Censorship: Yahoo, Microsoft, Google Agree on Code of Conduct

With the start of the Olympics in Beijing being only a few days away, a lot of focus in the technology blogosphere has been on the restrictions put on Chinese Internet users by the Chinese government and the role of major US Internet companies in this. According to US Senator Dick Durbin, Google, Yahoo, and Microsoft are close to agreeing on a code of conduct that would govern how these companies would operate in restrictive environments like China.

According to letters send by the three companies to Durbin’s office, the companies will announce the details of this code of conduct later this year. Besides the three American companies, Vodafone and France Telecom also joined in the efforts to create this code.

The letters sent to Durbin are not very concrete in their description of the code, though they all stress the following three core components:

Principles on Freedom of Expression and Privacy that provide direction and guidance to the ICT industry and its stakeholders in protecting and advancing the enjoyment of freedom of expression and privacy globally. The Principles describe key commitments in the following areas: Freedom of Expression; Privacy; Responsible Company Decision Making; Multi-Stakeholder Collaboration; Governance, Accountability, Transparency.

Implementation Guidelines that provide further details on how participating companies will put the Principles into practice. The Implementation Guidelines describe a set of actions which constitute compliance with the Principles and provide companies with guidance on how to implement the Principles.

A Governance, Accountability and Learning Framework founded on the notion that an organizational and multi-stakeholder governance structure is required to support the Principles and that participating companies should be held accountable for their role in the implementation of the Principles through a system of independent assessment.

All three companies also stress that this code could potentially have far-reaching effects on their operations in countries like China and that they have already established internal rules for how to deal with these issues.

During the Olympics, even journalists will not be allowed to access the full and open Internet, thanks to an agreement between the IOC and China, though China eased at least some of these restrictions after the first reports on this.

As Jim Puzzanghera notes in the LA Times, Yahoo especially has been criticized heavily for the way it handled the case of journalist Shi Tao in 2006. At that time, Yahoo revealed his identity as being linked to a Yahoo e-mail address after being pressured by Chinese officials. Shi Tao was later sentenced to 10 years in prison.

Yahoo Board Faces Down Critics

By David Needle
August 1, 2008

UPDATED: SAN JOSE, Calif. — TV cameras and other media massed outside the Fairmont hotel before the start of Yahoo’s shareholder meeting here today. But they weren’t huddled around embattled CEO Jerry Yang or other Yahoo officials.

Rather, it was maverick shareholder Eric Jackson who was holding court, detailing his displeasure with current management and why he still is in favor of the Internet giant doing a deal with Microsoft.

Jackson leads a group of 146 investors who jointly hold 3.2 million Yahoo (NASDAQ: YHOO) shares, he said, seizing the opportunity to reiterate his displeasure over Chief Executive Jerry Yang and the current board of directors.

“I’m frustrated and it’s not just about Microsoft,” he said. “We’ve been asking for a plan for the past four years, but there’s no indication the company can execute. I don’t think [Yang] is the right CEO. They need an outsider and new people around the table.”

During the question-and-answer portion of the shareholder meeting, Jackson continued criticizing Yahoo management, at one point telling Chairman Roy Bostock he should “do the honorable thing” and step down.

Jackson’s position didn’t appear to ruffle too many feathers on Yahoo’s board: Yang elicited a few laughs by greeting the tough-talking investor with, “Good to see you again, Eric.”

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Yahoo, Icahn Declare Cease-fire in Proxy War

months of bitter public sparring and mutual accusations, Yahoo has made peace with Carl Icahn, the billionaire investor who has been lobbying to take control of the company’s board of directors and force a transaction with Microsoft.

Yahoo (NASDAQ: YHOO) today announced a settlement with Icahn, who said he will give up his proxy fight to oust all nine of Yahoo’s incumbent board members at the company’s annual meeting Aug. 1.

Under the agreement, Icahn himself will take a seat on Yahoo’s board, which will be expanded to 11 seats following the meeting to accommodate two members of Icahn’s recommendation.

The détente comes as the odds appeared to be getting longer for Icahn. Yahoo has lately been on the offensive against Icahn, warning shareholders that he had no credible plan to lead the company and accusing him of acting out of short-term financial interest. On Friday, Legg Mason Chief Investment Officer Bill Miller said he would support Yahoo’s board, voting his firm’s roughly 60.7 million shares, or 4.4 percent of the company’s outstanding shares, in favor of the incumbents.

Icahn began buying up shares of Yahoo and talking about engineering a sale to Microsoft (NASDAQ: MSFT) when talks between the two companies broke down in May. While he has not backed down from that goal, the conciliatory tone of today’s announcement was in marked contrast to the pitched rhetoric of his recent comments.

“I am very pleased that this settlement will allow me to work in partnership with Yahoo’s board and management team to help the company achieve its full potential,” Icahn said in a statement. “While I continue to believe that the sale of the whole company or the sale of its search business in the right transaction must be given full consideration, I share the view that Yahoo’s valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders.”

The truce between Icahn and Yahoo could make a transaction with Microsoft a more distant possibility.

“We believe that a deal for Microsoft to acquire Yahoo’s search business or the entire company will become less likely, and that Microsoft will aggressively build its online service business through smaller acquisitions and organic growth,” Standard and Poor’s analyst Scott Kessler wrote in a research note.

Icahn, who holds slightly less than 5 percent of Yahoo’s stock, will join Chairman Roy Bostock and CEO Jerry Yang on the company’s board under the agreement. Icahn has repeatedly accused Bostock and Yang of failing to negotiate with Microsoft in good faith and had vowed to replace Yang as chief executive if he won the board.

In their statement, Bostock and Yang both expressed relief that the strain of the proxy battle was over.

“We are gratified to have reached this agreement, which serves the best interests of all Yahoo stockholders,” Bostock said. “We look forward to working productively with Carl and the new members of the board on continuing to improve the company’s performance and enhancing stockholder value.”

Icahn will take his seat on the board from Activision Blizzard CEO Robert Kotick, who had indicated to Bostock he planned to step down from the board once the proxy contest was resolved.

In addition to Icahn and the eight incumbents, Yahoo said it plans to appoint two new members to the board. They will be chosen from Icahn’s recommendations, which includes his previously announced slate and Jonathan Miller, who previously served as chairman and CEO of AOL, and has been a potential successor to Yang.

In a research note, Jefferies analyst Youssef Squali suggested that Miller’s nomination “positions him as potentially the next Yahoo CEO in case a deal with Microsoft is not reached and Yahoo fails to execute against its aggressive growth plans,” he said.

Squali called Miller’s nomination an “insurance policy” for Icahn, giving him a tough and experienced Internet executive who could replace Yang if the company continues to sputter. As chief executive, Miller could be counted on to move aggressively to make deals and spin off assets, Squali said

Icahn had recently been negotiating with Microsoft in an attempt to revive talks about a transaction with Yahoo. Earlier this month, Microsoft and Icahn presented Yahoo with a proposal to buy its search engine with a minimum revenue guarantee.

Yahoo rejected that proposal, claiming that it could not deliver a better value than the ad deal it recently signed with Google (NASDAQ: GOOG). That agreement, which the companies voluntarily put on hold pending a regulatory review, could still be nixed if Yahoo strikes a deal with Microsoft.

Yahoo reports its second-quarter earnings tomorrow evening, and many analysts are expecting a fall to the low end of the company’s guidance.

Microsoft Talks Up Yahoo Integration Plans

Microsoft Talks Up Yahoo Integration Plans
By Kenneth Corbin
February 22, 2008

Oh, the inevitability of it all.

In an internal e-mail sent earlier today, Kevin Johnson, Microsoft’s president of platforms and services, reminded his employees of the strategic advantages that will come from acquiring Yahoo, and addressed issues about the integration of the two companies such as staffing, corporate culture and branding.

With the two sides (publicly) deadlocked, talk whipping around of how high Microsoft will go, how low an offer Yahoo will accept and a looming proxy battle to oust the board, this stage of the deal has become a very public chess match. Every move is a calculated step, and this e-mail was no exception.

Johnson’s missive bore the tone of a press release. In fact, given the media alert that accompanied it, it was a press release.

“We have been very thoughtful about this combination, and are excited about what our two companies can do together,” Johnson wrote. “While Yahoo has issued a press release rejecting our proposal, we continue to believe we have a full and fair proposal on the table.”

He told his staff that “if and when Yahoo agrees to proceed,” the two companies would then work to clear the regulatory hurdles, and the transaction would close before the end of the year, sticking by the original timetable.

[cob:Related_Articles]Johnson, one of the Microsoft executives on the conference call announcing the offer exactly three weeks ago, put out the e-mail ostensibly to answer common questions employees had raised about the combination of the companies. They happen to include several of the same questions that members of the press have been asking.

The fate of the two brands has been a big one. “The Yahoo brand is one of the reasons the combination of the two companies would create so much value,” he wrote, adding, however, that it would be “premature” to speculate on which products would bear which brand in the combined company. A joint committee will see to that when the time comes, he said.

Pairing technology platforms

On pairing the technology platforms, Johnson reassured his team that Microsoft has made numerous acquisitions of companies whose technologies are not Windows-based. In some cases the open source technology has eventually morphed into Windows; in others, Microsoft has made the relevant facet of Windows interoperate with the acquired technology to preserve its original form. In the case of Yahoo’s technology, Johnson said that engineers from both companies would work together to make the appropriate decisions.

Johnson wrote that the two companies’ cultures would come together — some sooner, some later — in a synergistic hybrid buoyed by Microsoft’s R&D and Yahoo’s Web and “21st century media expertise.”

With regard to staffing, and the possibility of cuts, Johnson said that there would inevitably be some overlap of the two companies (read: layoffs), but that Microsoft is growing, and faces “no shortage of business and technical opportunities.” Any layoffs that come on the Yahoo side are going to be costly, after the golden parachutes announced earlier this week.

Finally, Johnson said that the combined company would maintain offices in Redmond and Silicon Valley.

With the number of options available to Yahoo CEO Jerry Yang dwindling, this acquisition has taken on an air of inevitability. The more pressure put on Yahoo’s board to come to the table, the better Microsoft’s bargaining position will be. On a merger of this scale, whittling even a fraction of a dollar off the final per-share price would save Microsoft hundreds of millions of dollars.