Tech Industry

Week in review: Tech's shopping spree

Big companies go on the hunt for acquisitions to beef up their positions, while developers get many warm welcomes. Also: Unruly at South by Southwest.

With the current pace of mergers and hostile takeover attempts, you might think there was a sale somewhere on tech companies.

Perhaps the most intriguing move came from AOL, which acquired social-networking site Bebo for $850 million in cash. Rumors had floated over the past few months that Bebo, which has more than 40 million members, was up for sale. Reports suggested a $1 billion price tag, but there were few hints as to potential buyers.

Coincidentally, AOL itself has been talked about as an acquisition target. Jeffrey Bewkes, CEO of Time Warner, which operates AOL, has spoken recently about plans to spin off or sell divisions of the company.

AOL has been mentioned as a possible partner in Yahoo's defense against a takeover by Microsoft. How AOL's move will affect Microsoft's proposed takeover is unknown, but it looks like Yahoo wants to be friendly. Microsoft and Yahoo are holding informal merger discussions, marking a shift from the "radio silence" that previously existed between the two companies, according to a source familiar with the talks. A lot has changed over the past two weeks, compared with February 1, when Microsoft issued its unsolicited buyout bid for Yahoo, which initially valued the company at $31 a share.

"Yahoo has shown some willingness to have a conversation and talk," the source said, noting that the Redmond giant has since come to the conclusion that it may never get a formal rejection letter from Yahoo.

Last week, Yahoo announced it would extend the deadline for investors, including Microsoft, to nominate an opposition slate of directors, in an effort to avoid a proxy fight with the software giant while it explored its options.

In its latest move into virtualization, Microsoft bought Kidaro, a company that helps businesses manage their collection of virtual machines. Microsoft said the technology will make it easier for businesses to manage application compatibility challenges, ultimately spurring faster Vista adoption as well as broadening the use of virtual machines within corporations. Financial details were not released.

And on Friday, Microsoft announced that it has acquired Rapt, an advertising management software and services company.

In a battle for gaming domination, meanwhile, Electronic Arts has launched a hostile bid for rival game publisher Take-Two, making a $26-per-share tender offer for all outstanding shares of game publisher Take-Two following the rejection of an unsolicited bid. The bid for the publisher of the Grand Theft Auto game series places the value of Take-Two at $2 billion. The EA tender offer is set to expire April 11 at midnight Eastern Time, unless extended.

Meanwhile, the last obstacle to Google's acquisition of DoubleClick was cleared when European antitrust regulators approved the $3.1 billion merger, paving the way for a blockbuster deal in Internet search and publisher-based advertising tools. Google's rivals such as Microsoft, as well as privacy groups, were hoping that the commission, as well as U.S. antitrust regulators, would kill the Google-DoubleClick deal.

Last December, the Federal Trade Commission gave the online-advertising megamerger its blessing. U.S. regulators noted that Google and DoubleClick are not direct competitors and that the markets within online advertising evolve quickly. As a result, the FTC did not find evidence that competitive harm would arise from the merger.

However, Google may cut its workforce as it integrates online ad firm DoubleClick into its operations, Google Chief Executive Eric Schmidt warned in a blog posting after the acquisition was approved.

With the merger wrapped up, Yahoo may face even greater pressure to find itself a buyout partner, according to Wall Street analysts and investors. The Google-DoubleClick deal presents a greater threat to Yahoo's business of providing both Internet search advertising and display advertising, note analysts. As a result, Yahoo now has another issue to contend with, beyond Microsoft's unsolicited megabillion-dollar buyout deal waiting in the wings.

Fireworks in Austin
The South by Southwest festival in Austin, Texas, usually features hip bloggers, rocking parties, and people at the cutting edge of interactive technology. But this week, it also featured some onstage verbal sparring and a near-riotous audience.

During Facebook CEO Mark Zuckerberg's keynote address, onstage interviewer Sarah Lacy of BusinessWeek out-and-out bombed, becoming much more of the story than she should have been and having the crowd turn on her over the course of the hour-long discussion. The battle between Lacy and the audience began almost immediately.

From the beginning of her interview with Zuckerberg, she repeatedly interrupted him, and annoyed audience members began murmuring that she should stop doing so. Later on, Zuckerberg himself seemed to get annoyed by Lacy's style. As he was answering one of her questions, she began to talk over him, only to notice his reaction.

Her Twitter response to criticism of her did not help calm things down. The text of her (very public) post: "Seriously screw all you guys. I did my best to ask a range of things."

To observers, the problem wasn't Lacy's questions. It was her style.

CNET's Daniel Terdiman was in the audience and said he believed that what happened was that she felt she should be part of the story--by making jokes about her upcoming book, interrupting Zuckerberg, and so on--and absolutely misread the audience. sat down to chat with the young Facebook founder a day after the keynote debacle, and after the media flurry, Zuckerberg was understandably eager to move on and talk about different topics. But he still touched upon the incident, hinting that while he may not have been totally thrilled with the subject matter, he thought Lacy was still getting unnecessarily hounded.

"I thought she asked some interesting questions," Zuckerberg said. "We may have not talked about the things that were most relevant to the audience that was here, but I've worked with Sarah on a number of pieces, and I generally think she's really smart and didn't necessarily deserve the reaction that people gave her."

There was also a great deal of widespread disappointment as the first real evening of SXSW's after-parties kicked into gear. Why? Well, it was the crowds. The long lines of people waiting to get into the parties gave festival-goers time to ponder whether SXSWi had gotten so big and so mainstream that it just wasn't fun anymore.

However, some people had fun, and the best party, according to's Caroline McCarthy, was an impromptu shindig whose genesis sprang from the frustration with the crowds. After standing around for half an hour to get into one party,'s Gary Vaynerchuk invited everyone within earshot to come back to his hotel for a wine party--no Facebook or MySpace announcements; just word of mouth and Twitters from people close enough to hear.

Developer developments
Video-sharing site YouTube is expanding its application programming interfaces to allow more direct access to the service. The updates to the APIs give developers deeper access into YouTube for video uploading and allow for "chromeless" players, or players without the traditional YouTube interface and branding.

This move means YouTube will become not just a destination for videos, but a system that serves videos into other apps. Clearly, it's an effort to turn YouTube into an infrastructure play which, once adopted by a developer on a site, would be difficult to remove. It will also give YouTube an even more impressive library of videos, which can be used to serve up advertising.

But before you start building new applications around YouTube's video player, it might be wise to check out the Terms of Service agreement. It has a lot to say about what you can or can't do--particularly when it comes to any thoughts of making money.

First up, the No.1 video-sharing site says plainly that "the intent of the API is for noncommercial use." More specifically, the TOS prohibits using the application programming interface for the "primary purpose of deriving revenues...such as advertising or subscription" services.

In a similar move, Yahoo is opening up its search platform to third-party developers. The company also says it will be supporting the semantic Web. In the coming weeks, Yahoo will hold a party to launch a beta test program for a tool that developers can use to write applications that integrate Yahoo Search.

For the consumer, Yahoo's move means more direct connections to Yahoo Search results, and a better overall search experience, on various Web applications.

Meanwhile, despite some early problems managing the flood of developers seeking access to the iPhone software development kit, Apple reported that 100,000 developers have downloaded the kit as of Sunday.

Also of note
Microsoft Chairman Bill Gates urged Congress to let more foreign-born engineers work in the United States and to direct larger numbers of tax dollars to research and education...In-flight broadband is coming soon for travelers on some American Airlines and Virgin America flights...An influential congressional committee is once again showing support for using U.S. antitrust laws to force broadband providers to treat network traffic in a nondiscriminatory manner.