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Sunday, June 9, 2013

Google Is Close to Acquiring Waze, a Rival in Maps

Google, which dominates the market for online maps, is close to a deal to acquire Waze, a largely Israeli company that has developed a social mapping service that is popular with drivers seeking to find the best route given actual traffic conditions.

The proposed acquisition, for a price of more than $1 billion, could be announced early this week, according to three people with knowledge of the discussions who spoke on the condition of anonymity because the deal was not final.

Waze, which was previously in discussions to sell itself to Facebook, attracted the interest of the bigger technology companies because of the social nature of its maps. Waze’s technology, which is available only on mobile devices, uses voluntary GPS tracking of its users and their live reports about accidents and other road hazards to dynamically adjust routing to get users from point A to point B in the shortest possible time.

Waze is officially based in Palo Alto, Calif., but has extensive operations in Israel. It is particularly strong outside the United States, claiming to have about 47 million users globally. In Israel, nearly 9 in 10 registered drivers have used the service, according to the company.

Many of Waze’s maps have been created by passively tracing the routes of its users via GPS, but about 70,000 volunteers also submit edits to improve its maps, much the way volunteer editors contribute to the online encyclopedia Wikipedia.

Google also uses volunteers to improve its maps, but real-time traffic and route adjustments have been a weakness. At Google’s annual developers conference last month, the search giant unveiled a new mobile version of Maps that includes more real-time traffic information.

Still, Google is far and away the leader in online mapping, and its interest in Waze could be a defensive move, to keep mapping expertise to itself. Facebook, for example, already has an extensive partnership with Waze, and had been interested in the company’s technology and rabid fan base as a way to extend its mobile presence.

It’s unclear whether the deal would face antitrust problems, given Google’s already strong presence in online maps.

Waze, a tiny company with about 100 employees, has struggled to generate revenue from its maps. It has experimented with ads for gas stations and fast-food restaurants that are along the route, but has found no reliable source of income.

“Their biggest issue is to grow their active user base,” Marc Prioleau, a strategic consultant in the navigation industry, said in an interview last week as rumors of a potential sale of Waze were swirling. “The technology could really be leveraged inside Google, or Facebook’s one billion users, or Apple’s iPhone.”

Waze had recently signaled that it needed to raise capital in some fashion to expand its operations, either through another round of venture financing or a sale of the company.

Waze’s previous venture investors included Kleiner Perkins Caufield & Byers, BlueRun Ventures, Magma Venture Partners and Vertex Venture Capital.

Intelligence Agencies and the Data Deluge

Political leaders including President Obama and Senator Dianne Feinstein in recent days have defended snooping on private communications by noting that intelligence agencies were not reading personal messages, but rather information about the messages. “This is just metadata,” Senator Feinstein said at a news conference. “There is no content involved.”

In fact, say researchers in the field of data analysis, the metadata, or the information about such things as where a message came from and when it was sent, is frequently more valuable to security officials than the content of the messages. It provides dense and useful information to agencies increasingly swamped by the global computing onslaught.

A study published in Nature last March demonstrated that just four data points about the location and time of a mobile phone call made it possible to identify the sender 95 percent of the time. Using just two randomly chosen points, it was possible to identify half of users. Such information can come not just from phone companies, but also from smartphone applications or Wi-Fi hot spots.

Metadata is also useful because national security is now dealing with a deluge of information. Researchers at IDC have determined that the amount of global digital information, like e-mail, Twitter posts and digital photos, has risen from about 500 billion gigabytes in 2008 to almost four trillion gigabytes this year. By 2015, they estimate, there will be eight trillion gigabytes of material to go through, much of it from fast-growing countries with young populations, like China and Indonesia.

Unlike e-mails written in different languages or with personal touches, metadata about who sent and received a message, when it was sent and from where, always looks the same. Besides cutting down on the absolute amount of traffic to examine, metadata makes it easy to organize information and search for patterns, establishing social networks from individuals.

For some communications, metadata matters more than content. “A call to a suicide hot line, Alcoholics Anonymous, or a gay sex chat room at 2 a.m. are all more sensitive” than the actual message, said Christopher Soghoian, principal technologist at the American Civil Liberties Union. “You can text political donations. The metadata shows your political leanings, the content just shows the amount you gave. Calling a cell tower away from my house in the middle of the night indicates I’m not sleeping at home.”

“Metadata is the least protected form of communications information, and that is a shame,” he said. “You just have to say it’s important to an ongoing investigation.”

In the past decade, commercial cloud computing has grown powerful faster than the rate at which highly engineered supercomputers have improved, creating more problems for government spies. “They have better stuff than what you can get commercially, but they’re not five or six generations ahead anymore,” said Jonathan Schwartz, the former head of Sun Microsystems, which sold the government some of its most advanced computers. “You can look at where Amazon or Google will be in two years, and get a pretty good idea of where they are now.”

To cope with its challenges, the government has put on a more open public face, while privately making even more intense efforts. In 1999 the C.I.A. created In-Q-Tel, an independent nonprofit venture capital arm, which it uses to get a window on early-stage technologies. Contests like Virginia’s Cyber Challenge are modeled on talent-spotting contests that the People’s Liberation Army of China uses to spot young hackers.

Even the secretive National Security Agency has tips on improving K-12 education for future code crackers, and offers high school students internships through its Web site. The agency also speaks at open-source conferences, as seen in this unusual video.

The N.S.A. maintains a museum in Fort Meade, Md., that shows off past supercomputers and secure smartphones, as well as older machines and storied tales, like the coded messages hobos left for one another. It is a popular stop for tech executives after sales calls.

Privately, the N.S.A. has played hard with Internet technology companies, seeking secret product modifications to make it easier to spy. “The pitch they give you is not subtle,” said a former executive who was involved in these discussions. “They tell you that somewhere there is an American who is going to be blown up; the only thing that stands between that and him living is you.”

The executive, who requested anonymity to preserve his professional relationships, said his company debated cooperating. “The first question we asked was how big a customer they were,” he said. “Then, what it would do to our foreign sales if it got found out. Then civil liberties.” When he balked, he said, N.S.A. agents “told me they were doing ‘a standard counterterrorism assessment’ on me.”

His company declined to help, he said, partly because it was convinced it would not matter. “We had former N.S.A. people working for us. They told us: ‘You don’t understand. They have so many resources that they can just get what they want. They’re only asking you to make it easier for them.’”

Disruptions: Celebrities’ Product Plugs on Social Media Draw Scrutiny

In 1982, Bill Cosby appeared on television showing off a snazzy new computer. “Looking for a powerful home computer?” he said as he waved his hands over a Texas Instruments PC that looks archaic now. “This is the one! With 16k memory, it can take you a long way.”

The commercial made it obvious that Mr. Cosby, a prominent comedian and television star, was being paid to promote the boxy device.

Computers have changed significantly in the decades since. And, to the confusion of consumers, celebrity endorsements have, too.

Today, when celebrities and people with large followings on social networks promote a product or service, it’s often impossible to know if it’s an authentic plug or if they were paid to say nice things about it.

Take Miley Cyrus, the 20-year-old pop star who was traveling around America last week promoting her new album. One morning she posted on Twitter: “Thanks @blackjet for the flight to Silicon Valley!” The details of the arrangement between Blackjet, a Silicon Valley start-up that arranges for private jet travel, and Ms. Cyrus are unclear. But Dean Rotchin, chief executive of BlackJet, said “she was given some consideration for her tweet.” Ms. Cyrus did not respond to a request for comment.

Did her 12 million Twitter followers know about the arrangement? It’s unlikely, and that lack of clarity, increasingly common in the social media postings of celebrities, is starting to draw the attention of federal officials.

“In a traditional ad with a celebrity, everyone assumes that they are being paid,” said Mary K. Engle, associate director of the advertising practices division at the Federal Trade Commission. “When it’s not obvious that it is an ad, people should disclose that they are being paid.”

Under F.T.C. guidelines, companies and the celebrities they are sponsoring risk being deceptive by not noting that these endorsements are advertisements, Ms. Engle said. Sometimes, they are breaking federal rules called “Dot Com Disclosures” that require clarity about sponsorships, even on Twitter. People who violate the law can be given warnings or be fined, though the size of the financial penalty isn’t clearly defined.

Some celebrities are unapologetic about promoting their investments anywhere they can. In 2011, Ashton Kutcher was guest editor of an online-only version of Details magazine, where he profiled a dozen companies in which he was an investor or adviser, but did not disclose the investments. At the time, Dan Peres, the editor in chief of Details, said the magazine stood “by how we communicated Ashton’s involvement with some of the companies.” Mr. Kutcher declined to comment.

Mr. Kutcher has also tried to sneak companies in which he invests onto “Two and a Half Men,” the CBS show where he is a lead actor, by placing stickers for the tech outfits Foursquare, Chegg and Flipboard on his character’s laptop. He boasted in an interview at the TechCrunch Disrupt conference that he “pulled it off,” until the network found out and started blurring the back of his laptop during the show.

Mr. Kutcher regularly posts about companies he invests in on Twitter, too. He also uses his Twitter and Facebook heft (he has about 14 million followers on both services) when negotiating with companies he wants to invest in, by noting that he will share the product on these social networks. The F.T.C. declined to comment on any particular instances where celebrities have posted about companies with which they have financial relationships. The agency did say there are “open investigations” into companies that have broken federal rules.

“Like advertorials and infomercials, with Twitter, our view would be that the consumers have a right to know. It gives them that additional information, just like a celebrity endorsing something on TV,” said Andrea C. Levine, director the National Advertising Division, part of the Council of Better Business Bureaus, which reviews advertising claims for accuracy.

“It’s a new day, with a new way, but an old issue,” Ms. Levine said.

In May, Kim Kardashian posted on Twitter: “Pregnancy lips…. @EOS to the rescue! LOL” with a picture attached of her using EOS lip balm. Ms. Kardashian did not respond to a request for comment.

Last month, the actor Michael Ian Black was more forthcoming and told his two million Twitter followers that Dos Equis had paid him thousands of dollars to share an ad for the beer company.

Linda A. Goldstein, a partner and chairwoman of the advertising, marketing and media division at the law firm Manatt, Phelps & Phillips, said that in all of these contexts the advertisers, investors and celebrities had a responsibility to disclose that they have something to gain.

“The message to brands is that you are responsible for the action of your spokespeople, so when you engage them, they should be aware of their obligations,” Ms. Goldstein said. In some cases individuals are breaking the law, she said, and she believes the F.T.C., or another government agency, will eventually bring fines against a celebrity for not disclosing his or her financial relationship.

Although there are no specific rules about the language people must use in an endorsement, Ms. Engle from the F.T.C. suggested using the word “ad” to preface a tweet. “It only takes up two extra characters.”

There is a risk, of course, that today’s celebrities risk angering fans by not disclosing their financial ties. In an interview with InfoWorld magazine in 1982, William Turner, the marketing manager for Texas Instruments’ consumer products group, was asked why he chose Mr. Cosby to represent the company.

“He represents comfort,” Mr. Turner said, “and people trust him.”