More privacy fears as Facebook buys facial-recognition startup for undisclosed sum

By Daily Mail Reporter

Facebook is bringing one of its long-term vendors, a facial-recognition technology company Face.com, in-house.

The Israeli company's technology helps people tag photos on the Web by figuring out who is in the pictures.

The deal bolsters one of Facebook's most popular features - the sharing and handling of photos - but the use of the startup's technology has spurred concerns about user privacy.

Media reports in past weeks have pegged the size of the transaction at between $80 million to $100 million, but two people familiar with the terms of the deal said the actual price was below the low-end of that range.

Other sources suggest the deal is closer to $60m.

Facebook, which will acquire the technology and the employees of the 11-person Israeli company, said in a prepared statement that the deal allows the company to bring a 'long-time technology vendor in house.'

A Facebook spokesman said: 'People who use Facebook enjoy sharing photos and memories with their friends.

'Face.com’s technology has helped to provide the best photo experience. This transaction simply brings a world-class team and a long-time technology vendor in house.'

Face.com founder Gil Hirsch said on his company's blog: 'Our mission is and has always been to find new and exciting ways to make face recognition a fun, engaging part of people’s lives, and incorporate remarkable technology into everyday consumer products.

'We love building products, and like our friends at Facebook, we think that mobile is a critical part of people’s lives as they both create and consume content, and share content with their social graph.'

Face.com, which has raised nearly $5 million from investors including Russian Web search site Yandex, launched its first product in 2009.

The company makes standalone applications that consumers can use to help them identify photos of themselves and of their friends on Facebook, as well as providing the technology that Facebook has integrated into its service.

Faceboook uses the technology to scan a user's newly uploaded photos, compares faces in the snapshots with previous pictures, then tries to match faces and suggest name tags.

When a match is found, Facebook alerts the person uploading the photos and invites them to 'tag,' or identify, the person in the photo.

Responding to inquiries from U.S. and European privacy advocates, Facebook last year made it easier for users to opt out of its controversial facial-recognition technology for photographs posted on the website, an effort to address concerns that it had violated consumers' privacy.

The deal is the latest in a string of acquisitions by Facebook in recent months, including the $1 billion acquisition of mobile photo-sharing service Instagram.

U.S. antitrust regulators are currently undertaking an extended review of the Instagram deal, which Facebook expects to close by the end of the year.

Shares of Facebook, which continue to trade below the price at which they were offered during the initial public offering in May, were up 5.5 percent at $31.66 in midday trading on Monday.

Flash Drives Replace Disks At Amazon, Facebook, Dropbox

By Cade Metz

SAN JOSE, CALIFORNIA — If you drive south from San Jose until the buildings are few and far between, exit the highway, and take a quick left, you’ll find a data center occupied by some of the biggest names on the web. Run by a company called Equinix, the facility is a place where the likes of Google, Facebook, and Amazon can plug their machines straight into the big internet service providers.

If you’re allowed inside and you walk past the cages of servers and other hardware, you can’t see much. In most cages, the lights are off, and even when they’re on, there are few ways of knowing what gear belongs to what company. Some companies don’t want you to see. Google engineers have been known to wear miner helmets when installing new hardware, determined to keep their specialized gear hidden from the competition.

But if you walk into the right building and down the right aisle, you’ll run into a giant Dropbox logo. Clearly, the file-sharing upstart is proud of its data center gear. But at the same time, it doesn’t think this hardware is all that different from what the rest of the world is using. And that’s about right.

Inside its cage, Dropbox is running servers equipped with solid-state drives, also known as SSDs — super-fast storage devices that could one day replace traditional hard drives. The company doesn’t use SSDs in all its servers, but it’s moving in that direction. In other words, Dropbox is like the web as a whole. Such names as Facebook, Amazon, Microsoft, Mozilla, and Wikia are also using solid-state storage in their data centers, and judging from anecdotal evidence, the trend goes even further.

Like a hard drive, an SSD is a device for storing information. But unlike a hard drive, it doesn’t have any moving parts. Today’s SSD are built with flash memory — the same stuff that stores data and applications on your iPhone. These drives have been around for years, but they’ve been slow to make headway in the real world, in part because they’re more expensive than traditional hard drives. A 300GB flash drive sells for around $500, whereas a comparable hard drive is closer to $100. A 300 terabyte hard drive — which is about ten times larger — sells for around $350.

But in just the last 12 months, SSDs have turned the corner. They’re appearing in high-profile laptops such as Google’s Chromebooks and Apple’s brand-new MacBook Pros, and in the data center, many companies are realizing that they make economic sense even with their higher price tags.

In 2011, according to Jim Handy, an analyst with research outfit Objective Analysis, businesses purchased an estimated 79 million SSDs that connect to servers using the serial-ATA interface — i.e., the interface that traditional hard drives use. That’s a $2.2 billion market, says Handy, and he expects this to grow to 13 million devices and $3.6 billion in 2012.

“I think this is getting pretty common,” says Artur Bergman, the founder of Fastly, a San Francisco outfit that uses SSDs exclusively in providing a service that helps other businesses speed their delivery of pages over the net. “Though some people still have a hard time grasping it, these drives save a tremendous amount of money. They look more expensive, but when you need higher performance, you need way less of them.”

The Speech

About a year ago, Bergman gave a four-minute speech at a Silicon Valley conference attended almost exclusively by engineers who sit on the cutting edge of web infrastructure. He started by asking if anyone in the audience used SSDs in the data center, and less than 20 percent raised their hands. And when he asked who used only SSDs in their data centers, one person raised his hand — the head of engineering at Wikia, who had inherited his SSD-happy data center from Bergman, the outfit’s previous head of engineering.

Anyone who hadn’t raised a hand, Bergman said, was “wasting their life.” Yes, wasting their life. “I keep repeating that to every single individual I talk to, and what I get back is: ‘[SSDs are] too expensive,’” he said. “Actually, they’re cheaper.” Cost shouldn’t be measured by the price tag on an individual SSD, he said, but by how much you spend on drives across the data center in order to juggle the required information with each passing second.

One SSD, he said, can handle about 40,000 reads or writes a second, whereas the average hardware gives you about 180. And it runs at about one watt as opposed to 15 watts, which means you spend far less on power. “Do the math on how much you can save,” he said. In short, you need fewer servers to do the same amount of work. At Wikia, Bergman first installed SSDs on the company’s caching servers, used for providing quick access to data that repeatedly accessed by web surfers. Then, he moved them into the company’s database servers, where data stored more permanently. This provided so much additional speed, Bergman says, the caching servers were no longer needed.

When he gave the speech, Bergman had been preaching this same message for about two and half years — and few listened. But twelve months on, he says, it seems that the web is finally heeding his advice. Companies are constantly emailing him, just to let him know they’ve embraced SSDs.

Yes, many companies are still holding back, in part because they’re waiting for prices to come down even further, in part for other reasons. SSDs are not only more expensive than traditional hard drives, they can accept only so much data before they can’t accept any more. In other words, they have a limited lifespan.

But so do hard drives, which are prone to sudden and unexpected death. Bergman doesn’t see a SSD’s limited life as a big issue. “It’s a pretty good failure mode compared to a hard drive, which just takes longer and longer to write data before dying,” he says. At Wikia, he says, he replaced the company’s first SSDs after two years, and didn’t have any write problems before that.

“I don’t trust a hard drive after three years,” he says. “They don’t fail because they run out of write cycles, but they still fail.”

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Google Is Evil

By Rory O'Connor

It’s bad enough when you run a search company in an increasingly social world. It’s worse when anti-trust regulators say you have unfairly and illegally used your dominance in search to promote your own products over those of competitors. Now Google executives, who like to boast of their company’s informal motto, “Don’t Be Evil,” also stand accused of being just that — and rightly so. What other interpretation is possible in light of persistent allegations that the internet titan deliberately engaged in “the single greatest breach in the history of privacy” and “one of the biggest violations of data protection laws that we had ever seen?”

Google’s history of anti-social social networks and anti-trust trust relations that deceptively breach online consumer privacy and trust has already begun to threaten its longstanding web hegemony and its vaunted brand. Now the company’s repeatedly defensive and dishonest responses to charges that its specially equipped Street View cars surreptitiously collected private internet communications — including emails, photographs, passwords, chat messages, and postings on websites and social networks — could signal a tipping point.

With the phenomenally successful and profitable internet giant being newly scrutinized by consumers, competitors, regulators and elected officials alike, all concerned about basic issues of privacy, trust and anti-trust, the question must be raised: Is Google facing an existential threat? With government regulators nipping at its heels on both sides of the Atlantic, Facebook leading in the race for attention and prestige, and “social” beginning to replace “search” as a focus of online activity, the company that revolutionized our means of finding information just a decade ago now finds itself increasingly under siege and in danger of fading from prominence to become, in essence, the “next Microsoft.”

That possibility came into sharper focus recently when fed-up European regulators gave the company an ultimatum — change your lying ways about your anticompetitive practices in search, online advertising and smartphone software or face the consequences. Regulators in the United States are poised to follow suit.

Meanwhile, the secret Street View data collection has already led to inquiries in at least a dozen countries. Yet Google still refuses to ‘fess up and supply an adequate explanation of what it was up to, why the data was collected and who knew about it. To date, no domestic regulator has even seen the information that Google gathered from American citizens. Instead, Google chose first to deny everything, then blamed a programming mistake involving experimental software, claimed that no use of the illicit data in Google products was foreseen, and said that a single “rogue” programmer was responsible for the whole imbroglio. The Federal Communications Commission (FCC) determined instead that the data collection was no accident, that supervisors knew all about it and that Google in fact “intended to collect, store and review” the data “for possible use in other Google products,” and fined Google for obstructing the investigation.

Google’s response to the FCC was not unusual. At every step of the way, the company has delayed, denied and obstructed investigations into its data collection. It has consistently resisted providing information to both European and American regulators and made them wait months for it — as well as for answers as to why it was collected. Company executives even had the temerity to tell regulators they could not show them the collected data, because to do so might be breaking privacy and wiretapping laws! As Bradford L. Smith, Microsoft’s general counsel, told The New York Times while citing Google’s stated mission to “organize the world’s information and make it universally accessible and useful,” it seems “Google’s practice is to prevent others from doing the same thing.”

Given its record, and with so little accountability, how can any of us trust Google — or other Internet giants like Facebook, which now faces its own privacy and anti-trust concerns? Who gave these new media companies the right to invade our privacy without our permission or knowledge and then secretly store the data until they can figure out how to profit from it in the future?

No one, obviously … and as a direct result of their arrogant behavior, both Google and Facebook now face the possibility of eventual showdowns with regulators, the biggest to hit Silicon Valley since the US government went after Microsoft more than a decade ago. Their constant privacy controversies have also caused politicians to begin taking notice. Senator Al Franken of Minnesota, for example, who is in charge of a subcommittee on privacy, noted in a recent speech that companies such as Google and Facebook accumulated data on users because “it’s their whole business model. And you are not their client; you are their product.”

Small wonder that Google co-founder Larry Page is feeling “paranoid”, as the Associated Press recently reported. Why? As I detail in my new book Friends, Followers and the Future: How Social Media are Changing Politics, Threatening Big Brands and Killing Traditional Media, as the new “contextual web” takes the place of the data-driven web of the early 21st century, it will mean further bad news for Google — even though the company still sold $36.5 billion in advertising last year. Couple Google’s paranoia about Facebook and the evident failure of its latest social network, Google Plus, with its problems about privacy, trust and anti-trust, and it’s no surprise that executives are feeling paranoid. After all, they are facing the very real prospect of waging a defensive war on many fronts — social, privacy, and trust — simultaneously. Despite its incredible reach, power and profit, it’s a war that Google — the 21st century equivalent of the still-powerful but increasingly irrelevant Microsoft — may well be destined to lose, along with the trust its users have long extended to one of the world’s most powerful brands.

Christine Lagarde attack on Greece backfires as she pays no tax

Christine Lagarde, the International Monetary Fund managing director who provoked an angry reaction from the Greek people after telling them to pay their taxes, does not pay tax on her own salary, it has emerged.

By Philip Aldrick, Economics Editor

Ms Lagarde was forced to publish an embarrassing climbdown on her Facebook page over the weekend after being bombarded by hundreds of Greek people who felt insulted by her suggestion that the country’s crisis was partly due to “all these people in Greece who are trying to escape tax”.

However, on Tuesday she had to admit that her $467,940 (£300,000) annual salary and $83,760 of additional allowances are entirely tax-free as the IMF is an international organisation.

An IMF spokesman said: “Salaries, like those in most international organizations, are paid on a lower, net of tax basis to ensure equal pay for equal work regardless of nationality.”

He added that Ms Lagarde, 56, does pay all other “taxes levied on her, including local and property taxes in the US and France”.

Ms Lagarde earns more than President Barack Obama and David Cameron, both of whom pay taxes.