Google’s Susan Wojcicki

Google’s Susan Wojcicki defended the search giant Thursday against the newest claims from the content industry that it has amassed a fortune partly on the back of pirated content, made the previous night by “superagent” Ari Emanuel at the D: All Things Digital conference.

“I think he was misinformed, very misinformed,” Wojcicki said, regarding comments made by Emanuel that since Google was capable of filtering child pornography out of YouTube, it could do the same for pirated content if it really wanted to. “We do not want to be building a business based on piracy.”

Child pornography is something that is easy to filter from a technical standpoint: you know it when you see it, Wojcicki said. Content, on the other hand, is more complicated because there can be multiple rights holders to a piece of content.

Google lets rights holders identify their content by submitting a copy through YouTube’s Content ID system, which scans YouTube for matches for that copy and lets rights holders decide if they want to run ads against that content or just remove it. It’s not clear whether Emanuel’s rant concerned YouTube or Google’s search results, but Google has tried a few things with search results in an attempt to balance between the concerns of copyright owners and its desire to index as much information as possible.

Image credit Asa Mathat | All Things Digital

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FTC Chairman Jon Liebowitz

The Federal Trade Commission is taking a close look at the use of “standards essential” patents in the smartphone patent wars, Chairman Jon Liebowitz said Thursday, implying that the use of those patents in an injunction request is troubling to the agency.

“That’s an area that the commission is enormously concerned about,” Liebowitz said at the D: All Things Digital conference as part of a wide-ranging discussion on privacy, antitrust, and, of course, patents. If it launches an actual investigation into the issue, it’s likely to cause headaches for Google and its Android partners, who have been criticized for using such patents in their defense against lawsuits brought by the likes of Apple and Microsoft.

Apple CEO Tim Cook used part of his appearance Tuesday evening to complain about the use of these patents, which are generally required by standards-setting organizations to be licensed to other companies under “reasonable and non-discriminatory” terms when used as part of a technology standard. Liebowitz’s main concern seemed to be companies who invoke such patents when “suing for injunctive relief”. He suggested that reasonable people may differ over whether the licensing terms are truly “reasonable and non-discriminatory” and can settle those differences in court, but tech companies shouldn’t be allowed to obtain injunctions on sales of products based on those patents.

The European Commission is already looking into this issue and warned Google before approved its acquisition of Motorola that it would be watching its behavior with respect to such patents.

In other matters:

• “Your computer is your property,” Liebowitz said, in a discussion about privacy and the Do Not Track system that the five major browser companies have agreed to implement. Users should have to opt into any privacy changes, he said, suggesting that the Web might have been designed differently–around an opt-in system–if industry and regulators had known how much of a concern privacy would become 15 years later.
• Liebowitz confirmed that his agency is investigating Google for possible antitrust violations, which isn’t really that big a deal considering that Google itself announced the investigation last year. But he called Beth Wilkinson–the lead investigator on the issue and subject of a Reuters profile Thursday–a “world-class litigator” ideally suited to do battle with Google should any evidence of wrongdoing be uncovered.
• Internet companies are starting to understand that privacy controls can be good for business, he said. “The more choice of control [that] consumers have over the Internet, the more they trust it and the more commerce they do.”

Image credit Asa Mathat | All Things Digital

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(L to R) Walt Mossberg, Daniel Ek, Sean Parker

It took Spotify two and a half years to enter the U.S. market amid complicated licensing discussions with record labels, and Apple played a role in trying to keep the company out of the country, Spotify director Sean Parker said Wednesday.

“There were some indications that that happened,” Parker said, rescuing Spotify CEO Daniel Ek from having to answer a question about Apple’s role in Spotify’s long march to the U.S. market at the D: All Things Digital conference. “You hear things, people send you e-mails… there is definitely a sense in which Apple was threatened by what we were doing.”

This isn’t an entirely new notion: my former colleague Greg Sandoval at CNET reported in 2010 that Apple was talking smack about Spotify’s business model in discussions with record companies, implying that it could hurt sales of downloaded music. But Parker’s acknowledgment is still quite interesting when considering whether or not Apple ever plans to introduce a subscription service for music, something the company has long resisted but has long been rumored to be considering.

Back in 2011, when Spotify launched in the U.S., Ek told Om that “people tend to overdramatize this tension with Apple.”

Regardless of Apple’s role in Spotify’s negotiations with record labels, Parker said that Spotify has broken through where others have failed because of a focus on the product. “You have to lead with the product, and that informs your licensing,” he said, whereas other services cut the licensing deals first and then got around to building a product.

Image credit Asa Mathat | All Things Digital

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During her latest presentation on the tech landscape at D: All Things Digital, Meeker pointed out that the factors that caused Facebook to warn investors about how increased mobile usage is changing its business model are universal. Mobile traffic now accounts for 10 percent of overall traffic and overall mobile revenue is surging, but companies built around desktop-web economics are scared by the fact that mobile ads are seen as far less valuable: five times less valuable than desktop Internet ads, Meeker said. And even companies that have figured out how to get users to actually pay them for their products–think Tencent and Zynga–are taking in far less revenue per mobile subscriber than per desktop subscriber.

That implies that companies born entirely of the mobile era might have an advantage, but not necessarily, as those companies haven’t really figured this out yet either. “It’s early,” Meeker said. “The screen is small and the ad units haven’t been rolled out effectively yet.”

Meeker reminded everyone, however, that we went through many of the same questions a decade ago amid the rubble of the dot-com bust. Companies like Google and Facebook clearly figured out how to make real money off desktop Internet ads, and Meeker thinks that someone will come along that figures out how to do the same on mobile.

“The data in Japan proves that the users can be monetized,” she said, pointing to gaming companies like Gree and CyberAgent, who have seen strong growth in mobile revenue.

What supports her optimism? The mobile world is much more sophisticated and prepared for this transition than those who tried to monetize the desktop Web back in the 1990s, she said. With so many developers and business people focused so closely on mobile technology–and the fact that there are already so many people using smart mobile devices–at some point relatively soon someone will figure out how to connect the dots.

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Mary Meeker Kleiner Perkins Caufield & Byers

There are very few analysts who make the tech industry stop and listen when they are given a microphone. Mary Meeker, formerly of Morgan Stanley and now with Kleiner Perkins, is one of those analysts, and on Wednesday she delivered one of her trademark presentations at D: All Things Digital touching on the global economy, the mobile opportunity, and Facebook’s unprecedented IPO.

Her 112 slides–which she somehow ran through in like 10 minutes–are embedded below, but here are a few highlights.

• Everybody knows China’s Internet usage is growing like crazy and that India is close on its heels, but the rest of the top five fastest growing countries are maybe a bit more surprising, Meeker said: Indonesia, Philippines, and Nigeria.
• There are a billion people using 3G mobile wireless connections, but that represents just 18 percent of all mobile users.
• Mobile growth has been strong, and much headroom remains, but people are still having trouble figuring out how to make money on mobile: eCPMs (a key advertising metric) are five times lower on mobile than on the desktop Internet, and the average revenue per subscriber on mobile services compared to desktop is just as bad in some cases.
• No “bubbles” were discussed, but Meeker did note that Kleiner didn’t invest a penny in private companies during the last quarter: they felt the prices were too high. As private valuations rise while public valuations of companies like Facebook and Zynga fall, there’s obviously potential for private investors to lose money.
• Meeker called Facebook’s IPO “a financial share tsunami,” noting that the sheer volume of Facebook shares traded on its first day exceeded the average daily volume of the entire New York Stock Exchange. She declined to criticize those involved, but said that if Facebook had conducted an auction instead of a more traditional IPO, its IPO price would have likely been a lot higher due to that demand.

KPCB Internet Trends 2012

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Apple CEO Tim Cook

It’s an impossible act to follow. No, not the gospel choir and high-school marching band that preceded Apple CEO Tim Cook’s appearance at D: All Things Digital. Rather, it’s the legend of Steve Jobs that Cook will be forced to confront in nearly every public appearance for quite some time.

But Cook reminded attendees Tuesday night that in the weeks before his death, Jobs urged him to remember the lessons that Walt Disney executives learned the hard way: decisions about the future of a business can’t be made by constantly asking yourself what your predecessor would have done.

In an otherwise boring talk (he, of course, didn’t announce any new Apple products and disarmed any serious questions from Walt Mossberg and Kara Swisher with the poise of a politician) Cook emerged as an almost anti-Jobs: calm, cool, and collected, with a humble “aw-shucks” attitude that fit perfectly with his mild Southern drawl.

Cook is not exactly a stranger. He’s been with Apple for 14 years and has long represented the company before financial analysts on quarterly earnings calls. But Tuesday marked only the second extended interview session he’s granted since becoming the leader of the epicenter of the tech industry. He reinforced what little we know about his style and revealed a few new things during the hour-plus session beside the Pacific in Rancho Palos Verdes.

• He’s not unemotional, but he is definitely not a disciple of the “insanely great/total shit” dichotomy that seemed to govern Jobs’ approach to life. For example, Cook seems to really want to put the mobile patent mess behind him, calling it “a pain in the ass” and saying “It’s overhead. It’s overhead that I wish didn’t exist. If we could find a way to settle this…,” he said, trailing off. But he also spent about as much time as he did on any single topic criticizing those who use so-called “standards-essential patents” to try and extract royalties from others, a clear dig at Motorola’s (and by extension, Google’s) patent strategy.
• He’s polite but not afraid to throw elbows. One of the more amusing exchanges of the evening was between Cook and Henrique De Castro, one of Google’s top advertising executives, regarding Apple’s iAd, a strategy that has not exactly set the advertising world on fire. De Castro wondered how iAd fit into Apple’s strategy to “focus” on doing a few things very well. Cook quipped, “So, you want me to get out of the advertising business. I hope the FTC isn’t in the room.” Mossberg quickly pointed out that as it happened, Jonathan Leibowitz, chairman of the Federal Trade Commission and someone with a keen interest in Google’s online advertising dominance, was in the room and is scheduled to speak Thursday morning. Did Cook know that? Who knows. But he successfully threw a Googler’s question about a rare Apple stumble back in De Castro’s face, which will undoubtedly play well with the troops back in Cupertino.
• He’s perhaps even more skilled with the media than Jobs. Jobs, of course, was famous for his “reality-distortion field” and had a way of disarming questioners with sheer intensity. Cook is a Southern gentleman, or at least that’s the role he plays in public. He wasn’t confronted with anything too difficult Tuesday night, but he fielded pointed questions from Mossberg, Swisher, and the audience with a comfort that implied he’d been putting on these kinds of performances for years, as opposed to months. Cook won’t be controversial, and it’s hard to imagine him writing the types of “Letters from Steve” that set industries afire, but maybe that’s just what a more mature Apple needs.

Cook has one of the most difficult jobs in American business. If Apple continues its remarkable run of success, it’s because Jobs left him with all the tools. If Apple stumbles, it’s because Cook failed to heed the lessons Jobs tried so hard to impart.

What’s interesting about Cook is that he appears not to care. If Jobs was Apple’s lead singer–the diva that made the tech industry (and the tech media) swoon and occasionally recoil while cranking out incredible art–Cook is its bass player: steady, essential, and comfortable in the spotlight without the need to be the center of attention.

At one point, Cook claimed he’s “never felt the weight of trying to be Steve.” If that’s actually true, then he’s a remarkably focused person. And as long as Apple continues to put up the kinds of numbers that it reported in April, Cook won’t have to worry about that weight.

Tuesday night was a reminder that we won’t really get to know Tim Cook until Apple confronts its first post-Jobs crisis. He gave attendees every impression that he’s a good man in a storm and that he made sure to learn as much from Jobs as he could in the short time they had left together over the last couple of years.

But we still don’t know very much about the leadership style of the man running one of the world’s most valuable companies.

Image credit Asa Mathat | All Things Digital

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