Daily Archives: July 18, 2007

Chalk one up for the Google PR team. The search engine scored a public relations coup earlier this week when it announced that it would begin deleting ‘cookies’ – the little bits of data that help web sites identify their users and track their browsing habits – after two years.

The immediate conclusion of most journalists seems to have been that Google’s new policy will help allay privacy conerns. Understandable, since that’s how Google sold the story. From the Google press release:

After listening to feedback from our users and from privacy advocates, we’ve concluded that it would be a good thing for privacy to significantly shorten the lifetime of our cookies — as long as we could find a way to do so without artificially forcing users to re-enter their basic preferences at arbitrary points in time. And this is why we’re announcing a new cookie policy.

But hold on. A CEO I spoke to yesterday, who is following the privacy issue closely, says Google’s new policy will have almost no effect on privacy. That’s because Google will reset its two-year cookie countdown each time you visit the Google site. The only way the policy would have any effect at all is if people didn’t return to the site for two years. Fat chance.

A few reporters have caught on to Google’s little PR hoodwink, including Ryan Singel at Wired:

People who go two years between Google searches on a given browser will have their old queries de-linked from their new ones.  Google users who do not occasionally destroy their cookies will continue to have their entire search history recorded for posterity and potential subpoenas.  Google users who sign up for an account and don’t know to UNCLICK the Web History box will have almost all of their Web usage recorded by Google.

To be fair, Google is quite upfront about all this in its press release. It also says that users who return to the Google site will continue to be able to control their cookies through their browsers. Still, for Google, or anyone else, to suggest that Google’s decision to delete cookies after two years is a big step forward to privacy is an exaggeration, at best.

 

Richard Waters

Facebook_logo Guessing the value of Facebook has become Silicon Valley’s favourite pastime. According to one of its biggest investors, however, it really isn’t for sale – at least, not at anything like the price anyone would be willing to pay for it.

Peter Thiel, who says he’s the second-biggest shareholder in the hottest private company du jour, is pretty direct. "We believe it’s worth $8-10bn," he said at a meeting last week. (The "we" includes his fellow directors at the social networking company, founder Mark Zuckerberg and venture capitalist Jim Breyer.) He adds:

We could probably get $2-3bn at the moment, but there’s noone who thinks it’s worth what we do.

How do Thiel and co justify their price tag? With 30m users, growing at 3 per cent a week, Facebook could have 100m users by the end of this year, he says. As a former boss of PayPal, he also says he’s seen before just how significant companies with built-in network effects can become:

The big lesson I learnt from the PayPal experience was, people tend to underestimate how far it can go.

He makes two other claims for Facebook’s lasting competitive advantage. One is its new platform strategy. Quoting Bill Joy ("Most of the smart people in the world don’t work for you") he says that opening up to other developers gives Facebook a degree of future-proofing. The company may not itself anticipate the killer app of online behaviour five or ten years from now, but if the smartest developers are drawn to its platform there’s a fair chance it will play host to the next big thing.

The other is that Facebook is collecting valuable information about all those new users. At some stage, that will prove very valuable – even if, for now, it has its eyes fixed on growth rather than monetisation.

Can the question of business model be dismissed so easily? A partner in one of the Valley’s most prominent VC firms (while confessing to deep envy at not having been able to invest in Facebook himself) points out that simply plastering display ads over Facebook pages will not do. That is simply a recipe for degrading the user experience. Where is the killer app for commercialising the site – the AdWords of the social networking world, something which fits naturally into the experience in the same way that search marketing complemented Google? Short of such a breakthrough, it seems purely speculative to try to put a value on Facebook.

If Thiel’s price tag represents his (and Zuckerberg’s) true opinion, and isn’t some elaborate attempt to stoke up a bidding war, then it seems Facebook will stay an independent company for a good while yet. That’s what Fred Wilson believes (or rather, hopes) – he’s counting on an IPO next year.