Apple, Google, Amazon, smartphone makers sign privacy accord

SAN FRANCISCO (Reuters) - Six of the world's top consumer technology firms have agreed to provide greater privacy disclosures before users download applications in order to protect the personal data of millions of consumers, California's attorney general said on Wednesday.

The agreement binds Amazon, Apple, Google, Microsoft, Research In Motion, and Hewlett-Packard -- and developers on their platforms -- to disclose how they use private data before an app may be downloaded, Attorney General Kamala D. Harris said.

"Your personal privacy should not be the cost of using mobile apps, but all too often it is," said Harris.

Currently 22 of the 30 most downloaded apps do not have privacy notices, said Harris. Some downloaded apps also download a consumer's contact book.

Google said in a statement that under the California agreement, Android users will have "even more ways to make informed decisions when it comes to their privacy."

Apple confirmed the agreement but did not elaborate.

Harris was also among U.S. state lawmakers who on Wednesday signed a letter to Google CEO Larry Page to express "serious concerns" over the web giant's recent decision to consolidate its privacy policy.

The policy change would give Google access to user information across its products, such as GMail and Google Plus, without the proper ability for consumers to opt out, said the 36 U.S. attorneys general in their letter.

EU authorities have asked Google to halt the policy change until regulators can investigate the matter.

CAN AND WILL SUE

California's 2004 Online Privacy Protection Act requires privacy disclosures, but Harris said few mobile developers had paid attention to the law in recent years because of confusion over whether it applied to mobile apps.

"Most mobile apps make no effort to inform users about how personal information is used," Harris said at a press conference in San Francisco. "The consumer should be informed of what they are giving up."

The six companies will meet the attorney general in six months to assess compliance among their developers. But Harris acknowledged "there is no clear timeline" to begin enforcement.

The attorney general repeatedly raised the possibility of litigation at some future time under California's unfair competition and false advertising laws if developers continue to publish apps without privacy notices.

"We can sue and we will sue," she said, adding that she hoped the industry would act "in good faith."

There are nearly 600,000 applications for sale in the Apple App Store and 400,000 for sale in Google's Android Market, and consumers have downloaded more than 35 billion, said Harris.

There are also more than 50,000 individual developers who have created the mobile apps currently available for download on the leading platforms, she said.

These figures are expected to grow. She said an estimated 98 billion mobile applications will be downloaded by 2015, and the $6.8 billion market for mobile applications is expected to grow to $25 billion within four years.

(Reporting By Gerry Shih; Editing by Carol Bishopric and Michael Perry)

Bail rules prevent Kim Dotcom from using Internet

WELLINGTON, New Zealand (AP) — Megaupload founder Kim Dotcom made his fortune and even took his name from the Internet, but now he's barred from logging on.

Dotcom, accused by U.S. authorities of facilitating millions of illegal downloads through the file-sharing website, has been ordered not to access the Internet as part of his bail conditions. Another unusual condition: No helicopters can land at his home.

Dotcom was arrested in New Zealand in a high-profile raid Jan. 20 and was released Wednesday. New Zealand court authorities disclosed his bail conditions Thursday after The Associated Press and other media requested the information.

Under the terms of his release, Dotcom may leave his Auckland home only for approved outings such as court appearances and medical appointments. He is banned from contacting three Megaupload colleagues who were also arrested during the New Zealand raid and have also been released on bail pending extradition proceedings.

U.S. authorities have charged Dotcom with racketeering. They say he and his colleagues cheated movie makers and songwriters out of half a billion dollars in copyright revenue while making a fortune for themselves.

Dotcom did not have to post any monetary bond for his bail, a standard policy for New Zealand's district courts. He has an extradition hearing scheduled for August.

Dotcom was born Kim Schmitz in Germany but legally changed his name.

HP slips on concerns of delay in turnaround

(Reuters) - Shares of Hewlett-Packard Co fell more than 7 percent Thursday, after the world's No. 1 computer maker posted a sharp decline in quarterly earnings and warned it would take several years to turn around its sprawling businesses.

Chief Executive Meg Whitman, who took over the top job in September after the company fired Leo Apothekar, requested investors to keep their patience and said a turnaround the size the company was efforting took considerable time.

J.P. Morgan Securities, however, said secular, macro and company-related risk may delay an appreciable turnaround.

RBC Capital said investors may look past the choppy revenue performance, given the temporary difficulty in procuring hard-disk drives, but added that it expects problems to continue into the second quarter.

On Wednesday, HP, which has been trying to pick itself up from the mess the company found itself last year, reported a decline in sales in three of its key units: personal computers, printers and enterprise equipment.

"Revenue shortfall in PCs and significant quarter-on-quarter margin deterioration in every business raise questions about the competitiveness, cost structure and secular pressures in HP's business segments," Morgan Stanley said in a note to analysts.

Wall Street analysts fear that the multiple pressures that weighed on margins -- including yen strength, competitive hardware pricing and the ongoing HP Services restructuring -- are more than "one-quarter issues," and could continue into coming quarters.

Earlier this week, Dell Inc, the world's No. 3 personal computer maker, also posted fiscal fourth-quarter earnings below analysts' expectations and forecast fiscal first-quarter revenue below estimates, stoking fears the PC industry has not fully emerged from its downturn.

"While Dell did not have a particularly good January earnings call and in our opinion left a great deal of ambiguity in terms of the forces that impacted the January quarter, we believe HP's report, by comparison, was worse," said BMO Capital Markets' analyst Keith Bachman.

Bachman cut his price target on HP's stock to $33 from $35.

Of the 34 analysts covering HP, 18 rate it at "hold," five at "sell," six at "strong buy," and five at "buy," with a mean price target of $30.40, according to Thomson Reuters' StarMine data.

Shares of HP fell to $26.85 in Thursday morning trade. The stock has lost over 40 percent of its value since its 2011 high of $49.38.

Salesforce's 4Q, outlook lifts stock 10 percent

SAN FRANCISCO (AP) — With each passing quarter, Salesforce.com Inc. is proving its once-unorthodox method of providing business software applications over the Internet is becoming a corporate craze.

The latest evidence came late Thursday with the release of Salesforce.com's fourth-quarter performance and initial forecast for this year. The numbers were highlighted by the kind of rapid revenue growth that investors love, lifting the already high-flying stock by nearly 10 percent. If that gain carries over into Friday's regular trading, Salesforce.com will boast a market value of about $20 billion — not bad for a company that was widely mocked when it started in 1999.

Back then, CEO Marc Benioff was among the few evangelists for the notion of selling software as a leasing service that collected a monthly fee from customers who could use applications on any device with an Internet connection. The idea represented a radical change from the more traditional — and expensive — approach of licensing and installing software on computers kept in the corporate customers' own offices.

Gradually, though, companies have become more comfortable with allowing their software needs to be stored on remote servers. The main reason: They have realized it saves money, is more convenient and makes it easier to upgrade to new technology. To adapt, older business software makers such as Oracle Corp. and SAP AG have recently been spending billions to acquire smaller rivals that specialize in selling software as a service.

The concept is becoming so popular that the geeky term used to describe it, "cloud computing," is moving into the mainstream.

Apple Inc., the trend-setting maker of the iPod, iPhone and iPod, jumped on the bandwagon last year with a service called "iCloud" that stores consumer files in its data centers. Internet search leader Google Inc. is widely expected to introduce a similar remote-storage service later this year.

Salesforce.com won more business converts during its fiscal fourth quarter — a span running from November through January.

The company, which is based in San Francisco, sustained a loss of $4.1 million, or 3 cents per share, in the period. That contrasted with earnings of $10.9 million, or 8 cents per share, at the same time last year. Dramatically higher expenses for employee stock compensation dragged down Salesforce in the latest quarter. The difference primarily stemmed from the hiring of nearly 2,500 workers during the past year.

If not for the employee stock compensation and several other accounting items, Salesforce said it would have earned 43 cents per share. That figure was 3 cents above the average estimate among analysts polled by FactSet.

More importantly to Wall Street, Salesforce's revenue growth accelerated during the quarter. The company's revenue totaled, $632 million, up 38 percent from the prior year. That was better than the 36 percent year-over-year revenue increase in the fiscal third quarter. The revenue for the most recent quarter also exceeded the average analyst projection of $624 million.

Salesforce's outlook for its current quarter ending in April calls for revenue of $673 million to $678 million. Analysts had been expecting $664 million. The company foresees adjusted earnings per share of 33 cent or 34 cents, below the average analyst forecast of 36 cents, according to FactSet.

Salesforce shares surged $12.88 to $144.65 in extended trading.

WikiLeaks suspect Manning defers plea, court-martial begins

FORT MEADE, Maryland (Reuters) - U.S. Army intelligence analyst Bradley Manning, accused of the largest leak of classified documents in U.S. history, deferred a plea in a military court arraignment on Thursday, marking the first step in a court-martial that could land him in prison for life.

In Thursday's procedure, Manning, 24, was formally charged with 22 counts including aiding the enemy, wrongfully causing intelligence to be published on the Internet and theft of public property. Military prosecutors say Manning downloaded more than 700,000 classified or confidential documents and transferred thousands to WikiLeaks, which promotes leaking government and corporate information.

Manning's plea deferral allows his defense team time to strategize and see the outcome of several motions to be heard before the trial begins, which could be as late as August.

"It basically leaves their options open," said a legal expert with the Military District of Washington, the Army command unit for the capital region, who was present at the arraignment. The expert could not be named under rules imposed on media covering the proceedings.

When asked if he understood his rights to counsel, Manning, in a dark green military dress uniform and black-rimmed military glasses, spoke quickly but forcefully. "Yes, your honor," he said.

Manning's attorney, David Coombs, announced that Manning would defer his plea as well as a decision on whether to face trial by a military judge or a panel of military members, made up of senior officers or enlisted members of rank no lower than Manning's.

At the beginning of the arraignment, Manning entered from a back door and walked briskly to the front of the room. During the proceedings, he leaned forward on to a desk, occasionally conferring in whispers with Coombs.

Military prosecutors say Manning, trained on various intelligence systems, was a trusted analyst who knowingly and methodically downloaded thousands of files from the military's Secret Internet Protocol Router Network, or SIPRNet, while serving in Iraq.

They sought to link Manning to WikiLeaks founder Julian Assange, introducing logs of web chats that an investigator said appeared to show conversations in which the two discuss sending government documents.

Manning's lawyers have cast him as an emotionally troubled young man whose behavioral problems should have prompted superiors to revoke his access to classified information.

Manning has gained a following of supporters who see him as a whistleblower who acted on behalf of his country. At the end of the arraignment one Manning supporter, a protester with the anti-war group Code Pink, stood up and yelled out, "Judge, isn't a soldier required to report a war crime?"

(Editing by Cynthia Osterman)

Summary Box: Obama admin seeks privacy rules

THE VISION: The Obama administration is calling for stronger privacy protections for consumers who use the Internet, mobile phones and other technologies.

THE DETAILS: Technology companies, consumer groups and others will now convene to jointly craft new protections. Such guidelines will initially be voluntary for companies, but those that agree to abide by them could be subject to sanctions for any violations.

THE REACTION: Consumer and privacy groups welcomed the effort, though some worried that it won't do enough. Legislation would be needed to require all companies to follow such guidelines.

Magazine publishers going for slice of e-commerce pie

NEW YORK (TheWrap.com) - The line between publisher and retailer is blurring as companies partner up to try and capture more of the e-commerce pie.

Hearst and People magazine have both recently signed deals targeting online shoppers: Hearst aligned with Amazon, and People with Gilt Groupe on a sale inspired by Oscar fashions.

Pam Horan, president of the Online Publishers Association, said that at its recent Annual Summit there was much discussion of the Amazon deal and other e-commerce proposals.

"Consumers are buying more and more stuff online, so there is an opportunity for publishers to provide this comprehensive experience," Horan told TheWrap.

But some question how these partnerships will affect editorial independence. Horan said a renewed look at e-commerce is likely in 2012.

In its deal, Hearst will make in-magazine purchases much easier, providing links to Amazon in the tablet editions of many of its magazines.

People magazine, a Time Inc. title, chose to partner with the Gilt Groupe for its own brand of e-commerce. Its partnership is content only, as some of People.com's editors will curate the items available for Gilt's special Oscars sale. The clothing available is supposed to be inspired by the Oscar red carpet.

Hearst and Time are not the first companies to pursue this new revenue stream, nor will they be the last.

According to ComScore's "Mobile Future in Focus" report released Thursday, mobile devices are the new go-to gadgets for online shopping, browsing and bidding.

More than half of Americans that own smartphones used them to perform retail-related activities while in stores last year. In December, at the height of the holiday shopping period, 28.5 million mobile users accessed online retail content; that's an 87 percent increase over December of 2010.

"The rise of mobile retail has become both an on-screen and in-store phenomenon," the report said. "The retail industry, which already experienced an upheaval with the advent of online shopping, is poised for further disruption as smartphones enter brick-and-mortar stores."

That phenomenon is likely to spread to tablets as well, since the market for those devices is growing even faster than the one for smartphones did.

"In less than two years, nearly 40 million tablets were in use among mobile subscribers in the U.S., outpacing smartphones which took 7 years to achieve the same level of adoption," the study noted.

As the ComScore study notes, consumers are doing research or buying content on their phones and tablets, "Publishers are trying to reduce any kind of friction preventing consumer access to these products."

John Loughlin, general manager of Hearst Magazines, told Adweek's Lucia Moses that there's no editorial interference. Ruth Reichl, the former editor of Gourmet and now the editorial director of the Gilt Groupe's Gilt Taste, contends that there's no conflict of interest if you're vigilant about it.

"More and more you are seeing the blending of commerce and content," Reichl told TheWrap last year. "Where it becomes a conflict is if you're hedging your bets and someone comes in and offers you a lot of money to sell things. Suddenly you're selling things you really don't like."

(Editing By Zorianna Kit)