Dean Wright is Global Editor, Ethics, Innovation and News Standards. Any opinions are his own.

It was 20 years ago that the Berlin Wall, the most iconic symbol of the Cold War, fell, on Nov. 9, 1989.

In recent days, there have been a number of commemorations of the event and news organizations around the world have taken note of what was one of the most important stories of the latter half of the 20th century.

I had the privilege of attending and speaking at one Berlin event organized by Google and Reporters Without Borders. The event, Breaking Borders, took the anniversary as an opportunity to explore how the Internet is playing a role in advancing participatory democracy around the globe. Twenty years earlier, television and satellite technology helped play a role in the fall of the Wall, by connecting people and empowering them with information.

Among those appearing at the event, either as speakers or panelists, were Thorbjørn Jagland, secretary-general of the Council of Europe; Jean-François Julliard, secretary-general of Reporters Without Borders; Rachel Whetstone, Google's vice president for public policy and communications; Andrew Puddephatt, director of Global Partners & Associates; Rita Sussmuth, former president of the German federal parliament; and Sami Ben Gharbia, advocacy director for Global Voices.

The session was recorded and the presentation is on YouTube.

A common theme at the conference was that, yes, the Internet provides a vastly more powerful way to obtain and share information, giving voice to many who had been muzzled. However, there was also a consensus that the Internet also presents myriad challenges and potential barriers.

How, for example, does one make one's message heard over the cacophony of voices on the Internet and, as I explored in my remarks to the conference, what should be the role of the mainstream media? Just as Internet technology can give voice to the voiceless, so can it be used by authorities to suppress speech.

Good afternoon, ladies and gentlemen.

It is an honor to speak to you today and to share a stage with such a distinguished group.

Twenty years ago, I sat with my family in our house in Palo Alto, California, as we watched live television coverage from Berlin. We watched as only a few hundred meters from here thousands of Berliners converged on the Wall, singing, dancing, embracing and, yes, taking sledgehammers to perhaps the most iconic symbol of the Cold War.

Six weeks later, on Christmas Day, we watched again as the American conductor Leonard Bernstein conducted an international orchestra-- again, only a few hundred meters from here-- in a soul-stirring performance of Beethoven’s 9th Symphony to celebrate the fall of the Wall.

For the occasion, the maestro took some artistic liberty with the text of Schiller’s poem, “Ode to Joy.” He changed one word. Instead of singing of “Freude” – Joy-- the assembled choirs and soloists would sing of “freiheit” –Freedom.

As my wife and children and I watched—along with millions of others from California to Japan—we joined with the Berliners in the audience and on the square outside the Schauspielhaus in weeping with joy. Just as the media had played a role in helping to bring down the Wall—by connecting people and empowering them with information—so now was it connecting the joy of Berliners to the world.

It was particularly inspiring to see among the performers the teenage girls in the Dresden Philharmonic Kinderchor, girls who had grown up in the German Democratic Republic and who now, practically overnight, found themselves playing an important role in a ceremony marking a new era.

Now—20 years later—they and their children have access to information and communication technology that has brought about a new freedom, rendering geographical borders more meaningless and making it more possible to get around government efforts at censorship and the suppression of the free flow of information.

I believe Schiller, who in his poem yearned for the unity of humankind, would like much of the Internet revolution, particularly the democratization of information. However, such a lover of beauty and reason might look askance at much of the content on the Internet.

We have moved into a time when anyone with an idea and an Internet connection can be a publisher, so there has been an explosion of information available to everyone. This explosion has given voice to many who had been muzzled. But it has also resulted in a cacophony of sources—many trustworthy, many not; many beautifully voiced, many not.

We have seen how such wide access to publishing tools and information has been a force for liberation, but we have also seen how information can be manipulated and how easily disinformation can dominate the debate.

We’ve seen how the disenfranchised can use social media and other information technology to organize and get out their message, but we’ve also seen how the authorities can use the same tools to subvert these “Twitter revolutions”.

Social media were justly lauded for their role in breaking through government controls after Iran’s elections in June. When foreign journalists were forced to stay in their offices or leave the country, social media helped fill the information vacuum. Major news organizations, including my own, became dependent on social media for images and information. Practically overnight, we drew up standards guidelines on how information gleaned from social media could be used.

There was a great deal of confusion. Some tweeters from Iran changed their location to escape censorship and harassment. Tweeters from outside Iran contributed to Iran-related feeds— some with support, some with false information, some with irrelevant tweets.

A number of fake feeds were set up, some by the authorities, according to activists.

Just whom could we trust?

In the Telegraph, columnist Andrew Keen wrote that “the early promise of a democratic Twitter powered revolution (had) been replaced by a series of bleak lessons in digital realpolitik.”

A little over a year earlier, in Kenya, the digital revolution helped empower journalists covering the elections there. Let’s remember that in Kenya--and in much of Africa, where Internet penetration is barely 5 percent-- the mobile phone, not the computer, is the networking tool.

Journalists were able to transmit news, such as poll results from remote locations, immediately via text messages, circumventing government controls. But later, during ethnic clashes after the elections, the same technology was used to spread false rumors and to threaten journalists.

As Tom Rhodes, who heads the Africa program of the Committee to Protect Journalists, put it, “Though many Kenyans used text messages and blogs to urge a peaceful resolution during the post-election crisis, others encouraged violence.”

Think back 15 years. If today’s Internet and social media like Facebook and Twitter and robust mobile platforms had been available, could they have helped prevent the genocide in Rwanda—or at least serve as a counterweight to inflammatory domestic television and radio broadcasts? Might social media have made it harder for the world to turn a blind eye to the massacres? Or might the voices warning of genocide have been lost in an Internet cacophony of celebrity news, trivia and self-important shouting?

The invitation to this event tells us that, two decades after the fall of the Wall, today’s open Internet is playing a pivotal role in advancing participatory democracy around the globe. I believe that is true. But the Internet is really a utility. It can empower and amplify voices that otherwise would not be heard and it can unite communities of interest into powerful networks.

But how do those voices and networks cut through the cacophony and the disinformation?

It is here that I believe we in the mainstream media have an important role to play.

For far too many years, news organizations had an arrogant, one-way relationship with their audiences. We gathered news, packaged it in ways we thought made sense and shoveled it out to our audiences. If they liked what we delivered, fine. If not, well, they could always write a letter to the newspaper editor.

In today’s media world, not only is feedback instantaneous. Anyone with an Internet connection can be a publisher, can raise their voice, can tell the world what they see and what they think.

But my, what a din! How can anyone know whom to trust?

In the old, arrogant, one-way world, we told you whom you could trust—us! And by and large you did. But over the past 20 years, trust in news organizations – particularly in the United States and the United Kingdom—has plummeted to new lows. A recent Pew Center survey found that barely a quarter of Americans believed news organizations generally got the facts right in a story.

Once that trust is lost, we mainstream news organizations also run the risk of becoming just another lonely voice in the cacophony.

So how do we retain—or regain—that trust, and how do we remain relevant in today’s connected world?

We start by telling the world about the rules we live by and truly living by those rules. We also must be an enthusiastic partner and participant in the newly democratized world of Internet publishing and social media. We need to shed the arrogance and share the standards and values that give us strength and credibility. By doing so, we provide resources to others to create responsible, ethical journalism.

Let me offer a couple of examples of what we at Reuters have done.

First, in July we made the Reuters Handbook of Journalism available to the public for free online at handbook.reuters.com. It’s my hope that the citizen journalist, the student, the teacher, the budding reporter, the blogger will be able to learn and benefit from our handbook. By putting the 513-page handbook online, it will be available to countless thousands who otherwise would not have had access.

We decided to make the handbook available for a number of reasons.

The first is transparency. At a time when trust is such an endangered commodity—in both the publishing and financial worlds—it’s important for news consumers to see the guidelines Reuters journalists follow.

Just as important, however, is the service we hope the handbook will provide to journalists, publishers, teachers and students around the world. As the barriers to publishing have practically disappeared, practically anyone can be a publisher. But it’s also become clear that publishers have varying standards of truth, fairness and style. Our handbook is a good place for a new journalist or publisher to begin to develop his or her own standards.

And there’s a feedback button to tell us what we might have wrong or how to improve the handbook.

But it’s not enough for us to merely share our rulebook. We must be actively engaged in the new media reality.

Reuters journalists use social media to report and distribute news and we are developing new standards and guidelines to help us do that in a way that we can retain the trust of our audience. As those guidelines are developed, they will be added to the Handbook of Journalism.

We’ve also reached out to our publishing colleagues in the blogosphere to complement our reporting. I’m honored to be on the program with Sami Ben Gharbia of Global Voices, just as we were honored to work with Global Voices on our news website Reuters.com. Global Voices bloggers have supplemented Reuters coverage of a number of stories, including the Mumbai bombings, the visit of Hu Jintao to the United States and this year’s elections in Iran.

These are small steps in the vast information ecosystem of the Internet, but I believe they demonstrate ways we can help promote responsible, high-quality journalism across the Internet, in a media environment without walls.

We are living in a scary but exciting media world. The world’s financial system is facing challenges not seen since the Great Depression. Mainstream news organizations are struggling, as advertisers cut back and customers cut spending. As news becomes available—for free—from a vast range of sources, we face challenges in adding value to our product.

But we in the mainstream media have a responsibility to be enthusiastic participants in—and moderators of—this exciting and challenging world.

I think again of those wonderful young singers from Dresden in the Christmas Day concert of 20 years ago. The fall of the Wall was their story –and the media of the day shared that story with the world. Now they’re in their 30s and the media they and their children use include the Internet, Blackberrys and iPhones.

What will be their children’s story? Whatever it is, they will be able to share it in ways undreamed of when the Wall fell. And no matter how the storytelling medium changes, we in the mainstream media must be there to help.

Google doesn't want you to be afraid of the cloud.

The company announced a new feature on Thursday that lets people view all the personal information they've entered into Google's sundry Web-based products over the years.

The information in Google's new Dashboard covers everything from your personal account information for email and other Google services, to your viewing history on YouTube and the photos you've uploaded to Picasa. It's information that was always accessible in the past, but Google is now making it viewable in one, all-inclusive snapshot.

Privacy advocates have long warned that Google is accumulating too much information about people through its broad menu of Web-based services and not providing enough insight into how the information is being used.

Whether Google's Dashboard will appease them remains to be seen.

Google said it will begin by incorporating information from 23 Google products in the dashboard, with more to come in the weeks ahead.

Of course, the dashboard also has the benefit of reminding consumers about all the Google services they signed up for in the past and may forgotten about - a reminder that just could lead someone to start using a product again.

For Google, transparency has its benefits

Let the second-guessing, the mock horror, the disbelief, the crowing begin.

Google CEO Eric Schmidt has acknowledged he realized upfront that he was overpaying to acquire YouTube, to the tune of $1 billion, judged by any conventional measures.

The many critics of Google's $1.65 billion deal to acquire the video-sharing site three years ago will claim this confirms everything they have always said about the deal. Not quite.

In fact, not really at all.

Schmidt came clean in a deposition by lawyers in the Viacom copyright lawsuit that there was very little revenue coming into YouTube to justify the price his company paid.

No surprises here. There were intangibles to consider:

1. YouTube's popularity was sky-rocketing, making it the runaway market leader among video-sharing sites.
2. It was crushing his company's own site, Google Video.
3. YouTube was up for auction and would be sold to a competitor unless Google jumped first.
4. Google overbid to ensure YouTube didn't fall into rival hands.

The Google CEO said he told his company's board of directors that the 18-month-old video-sharing site was worth $600 million to $700 million, according to CNet, which obtained a transcript of his testimony. Of course, he fails to mention the potential costs of copyright lawsuits that already loomed for YouTube.

"In the deal dynamics, the price, remember, is not set by my judgment or by financial model or discounted cash flow. It's set by what people are willing to pay," Schmidt says.

So the real justification for the 150 percent premium Google paid was in derailing, or at least delaying, the rise of a potential competitor. Of course, Google has faced a long struggle to find ways to make advertising work on the site in order to pay the costs of free video. Only last quarter could Google say YouTube would be profitable in the "not long, not-too-distant future."

Of course, all the fuss over YouTube's valuation is not really Google's problem. The real issue is the extrapolation of valuations of all the Web 2.0 companies since then which have used the YouTube price as the benchmark for all the other-worldly valuations of their unproven business models.

Here are the relevant excerpts from Schmidt's deposition by Viacom lawyers, via CNet:

Viacom attorney Stuart Jay Baskin: And what was management's valuation?

Eric Schmidt: Much lower than we paid for it.

Baskin: And how was that communicated to the board?

Schmidt: I told them.

Baskin: So why don't you tell us what you remember telling the board in connection with the valuation?

Schmidt: I believe YouTube was worth somewhere around $600 million to $700 million.

...
Baskin: What methodology did you use to come up with that number?

John P. Mancini, an attorney working for Google, objects.

Schmidt: My judgment.

Baskin: Was it based on cash flow analysis? Comparable companies? What were you using as the basis for your judgment?

Mancini objects.

Schmidt: It's just my judgment. I've been doing this a long time.

...
Baskin: I'm not very good at math, but I think that would be $1 billion or so more than you thought the company was, in fact, worth.

Mancini objects.

Schmidt: That is correct.

(Photo credit: Reuters/Jonathan Ernst)

-- Wei Gu is a Reuters columnist. The opinions expressed are her own --

Google's former China head Kai-Fu Lee wants to create China's next internet giant in a factory. He believes that by combining the smartest entrepreneurs, the shrewdest businesspeople and the brightest business ideas, he will be able to create five highly sellable companies a year. That sounds like an ideal model for venture capital, but is he being realistic?

Lee's plan, formulated while he spent time in hospital over the summer, follows a battle with Beijing regulators who wanted to censor Google searches that lead to pornographic sites. It has drawn strong support from investors.

Lee has managed to raise $115 million in just one month, winning support from YouTube Inc. co-founder Steve Chen, as well as Foxconn Electronics Inc., Legend Group, New Oriental Education and venture firm WI Harper Group.

They believe that as China embraces a start-up culture, Lee's business, which is a mix of venture capital and development lab, will be well positioned to capitalize.

Lee's plan is to hire 100 to 150 young engineers, help nurture their ideas, then spin off 50 to 75 of them a year with funding from his venture, whiling hiring new people to make up for the loss. However, it looks like his company, called Innovation Works, has yet to line up ideas or engineers.

This kind of "incubator" model became popular in the U.S. and Europe during the dot-com boom, but most of them just burned through a lot of money and then folded. Lee and his backers believe that China's market is more favorable, as it is at a crucial point regarding "cloud computing" and mobile technology, and there is a strong need for early-stage funding.

The new fund is still starting off, but Lee plans to expand from its base in Beijing to places such as Taiwan, the Asian hardware manufacturing base.

Investors are attracted by Lee's reputation as the single largest magnet for talent in China. Lee, who grew up in the United States, has won a loyal following from Chinese students through his numerous coaching books, public speeches and blogs, although critics say he has spent too much time promoting his personal brand.

An expert in speech recognition technology, he founded Microsoft's China research lab in the late 1990s. When he left to join Google, Microsoft sued him for violating a promise not to join a competitor.

Nimbler local rival Baidu now dominates China's search market with 75.7 percent in terms of total search queries, dwarfing Google's 19.8 percent share, according to iResearch. At Google, Lee was caught between the Beijing authorities who insist that foreign web companies censor the Internet and his U.S. bosses who demanded he drum up more business in China.

He has wanted to break away from his corporate role to start his own company for a decade, but it looks as if he is stuck in the corporate mindset. Lee is adopting an almost a planned economy approach to an industry that has always relied on markets to determine who is the fittest to survive. Indeed, he is even promising to tailor-make companies for interested foreign investors.

A factory model lowers the risk for investors as they will enjoy more control, but that also means less incentive and ownership for entrepreneurs, since their roles are reduced to that of employees. Why would young people take their ideas to Lee rather than make a go of it themselves?

Unlike Silicon Valley, China does not have an ecosystem where start-up companies can easily find angel investors. Even though China is a hotspot for venture capital, with $50 billion chasing mid- to late-stage projects, less than $1 billion in total is earmarked for early-stage projects.

Lee prides himself on his doggedness in chasing after talent. One year while at Google he made offers to graduates, only one of which was initially rejected. He called the student, found out that his girlfriend thought Google was a bit of a start-up, then asked for his girlfriend's number and called her up. That year he achieved a 100 percent offer acceptance rate.

Nevertheless, it remains to be seen whether Lee can retain his ability to attract and inspire the best young people now that he is no longer at Google. He needs a lot of them to make his dream come true.

-- At the time of publication Wei Gu did not own any direct investments in securities mentioned in this article. She may be an owner indirectly as an investor in a fund --

-- Aron Cramer is president and CEO of BSR, a global business network and consultancy focused on sustainability. The views expressed are his own. --

As the World Economic Forum’s “Summer Davos” meeting in Dalian, China, gets underway, it is a bit chilling to think back to how the financial crisis was unfolding in real time during last year’s event.

As the 1,000 leaders gathering for this year’s event spend three days debating how to restore economic growth and social stability, the need to focus on a long-term transition to a more sustainable economy is clearer than ever.

Doing this will require unprecedented cooperation among businesses and consumers. The companies that build new business models and innovative products and services will win in the reset world, and shape an economy that avoids disruptions like the one that erupted last fall.

At this year’s meeting, I am chairing two workshops, where we will explore how to build new models of production and consumption that hold the potential to create not only a return to growth, but to a more sustainable model of growth.

Arising from an interlocking set of crises, three immense challenges stand before us. We must:

1. Return to economic growth while deleveraging massive debt.
2. Transition to a low-carbon economy that uses natural resources more efficiently.
3. Create new social contracts both inside and between nations.

These simultaneous challenges present a turning point for the world comparable in scale to the one we faced in the aftermath of World War II.

The good news is that the “reset world” currently under construction contains a multitude of opportunities just waiting to be captured by innovative companies ready to collaborate.

We are already starting to see a new wave of collaboration that will be the foundation of renewed economic growth. GE and Google are teaming up to build smart energy systems that radically reduce the reliance of consumers and business on carbon-based fuel. Nike is pioneering a collaborative R&D model called “Green Xchange,” which will create an open-source model for product development focused specifically on environmentally friendly products.

It’s heartening to see that this collaboration now includes the entire business “value chain”—which extends from a product’s development to its distribution and use—where companies are exploring ways products can be developed more efficiently, from design to assembly to distribution.

One of the meetings I’ll be running this week is a workshop with 50 CEOs and experts who are designing new production models that will deliver economic growth for the post-crisis era. The redesign of value chains, while somewhat invisible to the general public, is crucial to our economic future. Virtually all products, from a simple T-shirt to Boeing’s new 787 Dreamliner, rely on a dense web of companies focusing on a single step in the production process.

Tomorrow’s solutions won’t be built behind the towering ramparts of single companies. Instead, they rely on collaboration across the spectrum, ranging from design firms like IDEO to well-known brands like Pepsi, and from logistics providers like Jordan’s Aramex International to retail giants like Wal-Mart.

The ultimate challenge all companies face is creating products that meet a global class of consumers without requiring several planets’ worth of water, fuel, and other natural resources. This means products must satisfy the needs of 600 million Indian villagers as well as they do for the 500 million citizens of the European Union. This means greater coordination of transportation, just as sea carriers like Maersk have done by partnering with their clients to use slow (and therefore more fuel-efficient) shipping to get products from Asian factories to American ports. This means innovative packaging to reduce, if not eliminate, waste. And this means developing new ways to communicate with consumers so that they can better understand the social and environmental implications of their consumption habits—and find ways to save money in the bargain.

At this year’s Summer Davos—a year after the onset of the Great Recession—we know not only what the challenge is, but also what the answers look like.

This week’s event is dedicated to companies the World Economic Forum has designated as “New Champions.” There is little doubt that many of these companies will come from Brazil, China, India, the Middle East, and elsewhere in the developing world. But new champions will be determined more by mindset than by geography. Companies that keep their eyes on long-term trends, that meet people’s needs within environmental limits, and that look at innovative collaboration will shape the future. Companies that don’t will find that the financial crisis was only the beginning of their problems.

- Mic Wright is Online News Editor at Stuff. The views expressed are his own -

Google juice – it sure isn’t tasty but it is vital for anyone writing news online. The slightly irksome term refers to the mysterious combination of keywords and linking that will drag a webpage to the top of Google’s search pages.

While the exact way Google’s search algorithm works is largely a mystery to outsiders, news sites know it’s vital to write headlines stuffed with the keywords that the search engine seeks out.

Online, the perfect punning headlines created by The Sun newspaper’s super sub-editors just won’t cut it. News stories on the web are all about the facts and the most successful sites are constantly checking to see what keywords will send you soaring up the Google search rankings. If you story isn’t on the front page, it’s not getting clicks, the less clicks you get the less likely it is that your advertisers’ ads are going to get seen.

Now Google has announced that it’s been working on a brand new version of its search engine and it’s likely that online headlines are about to get even more straight forward. The new iteration of Google’s most profitable invention is codenamed Caffeine thanks to its speediness. It has already been made available for users to test and besides the noticeable increase in speed, it appears to make search a more real time experience than we’ve previously seen.

The move to real time search, showing web pages in search results as soon as they appear, is a response to the instantaneous nature of Twitter which has recently got the jump on Google when it comes to breaking news. Currently there is a slight but noticeable lag with Google results – its search crawlers (programmes that scour the web to see what sites have been updated) don’t grab changes immediately. But with the new version of the search engine they will.

This slight change in approach will make the way news organisations write their headlines even more important. It will also be like pressing the fast forward button. News writers will need to get their stories up faster and add new information swiftly to ensure that they remain high in the Google search rankings. A test by Mashable found that the new Google Search algorithm rewarding news gatherers for adding new information to their stories by placing them higher in the search results.

The new Google relies even more on keywords than the old version. Headline writers jobs have just got a lot harder. For readers, it’ll mean more and more matter of fact headlines carefully crafted to include the keywords that Google’s crawlers are after rather than created to entertain you. The days of the pithy, pun packed headline are over, at least online.

LONDON, Aug 3 (Reuters) - The resignation of Google CEO Eric Schmidt from Apple's board should come as no surprise to anyone with an inkling of what corporate governance means.

But then Silicon Valley's idea of corporate boards has long consisted of cozy, interlocking directorships which would be considered collusion in most other industries.

Google's CEO is not leaving Apple's board voluntarily. He is only stepping down in response to the increased government scrutiny of obvious potential conflicts of interest between the two companies.

Yet regulators shouldn't be content with Schmidt's departure. The truth is that Apple and Google have been heading into the same markets for years. A veritable chain of overlapping business ties remain in place even if the most obvious formal link is now broken.

The chairman of Apple's board, former Genentech CEO Art Levinson, remains on Google's board. Another Google board member, Ann Mather, is the former chief financial officer of Steve Jobs' former animation company, Pixar Studios.

Paul Otellini, the CEO of Intel Corp, Apple's main chip supplier, also sits on Google's board. Al Gore remains on Apple's board, but in his new turn as venture capitalist he has many business ties to Google and its founders. Gore is a partner of Google board member John Doerr at legendary Silicon Valley VC firm Kleiner Perkins.

For months, the U.S. Federal Trade Commission has been examining Schmidt's participation on the boards of the tech world's two most dynamic companies. Last week, the Federal Communications Commission said it was looking into Apple's decision to reject a Google phone application to run on the iPhone.

Google's CEO says he has consistently recused himself from Apple board discussion of the iPhone. There's no reason not to take him at his word. But that's largely a distraction from the bigger issues at stake here,

Schmidt need not have participated actively in iPhone discussions. By taking part in discussions of the rest of Apple's strategy, Schmidt was in a position to steer Google's own strategies around the Apple juggernaut. Rivals need not cooperate directly to divvy up markets.

Anyone following the industry knows that Apple and Google have been moving in similar directions since well before Schmidt joined Apple's board three years ago. As computers become more like phones and the Internet becomes more mobile, the competition has become only more obvious.

By August 2006, both companies were hard at work on their plans to enter the mobile phone market. In September 2005, Apple made its first failed foray into the market with a joint development effort with Motorola that led to the introduction of the Motorola ROKR iTunes phone.

A month before -- and a year before Schmidt joined Apple's board -- Google had acquired mobile device start-up Android, forming the genesis of its own push into mobile phone markets.

Six months after Schmidt became a director, Apple unveiled its ground-breaking iPhone, in January 2007. Fevered speculation mounted throughout 2007 that Google was working on its own so-called GPhone.

In November of that year, Google introduced its Android software for mobile phone development. In September of 2008, the first Android-powered phone built by Taiwan phone maker HTC for T-Mobile was introduced.

So far, Apple has been content to attack the high-end of the smartphone market. Google is aiming at the mid-priced phone market and new mini-notebook computers with Android. But the conceit that the two companies aren't competitors is wearing thin.

Reforming corporate boards has never been easy in Silicon Valley. Recall the boardroom battles that cost former Hewlett-Packard CEO Carly Fiorina her job. They pitted H-P's old guard against corporate governance advocates who were Fiorina's allies. The decline of Yahoo is another obvious example of failed board governance.

Independent corporate governance is an afterthought in the go-go corporate culture of Silicon Valley, where entrepreneurs backed by venture capitalists launch start-ups. Even years after an IPO, the founders and their VC backers typically keep disproportionate control over "their company."

Investors bear no small part of the blame. Most care only in retrospect, once rocket-fueled growth subsides and the shares of former high-tech stars fall back to Earth.

For now, both Apple and Google shares are moving higher, as the tradition of weak corporate governance looks set to survive a while longer.

(Photo: Reuters/Kimberly White)

LONDON, July 29 (Reuters) - There's been a bonfire of shareholder value at Yahoo and the blaze is not out yet, even after the agreement to a long-delayed deal with Microsoft.

Eighteen months ago, Yahoo walked away from Microsoft's nearly $45 billion acquisition offer -- a 60 percent premium to Yahoo's then market value.

Fast forward to today and there is a zero premium being offered by Microsoft. And that's after Yahoo also spurned $9 billion from Microsoft to buy just Yahoo's search business. Still, investors had been hoping Microsoft might pay at least $1 billion in up-front cash to Yahoo.

No chance. Instead, Yahoo is receiving face-saving revenue guarantees for search advertising sold on Yahoo's own sites for the first 18 months after the Microsoft deal takes effect.

Think ahead to 2012, the Olympics. That's when Microsoft and Yahoo expect to finish fighting for regulatory approval, closing the deal, dividing up assets, putting their plans into effect and re-launching services.

The agreement is not an acquisition, but for Microsoft, it might as well be, as it gets control of the key levers.

For Yahoo shareholders, it's value destruction not seen since the misguided merger of America Online and Time Warner at the peak of the dot-com era. The parallel between what is happening to Yahoo and the decline of AOL is instructive.

When the AOL-Time Warner deal was announced in 2000, AOL was valued at $166 billion. Four years ago, AOL was considered to be worth $20 billion. Now it's less than $6 billion.

Yahoo's stock market valuation hovered at just over $20 billion on Wednesday following an 11 percent decline in its share price that reflected disappointment at the terms of Microsoft's pact.

And there's no certainty Microsoft and Yahoo can win regulatory approval without big sacrifices.

The world has moved on since Microsoft first approached Yahoo. Google looks stronger, which might help the Microsoft-Yahoo case. But there are lots of lawmakers in Washington, not to mention Brussels, looking to write tough new laws to capitalize on consumer privacy fears.

Colin Gillis, a financial analyst with Brigantine Advisors in New York, argues the deal could be the trigger for a broader U.S. privacy law that seeks to rein in online behavioral targeting.

Among the major Internet advertising companies, Yahoo has been the most aggressive proponent of efforts to link user activities across the Web with targeted advertising. Pushing the Microsoft deal could prove damaging to its underlying ad strategy.

Terms of the deal give Microsoft effective control over Yahoo's search technology, which will be incorporated into its own effort, Bing. In exchange, Yahoo will act as the sales force for the display advertising business of the two companies.

The danger for Yahoo shareholders is they will wake up in 2012 to find themselves owning a shriveled piece of the Internet pioneer's former glory. A far leaner AOL, meanwhile, will be competing directly with Yahoo's media and advertising businesses.

Web search is the most dynamic aspect of the online advertising market. It's the best way advertisers have of figuring out consumer intentions. Microsoft ends up capturing search, while Yahoo retains the lower margin, labor-intensive job of selling display ads like site banners to other publishers.

In the end, Microsoft gets half of what it wanted and Yahoo has nothing more to show for the fight but something like $500 million a year in operating income when all the pieces are in place.

The new deal has a logical operational structure where Microsoft manages technology and Yahoo sells. But the value that's being created will increasingly fall to Microsoft, when, years from now, the partnership comes into effect.

-- At the time of publication Eric Auchard did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. To read some of Eric's previous columns, click here  --

(Editing by Martin Langfield)

Some tech links to start the week:

I am seriously considering changing my byline to Zing, what with all the media attention a certain search engine is getting.

The New York Times looks at the ups and downs of turning brands into verbs. The jumping off point is Bing, Microsoft's effort at verbal one-upsmanship over Google, Twitter and over generic daily activities. The software giant must alter deeply ingrained computer habits to succeed. In the meantime, my original questions about Bing remain.

The more substantial news this week would be if Microsoft finally inks a search and advertising partnership with Yahoo Inc. It's not easy to overcome deal speculation fatigue -- it's been a year-and-a-half since Microsoft sought to acquire Yahoo outright, and a year since it dropped back to Plan B and sought out a more limited partnership deal. Boomtown reported Friday that Microsoft is down to a few short strokes away from signing.  Henry Blodget makes the point that Microsoft may have to pay up far more than the $1 billion it was offering a year back for such a deal.  Closing a deal now suggests renewed desperation on Microsoft's part after the paltry gain it received from Bing in June market share statistics for U.S. web search.

Beyond the personalities and the history that have kept Yahoo and Microsoft apart, there is the little matter of an advertising recession  that will delay any short- or medium-term rebound in either company's online advertising fortunes. AOL Chief Executive puts any resurgence in online advertising out to 2011 in an interview published by Reuters on Sunday.

UBS has published its quarterly survey of corporate technology spending intentions. The study of 100 U.S. and European CIOs finds these buyers slightly more optimistic about their budgets during the second quarter than they were earlier this year.  Among the more interesting findings:

• U.S. spending appears to be improving while European discretionary IT spending is declining.
• IBM and HP/EDS will take the lion's share of any increased spending by CIOs on computer service, while Accenture, CSC and Indian software services companies all stand to see far less.
• Only a handful of software companies can expect to see increased net spending in the next 12 months: Microsoft, SAP, Citrix and Oracle , to a far lesser degree. Out of favour are technologies such as security, software as service and voice recognition.
• Dell saw a big gain among buyers more likely to spend with it.  The Q2 survey showed 21 percent of buyers more likely to buy, up from 12 percent in Q1. UBS pins this increase on Dell's willingness to slash pricing.

The biggest surprise is the gulf emerging between the U.S. and Europe over plans to upgrade to the next version of Windows 7, due out in October, UBS finds. More than half of Europeans have no plans to upgrade to Windows 7, while closer to a quarter of U.S. buyers have yet to make plans. (Click to enlarge graphic)

(Images: Microsoft, UBS Research)

By Eric Auchard

LONDON (Reuters) - Intel Corp has cheered up investors by once again making forecasts about its financial performance. The trouble with reading too much into its rebound, however, is that this is largely due to productivity gains of its own making, rather than a broader awakening of demand.

To be sure, Intel's revenue, profit and margins surged past all published analyst expectations for the second quarter. Partly, this was merely the "snapback" that occurred after Intel throttled back production to as low as 25 percent of factory capacity in the first quarter, amid a glut of unsold chips and shriveling demand.

Things got so bad that it quit commenting on its outlook for the first two quarters of 2009.

The bigger news was its answer to the question of what was happening in the second half: Third-quarter margins should improve to around 53 percent on revenue around $8.5 billion, and could move up toward historic high levels by year-end. The comments sent Intel shares up as much as eight percent and sparked broad-based buying in technology shares around the globe.

However, there is little here to bolster confidence in other bellwethers of the technology sector reporting this week. Intel is benefiting from healthy demand in China and -- to a lesser extent -- the United States, among consumers rather than businesses. But these are not swing factors for the likes of Nokia, IBM or Google.

IBM must defy the widespread evidence of weak corporate activity that Intel and others cite. But the company's reinvention as a business services provider makes it likely to once again produce stable results that say little about the overall health of the wider technology sector. Its sales of computers and storage could slip more than expected and currencies will hurt, but if contract signings hold up in its core services segment, IBM will remain a safe haven.

Google is expected to show negligible revenue growth compared with a year ago. This is a dangerous season historically for the company and has led to repeated disappointments. Recent industry data shows paid search, the source of Google revenue, slowed faster than ever in the second quarter. Increased capital spending tied to network outages could be another negative factor.

Nokia is at the mercy of soft demand for phone replacements in a weak global economy. It will be further hurt by currency fluctuations. Quarterly revenue is expected to fall by more than 20 percent versus a year ago. The backlog of unsold handsets that hurt Nokia last year has been worked off. But there are few scenarios in which the company might boost its outlook for the second half.

The difference comes down to this: Intel has been investing for years in the transition to ever smaller 32-nanometer-scale chips that are far more efficient than the prior generation of chips at 45-nanometer scale. Even in the absence of fresh economic demand, efficiencies are once again working in Intel's favor. These are factors that other technology companies can only dream of.

-- Eric Auchard is a Reuters columnist. The opinions expressed are his own. At the time of publication Eric did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. --

(Editing by Martin Langfield; Photo: Reuters file photo)