Webware

It looks like the brouhaha surrounding social-app moneymaker Offerpal Media is bigger than founder Anu Shukla's "sh*t, double sh*t, and bullsh*t" response to the accusation that its business is built on scamming consumers. It's got upcoming developments in two lawsuits, one in which it's the plaintiff and one in which Shukla is a defendant.

VentureBeat's Dean Takahashi reported Thursday that a lawsuit was filed in an Alameda County, Calif., superior court against Shukla and co-founder Michael Liu on behalf of Kevin Halpern, who alleges that he helped found the company and was then shut out. In a court complaint, Halpert says that in exchange for offering his social-networking expertise to what would become Offerpal, Shukla promised him a 15 to 20 percent stake in the company that never came to fruition.

The defendant's motion to dismiss the breach-of-contract suit is scheduled for November 24, according to public court documents. On Wednesday, Offerpal had announced that Shukla would be leaving her post as CEO and would be replaced by digital-ad veteran George Garrick.

But that's not the only legal dispute that Offerpal is in. There's a judicial settlement conference scheduled for Friday in the trademark infringement lawsuit that Offerpal filed against Kickflip, a former customer that went on to create a competing business, called Gambit, according to a person familiar with the court details. The suit was originally filed in April, and the status of a potential settlement is currently unclear because most of the events thus far, as well as Friday's scheduled meeting, have been behind closed doors.

But the reason why Offerpal has been in the news so much as of late has been because of Shukla's public altercation with TechCrunch's Michael Arrington at last month's Virtual Goods Summit in San Francisco. In response to Arrington's allegations that Offerpal's profitable business, used by many social-gaming companies as a way for users to earn virtual goods in-game, actually misleads players into signing up for paid offers and subscriptions.

Following the Arrington-Shukla spat, a number of high-profile names in the gaming and social-networking world came out against developer-app scams and misleading ads. Offerpal maintains that it runs a legitimate business. But it's clear that this company's issues run quite a bit deeper than a single PR fiasco.

Finland's Ministry of Transport and Communications has made 1-megabit broadband Web access a legal right, YLE, the country's national broadcasting company, reported on Wednesday.

According to the report, every person in Finland (a little over 5 million people, according to a 2009 estimate) will have the right of access to a 1Mb broadband connection starting in July. And they may ultimately gain the right to a 100Mb broadband connection.

Just more than a year ago, Finland said it would make a 100Mb broadband connection a legal right by the end of 2015. Wednesday's announcement is considered an intermediate step.

France, one of a few countries that has made Internet access a human right, did so earlier this year. France's Constitutional Council ruled that Internet access is a basic human right. That said, it stopped short of making "broadband access" a legal right. Finland says that it's the first country to make broadband access a legal right.

But Finland's definition of "access" to broadband is a little fuzzy. According to the Helsinki Times when it reported the 100Mb target last year, the Finnish government said that no household "would be farther than 2 kilometers from a connection capable of delivering broadband Internet with a capacity of at least 100 megabits of data a second." It did say, though, that "about 2,000 (households) in far-flung corners of the country" wouldn't be included. Ostensibly, Finland plans to keep that same distribution when its 1Mb broadband access is implemented.

Finland has long been a tech-industry leader that has done a fine job investing in technology, more than many of its European counterparts. It's also home to Nokia, among other tech firms.

It's finally over for Beacon, the ill-fated advertising program that the social network initially launched with splashy Madison Avenue fanfare nearly two years ago.

The social network has settled a year-old class action lawsuit that targeted the social network's alleged failure to provide adequate information and privacy controls to users with regard to Beacon, which shared information about users' information on third-party partner sites in Facebook news feeds.

One of the terms of the settlement? Any last vestiges of Beacon, which failed to gain traction amid a barrage of negative press stemming largely from advocacy groups like MoveOn.org, will be shut down completely.

Also as part of the settlement, which is still pending approval from a judge, a $9.5 million "settlement fund" has been established to set up an independent foundation to "fund projects and initiatives that promote the cause of online privacy, safety, and security," according to a release. Up to a third of that fund, however, can potentially be recovered by the plaintiffs' lawyers.

"We look forward to the creation of the foundation and its work to educate Internet users on how best to control their privacy; engage in safe social-networking practices; and, generally, enjoy themselves more online by having knowledge that gives them a greater sense of control," a statement from Facebook representative Barry Schnitt read. "We fully expect the foundation to team with other leading online-safety and privacy experts and organizations that have been working diligently in these fields."

The suit was filed in August 2008 on behalf of 20 plaintiffs, most of whom were Texas residents. Named as defendants were Facebook, along with current and former Beacon participants Blockbuster, Fandango (owned by Comcast), Overstock.com, STA Travel, Zappos, Hotwire (owned by InterActiveCorp), and GameFly. Another, earlier Beacon-related lawsuit had been filed against Blockbuster several months earlier, claiming that its participation in the advertising program violated the Video Privacy Protection Act of 1987. Facebook was not named as a defendant in that suit.

Shortly after the negative buzz about Beacon started, Facebook began tweaking and modifying the program to allow more user control over the feature. But it was too late: advocacy groups claimed that it still wasn't enough, some existing partners pulled out, and others were likely deterred from participating because of the unsavory implications. Surprisingly, a "small number of customers" were still using it; Facebook will work to transition them out of it.

Facebook's experiments in social-media advertising turned instead to "engagement ads," which have come under some scrutiny themselves, and the "fan pages" that it encourages brands, organizations, and celebrities to create.

The irony behind Friday's news is that the thinking behind Beacon ultimately evolved into the phenomenally successful Facebook Connect, the universal log-in standard that, among other things, shares third-party activity on members' Facebook profiles.

The privacy controls on Connect are clearer and more extensive, but perhaps more crucial to Facebook Connect's success has been the fact that it's been marketed as a utility for ordinary members rather than an advertising tool for paying clients. It's free for third-party sites to implement, and with only a few exceptions, sites working with Facebook Connect code it in through the social network's application programming interface, or API, rather than ink a formal partnership.

And offering Facebook users the chance to register and log in to external sites without separate usernames and passwords gives Facebook Connect's marketing a slant of user convenience--and security, as some Web users may be more comfortable hitting a "Connect with Facebook" button than registering for an account with a new Web service.

"We learned a great deal from the Beacon experience," the statement from Facebook's Schnitt read. "For one, it underscored how critical it is to provide extensive user control over how information is shared. We also learned how to effectively communicate changes that we make to the user experience. The introduction of Facebook Connect--a product that gives users significant control over how they extend their Facebook identity on the Web and share experiences back to friends on Facebook--is an example of this."

A 17-year-old from Michigan has filed a lawsuit against e-commerce powerhouse Amazon after it deleted a book he had purchased for his Kindle device.

The high school student, Justin D. Gawronski, filed suit in a Seattle court along with California resident Antoine J. Bruguier, and they are seeking class action status.

Amazon forcibly (and ironically) recalled copies of George Orwell's "1984" and "Animal Farm" earlier this month after it was revealed that they were unauthorized. Justin Gawronski's complaint alleges that he was reading "1984" as summer reading for an advanced-placement class and had to turn in "reflections" on each hundred pages. With the loss of the digital book, Gawronski claims his page count was thrown off and his notes were "rendered useless because they no longer referenced the relevant parts of the book."

Amazon has declined to comment on the lawsuit, which appears was first reported late Thursday by The Wall Street Journal's Digits blog.

While buyers received refunds for the recalled copies of the Orwell books, the fact that no advance notice was given threw many customers off and created an uproar against Amazon. The lawsuit, for one, alleges that Amazon did not make it clear enough to customers that remote book deletions were a possibility. It also alleges, as do critics, that the company violated its own terms of use.

"The power to delete your books, movies, and music remotely is a power no one should have," the lawsuit quoted Slate's Farhad Manjoo as saying in an opinion piece following the book deletions.

Amazon founder Jeff Bezos put out a public apology shortly after the fiasco unfolded, but it's not clear how the company's policies will (or won't) change in the future.

eBay wants to spin off telephony service Skype into a separate publicly traded company, but something's standing in the way: Skype's founders are threatening to take back some of the technology amid a licensing dispute.

The auction giant's solution, according to a Bloomberg report on Thursday: build a new one.

This was revealed in a 10-Q regulatory filing with the Securities and Exchange Commission; eBay is not commenting beyond the filing. You can decide whether "Frankenskype" or "Skypenstein" is a better name for the hypothetical creation.

Here's what has happened: Skype's founders have established a company called Joltid Ltd., which still owns the rights to some of Skype's technology. Joltid has made the accusation that eBay doesn't have the right to do everything it wants with all of Skype's code as a result; eBay is suing Joltid to get that technology back. (Is this like the Silicon Valley equivalent of body-snatching?) But the catch is that the trial isn't scheduled until next June, which could put a big roadblock in the way of eBay's plans for a Skype IPO.

So that's why eBay is working on a total rebuild of Skype's software.

There is, however, this little issue. "The new software will be expensive and might not work," Bloomberg's article summarized. "The company said it might have to shut down Skype if the dispute with the founders isn't resolved."

eBay purchased Skype in 2005 for $2.6 billion, but it hasn't proven to be the best fit for the company. Rumors circulated that it was looking to sell Skype, possibly to Google, but then opted to take the company public instead.

Download Skype for Windows | Mac | iPhone | Windows Mobile from CNET Download.com.

Microsoft is bringing out the big guns to combat instant message spam and phishing attacks done to users of its Live Messenger network. The Redmond, Wash.-based software giant filed a civil lawsuit Thursday in King County Superior Court in Seattle against Funmobile, Mobilefunster, and several individuals, who Microsoft says is responsible for the intentional misuse of the service to gain the personal information of its users.

In the suit (which is embedded below), Microsoft cites a multitude of attacks including IMs that appear to be coming from users they know, as well as phishing attacks that mimic the look and feel of an outside service, or an official Microsoft support page.

Microsoft says that the successful use of these tactics has let third parties obtain these users' personal account information, then exploit it by sending mass spam and phishing messages to the contacts of users whose accounts have been breached.

In a post on Microsoft's security blog Microsoft on the Issues, Tim Cranton who is Microsoft's associate general counsel of Internet safety enforcement, said the company hopes the suit will accomplish three things. One is to stop companies and individuals from continuing the attacks through injunction. Microsoft also intends to "recover monetary damages," as well as send a message to other parties who would try similar tactics.

Microsoft counts the number of its Windows Live Messenger users at more than 320 million, although the suit makes no mention of how many of those users have been affected by the privacy attacks. However, it does say that the attacks have put a strain on the servers that run the service, as well as its security teams, which have to monitor and combat incoming attacks. In the meantime, the company is urging users of its Live Messenger service and other Live services not to give other people their log-in information.

Alexander Macgillivray's farewell message on Twitter.

(Credit: Twitter)

Google lawyer Alexander Macgillivray has joined Twitter as its general counsel, according to posts on Sunday from Macgillivray's personal blog and Twitter account.

"Working in Google Legal has been a dream job," Macgillivray wrote on his blog. "The people at Google are phenomenal. In every part and at every level of the company there are great people with multiple useful talents in addition to those that got them the job. For a lawyer, the issues we dealt with every day were fascinating, the real-world impact of our work was humbling, and the ethical compass of the place remained true."

At Google, Macgillivray had served as associate general counsel for products and intellectual property, and had most recently been one of the company's voices in its tussle with publishers over their rights to link and reprint content.

We're not ones to sound the alarms over an alleged rush of Googlers fleeing the company for the likes of Facebook and Twitter (these things ebb and flow), but this one is a notable departure. With Twitter communication playing an increasingly prominent role in international news and affairs, the small company clearly needs to have solid legal counsel on board. For Macgillivray, it's undoubtedly more responsibility with fewer resources than the likes of Google--but a bigger space in Silicon Valley's spotlight at the moment.

Updated at 1:25 p.m. PDT.

Google-owned video-sharing site YouTube is silencing music videos in the U.K. after negotiations with the country's Performing Right Society (PRS for Music), which collects licensing fees for artists and labels, failed.

"Our previous license from PRS for Music has expired, and we've been unable so far to come to an agreement to renew it on terms that are economically sustainable for us," a statement from YouTube read. "There are two obstacles in these negotiations: prohibitive licensing fees and lack of transparency. We value the creativity of musicians and songwriters and have worked hard with rights-holders to generate significant online revenue for them and to respect copyright. But PRS is now asking us to pay many, many times more for our license than before."

The YouTube statement continued: "The costs are simply prohibitive for us--under PRS' proposed terms we would lose significant amounts of money with every playback. In addition, PRS is unwilling to tell us what songs are included in the license they can provide so that we can identify those works on YouTube--that's like asking a consumer to buy a blank CD without knowing what musicians are on it."

But a statement from PRS for Music claimed that Google doesn't want to pay enough for licensing fees.

"PRS for Music is outraged on behalf of consumers and songwriters that Google has chosen to close down access to music videos on YouTube in the U.K.," read a statement from the industry group, which noted that Google rakes in billions of dollars in revenue. "Google has told us they are taking this step because they wish to pay significantly less than at present to the writers of the music on which their service relies, despite the massive increase in YouTube viewing."

A report from the BBC suggests that the change will take effect later on Monday.

Royalty fees in the U.K. reportedly caused streaming music service Pandora to pull out of the country (along with other non-U.S. markets) two years ago, and many smaller players in digital media are currently feeling the pain. PRS for Music has also targeted small businesses in the U.K. for playing radios publicly, which the group says is a form of piracy.

Since it only pertains to music videos, this won't affect, say, Queen Elizabeth's royal YouTube channel. But U.S. digital media companies, particularly when it comes to music, have repeatedly encountered rough seas abroad.

One of the most high-profile has been Apple's iTunes, which several years ago came under scrutiny from one European government after another, typically concerning digital rights management restrictions in its iTunes Store. But music videos have been contentious both in and outside the U.S., with labels apparently unclear as to whether the best strategy would be to ink deals with YouTube--where they have less control--or go at it on their own. Much of the controversy comes from the fact that the music industry says it just doesn't profit much from having its videos on YouTube.

Sources told CNET News earlier this month that YouTube was working with Universal Music Group to create a standalone site "closely linked" to YouTube, a shadowy project that has been described as a Hulu for music videos. And Viacom has created its own hub, MTVMusic.com. It's complicated enough in the U.S.; bringing overseas players and viewers into account opens many new cans of worms.

On an otherwise placid holiday weekend, one blog's commentary on a change to Facebook's terms of service created a firestorm of banter on the Web: does the social network claim ownership to any user content on the site, even if the user deletes it?

Facebook reorganized its terms of service last Wednesday. In a blog post, company legal representative Suzie White provided an explanation. "We used to have several different documents that outlined what people could and could not do on Facebook, but now we're consolidating all this information to one central place," White wrote. "We've also simplified and clarified a lot of information that applies to you, including some things you shouldn't do when using the site."

The blog post sounded benign. But the brouhaha arose on Sunday over a revision in the wording of Facebook's policy over what happens to profile content--shared items, blog post-like "notes," photos--when members delete their accounts.

Consumer advocacy blog The Consumerist phrased Facebook's fresh policy as "We Can Do Anything We Want With Your Content. Forever," pointing out that Facebook's ToS spruce-up removed several sentences in which the company said its licenses on user content expired upon account deletion. And that's where the hysteria began.

"Facebook should now be called The Information Blackhole," one Consumerist commenter proclaimed. "What goes in never comes out. Be careful what you huck in there."

Truth be told, most Facebook users won't give a hoot, the same way that the flurry over the Beacon advertising program in late 2007 was fueled by a few vocal privacy advocates while the general population didn't seem to care about it one way or the other. But for advocates of copyright reform and privacy, not to mention photographers and writers who may want the photos they upload or "notes" they write on Facebook to eventually lead to some kind of profit, the news was alarming.

Some prominent Twitterers and bloggers, like New Yorker music critic Sasha Frere-Jones, announced that they were deleting their Facebook accounts or pulling all uploaded content.

So Facebook issued somewhat of a clarification on Monday to explain what the change really meant.

"We are not claiming and have never claimed ownership of material that users upload," a statement from Facebook spokesman Barry Schnitt read. And indeed, Facebook's terms of service do say that "User Content and Applications/Connect Sites" are exempt from its claims on content ownership.

"The new Terms were clarified to be more consistent with the behavior of the site," Schnitt's statement continued. "That is, if you send a message to another user (or post to their wall, etc...), that content might not be removed by Facebook if you delete your account (but can be deleted by your friend)."