It has been a week of regulatory decisions on internet privacy issues.

The UK’s Office of the Information Commissioner has given the go-ahead for Phorm, the targeted advertising company to start trials with BT. While the ICO statement of this is not exactly a ringing endorsement of the service, it doesn’t raise any insurmountable concerns. Phorm is still under close scrutiny, but for now, allowed to go ahead.

At the same time, the Article 29 Working Party has finally published its opinion on data protection issues related to search engines, going much further than some observers expected. Search engines are to be required to delete search logs after only six months compared with 18 currently for Google and 13 for Microsoft and Yahoo.

There is still much puzzling over the exact interpretation of the dense document, but under some of the strictest readings it suggests that even the search terms you type into a search engine are personal information and should not be used without your permission for other purposes. In other words, they shouldn’t be used to send you targeted ads, an interpretation that would entirely undermine Google’s business model.

It seems unlikely that the rules will be taken to this extreme, but it is clear there is a clash coming between Google and the European regulators on the recommendations. Google maintains it needs server logs for 18 months – some European regulators say even 6 months are too much. After a year and a half of talking, neither side has convinced the other. It doesn’t bode well for finding a compromise from here.

The Phorm and Google cases show that regulators have fallen out of sync with public opinion on these matters. For internet users, Phorm is the easier to hate, because noone really likes advertising. Google, on the other hand, provides a useful service and is forgiven for much.

The regulators, however, appear to see Google as the more problematic of the two. It is OK to target people with ads as long as it is done anonymously, without identifying people. What is not OK is having a lot of personal details sitting on company servers, however unobtrusively they may have been collected and used.

Well, soon you can. The announcement last night of Google’s App Engine (currently in closed trial) is symbolically important: until now Google has been a vertically integrated company, building one of the world’s most powerful computing networks in order to deliver its own search and other services. Like Amazon before it, Google now says it will make that massive computing resource available to other businesses that want to run their software on its servers and access it as a service over the internet.

Once again, Google has beaten Microsoft to the punch (though to be fair, this is still only a very low-key trial, and what’s being played here is a very long-term game.) Microsoft has promised to reveal more about its own “cloud computing” platform this year, with much expected at an October developers’ conference in Los Angeles.

This is shaping up to be yet another fascinating face-off between the leading internet and software companies. Microsoft is a platform company in its DNA and has a massive following among developers, but it has less experience of delivering high-volume services over the internet. Google has unparalleled brains and brawn in running internet services, but it is still at the early stages in winning over developers (a sign of its growing influence will come at a big developer conference in San Francisco next month.)

Ultimately, much will come down to trust. The mantra of IT professionals used to be, noone ever got fired for buying from IBM. Maybe, one day, Google or Microsoft will step into those shoes.

The video game publisher THQ must be feeling a little like WALL.E, the robot title character in the next Pixar game it plans to release in sync with the animated movie this June.

WALL.E is left behind on earth to clear up the trash after all the humans have left, just as THQ faces a solitary future after the galactic mergers of Activision with Vivendi and potentially Electronic Arts with Take-Two.

THQ would be left among the rubble in the US as the only other significant third-party publisher (THQ’s $1.5bn market capitalisation is six times that of the persistently underperforming Midway Games.)

EA has argued that Take-Two ($1.9bn market cap) is sub-scale and unable to compete effectively in a world where truly global marketing and publishing operations are needed to maximise the revenues from hit games.

By that measure, THQ is sub-scale, but it’s an argument that Brian Farrell, THQ’s chief executive, tried to refute when I met him in San Francisco last week.

“The truth of the matter is that we do have scale,” he said.

“We have 2,000 people in product development on three continents, we are in every market, we put out 147 Skus [versions] of Ratatouille.”

“There are disadvantages to being overly large as well, we can can say: ‘Do you want to be number 30 in a bigger publisher’s roster or be in our top 10 - it’s a big argument with licensors.”

Mr Farrell says THQ and France’s Ubisoft would be left in the $1bn-$2bn market-cap range if both mergers take place and everyone else would be “sub-scale”.

THQ has hit a rough patch in the past few months. In January, it said games, including Stuntman and Ratatouille had underperformed, other games were being cancelled and its Concrete Games studio was being shut down.

“We have a very disciplined review process, [Concrete Games] wasn’t making progress and we had to make a tough call. It’s probably the first studio we’ve closed, but it’s all about talent and the management of that talent,” said Mr Farrell.

He has positioned two experienced executives to monitor production values and processes and is upbeat about the new games that reviewers were let loose on at a San Francisco event.

I had fun with Red Faction:Guerrilla, a game that allows you to demolish a building piece by piece with a hammer, and de Blob, a Nintendo Wii game where you can literally paint the town red. Saints Row 2, due in August, also looked impressive and Pixar’s WALL.E may well sell better than its Ratatouille. Making an engaging game about a rat that likes cooking was a tough one, Mr Farrell admitted.

I just got back from a free coffee and conversation across the road in Union Square, here in San Francisco, with coComment, the blog comment aggregator.

The service was handing out free cappuccinos encased in coComment coffee sleeves with phrases to complete such as “If I could name my own presidential candidate it would be…”

Apart from a publicity gimmick and a backhanded compliment to Starbuck’s The Way I See It cup quotes, the idea was to send people to coComment’s site to begin conversations in its Café threads.

Just like my chat today in the real-world café is now largely confined to notebook scribbles and the participants’ vague memories of a moment in time, most of the comments made on blogs around the web are forgotten footnotes trapped inside the note that provoked them.

“The idea behind coComment is to liberate the conversations of the web,” Kristina Serafim, its head of marketing, told me.

It works by users signing up and installing a browser plug-in. Then, a copy of any comment made on any blog is sent to coComment’s servers and becomes part of the user’s page-listing of all their comments.

Their friends can see their comments and tagged comments can be assembled to become part of larger conversations on topics.

As well as empowering the comments of users, coComment also drives traffic to the sites that provoked the comments, by preserving a link to the blog post.

Bloggers who attract few comments can integrate its feature into their site or adopt coComment as their outsourced commenting platform. Launched in February last year, coComment now has more than 1m users and has tracked comments on 250,000 sites.

In a related conversation, Seesmic, the video commenting and conversation service started by French entrepreneur Loic Le Meur, has just acquired Twhirl.

Twhirl is a desktop client that allows users to post their thoughts to Twitter, Jaiku and Pownce, the popular microblogging and communication services, simultaneously. Seesmic plans to enable its video conversations through Twhirl and in its recursive style has already put up a video conversation about how it acquired Twhirl through Twhirl-powered Twitter conversations.

Microsoft and Yahoo continue to circle each other like wrestlers, each waiting for the other to show its weakness before getting into a clinch. At a time like this, just about anything either side says is pure rhetoric.

That is the best interpretation of today’s report that Microsoft is ”evaluating” its bid in the light of deteriorating market conditions. This is a thinly-disguised version of the Larry Ellison treatment: soften up the target by cutting the value of a takeover offer (something Ellison did while Oracle stalked PeopleSoft) or at least threatening to (his treatment of BEA Systems.)

Like Reuters, I also talked to “people close to Microsoft” today, but I came away with the distinct feeling that not much has changed. No matter. With the arbs starting to sweat (most were probably thinking they’d have banked a nice profit on this deal by now) Yahoo’s stock has slipped 3 per cent.

Only two things are certain. One is that, whatever the rhetoric, Larry Ellison eventually ended up raising his offers to win PeopleSoft and BEA. The other is that the real negotiation between Microsoft and Yahoo will be conducted behind closed doors, not through these public posturings.

Not got around to upgrading to Windows Vista yet? In that case you might want to delay a bit longer: it looks like the next version, Windows 7, is coming sooner than we thought.

That reaction is exactly what Microsoft is afraid of - and why it has been scrambling today to stamp on the suggestion that unlike Vista, which arrived years late, 7 (codenamed Blackcomb, after a Canadian ski resort) may actually arrive early.

Unforturnately the speculation will not be easy to kill. Bill Gates himself let the cat out of the bag by declaring he was “super-excited” about the next Windows in “the next year or so”. Yesterday, Microsoft said it planned to offer a version of Windows XP until June 2010 or a year after the launch of Windows 7, “whichever date is later” - an apparent indication that a date of June next year had been pencilled in for the launch of the new operating system.

A Microsoft spokesperson says nothing has changed, Windows 7 is still expected to take around three years from the consumer launch of Vista (January 2007) and maybe Gates was referring to the first beta version of the software.

Regardless of this attempt at obfuscation, what seems to be emerging is this: rather than slipping later into 2010, as some had expected, the next Vista is well on track and at least an advanced version of it will be on display in the first half of next year. That won’t help Vista, which is still recovering from all the bad publicity of its first year.

Intel designed its Classmate PC to help schoolchildren in its emerging markets, but its second-generation model, unveiled in Shanghai today, represents a shift in strategy.

Classmate 2 recognises the success of Asus’s eee machine in attracting the broader consumer market in both emerging and developed worlds to small, cheap laptops.

It may have happened faster than Intel and One Laptop Per Child anticipated. Both focused on developing-world education markets, but now are adjusting to making their designs more widely available.

Intel says they define a new category called “netbooks” of smaller wireless internet-enabled laptops with low power requirements and a low price tag.

Intel has high hopes that its Atom processor, launched this week and set to be included in Classmate in the third quarter, could gain significant market share in new categories of “internet in your pocket” devices.

The Classmate 2 has a more sophisticated and rugged design, along with better battery life.  Intel sets the specifications and design for the machine and its Taiwanese manufacturing partner ECS helps system suppliers with configurations.

Intel listed 17 suppliers of Classmate 2 in 14 countries, including the USA, Greece, Vietnam and Australia.

Tom Rampone, head of its Channel Platforms group told me some models should be priced below $300, but a price tag of around $350 would be more typical.

The original Classmate was not noted for its performance, suggesting its successor will have to up its game considerably to be a match for the speedy eee, which sells for $300 and higher.

ECS expects to double Classmate shipments this year, but only to 200,000 units from 100,000 in 2007.

Drinking, gambling and… searching?

It seems the list of proscribed activities for the younger set is longer than you thought. A sharp-eyed blogger at CNET spotted last week that Google’s official terms of service explicitly bar anyone under the age of 18 from using any of its services. That’s right: no hanging out on Orkut, no peeping at YouTube, and definitely no searching for someone else’s homework to cut and paste.

So it’s a relief to hear that Google’s lawyers have finally decided to loosen up a bit. From a response just in:

The language regarding the age restriction is an acknowledgment by Google that, in most jurisdictions, an agreement with a minor may not be legally enforceable. Google intends to modify its terms of service to clarify that users under the age of 18 are welcome to use Google’s services, subject to certain limitations based on each specific service.

Get back to it, kids.

Googlers are in high demand. Doug Merrill, head of internal systems, has just moved over to EMI (while it’s tempting, after a recent senior departure or two, to start talking about a brain drain, the Google talent-magnet is still exerting Silicon Valley’s strongest pull.)

But how hard should other companies try to lure away Google talent? A prominent Silicon Valley headhunter I spoke to this week offered a contrarian view: that Google is like Microsoft in the 1990s, or IBM in the 1980s. It is so dominant in a particular market that it can’t help making money. That has created what this headhunter describes as a “Google bubble.”

What happens when you release Googlers from the bubble? Like Microsofties and IBMers before them, they are likely to take time readjusting to the “real world”, this person says. It’s easy, when you work for a company that has discovered modern capitalism’s version of the golden goose, to think that somehow you had something to do with it.

The betting among those who have been tracking Microsoft’s pursuit of international standards recognition for its Open Office XML formats (the voting by national standards bodies closed at the weekend) is that the software company will emerge victorious.

If correct, this is a significant breakthrough for Microsoft. To have lost would have handed a huge victory to the IBM-backed Open Document Format. The blessing of the ISO, on the other hand, would serve to further cement the de-facto standard that already exists around Office.

The official word from the ISO is not due until Wednesday, but Websites that have been trying to piece together the picture from individual national announcements point to what seems a big swing towards Microsoft among those countries that objected to OOXML as a standard when this came up for a vote last September. The Openmalaysia blog claims seven countries that had objected before have now either decided to support Microsoft or abstain - though the sourcing of much of this is far from clear (the UK’s decision to throw its weight behind Microsoft is attributed to open source standards lawyer Andy Updegrove.)

Until the formal count is in it would be rash to predict that this saga is over. But even hard-line opponents like the Groklaw blog now seem to have conceded Microsoft’s victory and have been left muttering about possible appeals against the way the ISO decision was reached.