Under The Same Blue Sky

Google sought to alleviate the concerns of privacy campaigners yesterday by unveiling new tools that will allow users to see what information the internet company is keeping on them.

Users who have signed up for Google’s consumer services, such as Gmail, Blogger, Picasa, and YouTube will be able to see a “dashboard” listing the personal details stored about them. Users will be able to edit and delete the information.

It is similar to the tools Google introduced this year to allow people to see the profile of interests it was building up about them in order to serve targeted advertising.

As Google offers people an increasing number of services from search to cloud computing, scrutiny of its privacy practices has increased.

This year a leading privacy group called on the US Federal Trade Commission to shut down Google’s web services until it could ensure better safeguards for personal data. There were mounting concerns that technical problems were making personal information on Google Docs, Google Desktop and Gmail visible to other users.

Privacy campaigners welcomed the new dashboard, launched at a conference of data protection commissioners in Madrid. “If the rest of the industry took this line, we would start to solve some of the problems with privacy,” said Simon Davies of Privacy International.

The new dashboard will not answer some of the key data protection concerns hanging over Google. It does not show the information Google collects when people use its internet search engine, which accounts for most of the company’s data.

What must Yahoo do? In the last year its founder chief executive was ousted in favour of cost-cutting kudos. It agreed to outsource the data-crunching technological side of search to Microsoft. And last week the group inundated investors with facts designed to demonstrate the potential of Yahoo’s advertising business. Yet its shares have been left behind in the tech rally, ending the week at the same price that they started May.

The simple answer is that Yahoo must grow. Opportunities abound – for instance three-quarters of Yahoo’s 600m users are outside the US, while the group makes only 27 per cent of revenues internationally – but management were largely quiet on strategy to expand sales. Focus was instead on plans to save money by correcting past mistakes. So from using 33 different types of computer code to run its homepages, they will soon all be based on the same software. Operating margins of 6 per cent this year are forecast to rise to 15-20 per cent by 2012.

Such a large improvement in profitability is less heroic than it sounds. Bernstein estimates that on current strategy, and with the Microsoft deal, margins should anyway hit 16 per cent. Assuming 5 per cent annual growth in sales and a 17.5 per cent margin, Yahoo’s current multiple of six times earnings before interest, tax depreciation and amortisation would suggest a price around $19 per share in 2011, a fifth higher than now.

Turning opportunities into sales will be difficult. Yahoo cannot lose more share in search to Google (or indeed Microsoft’s Bing site). Much relies on the company’s ability to collect better information about its users for advertisers, something the users themselves may object to. But advertising will continue to relocate online, and if Yahoo can grab its fair share, it will more than answer its critics.

The Apple iPhone, which has been setting the bar in touch-screen smartphones, could soon be overtaken by an army of Google-powered handsets.

Android-based phones – handsets that use the open source Google mobile operating system – are on the march as non-iPhone carriers look for a rival to Apple’s device.

Since its introduction a year ago on one device with one carrier, Android has come a long way. It is used on 12 handsets with 32 carriers in 26 countries.

They will be joined by HTC of Taiwan, Motorola and Samsung, which are rushing out models in the US before the end of the year as Sprint and Verizon Wireless join T-Mobile as Android supporters.

Verizon has launched an anti-iPhone advertising campaign, satirising the Apple handset and its exclusive carrier, AT&T, teasing viewers with the promise of its first Android phones in November.

“iDon’t have a real keyboard . . . run simultaneous apps . . . take 5-megapixel pictures . . . allow open development . . . have interchangeable batteries,” say the advertisements, ending with: “Everything iDon’t, Droid does.”

According to Eric Schmidt this month, “Android adoption is literally about to explode”.

The Google chief executive stepped down as an Apple director in August after Google’s phone and operating system ambitions became a competitive threat.

Android appeals as a viable alternative for mobile handset makers looking to break the dominance of Nokia, Research in Motion and Apple, which have two-thirds of the US market and an 80 per cent global share.