MediaFile

For all its vaunted idealism, Silicon Valley can be just as cynical as any other area of commerce. The tech companies set up to profit from spam and search-engine trickery are too numerous to count. But Facebook’s short history makes one thing clear: There has never been a tech company that built so much fortune from the exploitation of ordinary people while giving so little in return.

Yes, Microsoft was vilified – and rightly so – for crushing competitors and forcing customers into an inferior operating-system software, but its iron-fisted dominance helped shape an immature and inchoate computer-software industry into a single standard that made PCs everyday devices in offices and homes. Microsoft’s brutal strong-arm tactics were directed at rivals. Its sin against its customers was that its software, for decades, just wasn’t that good.

Facebook, by contrast, built the best social network of its time, so good it left rivals like MySpace in the dust. And that should have been enough to make Facebook a Silicon Valley success story. Once it came time to make money, Facebook exploited its users’ personal data to a degree that no company had ever achieved before.

Over the years, Facebook has curtailed some of its more blatantly exploitative practices, but only after a string of controversies forced its hand. It reluctantly let users control their privacy settings, and then it had to simplify those settings after many found them unnecessarily complex. (Some say they’re still too complex.)

Facebook also backed off changes in its terms of service that allowed it to license users’ data even after they left the site. But even now, regulators are objecting to Facebook’s insistence that users grant the company a “non-exclusive, transferable, sub-licensable, royalty-free, worldwide license” to any photo, video or passing thought they see fit to publish on the site. Facebook has not only redefined the social Web – it’s redefining the very definition of “sharing.”

The other day Glenn Britt, the chief executive of Time Warner Cable, got on the wrong side of history. He stuck with the television networks. On Monday he spoke out against Dish Network’s “Auto Hop,” which allows viewers to avoid the lifeblood of the TV ecosystem: ads. As Brian Stelter of the New York Times reported (emphasis added):

Mr. Britt said that if such ad-skipping became more prevalent, the reduction in ad revenue would be made up through higher subscriber fees or a lower total amount of production of television.

It got me to thinking. Maybe scaling back should be a promise instead of a threat. Television doesn’t serve social and cultural needs as it did generations ago, but what we get from it should be much better. And we already know how it can be, from the Web- and cable-savvy people disrupting a medium that disrupted everything.

Comcast, the largest U.S cable operator, is pushing ahead with its drive to transform the way Americans live with a range of new communications and video services launched at this year’s Cable Show  in Boston.

The latest is a new service called Voice 2go, part of its Xfinity Voice landline phone service, which offers lots of the features customers have become used to with cellphones.

The new features are based within a new Xfinity Connect mobile app that works on iPhones, iPads and Android phones. It enables Xfinity Voice customers to make free calls within a WiFi network — which is even more useful now that the Comcast and several other operators have enabled a common WiFi network across major U.S. cities. It also allows customers to use the service on 3G and 4G phones without eating up valuable minutes. As part of this it also enables free text messaging.

ESPN chief John Skipper is happy to talk to any of the so-called new over-the-top Web video players surfing around the fringes of the cable TV business. But he doesn’t see any major deals happening soon — if ever.

In a conversation with Reuters at this year’s cable show, Skipper was blunt about his skepticism over the idea his network –  the best paid in the business according to SNL Kagan data — could work with a new Web partner, a tie-up that may in some way threaten the cozy $100 billion a year cable programmer-distributor relationship which feeds the entire industry.

“We have a significant stake in maintaining the current model. There’s no advantage to us in new models that undercut what we have today,” said Skipper, speaking from the NCTA Cable Show in Boston.

We are witnessing a fascinating changing-of-the-guard moment in tech. The old Internet, represented this week by once-mighty Yahoo, is fumbling with another leadership crisis it must solve before it can even think about restoring some semblance of relevance. The new Internet, Facebook, is ruled by a young man in a hoodie who is on the verge of creating a massive public company that, as was the nascent Yahoo back in the early ’90s, will be an Internet darling longer on potential than track record, but running hard on an open field.

The common thread might seem to be the “If it’s big, it’s gotta be BIG” illusion that got us all in trouble at the turn of the millennium, when Internet investment hysteria equated today’s eyeballs with tomorrow’s profits. But it’s always about the profits, and the people who promise them. This time that person is Mark Zuckerberg, who as the books on the Facebook IPO closed Tuesday, well in advance of Friday’s first trade, seems to have convinced Wall Street that his seven-year-old company could be worth more than $100 billion — the richest-ever launch in Silicon Valley.

When you value your company at 100 times revenues, investors are banking on the belief that Zuckerberg has perfected the unstable compound that is social abandon and advertiser hunger.

The startup had millions of users, but, from the beginning, just one customer.

The predominant way of interpreting Facebook’s billion-dollar purchase of Instagram, in light of the social-networking giant’s forthcoming IPO, is that Mark Zuckerberg had to pick up the photo-sharing app to boost his company’s mobile engagement. That would allow him to guard the mobile flank against incursions from Google, Twitter, and whatever other social-media tools might next arise.

That may be true – and it may even be the way Zuck thought about the deal when he swallowed hard and ponied up the purchase price. But that way of analyzing Facebook’s pickup, and the pickup of dozens of other startups, not just by Facebook but by Google, Twitter, LinkedIn and others, is probably not telling the whole story. Here’s a different theory, one that better describes the tech world that we, the users of the Internet, now inhabit: Instagram may have had millions of us as its users, but it was really built for just one customer: Facebook.

Silicon Valley, for too long, has confused the issue of what it means to be a user of a website, service or app, and what it means to be a customer of the app. Intuitively, you’d think they would be one and the same: The person using the app is the person consuming the app. But increasingly, apps are being made to grab the attention of the hegemonic companies in tech. Whatever it takes to get bought.

The wireless industry is one of the least trusted businesses among U.S. consumers ,and network operators need to improve their reputations as they look to provide sensitive services like mobile payments or health monitoring, according to the chief executive of the No. 3 U.S. mobile provider Sprint Nextel.

Sprint CEO Dan Hesse cited statistics regarding the wireless industry from the Reputation Institute Pulse Index annual survey during his keynote at the CTIA — The Wireless Association annual U.S. wireless convention in New Orleans.

“Even cable and oil industries rate higher with consumers than we do,” Hesse said. “Its very troubling.”

We’ve all had a little time to breathe after the disclosure last week that Yahoo CEO Scott Thompson embellished his resume. Despite saying he received an undergraduate computer science degree, he in fact did not. And while rising through several positions of increasing responsibility for years, he allowed those vetting his suitability to believe otherwise.

So far Yahoo has said Thompson was guilty of an “inadvertent error” and that it was reviewing the matter. Third Point, the activist shareholder who revealed what had apparently been hiding in plain sight and is trying to grab spots on Yahoo’s board, is now demanding that Yahoo fire Thompson.

Is this what’s best for Yahoo? I doubt it. Is Scott Thompson what’s best for Yahoo? I don’t know. It’s too early to say. And that’s the point.

Albanian Army marching in Tirana's main square (Photo: Reuters)

The Albanian Army is coming everyone, watch out!

We’re only into week 1 of big media companies reporting their quarterly earnings and the most prominent name hasn’t been CBS Corp, Time Warner Inc, Comcast Corp, and Viacom — instead it’s all been about Netflix.

Pretty much on each of these companies’ conference calls, the $4 billion company from Los Gatos, California was a key reason for a boon to the bottom line by supplying  ’found money’ by digital licensing of shows that would have been gathering dust on a shelf somewhere in Hollywood. But also on the calls for several of the same companies, Netflix was seen by analysts as a threat to their future. Let’s not forget the four who reported this week have combined market value of over $160 billion.

At CBS on Tuesday, which most people see as a broadcast and billboards advertising company, the first quarter was given a nice bump from its licensing of old CBS shows like”‘Cheers” but also by newer cable shows like Showtime’s “‘Dexter” and “Sleeper Cell”. Here’s the ever ebullient CBS CEO Les Moonves telling analysts on Tuesday how great Netflix and other copycats are:

AmazonLocal, Amazon.com’s daily deal business that competes with Groupon Inc, is trying to make its offers more relevant to subscribers by asking them for more information on what they’re interested in.

AmazonLocal sent an email out on Wednesday asking subscribers to answer questions on what they like and dislike.

“You’re one click away from personalized deals,” AmazonLocal wrote in the email.