthingsd.com/20091117/kara-visits-facebooks-washington-d-c-office-and-talks-policy/ http://kara.allthingsd.com/20091117/kara-visits-facebooks-washington-d-c-office-and-talks-policy/#comments Tue, 17 Nov 2009 13:02:13 +0000 Kara Swisher http://kara.allthingsd.com/?p=20699 Yesterday, BoomTown paid a visit to the Washington, D.C., office of Facebook to meet its reps in the nation’s capital.

Perhaps not surprisingly, the social networking site has a very small staff–just a trio of on-the-young-side dudes–battening down the hatches from a funky office in a funky section of D.C., Dupont Circle, far from the tonier and lobbyist-rich K Street corridor.

In contrast, both Microsoft (MSFT) and Google (GOOG) have a massive D.C. presence, trying to influence policy.

Still, as many in government know–such as Sarah Palin this week–Facebook has become a key tool in the basic bag of political tricks, used for organizing, canvassing, communicating and, every now and then, inspiring.

But there is also a raft of thorny legislative issues for Facebook, especially related to privacy, an arena where the company has repeatedly shot itself in the foot (Beacon! TOS!).

The company’s relatively new D.C. staff will presumably be a little smoother going forward.

They include:

Director of Public Policy Tim Sparapani, most recently with the American Civil Liberties Union, who joined in the spring.

Adam Conner, who opened Facebook’s D.C. office and who worked for some pols when he was still a college student, showing them how to use social media.

And, most recently, joining as manager of public policy communications, Andrew Noyes, a former reporter for the National Journal (and the man in 17D who pinged me on a Virgin America flight last week to meet him and the other Facebook policy wonks).

Here’s a video of the interview, in which we discuss all the big issues, from privacy to data retention to how Washington’s view of tech still has not evolved much:

]]> http://kara.allthingsd.com/20091117/kara-visits-facebooks-washington-d-c-office-and-talks-policy/feed/ 0 http://kara.allthingsd.com/20091111/bing-keeps-the-changes-coming-but-will-it-work/ http://kara.allthingsd.com/20091111/bing-keeps-the-changes-coming-but-will-it-work/#comments Wed, 11 Nov 2009 18:00:15 +0000 Kara Swisher http://kara.allthingsd.com/?p=20503

It certainly is good to see Microsoft working the innovation thing, especially in the consumer space with its Bing search service.

The ultimate goal is to gain market share for Bing, from striking deals with hotter companies like Twitter and Facebook to doing a massive advertising and marketing campaign to making constant feature upgrades.

This is one of those weeks for Bing, which started off yesterday by renaming its video properties on MSN, now integrated with search, to Bing Videos. Microsoft also rejiggered its Bing Maps.

And today, the company is rolling out more features, including integration related to diet and nutrition with fancy search service Wolfram|Alpha, an “enhanced hover preview” and full-page weather and events results to add to its niche search offerings.

But whether all this will spell significant changes in market share compared to dominant rival Google (GOOG) is still an open question, with Microsoft (MSFT) eking out solid gains since Bing launched.

Today, Hitwise figures have Bing up seven percent to 9.57 percent in October, at the expense of both Google and Yahoo (YHOO).

Money is also coming in slightly better. A recent report by IDC noted that Bing’s search revenue has gained 6.1 percent to 6.8 percent from the second-to-last quarter.

But spending on advertising, as well as these new features, is also costly.

Still, Microsoft is pressing on.

The Wolfram feature, for example, adds a nutrition quick tab when searching on food items, as well as a body-mass index tool.

Here is a video on it from Bing, which might require installation of Microsoft’s Silverlight video technology (you might also want to launch full screen to see it better):

Bing will also improve the ability of users to get quick info by hovering over a link. Frankly, this annoys me more than bad clicks, but most people will probably like seeing snapshots of the actual Web sites, a search-within-this-site box and deep links.

Perhaps the most interesting iteration of this feature will be Facebook page previews. Click on arrow below:

The weather stuff is just more, more, more bells and whistles, integrating news, events, xRank results, Twitter feeds, images, Best Match results and content from sites you trust onto one page with a prettier interface. Check it out:

There will be more to come, of course, which should–at the very least–have competitors competing better.

]]> http://kara.allthingsd.com/20091111/bing-keeps-the-changes-coming-but-will-it-work/feed/ 3 http://kara.allthingsd.com/20091111/apple-uses-switchers-ad-to-keeping-smacking-windows-7/ http://kara.allthingsd.com/20091111/apple-uses-switchers-ad-to-keeping-smacking-windows-7/#comments Wed, 11 Nov 2009 09:03:13 +0000 Kara Swisher http://kara.allthingsd.com/?p=20498

While sales of Windows 7 are doing well–especially compared to the Vista, the previous operating system, according to many reports–Apple (AAPL) is continuing to slap the Microsoft (MSFT) operating system software around.

There was a bunch of unusually mean-spirited “Get a Mac” ads right when Windows 7 was released in late October, all of which stressed consumers dying to switch to Apple when faced with the prospect of upgrading their Microsoft software.

Now there is a name for them: “PC Switchers.”

It sounds a little naughty.

The ads, which began appearing a week ago, are now widespread–once again taking over the New York Times Web front page, as well as over at Wired.

Apple needs to be aggressive, of course, as it tries to chip away at Microsoft’s PC hegemony, which remains largely intact. Stressing consumer satisfaction is a natural weapon, of course.

Thanks to MacDailyNews for uploading the advertising to its channel on YouTube; you also can see the new video embedded here:

]]> http://kara.allthingsd.com/20091111/apple-uses-switchers-ad-to-keeping-smacking-windows-7/feed/ 10 http://kara.allthingsd.com/20091110/twinkedin-the-reeses-cup-video-of-linkedins-reid-hoffman-and-twitters-biz-stone-on-integration/ http://kara.allthingsd.com/20091110/twinkedin-the-reeses-cup-video-of-linkedins-reid-hoffman-and-twitters-biz-stone-on-integration/#comments Tue, 10 Nov 2009 08:29:06 +0000 Kara Swisher http://kara.allthingsd.com/?p=20452

Guess what? It’s yet another online company going gaga over Twitter integration–this time LinkedIn is announcing a partnership with the microblogging service.

Microsoft (MSFT) and Google (GOOG) recently announced various ways they were lacing their various services with Twitter’s feed, mostly around search.

But LinkedIn’s partnership with Twitter is a little more robust and will roll out to everyone on the business networking site, according to a blog post by Allen Blue, LinkedIn’s co-founder and VP of product strategy:

“The idea is simple: When you set your status on LinkedIn you can now tweet it as well, amplifying it to your followers and real-time search services like Twitter Search and Bing. And when you tweet, you can send that message to your LinkedIn connections as well, from any Twitter service or tool.”

I spoke to Blue yesterday, and he said the deal was good for both sides.

“We want our users to get the broadest distribution possible to find what they are looking for,” said Blue. “And Twitter is trying to find ways to increase the value for business people on Twitter.”

Here is LinkedIn co-founder and Chairman Reid Hoffman and Twitter co-founder Biz Stone talking about the peanut butter and chocolate of it all in an adorkable video (it made me hungry, so excuse me while BoomTown goes and raids my kids’ Halloween stash):

]]> http://kara.allthingsd.com/20091110/twinkedin-the-reeses-cup-video-of-linkedins-reid-hoffman-and-twitters-biz-stone-on-integration/feed/ 1 http://kara.allthingsd.com/20091110/aol-small-layoff-today-a-voluntary-buyout-and-then-the-big-one/ http://kara.allthingsd.com/20091110/aol-small-layoff-today-a-voluntary-buyout-and-then-the-big-one/#comments Tue, 10 Nov 2009 08:00:21 +0000 Kara Swisher http://kara.allthingsd.com/?p=20443

Essentially–although AOL is located in New York and not California–it’s going to be like tremors before the Big One at the online company today, as about 100 employees are laid off.

Sources said the cuts, first reported by Valleywag’s Ryan Tate, will be widespread across AOL, even as the company inches ever closer to being spun off from its corporate overlord, Time Warner (TWX).

That will come within the next month, once the spate of regulatory comments and approvals is in place, said sources.

And during this time, AOL CEO Tim Armstrong’s “Project Everest”–the code name for cost-cutting across the company–will be chugging along to its final destination.

After tomorrow’s small cut, sources said, Armstrong has told employees he is seriously considering a suggestion made to him on a listening tour of AOL, which he took in his first 100 days on the job, of asking for voluntary departures that would include some sort of buyout.

It’s unlikely that that will be enough to achieve the kinds of cuts needed to bring costs in line with depressed revenue at AOL.

At its third-quarter earnings call last week, Time Warner reported that AOL revenue was down 23 percent. In addition, subscription revenue, which will continue to shrink, was down another 29 percent, and advertising revenue, which is supposed to improve one day, was down 18 percent.

Thus, with that performance, AOL is likely to do a massive layoff of upward of 1,000 employees.

That action will take place right before or, more likely, at the same time or right after the spinoff.

In other words, not very happy holidays for some.

But AOL is not alone in making cuts in the tech space. Last week, both Microsoft (MSFT) and RealNetworks (RNWK) laid off staff, as did Electronic Arts (ERTS) yesterday.

Here is a recent interview I did, while in Germany, with Armstrong, where he talked about AOL’s prospects:

]]> http://kara.allthingsd.com/20091110/aol-small-layoff-today-a-voluntary-buyout-and-then-the-big-one/feed/ 0 http://kara.allthingsd.com/20091106/all-is-forgiven-its-a-clean-slate-says-andreessen-about-lawsuit-mad-skype-co-founders/ http://kara.allthingsd.com/20091106/all-is-forgiven-its-a-clean-slate-says-andreessen-about-lawsuit-mad-skype-co-founders/#comments Fri, 06 Nov 2009 19:28:48 +0000 Kara Swisher http://kara.allthingsd.com/?p=20364

Silicon Valley legend and now VC Marc Andreessen was making the interview rounds after the settlement between the litigation-addled co-founders of Skype and all the various people they were suing was announced this morning.

He has been tight-lipped until now, due to the morass of lawsuits.

But, as Andreessen told BoomTown in a phone interview about the aggressive legal tactics of Niklas Zennström and Janus Friis that resulted in them finally seizing a stake in the Internet telephony giant by suing him and many other Silicon Valley players:

“We did not take it personally. It’s a clean sheet of paper.”

Well, it is actually a torn, stained and very worn out piece of paper, due to all the various machinations, but bygones!

Andreessen–who knows a thing or two about legal tussles, if you recall Netscape-Microsoft (MSFT)–said the real point is that it is time to focus on the business of Skype rather than fighting over who controls Skype.

“It’s really good to have everyone lined up and rowing in the same direction. We have to capitalize on the opportunity, because Skype is poised for a new wave of growth,” said Andreessen. “They have an amazing head of steam, because the logical way for voice and video communications to be conducted will be over the Web.”

Thus, Zennström and Friis now join the winning buyout group, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board, along with eBay, in owning Skype.

But Index Ventures, which was in, is–as Heidi Klum might say–out!

Under the terms of the agreement, Niklas Zennström and Janus Friis will take a 14 percent stake in the company they founded and then sold to eBay (EBAY), which will include an undisclosed investment by them.

I reported yesterday that the total was 13 percent–10 percent for the rights to key Skype technology held by the co-founders and the option to invest $83 million for three percent more.

In exchange, the pair will give Skype software essential to its operation and drop their various lawsuits against eBay and Skype’s buyers.

As for Zennström and Friis’s egregious use of the courts to grab their 14 percent stake in Skype, litigation they waged after losing their bid to buy Skype back from eBay, Andreessen was being very politic.

“We love working with aggressive founders and are in favor of founders being involved in their companies,” he said. “Great founders are not known for being shy and reserved. Look at Bill Gates. It’s not a question of personality, but of accomplishment.”

Noting that he had not worked with the pair before, Andreessen (pictured here) said, “We have a lot of respect for them. We think they’re geniuses.”

But, I queried, would he have used such tactics?

“It’s not a book club, it’s a super-serious, high-stakes game,” said Andreessen. “I don’t know; I’ve not been in the situation they’re in. If your goal in life is to avoid drama, this is probably the wrong industry for you.”

Perhaps, but I told him that I doubted even a battle-hardened entrepreneur like Andreessen would use the courts in such a manner to achieve business goals.

To each his own, said Andreessen!

“One of our investing mottos is that we invest in strength, not lack of weakness,” he said. “The question is how big is the opportunity.”

And, apparently, it is big enough to overlook all the drama that has gone on.

Andreessen said he expects to be more involved at Skype–which, with his $50 million investment, is the biggest deal in his $300 million fund–than other board members, noting different directors have different roles.

It’s a big board of 23, as I had previously reported. Zennström and Friis are each getting a seat.

“We are going to be helpful,” Andreessen said about his fund’s role at Skype. “We’re a company picker, looking for those that have the greatest potential.”

Andreessen, ever the diplomat, made sure to add that that also means doing business with Index, the member of his Skype consortium that departed as Friis and Zennström (pictured here) entered, due to stark tensions between the two sides.

“I have a lot of respect for [Index partners Danny Rimer and Mike Volpi] and expect to work with them a lot in the future,” said Andreessen. “In fact, I am talking to them today about two other deals.”

In other words, in Silicon Valley, the big wheel just keeps on turning.

]]> http://kara.allthingsd.com/20091106/all-is-forgiven-its-a-clean-slate-says-andreessen-about-lawsuit-mad-skype-co-founders/feed/ 2 http://kara.allthingsd.com/20091105/realnetworks-to-lay-off-four-percent-of-staff-today/ http://kara.allthingsd.com/20091105/realnetworks-to-lay-off-four-percent-of-staff-today/#comments Thu, 05 Nov 2009 08:34:22 +0000 Kara Swisher http://kara.allthingsd.com/?p=20317

The Seattle area is going to get another jobless jolt today, with RealNetworks planning to lay off four percent of its workforce, sources said.

That’s a small number–just about 70 people out of its 1,700-person staff–but the move comes on the heels of layoffs of another 800 employees at nearby Microsoft yesterday.

The software giant has cut thousands of jobs over the last year, part of a move to eliminate 5,000 positions by mid-2010.

While the dismissals–which are likely to be announced by managers to affected RealNetworks (RNWK) employees sometime this morning–will be global, both companies are tech leaders with headquarters in the Pacific Northwest.

According to sources, the reasons for the layoffs at RealNetworks are, as was the case at Microsoft (MSFT), to realign the workforce after the recent economic downturn and to control costs.

But RealNetworks could also hire back some of the laid-off employees, as other parts of the company are expanding.

The company had signaled the possibility of staff cuts previously, but had not been specific.

The last staff cuts at the company, which makes digital media software and tools, were larger, about 130 employees sacked about a year ago.

RealNetworks announced better-than-expected third-quarter earnings last week, barely returning to profitability by cutting costs to make up for weaker revenue.

(Digital Daily’s John Paczkowski contributed to this report.)

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