Jared Grusd, AOL’s SVP of business development and chief of strategy, is leaving the New York Internet giant to work at Spotify, according to sources close to the situation.

At AOL, according to his bio, Grusd “oversees the organization responsible for all domestic and international strategic partnerships and commercial alliances for AOL and each of its operating units. He is also responsible for identifying and evaluating new corporate strategies and opportunities for the company.”

The marathon fiend and former Google exec — who held top legal-deal jobs there — also serves on AOL’s Executive Management Team.

It is not clear what the well-respected Grusd will be doing at the online music service, which has been expanding its executive ranks as it has moved aggressively into the U.S. market. But sources said it was a high-level position in New York.

Spotify recently hired former Clear Channel exec Gerrit Meier as GM of distribution and partnerships, reporting to U.S. head Ken Parks.

Spotify also just scooped up former AOL sales head Jeff Levick — another Google alum — as its chief advertising officer.

The departure of Grusd further thins out the exec ranks at AOL, which is still mired in a turnaround under the leadership of CEO Tim Armstrong (yes, he too is a former Googler!).

I lobbed a query into AOL PR for comment, and am awaiting news of my news.

So what happens if you cut directly to the chase and build true casino games like slots, poker or bingo?

It turns out that rings up a pretty healthy business, too. The best part is that because of U.S. gambling laws, game players don’t ever get to cash out their winnings.

In other words, the house always wins.

In July, Sean Ryan, the director of game partnerships at Facebook, said the casino category is creating “unbelievable monsters,” and is still largely untapped by developers. “It turns out that people are completely okay winning virtual currency that they can never cash out,” he said.

But the category giant is no longer sleeping.

Earlier this year, Playtika, the developer behind popular Slotomania, was acquired by Caesars Entertainment Corp. for $80 million, and others are scrambling to keep up.

Today, Berlin-based Crowdpark has announced that it has raised $6 million in capital to help fuel its concept of social betting, where people can bet with friends on everything from who will win a football game to whether Angelina Jolie and Brad Pitt are getting married.

“This is just an entertainment product. You pay with Facebook Credits, so the players do know they don’t get any money back,” said Crowdpark’s co-founder and Chief Product Officer Ingo Hinterding. “It’s 100 percent legal.”

And there are many other players in the space, too.

Arguably, the first to establish the category was industry leader Zynga. In 2007, it launched Texas HoldEm Poker, a game that continues to attract close to 6.4 million users a day and is one of the company’s Top 3 revenue-generating titles. Two weeks ago, Zynga said it was expanding its casino games with an upcoming launch of Bingo.

Meanwhile, a number of lesser-known companies are literally hearing bells and whistles going off.

Seattle-based DoubleDown Casino, which has slots, video poker, blackjack and roulette in the same app, today launched a new game called Photo Booth Friends.

It falls under the “slots” category, which means you click to replicate the effect of pulling down the handle to see the reels spin on the screen. Photo Booth Friends lets you customize the reels with photos of your friends.

DoubleDown recently celebrated achieving one million daily active users, and has eclipsed other popular games like Zynga’s Mafia Wars, based on monthly active users.

Ryan name-dropped DoubleDown as one of the unbelievable monsters, and according to sources familiar with the company’s financials, we hear the game is now generating $140,000 a day in revenue. For reasons of competition reasons, the company declined to comment.

Others exploring the casino category include RealNetwork’s GameHouse and Electronic Arts through its recent acquisition of PopCap Games.

Here’s an infographic from Crowdpark, breaking down the social betting opportunity on Facebook:

Casino photo credit: FreeRishad.

Viacom and Google, who have been tangling over copyright violations at YouTube since 2007, will be at it again today at a federal courthouse in New York. The two sides will start oral arguments for Viacom’s appeal of the case, which Google won decisively in a 2010 ruling.

In the past, both sides have tried digging up evidence to discredit each others’ arguments, and while both came up with plenty of embarrassing stuff, they couldn’t find a smoking gun.

So now we’re back to the basic question of the case: How much protection does the Digital Millennium Copyright Act offer YouTube, or any other site that lets users upload and distribute content they don’t own?

That question has come up to the courts in at least three different suits in recent years: Viacom versus Google, Universal Music Group versus Veoh, and EMI versus MP3Tunes. And in all three cases, federal judges have offered up the same response: The DMCA gives Web sites enormous latitude. As long as the site serves a legitimate function, it can’t be held responsible if users upload stuff they don’t own. If copyright owners find something that shouldn’t be there, and they ask the site to take the offending piece down, the site has to comply. But that’s about it.

So far, that’s very encouraging news for all manner of digerati. And in theory, it’s quite threatening to media companies and other people who create, finance and distribute intellectual property for a living.

But things might not be quite so dire for the media guys. While you can read the recent court rulings as an invitation for a free-for-all, it looks a little different in the real world.

YouTube, for instance, has spent a lot of time and money creating systems to filter content on its site, which hoovers up more than 24 hours of stuff every minute. And it works hand in hand with most big media companies to help them keep stuff they don’t want off the site — and to help them distribute other stuff they do want there.

Included in that list of companies playing very nicely with YouTube — Viacom’s sister company, CBS. And once this suit finally gets settled — which could still take years — my hunch is Viacom will want to work closely with the world’s biggest video site, too.

[Image credit: Sweetheart/Shutterstock]

Is this really a fight over hyper-technicalities over particular language aspects of this private-party contractual documentation, or is this really a fight over whether the blogosphere should be able to take people’s creative works and reproduce it?

Righthaven CEO Steve Gibson, who says he remains optimistic about his company’s future despite its legal setbacks

What does that mean for the rest of us? In a nutshell: It’s yet another victory for Web sites and services that let users upload and access music, movies and other files under the protection of the Digital Millennium Copyright Act.

And it gives Google and Amazon additional cover for the cloud locker services they launched earlier this year, without approval from the big music labels.

In practical terms, though, I’m not sure that the decision does anything beyond maintaining the status quo. Had it gone the other way, it’s possible that it would have threatened lots of popular Web sites and services. But since it doesn’t: Carry on!

The most important news is that a third federal court has ruled on behalf of Web services whose users might use it to upload and/or access files that violate copyright rules.

In this case, it’s MP3Tunes fending off EMI Music. But it’s the same basic story as the Veoh/Universal Music and YouTube/Viacom cases: A judge has ruled that the DMCA doesn’t require Web services to figure out which files that users upload have the right to be there.

Assuming all of those rulings stand up (Viacom is appealing the YouTube decision, and this one will likely go back into the court system, too), this will give Web sites enormous flexibility. The rulings don’t give users unlimited access to stuff they don’t own, though, and they do require sites to pull down files if copyright owners complain.

In this case, Judge William Pauley ruled that MP3Tunes, which operates a “locker” music service similar to the ones Google and Amazon launched earlier this year, was liable for some copyright infringement, because it didn’t remove specific songs EMI had flagged. And he said MP3Tunes founder Michael Robertson was also liable, because he knowingly uploaded songs he didn’t own.

That means Robertson and his company could still end up paying significant penalties, even though they won most of their case.

Pauley’s ruling also briefly blessed the construction of the locker service itself. In short, he said that users have a right to upload their own songs to the cloud and play them back, even if the service they used to do it doesn’t have an arrangement with the music labels.

That’s good news for Google and Amazon, because they don’t have deals with labels for their services. But it didn’t seems like they were going to need them, anyway.

Though music executives huffed and puffed after the lockers launched, they haven’t taken legal action against the companies. They also haven’t pursued mSpot, a small start-up that offers something similar.

I’ve seen some reports that suggest that Pauley’s ruling gives Google and Amazon the ability to do a “scan and match” service, where users don’t have to laboriously upload their songs to a locker — instead, the service would simply look at what’s on their hard drive, and give them access to a copy stored on the site.

That’s what Apple’s new iTunes Match service does (among other things). And Apple hammered out a deal with the labels to make that happen.

But as far as I can tell, the only additional leeway that Pauley gives to Google and Amazon is the ability to save storage space on their own servers, by using “deduplication” technology — a “standard data compression algorithm that eliminates redundant digital data.”

That’s not nothing — it’s always nice to save storage space — but it won’t fundamentally change what they’re offering to consumers, who will still have to spend a long time moving their stuff into the cloud.

Big picture: If the idea of storing all of your music on a remote server — so that you can listen to it whenever you want, wherever you want — is appealing, this ruling is good news. It’s also good news if you like watching videos on YouTube, listening to songs on Tumblr, or using lots and lots of other Web sites that depend on stuff users upload. But since you can do all of that already, you’re not going to notice a change.

After Google’s legal head David Drummond let forth with a blog post about how Microsoft and Apple had formed an evil patent cabal against the search giant, the software giant’s PR head Frank Shaw was not having any of it.

In his post, Drummond had claimed the pair ganged up on Google and had not offered to partner over key former Novell patents, in an attempt to stop the growth of its Android mobile operating system.

Except not, according to an email that Shaw posted on Twitter from Google’s legal counsel Kent Walker to Microsoft’s legal head Brad Smith.

Tweeted Shaw: “Free advice for David Drummond – next time check with Kent Walker before you blog. :)”

It was followed by the image of the email, in which Walker seemed to turn down an offer of a partnership over the patents. “After talking with people here, it sounds as though for various reasons a joint bid wouldn’t be advisable for us on this one.”

Smith also piled on on Twitter, noting: “Google says we bought Novell patents to keep them from Google. Really? We asked them to bid jointly with us. They said no.”

Wax on, Google!

Here’s the image of the email:

Please see this disclosure related to me and Google.

This morning, News Corp. CEO and majordomo Rupert Murdoch, his son James (who is also a top company exec) — as well as former employee and full-time lightning rod Rebekah Brooks — march on down to the British Parliament to answer questions from a committee there about the ever-growing PhoneGate scandal.

For those living under a rock, News Corp. is embroiled in ever more serious controversy about who knew what and when (also where, why and how much) in the hacking of phones of a myriad of well-known people in the U.K. by its News of the World tabloid newspaper.

Besides celebrities and politicians, that has included the voicemails of a murdered girl, an appalling act that has galvanized public opinion and the weak spines of legislators into action in this inquiry.

It’s sordid, it’s ugly and it makes for what could be an explosive event, starring the man who brought you “Titanic,” Glenn Beck, “Glee” and, most recently, the sale of Myspace.

There’s no question, getting the 80-year-old Murdoch on the ropes will be the aim of the committee members holding the hearing, and how one of the world’s most famous and legendary media moguls performs — or does not — will be a big deal to both interested observers and News Corp. shareholders.

By way of full disclosure, that’s not me, but this site is owned by Dow Jones, which is owned by News Corp. In other words, somewhere up the corporate food chain, Murdoch is my boss.

In any case, that has never stopped me or AllThingsD.com from telling it like it is, so here is the liveblog of what is sure to be a doozy of a media event:

6:36 am PT:: It all starts for the Murdochs, as soon as the former Scotland Yard head John Yates has completed questioning about the police’s obvious bungling of the various investigations over the years.

Rupert Murdoch and his son, James Murdoch, are on, looking grave and dressed in grey.

Sitting behind them are Rupert Murdoch’s wife, Wendi Deng, and his top adviser at News Corp., Joel Klein, who is heading up the phone hacking scandal internally at the company.

The hearing — in a room that looks like a high school debate could take place there — starts off politely enough.

But the first question is directed toward James Murdoch about his clearly incomplete investigation when phone hacking allegations were first made many years ago. He begins with an apology.

“These actions do not live up to the standards of News Corp.,” says the younger Murdoch.

He is interrupted by his father, Rupert Murdoch, who notes rather dramatically: “This is the most humble day of my life.”

The questioner quickly asks the obvious query, after James Murdoch claims News Corp. was not in full possession of the facts when execs had told a previous committee there was no reason to believe there was more widespread hacking.

Were News Corp. execs lying?

James Murdoch continues to insist that the bulk of evidence came out — “real evidence” — in later civil trials. And also, that News Corp. is now investigating the situation fully.

He throws around words like “proactive action” and “transparency,” which is probably cold comfort now to those hacked when things were less clear to News Corp.’s senior management.

Now up, Rupert Murdoch, who is asked quickly about statements he made about not tolerating wrongdoing and who had lied to him at News Corp. about the phone hacking.

Apparently, he “didn’t know” a lot about the hacking that took place, while also defending the non-hacking employees of his company.

But the questioner is still on him about exactly what he did know about the situation, which seems to be — at least according to his testimony — a lot of I-don’t-knows.

6:53 am: It continues about what Rupert Murdoch knew and when he knew it and what he did. Or not.

As Rupert Murdoch keeps up with this tone of not being clued in to what have turned out to be critical events, James Murdoch wants to keep jumping in with the details, which he is eager to impart.

“At what point did you find out criminality was endemic at News of the World?” asks the questioner.

Rupert Murdoch does not like the word endemic, but stresses that he was “shocked, appalled and ashamed” by the case of the murdered girl, Milly Dowler.

The questioner seems frustrated by Rupert Murdoch’s answers, which are, for the typically razor-sharp media mogul, unusually slow.

Like a persistent terrier who wants to perform, James Murdoch is back again offering to serve up the deets.

7:04 am: Now, it is onto the closing down of News of the World: Was the tabloid shut down because of the criminality?

“We had broken our trust with our readers,” says Rupert Murdoch. “We felt ashamed for what had happened.”

A new questioner is on, with a bizarre query about why Rupert Murdoch came in the back door of the Prime Minister’s house at 10 Downing Street on a recent visit there.

It’s a cloddish effort to show him as a powerful puppetmaster to pols, but only serves as a punch line.

Back on track, with questions about whether there was hacking in the U.S., which Rupert Murdoch said he could not believe had happened.

More questions about how badly the company acted, which came down to the questions about whether he was “ultimately” responsible for the hacking.

“Nope,” says Rupert Murdoch, who keeps insisting he relied on others, some of whom apparently “misled” him.

It’s an astonishing admission and, really, excuse, given he has been chairman, CEO and a very strong leader of News Corp. for more than a half-century.

7:16 am: A new questioner, who asks who decided to close down News of the World. It was Murdoch himself, his son and other execs.

Next up, why did News Corp. pay off a victim of hacking, which James Murdoch did without informing his father or the News Corp. board.

James Murdoch essentially points out that it is typical to do this in companies of the global scale of News Corp.

These are apparently very busy, busy, busy people, who do not seem to have time to notice how such juicy and best-selling scoops might have been magically produced by News of the World.

Onto ethical conduct guidelines, which News Corp. has in a pamphlet form, says James Murdoch, but pages which some at the company have obviously never cracked.

Rupert Murdoch is asked again about his culpability in the case, which he continues to maintain he does not shoulder the blame.

James Murdoch does note that the company “will think more forcefully … about our journalism and ethics.”

Given the situation, in which every day brings a new revelation of bad acts by News Corp. employees, this promise of better behavior seems to be a case of much too little and very, very late.

Rupert Murdoch still uses the opportunity to stress the need for a free press, despite its excesses.

7:31 am: More about the payments to settle with phone hacking victims and how soon the company realized the problems were more widespread.

James Murdoch talks about how he might have acted differently had he known more then as he does now.

“If we knew now what we knew then,” says James Murdoch, “we would have taken more action and moved more aggressively.”

But what else is he going to say? It’s a could-have, would-have, should-have line of questioning that is eliciting very little in the way of true information.

Finally, a good point about “willful blindness,” which is a term from the Enron scandal about avoiding knowing about problems you really should have known about.

“Is that a question?,” asks James Murdoch. It is a statement, actually, and a decent enough one.

“We didn’t do that,” says Rupert Murdoch firmly this time.

Still, soon enough, Rupert Murdoch is insisting he was not as involved as people have imagined him to be with the management of his newspapers.

A new questioner is pressing this important point, but Rupert Murdoch is not biting on a query about his legendarily hands-on managing style.

“I’d say, ‘What’s doing?’” he explains about his conversations with editors, but adding he might not have been told about payoffs to phone hacking victims.

The questions are in the deep weeds here, but it’s still interesting that Rupert Murdoch continues to maintain that his life was too busy to wallow in the details, however controversial and important those details might be.

7:55 am: More and more don’t-knows pile up and up in a giant mountain of acts perpetrated by someone somewhere, but not the Murdochs.

“I can tell you I was surprised as you were,” says James Murdoch about certain payments to various hackers and those who were hacked.

Was it Les Hinton, who then ran News International and later Dow Jones, from which he recently resigned?

Could be! Maybe! Mistake were made! Who knows!

Well, someone does!

It moves onto Brooks, the tarnished News International exec and editor whom Rupert Murdoch does note he still trusts. Finally, some certainty!

Brooks is definitely one of the more compelling characters in this drama, although the media focus on her striking red hair color seems odd and vaguely sexist, as if she is some flame-haired she-devil from media hell. She might certainly be guilty in this mess, but her fabulous hair has nothing to do with it.

(Rupert’s mane is grey, by the way, and James’ is brown, if you really need to know.)

Fascinatingly, Murdoch’s backing of Brooks has been strong and consistent, despite intense criticism of her by many in this scandal.

The payment of legal fees of perpetrators and payments to the victims in the hacking seems to obsess one questioner, who wants News Corp. to stop doing it.

Murdoch says he’d like to if contracts did not preclude that, which essentially means News Corp. will keep up forking over the legal fees and payments.

8:12 am: The attention turns to how James Murdoch found out about the various emails that showed there was more evidence of hacking than was first thought about and what he felt about it.

He says very little, noting that the matter is under police investigation. It’s not don’t-know now, but can’t-say.

The hearing is beginning to feel a little rope-a-dope, with the Murdochs apologizing and taking blows, saying very little — either claiming lack of knowledge or lack of ability to comment about the ongoing police inquiry — and tiring out the questioners.

It is a classic tactic of the boxing champion Muhammad Ali and it works in the ring.

Whether that will be the case with PhoneGate remains to be seen, but it certainly has made what could have been a more explosive hearing much less so.

Instead, it seems to have turned into a what didn’t the Murdochs know and when didn’t they know it hearing.

On questioner gets this irony. “That’s frankly unsatisfactory,” he says about the Murdochs continuing shock and surprise at the thorny situation they find themselves in.

Maybe it seems a little hard to believe, but the persistent story from James Murdoch is that they were told by their lawyers, the police and others that nothing was awry once the initial phone hacking investigation was complete and only found out about the larger problem in later civil lawsuits.

But, asks the questioner to Rupert Murdoch, should his editors and managers at News of the World have known about it?

Of course, they should have.

But, once again, the legendary media baron, who made his fortune and fame in disseminating news and information across the world in newspapers, on television, on satellite and on the Web — at least for now — can’t say.

So, was he “kept in the dark” about the situation? Rupert Murdoch acknowledges he might have asked more questions, although he noted his British newspapers were only a small part of his massive empire.

But, he adds, “Anything that is seen as a crisis comes to me.”

Well, not the phone hacking crisis, it seems.

But, they’re sorry. So sorry. And, of course, humbled.

8:54 am: Suddenly, there is a disturbance, in which someone seems to have possibly attempted to accost the Murdochs.

But it is not clear what has happened, as the hearings are suspended for 10 minutes.

James Murdoch leaps up quickly to protect his father, which he has been doing in this hearing verbally already, where the strategy seems to be to let him largely do all the talking.

Even faster on her feet and with arms raised toward a man in a plaid shirt and carrying a pie plate with shaving cream is Rupert Murdoch’s wife, Wendi.

The man seems to have managed to get some of the foam on Rupert Murdoch, but Wendi Deng appears to have partially thwarted her husband from receiving a full pie in the face.

It’s the first striking visual of this hearing, protecting the patriarch and the king of the empire from harm, no matter what.

Here is a video of the incident:

According to Britain’s Channel 4: “As the man was being led away in handcuffs escorted by a single police officer, he refused to give his name, saying: ‘As Mr Murdoch himself said, I’m afraid I cannot comment on an ongoing police investigation.’”

9:09 am: The room is cleared, so it is only the Murdoch crew behind James and Rupert Murdoch, and now the committee is even more solicitous.

Rupert Murdoch is without his jacket and his wife is being commended for her most excellent left hook.

Still, it’s back to business and the questioner does zero in on a major disconnect over how two media execs as famously aggressive and involved as the Murdochs were so passive in this hacking situation.

It “was a terrible shock,” says James Murdoch.

The same is said about what would be even more disturbing and recent allegations of the hacking of the victims of the 9/11 bombings.

Both father and son say there is no evidence of this so far, but they were surely looking into it.

While it certainly did not come through in what have largely been feckless questions from the committee, the final questioner does correctly ask the pair if they might want to pay more attention.

The last question is for Rupert Murdoch and finally gets to the real query everyone wants to ask.

Noting Murdoch is “captain of the ship,” she asks if he has considered resigning.

“No,” answers Murdoch firmly.

“Why not?” she presses.

“People let me down and it’s for them to pay,” says Rupert Murdoch. “But I think, frankly, I am the best person do clean this up.”

He finishes up with a statement about being sorry, how he was also betrayed and how phone hacking and bribery is wrong.

“Saying sorry is not enough, things must be put right,” he says.

Finally, something we do know.

Some employees are alleging they were duped via complicated legalese and double-talk in employment contracts about how their shares would be handled upon termination or voluntary departure from the Internet telephony giant.

That matters, since Skype was recently sold to Microsoft for $8.5 billion, well above previous valuations. Thus, those who were, as a Skype PR person said, not in it to win it, um, lost.

Dramatic stuff, to be sure. But, even with all the fervor around the employment contract issue, the handwringing about what it means for compensation issues in Silicon Valley and a whole big dose of how private equity companies (in this case, a firm that had bought Skype called Silver Lake) are evil, it’s struck me as little more than an insider read-the-legally-obtuse-contract dispute.

And, although I love Reuters’ Felix Salmon’s epic tsk-tsking posts, that’s why I like to see real documents as proof of what people knew and when.

Apparently, a lot and rather clearly from this PowerPoint that was given to employees of Skype as of December 2009 as part of its changing ownership, after Silver Lake and other investors bought it from eBay.

While it’s not proof of what employees got it — typically, it is standard HR policy to hand this stuff out to everyone — and who read it (no accounting for slaggards!), it is pretty clear on what happens upon leaving Skype, either by a firing or quitting.

On the eighth slide, as you can see above, it says, in part:

“Good Leaver”: someone who gets fired without “Cause”

* Gets the fair-market value of their currently vested options

“Bad Leaver”: someone who resigns, or is fired for “Cause”

* Skype buys back their options at the lower of fair-market value or strike price

* This provision lapses post-IPO

It seems pretty buyer-beware clear, but check it out for yourself:

Skype – Employee Presentation

I’d say it’s astonishing no one has done it before, but it’s not: The music business has a long tradition of resisting good ideas. So how did the Turntable.fm guys finally get the industry on board?

They haven’t. The start-up doesn’t have deals in place with any labels or publishers.

[Record-scratch sound here.]

This doesn’t mean that Turntable.fm is illegal. The company believes it’s obeying the law, and it might be right. But this thing has gotten so buzzy, so fast, that it’s going to be hard for the label lawyers to stay away.

Here’s how Turntable got started, how it works, and why it might be able to stick around. But if you haven’t already, go play with it now, just in case.

The backstory:

Turntable started as Stickybits, which did something hard to explain involving barcodes and geotagging, and seemed more like an art project than a business. Last year it raised nearly $2 million.

This spring, CEO Billy Chasen abandoned that idea and used his remaining money to build Turntable. This one is easy to describe.

Here goes: You and up to four other people take turns streaming just about any song you want for anyone who wants to listen, for free, in one of the site’s “rooms.” A deal with MediaNet, a digital content provider, gives Turntable access to millions of songs, and if the song you want to play isn’t there, you can upload your own MP3 to the site and play that. There’s a chat feature so you can compare notes, and you can “follow” your pals.

That’s about it. There’s a “gamification” element where you can collect points and rewards for playing music people like, but that’s definitely secondary. The real thrill is sharing music, and discovering music.

The law:

So how can any of that be legal without label deals? In short, Chasen believes he’s able to run the service under the protection of the Digital Millenium Copyright Act (DMCA) — the same law that lets Pandora operate without label deals — as a “non-interactive” Web radio service.

That description will seem odd to most people who’ve used Turntable. Because the service doesn’t seem like radio at all, and it is most definitely interactive.

You pick the songs you want to play, and the order you want to play them. And if you’re really into it, you’ll change that on the fly, based on the song the person before you just played.

But if you spend enough time mucking around with Turntable, you’ll start to run into small constraints here and there. You can’t play music in a room by yourself, for instance. And there’s a limit on the number of times you can play a song by a single artist per hour. And you can’t see the next song another user has cued up.

None of these limits seem like real limits, because they don’t detract from the service’s core appeal. But these are all rules that “DMCA-compliant” Webcasters work under, and they’re evidence that Chasen is trying to do the same thing. If it works, he’ll simply pay music owners a flat fee for each song he streams every month, just like Pandora does.

The precedent:

In addition to Pandora, Chasen has another model to work with here: 8tracks, a three-year-old service that also lets you play any music you want, and listen to other people’s music, for free, using a DMCA license. The main difference is that instead of playing the songs live, you create “mixtapes,” which other users play back on their own time.

8tracks never got the same kind of buzz that Turntable is getting, but it has diligently built up a fan base, and now draws more than two million users a month. Just as important, it’s been able to stay out of legal trouble. I think it’s a pretty great story.

There’s a technical difference between 8tracks and Turntable, too: 8tracks relies on songs its users own and upload, while it seems like most people on Turntable are using the tracks Chasen and Medianet provide. That distinction seems like a small one, but some music biz folks I’ve talked to have pointed to that as a red flag.*

The problems:

The risk for Turntable is the same one every music start-up without label deals faces: Not that a court will find them guilty of something, but that they’ll have to spend a lot of time and money on lawyers.

And while it seems blindingly obvious that Turntable.fm is a great thing for the music business — it lets music fans tell other music fans about music they like, the best possible advertising — I wouldn’t put it past a label or two to gripe about the service. Particularly if it makes the leap from the digerati into the mainstream.

(It’s important to note here that there are lots of traditional music business folks who are resentful of Pandora’s success, even though the company pays out more than half its revenue to copyright owners.)

If Turntable does sidestep legal challenges, it will have to make money one day, too. This is also an issue, since no one’s actually proved that free, ad-supported Web music can be profitable.

But I’m much less worried about this one. If it gets to that point, the Turntable guys should at least be able to tell advertisers that their ads will be much more effective, since Turntable users spend a whole lot of time looking at their screens.

Does any of this matter?

I’m an unlikely candidate to get swept up in the buzz around a hot Web site.

I’m reflexively cautious about that kind of behavior, and it’s easy to point to buzzy start-ups that shot up, then cratered (Myspace), or never got above the buzz stage to begin with (Chatroulette). And even if Turntable does stick around, it’s possible that it’s just a feature and not a business.

But this one feel pretty special. We’ve had plenty of music sites, and plenty of social sites, but none that mixed them well together. I hope they make it work.

——————————

*Don’t want to bog this down in legalese, but note that Google and Amazon’s music locker service, which doesn’t have the labels’ blessing, relies on music its users provide. But Apple got the labels’ blessing to provide a “scan and match” service, where a single master track could be used by multiple listeners. I wouldn’t be shocked to hear a music label lawyer tell Turntable its model is closer to Apple’s, and requires a separate deal.

When a group of powerful investors, including Silver Lake Partners and Andreessen Horowitz, waded into the mess at Skype less than two years ago with a $1.9 billion cash investment for a big chunk of the company, it was–how can BoomTown put this delicately–a hot mess.

With lawsuits flying over intellectual property violations, turmoil in the relationship with its eBay owners and increasing competitive pressures, you get the mess part.

But there was also the hot, because of so much potential in the fast-growing Internet telephony and video communications company.

Hotter today, it seems.

Microsoft–in what would be its most aggressive acquisition by the software giant in the digital space–is poised to announce that it will buy Skype, forking over $8.5 billion all in, which includes the assumption of the Luxembourg-based company’s debt.

Sources said that the splashy deal is now done and will be announced early this morning to much fanfare.

That is a far cry from 2009.

In fact, at the time that his newly hatched venture firm made its biggest deal yet, Silicon Valley legend Marc Andreessen was all sunshine and ponies about the just-settled tense legal situation.

As I wrote after talking to him then:

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–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.”

It turns out he was right, given the haul that Andreesen Horowitz and other investors will be getting now.

The price tag essentially tripled the $2.75 billion valuation then. In fact, a year before, eBay had actually written down the value of Skype to $1.9 billion.

That means for its $65 million–it was reported then the Andresseen Horowitz stake was $50 million, but it was more–it will nail nearly $200 million.

That could be much more depending on what percentage of the deal the VC firm actually got.

Andreessen Horowitz’s stake is joined with Silver Lake, as well as the Canada Pension Plan Investment Board.

In total, they own about 56 percent of Skype, worth about $4.5 billion.

Another 30 percent is owned by eBay, which seems to have done a little better than even-steven for all its trouble with Skype.

It will get $2.4 billion now, having paid out about $3 billion back in 2005 for Skype. It got the $1.9 billion in the latest investor deal in 2009.

The big winners are Zennström and Friis, who keep on selling the same company to corporate moneybags over and over, while also suing anyone who looks at them crossways.

The Skype co-founders–who started out as Internet scofflaws with their Kazaa music-stealing service–had a 14 percent share, giving them $1.1 billion.

Like I said–not that I actually invest in any of these tech companies I cover–I’ll have what the lawsuit twins and Andreessen are having.

Back in 2009, in fact, he laid it out with regards to Skype pretty presciently.

“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.”

Big, apparently, now that Microsoft is footing the bill.

The Wall Street Journal reported earlier tonight that Microsoft–in what would be its most aggressive acquisition in the digital space–was zeroing in on buying Skype for $8.5 billion all in with an assumption of the Luxembourg-based company’s debt.

Sources told BoomTown tonight that the deal for the online telephony and video communications giant is actually done and will be announced early tomorrow morning.

The purchase–which has been spearheaded in closely held negotiations by Microsoft CEO Steve Ballmer, with an assist from Business Division CFO Amy Hood and top dealmaker Charles Songhurst–is a bold move for the software giant and its biggest acquisition in more than three decades.

The big price will give Microsoft–which has struggled in its online efforts and has lost billions of dollars for its work–a big brand name on the Web.

With Skype, which has been aggressively expanding, Microsoft will continue to lose money in its Internet efforts. Skype lost $7 million on revenue of $860 million. Operating profits, which Skype preferred to highlight, were $264 million.

And–let us not forget–Skype’s debt is $686 million. Silver lining: That’s slightly less than Microsoft’s Online Services division losses in its most recent quarter!

But, sources said, the concept is bigger than just money, including getting access to Skype’s 663 million registered users.

Skype, which had been headed bumpily toward an IPO until now, will apparently be integrated into Microsoft’s Windows Live and other online communications efforts in both the consumer and enterprise arenas, sources said.

Think Kinect connecting.

Skype has had a big-company owner before–eBay Inc. paid $2.6 billion in cash and stock for it in 2005, as a way for the auction site’s buyers and sellers to communicate.

A 70 percent stake in Skype was sold in 2009 to investors such as Silver Lake Partners, Andreessen Horowitz, and the Canada Pension Plan Investment Board. It then valued Skype at $2.75 billion.

So, obviously, the deal is a big win for them. In addition, at the time they made their investments, Skype was a huge legal mess with lawsuits flying.

Skype has since gotten cleaned up enough to attract Microsoft.

Other suitors have looked at Skype, including Google, although acquisition interest by Facebook was very much overblown, said several sources.

Interestingly, Microsoft’s new smartphone partner Nokia also held meetings with Skype’s CEO Tony Bates, a former Cisco exec who arrived at the company last fall.

Interest in Skype by Microsoft was first reported by GigaOm’s Om Malik on Sunday.

Tune in at 5 am PT for the official press release, apparently, and lots and lots and lots of analysis of whether Microsoft paid too much for Skype.

On some level of journalism, I guess anything could happen.

At least that’s according to a recent article by Business Insider’s Henry Blodget about an alleged “mole” at Twitter who was allegedly spying for Google, specifically about an exec the microblogging service was trying to poach from the Silicon Valley search giant.

In a decidedly splashy, hello-traffic, ALL-CAPs headline–THE SEARCH FOR THE “TWITTER MOLE”: All Eyes On John Doerr“–Blodget pointed his J’accuse finger at the legendary venture capitalist as the culprit.

Based on…

Well, based on nothing, it appears, except rank speculation and what appears to be no attempt to get Doerr to comment.

And, while it’s not my cup of tea, whatev, I suppose.

Except when I read down to the bottom and landed on this gem:

We have talked to several sources familiar with aspects of the situation. Thus far, we have not been able to confirm either assertion.

First, no one has even confirmed that Google was tipped off in advance of Twitter’s poaching effort, much less by a Twitter mole.

This doesn’t mean it didn’t happen.

And later still:

So we haven’t been able to confirm the “high-level mole at Twitter” story. And we think there’s a good explanation for why there might not be a mole at all.

Secondly, we have talked to no one who has any evidence other than the logic above that, even if there is a Google mole at Twitter, the mole is John Doerr. One insider we spoke to, in fact, dismissed the idea out of hand.

Say what?

It’s kind of like thinking that a sparkly Civil War-era vampire falling in love with a moody chick in the Pacific Northwest and flying through the pines all day and mooning over their cruel fate was real.

Okay, that was a Hollywood movie called “Twilight,” but that doesn’t mean it didn’t happen!

Thus, Doerr–a tough customer to be sure, capable of all kinds of sharp-elbowed behavior–is guilty until proven innocent?

Or just not guilty at all, but let’s just say he might be anyway, without a shred of evidence, because it could have happened!

(Courtroom confession: It was All Things Digital‘s Liz Gannes, who did it on the blog with scoop on the Twitter talent raid effort of Sundar Pichai!)

Speaking of evidence, less than a week later, Javert–oops, I mean, Blodget–was back in another kangaroo court performance with another terrifically loud headline:

“The Guy Who Says He Owns 50% Of Facebook Just Filed A Boatload Of New Evidence–And It’s Breathtaking.”

Breathtaking, I guess, if you are in that fantasy teenaged girl mode, but deeply suspect if you are anyone with a modicum of journalistic responsibility.

It is perfectly fine for Blodget to dredge up the copious emails from a man named Paul Ceglia–who alleges he possesses a contract that he struck with Facebook co-founder Mark Zuckerberg at the time of its creation–and analyze them.

And it is certainly notable that a credible law firm, DLA Piper, has taken on the case for Ceglia and it does seems unlikely that it would have done so without doing some level of due diligence.

In fact, in an interview with Am Law Daily, DLA partner Robert Brownlie, international co-chair of the firm’s securities litigation, said: “At first I shrugged it off as incredible. I would not have gotten involved and DLA would not have gotten involved if we had any doubts about the facts or evidence in the case.”

That was, of course, countered by Facebook’s lawyer Orin Snyder at Gibson, Dunn & Crutcher, who said in a statement that the Ceglia allegations were part of “a fraudulent lawsuit brought by a convicted felon.”

By the way, in fancy-lawyer parlance, that translates to a liar-liar-pants-on-fire defense.

So, microwave the popcorn and get ready for the drama, because no question, it is clearly going to be juicy all around with a whole lot of social networking poking!

In fact, such a case is tailor-made for Blodget, who has always been a very gifted writer with a nose for sharp-edged analysis.

It’s too bad, then, that he did not hone his knife to such an edge when it comes to Ceglia, giving him much too much credibility based on what could be fake emails, especially since they come from a man with a history of fraud.

History, in fact, that Ceglia is depending on in this case, since Zuckerberg most definitely has one in regards to partnerships gone bad.

Thus, Zuckerberg has been sneaky before, ergo he’s sneaky here.

That’s no surprise as a legal tactic, of course, and I threw in the “ergo,” since I too want to play Perry Mason in a blog.

But. More to the point, while Facebook was certainly hard-nosed in dealing with both protracted and high-profile legal challenges from the Winklevoss twins and also Eduardo Severin, I don’t think I have ever seen the company explicitly say evidence was completely fabricated, as it is alleging Ceglia’s emails are.

As I said, I have no idea if they are or they’re not, but I do know this: While those emails are certainly bombshell in nature, they are designed to be so precisely because it is a lawsuit in which the principal is trying to shame Facebook into settling.

None of that seems to concern Blodget, who concludes at the end of the post:

“In short, to us at least, the emails don’t read ‘fake.’”

In short, to me at least, that’s for fake-email experts and the courts to decide.

The real fact of the matter is, who knows? I certainly don’t, although I do know it’s terrifically easy to file a lawsuit and claim just about anything you like.

And the same seems to be true–more and more these days and not for the good–for blogs too.

As for me, I need to get back to my goal of proving that sparkly vampires do exist.

It seems Cameron and Tyler Winklevoss, the Don Quixote twins of the digital age, have tilted at yet another legal windmill unsuccessfully.

So now, after losing another court challenge to overturn a previous court challenge, they’ll have to settle for $65 million.

Actually, $100 million, which is how much shares in Facebook have appreciated since the pair and also Divya Narendra settled with the social networking giant.

Said the ruling from the U.S. Circuit of Appeals for the Ninth Circuit, in part:

The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their dispute and signed a release of all claims against Facebook. With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity. For whatever reason, they now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached.

The end? Say it ain’t so! BoomTown, for one, will miss those big lugs.

Not so much Facebook co-founder and CEO Mark Zuckerberg, especially since the pair allege the tech wunderkind stole the idea for the start-up while a student at Harvard University.

After much legal mishegas, they got $20 million and 1.25 million shares at a price of $8.88 each.

And that’s more than enough, said court to the the Winklevii–it’s their eternal nickname in Silicon Valley now–and they can’t back out of a settlement they made in 2004.

As for the specifics, the three-judge panel struck down every Winklevoss argument:

- They said the terms of the Facebook deal introduced after mediation were typical.

- They said Winklevii should have been sophisticated enough to understand valuation.

- They said Winklevii couldn’t use the sealed mediation settlement documents to argue their case.

It’s true, but it’s also sad to see it all over, since all the litigiousness between Zuckerberg and the Olympic rowing brothers has been so dramatic that it was the subject of the almost Oscar-winning movie, “The Social Network.”

But maybe they can go to the Supreme Court! One can dream!

And with their latest loss and all the Google machinating against Facebook, who’s up for a sequel: “Geek Wars: The Empire and the Vii Strike Back.”

In a statement, Colin Stretch, deputy general counsel of Facebook said: “We appreciate the Ninth Circuit’s careful consideration of this case and are pleased the court has ruled in Facebook’s favor.”

Here’s the full ruling:

08-16745

While Facebook should not be expecting big bouquets of love from its partner and investor Microsoft, at least it’s not going to be getting legal brickbats either.

According to sources close to the situation, the pair have settled a dispute over the Silicon Valley social networking site’s talent raid of Microsoft’s head of global ad sales, Carolyn Everson, for a similar job at Facebook.

In fact, Everson has already been at work for a week, sources said, after she agreed not to solicit a small group of advertising clients for a short period of time.

She is also barred from using any strategic information in her new Facebook job that she obtained while at Microsoft, sources said.

This kind of agreement is not uncommon in disputed job shifts and is also a far cry from a more stringent legal outcome, which might have benched her completely for some time.

But Everson is a veteran ad exec, having previously worked at Viacom’s MTV Networks. Thus, Microsoft could not have barred her from calling on advertisers she had known previous to her short employment there.

Still, the February hiring by Facebook came as a surprise to many at Microsoft, especially since Everson (pictured here) had been hired only last June, after a long search. In that time, she had become a high-profile presence at internal and external Microsoft events.

So, it’s clear the Everson hiring infuriated Microsoft execs, especially since the company regards Facebook as a close partner. Microsoft is a longtime investor too.

“We’re no longer angry,” said one source at Microsoft, about the cooling of tensions, “as much as disappointed.”

But key in the weighing of options at Microsoft is the obvious importance of keeping up good relations with Facebook. It is an important partnership, especially for its Bing search business, especially as an advantage over Google.

Thus: Bygones!

On Monday, Nortel announced that Google had bid $900 million to acquire the bankrupt company’s patent collection.

In a blog post, Google said the current litigious environment justifies the pricey bid.

“The tech world has recently seen an explosion in patent litigation, often involving low-quality software patents, which threatens to stifle innovation,” said Google general counsel Kent Walker. “Some of these lawsuits have been filed by people or companies that have never actually created anything; others are motivated by a desire to block competing products or profit from the success of a rival’s new technology.”

Google has been on the receiving end of a number of patent lawsuits, both directly and indirectly. Oracle, with its Sun acquisition, has sued Google over Android, while Microsoft has sued and threatened to sue Android handset makers, saying that the mobile operating system infringes on Microsoft’s intellectual property. Microsoft has already sued Motorola and Barnes & Noble and reached a licensing deal with Taiwan’s HTC.

Microsoft is looking to make the case that Google’s Android isn’t really free to handset makers and has been arguing both privately and through its legal actions that it believes it deserves royalties for any use of Android.

And it is not just Microsoft seeking to use patents as part of its smartphone battle. Apple has also sued HTC, while Nokia has also been active on the patent assertion front.

Walker argues that what is really needed is significant patent reform but–given the current situation–the company is best off trying to assemble a patent army of its own.

“Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories,” Walker said. “So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction. Today, Nortel selected our bid as the ‘stalking-horse bid,’ which is the starting point against which others will bid prior to the auction. If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community–which is integrally involved in projects like Android and Chrome–continue to innovate.”

Microsoft’s legal eagle Brad Smith didn’t even bother to pretend the software giant’s filing of a formal antitrust complaint against Google with the European Commission wasn’t a wee bit ironic.

Wrote Smith in a blog post late last night:

“There of course will be some who will point out the irony in today’s filing. Having spent more than a decade wearing the shoe on the other foot with the European Commission, the filing of a formal antitrust complaint is not something we take lightly. This is the first time Microsoft Corporation has ever taken this step.”

But take it the company did, noting: “Microsoft is filing a formal complaint with the European Commission as part of the Commission’s ongoing investigation into whether Google has violated European competition law.”

Google, no surprise, disagreed, via a statement from a spokesman.

“We’re not surprised that Microsoft has done this, since one of their subsidiaries was one of the original complainants. For our part, we continue to discuss the case with the European Commission and we’re happy to explain to anyone how our business works.”

Here is the whole Microsoft post, in which Smith outlines Microsoft reasons for its action:

Adding our Voice to Concerns about Search in Europe

30 Mar 2011 9:00 PM

Posted by Brad Smith

Senior Vice President & General Counsel, Microsoft Corporation

Microsoft is filing a formal complaint with the European Commission as part of the Commission’s ongoing investigation into whether Google has violated European competition law. We thought it important to be transparent and provide some information on what we’re doing and why.

At the outset, we should be among the first to compliment Google for its genuine innovations, of which there have been many over the past decade. As the only viable search competitor to Google in the U.S. and much of Europe, we respect their engineering prowess and competitive drive. Google has done much to advance its laudable mission to “organize the world’s information,” but we’re concerned by a broadening pattern of conduct aimed at stopping anyone else from creating a competitive alternative.

We’ve therefore decided to join a large and growing number of companies registering their concerns about the European search market. By the European Commission’s own reckoning, Google has about 95 percent of the search market in Europe. This contrasts with the United States, where Microsoft serves about a quarter of Americans’ search needs either directly through Bing or through our partnership with Yahoo!.

At Microsoft we’ve shown that we’re prepared to work hard and invest literally billions of dollars annually to offer Bing, a search service that many now regard as the most innovative available. But, hard work and innovation need a fair and competitive marketplace in which to thrive, and twice the Department of Justice has intervened to thwart Google’s unlawful conduct from impeding fair competition. In 2008 the DOJ moved to file suit against Google for its unlawful attempt to tie up and set search advertising prices at Yahoo!, causing Google to back down. And last year the DOJ formally objected to Google’s efforts to monopolize book content, a position affirmed by a federal district court in New York just last week. Unfortunately, even this has not stopped the spread by Google of new and disconcerting practices in the United States.

As troubling as the situation is in United States, it is worse in Europe. That is why our filing today focuses on a pattern of actions that Google has taken to entrench its dominance in the markets for online search and search advertising to the detriment of European consumers.

How does it do this? Google has built its business on indexing and displaying snippets of other organizations’ Web content. It understands as well as anyone that search engines depend upon the openness of the Web in order to function properly, and it’s quick to complain when others undermine this. Unfortunately, Google has engaged in a broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers.

On PCs it is usually not difficult for people to navigate to any search engine. Google in fact makes this point virtually every time someone raises antitrust concerns about their practices. Their defense ignores the hugely important fact that there are many other important ways that search services compete. Search engines compete to index the Web as fully as possible so they can generate good search results, they compete to gain advertisers (the source of revenue in this business), and they compete to gain distribution of their search boxes through Web sites. Consumers will not benefit from clicking to alternative sites unless all search engines have a fair opportunity to compete in each of these areas.

Our filing details many instances where Google is impeding competition in these areas. A half-dozen examples below help illustrate some of our concerns.

First, in 2006 Google acquired YouTube–and since then it has put in place a growing number of technical measures to restrict competing search engines from properly accessing it for their search results. Without proper access to YouTube, Bing and other search engines cannot stand with Google on an equal footing in returning search results with links to YouTube videos and that, of course, drives more users away from competitors and to Google.

Second, in 2010 and again more recently, Google blocked Microsoft’s new Windows Phones from operating properly with YouTube. Google has enabled its own Android phones to access YouTube so that users can search for video categories, find favorites, see ratings, and so forth in the rich user interfaces offered by those phones. It’s done the same thing for the iPhones offered by Apple, which doesn’t offer a competing search service.

Unfortunately, Google has refused to allow Microsoft’s new Windows Phones to access this YouTube metadata in the same way that Android phones and iPhones do. As a result, Microsoft’s YouTube “app” on Windows Phones is basically just a browser displaying YouTube’s mobile Web site, without the rich functionality offered on competing phones. Microsoft is ready to release a high quality YouTube app for Windows Phone. We just need permission to access YouTube in the way that other phones already do, permission Google has refused to provide.

Third, Google is seeking to block access to content owned by book publishers. This was underscored in federal court in New York last week, in the decision involving Google’s effort to obtain exclusive and unfettered access to the large volume of so-called “orphan books–books for which no copyright holder can readily be found. Under Google’s plan only its search engine would be able to return search results from these books. As the federal court said in rejecting this plan, “Google’s ability to deny competitors the ability to search orphan books would further entrench Google’s market power in the online search market.” This is an important initial step under U.S. law, but it needs to be reinforced by similar positions in Europe and the rest of the world.

Fourth, Google is even restricting its customers’–namely, advertisers’–access to their own data. Advertisers input large amounts of data into Google’s ad servers in the course of managing their advertising campaigns. This data belongs to the advertisers: it reflects their decisions about their own business. But Google contractually prohibits advertisers from using their data in an interoperable way with other search advertising platforms, such as Microsoft’s adCenter.

This makes it much more costly for Google’s advertisers to run portions of their campaigns with any competitor, and thus less likely that they will do so. That is a significant problem because most advertisers figure that they have to advertise first with Google. If it’s too expensive to port their advertising campaign data to competing advertising platforms, many won’t do it. Competing search engines are left with less relevant ads, and less revenue. And while this restraint isn’t visible to consumers, its effects are nonetheless felt across the Web. Advertising revenue is the economic propellant fueling the billions of dollars needed for ongoing search investments. By reducing competitors’ ability to attract advertising revenue, this restriction strikes at the heart of a competitive market.

Fifth, this undermining of competition is reflected in concerns that go beyond Google’s control over content. One of the ways that search engines attract users is through distribution of search boxes through Web sites. Unfortunately, Google contractually blocks leading Web sites in Europe from distributing competing search boxes. It is obviously difficult for competing search engines to gain users when nearly every search box is powered by Google. Google’s exclusivity terms have even blocked Microsoft from distributing its Windows Live services, such as email and online document storage, through European telecommunications companies because these services are monetized through Bing search boxes.

Finally, we share the concerns expressed by many others that Google discriminates against would-be competitors by making it more costly for them to attain prominent placement for their advertisements. Microsoft has provided the Commission with a considerable body of expert analysis concerning how search engine algorithms work and the competitive significance of promoting or demoting various advertisements.

Over the past year, a growing number of advertisers, publishers, and consumers have expressed to us their concerns about the search market in Europe. They’ve urged us to share our knowledge of the search market with competition officials. As they’ve pointed out, the stakes are high for the European economy. On any given day, more than half of all Europeans use the Internet, and more than 90 percent of them look for information about goods and services on the Web. Indeed, the European Commission’s Digital Agenda made clear that commerce is moving online, where two-thirds of Europeans begin their shopping process. It’s therefore critical that search engines and online advertising move forward in an open, fair and competitive manner.

There of course will be some who will point out the irony in today’s filing. Having spent more than a decade wearing the shoe on the other foot with the European Commission, the filing of a formal antitrust complaint is not something we take lightly. This is the first time Microsoft Corporation has ever taken this step. More so than most, we recognize the importance of ensuring that competition laws remain balanced and that technology innovation moves forward.

We readily appreciate that Google should continue to have the freedom to innovate. But it shouldn’t be permitted to pursue practices that restrict others from innovating and offering competitive alternatives. That’s what it’s doing now. And that’s what we hope European officials will assess and ultimately decide to stop.

Please see this disclosure related to me and Google.