October 2010

[Commentary] Facebook admitted this week that it inadvertently passed some information to the "apps" - things like games you play with friends, or family trees - that can be accessed through the site. Some apps, in turn, handed the information over to advertisers who, under Facebook's rules, had no right to see it.

A system that is supposed to be sealed, keeping data in the hands of Facebook and the apps personally selected by its users, turned out to have a leak. Facebook's explanation of this glitch was somewhat disingenuous. It blamed a basic flaw in the design of web browsers for the problem. But if that was the case, then why, by its own estimate, did only a handful of app developers fall foul of its rules? In the overall scheme of things, this is not a big deal. The information at issue - the personal identification numbers of Facebook users - probably has little value unless it can be combined with other types of personal information, and Facebook says it does not believe the data were collected. But the slip was instructive. The architecture of the new world of social networks and smartphones is starting to throw up some vexing questions of control. Unless they are resolved, a potentially highly profitable way of delivering services to consumers will fail to reach its full potential, as users shy away and regulators start to interfere.

The encouraging news is that the new platform companies have every incentive to improve the policing of their systems and reassure users. Shortly before its latest slip, for instance, Facebook took an important step by giving its users a way to see what data their apps had accessed. Ultimately, proving they have mastered their powerful new machines - and are prepared to hand more of the control to their users - will be the surest way for companies like this to make sure no one tries to take the keys away.

The millions of messages sent daily via Twitter Inc. can help predict moves in the Dow Jones Industrial Average by signaling sentiment, researchers at Indiana University and the University of Manchester said.

By scouring tweets for key words and analyzing them using an algorithm they developed to divine the mood of Twitterers, Johan Bollen, Huina Mao and Xiao-Jun Zeng said they were able to predict the daily up and down movements of the Dow during a period in 2008 with 87 percent accuracy. Now they are testing whether their results can be applied to real-time data. "So far we have observed that some of the parameters may change over time but that our conclusion that Twitter mood data can predict fluctuations in the stock market will stand," said Indiana University's Bollen in an e-mail interview. "We feel that we have merely uncovered the tip of the proverbial iceberg." The research suggests that Twitter analysis could provide a cheap way to improve results of other computer models that use news events and other publicly available data to anticipate how investors will act. The data may even predict to some extent the magnitude of stock market moves, Bollen said.

Computer golf fanatics drove home to executives at Axel Springer, Europe's largest newspaper publisher, that German consumers might be ready to pay for news piped via the Internet.

The German company's subsequent decision last year to charge for web content has forced rivals to rethink their business models. Jens Müffelmann, head of Springer's electronic media division, recalls how Gamigo, a struggling games website, was bumped into profit by the introduction of virtual products. "You get to play golf for free, for example, but if you want a better club, you have to pay for it - with real money," he says. A lot of players were keen on the €69 ($96) edition, others even went for pricier clubs. In the following months, the anecdote stirred interest at meetings with editorial staff of Bild, a tabloid newspaper, and Die Welt, a national broadsheet, says Christoph Keese, Springer's public affairs head who co-ordinates paid-content initiatives. "The €69 was a real eye-opener - it was a sign customers were prepared to pay for things online," he says. Maybe publishers were paralyzed by the "free content" mantra for too long, he muses. "People will pay money if they like what's on offer."

Nokia-toting teenagers and BlackBerry-wielding businessmen have been a gold mine for telecommunications companies across the Gulf, turning the government-owned operators into some of the region's most aggressive and ambitious corporate giants.

But after deals worth $33bn in the Gulf alone in the past four years, the industry may soon enter a period of more measured, "organic" growth, as acquisitions targets are scarcer and competition heats up in domestic markets, analysts and bankers say. Etisalat's $11.7bn blockbuster bid for 46 per cent of Zain, the Kuwaiti operator, is expected to go through and lead to the eventual sale of Zain's 25 per cent stake in its Saudi subsidiary -- which competes against Etisalat's Mobily. But these may be two of the last big deals in the region for some time. Once Zain Saudi Arabia is sold, most of the region will have been carved up by the Gulf's remaining three large operators -- the United Arab Emirates' Etisalat, Saudi Telecom (STC) and Qatar Telecom, or QTel.