The Chinese aren’t exactly prone to emotional outbursts in front of Western reporters. In China, if you insult a business partner in the press, there’s likely a calculating reason behind it.

Witness the latest volley by Alibaba.com's CEO David Wei towards Yahoo, which owns 40% of the parent company for his Chinese ecommerce powerhouse. "Why do we need a financial investor with no business synergy or technology?" Wei said to Bloomberg on Friday.

Indeed, the idea that Yahoo and Alibaba have a "strategic partnership" has been stretched pretty thin since those days back in 2005 when Jerry Yang and Alibaba founder Jack Ma walked the grounds of Pebble Beach and negotiated a deal by which a small Alibaba would take over Yahoo China, in exchange for Yahoo getting 40% of the Alibaba Group. But now, without its own search engine, any idea that Yahoo would give Alibaba a strategic advantage is laughable, Wei said.

It's not the first time Wei & Co. have mouthed off to the press about their largest shareholder: Eight months ago Alibaba executives called Yahoo "reckless" for backing Google in its fight with the Chinese government. Meanwhile, Yahoo has criticized Alibaba for Yahoo's plummeting search marketshare in China, publicly flirting with the idea of selling the property off.

What's going on behind the scenes? In short, Jack Ma wants Yahoo out of his company, but Yahoo knows it would be crazy to sell before two of the most lucrative divisions of Alibaba, Taobao and Alipay, go public. And according to several sources close to both companies Carol Bartz is making a tense situation worse. Bartz has been widely criticized for Yahoo's lack of stock appreciation, revenue or traffic growth during her almost two-year tenure as Yahoo CEO. But if things continue on this course, business professors may look back at see her biggest failing was squandering the relationship with Alibaba.

First some background: The Alibaba deal allowed Yahoo to moonwalk away from the kinds of thorny censorship issues Google and other US properties have had to deal with in China and still profit off the country's runaway Internet growth. Alibaba spun off Alibaba.com into a $10 billion (77.69bn HKD) public company, and has two phenomena in the wings: Taobao, an eBay-like marketplace with 170 million users, that dominates 80% of China's ecommerce market, according to several reports. Taobao's marketplace is already 70% the size of eBay and is growing at a clip of 70% a year. Then there's Alipay, which is the PayPal equivalent in the country, with over 300 million users and annual growth of nearly 100% per year. Alipay's annual transaction run-rate is a staggering $64 billion. Stifel, Nicolaus & Co. estimate that Taobao could be worth another $10 billion and Alipay could be worth nearly $5 billion.

Of course none of these businesses has much to do with Yahoo's core business, and Yahoo China has withered away amid Alibaba, Taobao and Alipay's success. Even before Yahoo got out of search, there was little real strategic relationship between them but it was one hell of a lucky move, financially speaking. Say what you want about Yang's tenure as CEO, he excelled at managing the relationship with Ma, and is still on the board of Alibaba Group. Whether savvy or blind-luck, the deal is also helping keep Yahoo's stock afloat five years later. Research firm Stifel, Nicolaus & Co. says that as much as 85% of Yahoo's stock price is attributed to the value of Yahoo! Japan and Alibaba, going so far as to call Yahoo an Asian Internet play…. that also has a US business.

By some analyst accounts, the Asia business is the one area where Yahoo is killing its Valley competition. So you'd think that Bartz would be bending over backwards to make sure the relationship is going well, right? Wrong. Sources close to Yahoo and Alibaba say that when Bartz entered the job two years ago, she didn't reach out to Ma or Wei and when Ma finally came to Sunnyvale to meet with her, she dressed him down in front of his management team criticizing what Alibaba had done with Yahoo's China portal. Said one person close to the Alibaba side of things, “She displayed the diplomatic skills of a donkey.”

Forgive the mixing of animal metaphors, but that's called strangling the golden goose. Bartz was hired to be the "anti-Jerry" – direct, decisive and not mincing words. I'd argue that's what the coddled, complacent US operations of Yahoo needed. But hard-charging, successful Alibaba didn't need a lecture from a party they already resented giving such a sweetheart deal to five years ago. You think Bartz can be untactful on stage with Michael Arrington? Imagine her in a delicate Chinese negotiation. Yowza.

It's led to an ugly marriage between the two—which has become more evident as Alibaba's team continues to speak out about the lack of strategic value to the relationship. It's clear Ma wants the relationship severed, and it's increasingly coming up in Yahoo's meeting with Wall Street analysts. The more Bartz angers the Alibaba team and criticizes the Chinese government, the more ammo she gives Ma to drive a wedge between the two and even potentially force a sale if it’s deemed to be a poisoned relationship. It’s not too late to wake up, lavish praise on Ma –whether it’s genuine or not– and focus on the US business.

For Yahoo’s part, it has told analysts the tax hit it'd take on the transaction is the biggest barrier, but considering how much of Bartz' compensation is tied up in boosting that stock price and how much of that stock price is being kept afloat by Alibaba, I can't imagine tax implications are the only reason Yahoo is loathe to sell.

As far as Wall Street pressure to sell-or-not-to-sell, sources say there are two camps. Some buyers who bought Yahoo shares when the Microsoft takeover was in the offing, are looking for something—anything—to boost the stock from the moribund $13-range. A several-dollar-per-share dividend would be better than nothing, some Yahoo bears feel. But to most people, selling off Alibaba's stake before Taobao and Alipay go public would be tantamount to throwing in the towel and scrapping Yahoo for parts.

It's hard to know what Bartz is thinking here. I've always been a fan of her no-nonsense, no-sacred-cows style, but if she wants to keep Yahoo from being cheap takeover bait, she needs Alibaba and needs Ma. She might even- gasp!- be able to learn something about building a consumer Internet powerhouse from them. As the tension keeps growing and Alibaba executives keep sounding off, Yahoo will have to decide once and for all if it is a franchise worth saving or simply worth more split into pieces.

French designer Evan Roth has made a ten minute music video consisting of popular gifs vs. the typical fragmented Girl Talk tomfoolery (from the 2006 album Night Ripper). While Roth’s cleverly titled “Cache Rules Everything Around Me” is absolutely not the first time someone has combined Internet culture imagery and music (see: Paper Rad) it is perhaps the longest and most monumental I’ve seen.

Want to prove that you’re the ultimate Internet hipster? Tell your friends you actually saw this three days ago. Please fullscreen for full effect.

Via: Fat Labs

The geeks are getting pretty excited about the upcoming sequel to the 1982 hacker movie Tron. Tony Flynn, played by Jeff Bridges in both movies, is the protagonist. The soundtrack for the sequel is by Daft Punk, and the website that has been put up for the soundtrack contains an excellent easter egg – an ascii image of Flynn/Bridges from the first movie.

See TronSoundtrack.com and view source, you’ll see the image. Note that we haven’t actually confirmed that this is an official site for the movie or the soundtrack, but it looks legitimate and it’s cool either way.

Thanks for the tip Raffel.

Yesterday I wrote about how all web services could possibly be more useful with some “Instantization”; Scottish engineer Tam Denholm had the very same idea, and built Instantise to house the recent outcrop of Google Instant-inspired services on one URL (The American usage “Instantize” also redirects).

On the Instantise homepage you can find original instant search gangster Google, YouTube Instant, Maps Instant, Images Instant and the Denholm-created Hacker News Instant, Twitter Instant, and even PHP.net Instant. Hacker News Instant is especially delightful.

Denholm holds that the concept was “inspired/stolen from Michael Hart who got inspired/stole from Feross Aboukhadijeh who got inspired/stole from Google [and boredom]“, once again proving that especially in coding,  good artists copy, great artists steal.

Update: Denholm has added Techmeme Instant to Instantise’s roster of homebrew services.

Vaguely related video, below:

If you think back to 2005, you’ll remember that the Motorola RAZR phone was all the rage. Not entirely unlike the iPhone today, it was the sleek phone that everyone wanted. But if you happened to be on the largest carrier in the U.S., Verizon, you couldn’t get one. Again, sound familiar?

It wasn’t until just about a year later that a version (the V3c) finally came to Verizon. It was a long wait, but I was excited to finally have access to the device, I pre-ordered one the first day I could. When I finally got it, there were some surprises in store. Rather than having the same colorful user interface that my friends’ RAZRs (on other networks) had, it had some god-awful red proprietary UI made by Verizon itself. It also came with the added bonus of having Bluetooth file transfer capabilities disabled by Verizon. And it was loaded to the brim with Verizon’s V CAST garbage.

So while part of the wait was undoubtedly due to Motorola getting a CDMA version of the device ready to sell, a bigger part was likely Verizon negotiating and working to load the device up with their crapware. That doesn’t speak well for the supposed Verizon iPhone.

Rumors of the iPhone coming to Verizon are louder now than they’ve ever been. There is no doubt that Apple has been working on a CDMA version of the device (codename: N92) for some time now, and perhaps is even in the process of manufacturing it as we speak. But whether that device is destined for Verizon or Sprint (the other U.S. CDMA provider) remains to be seen. Undoubtedly, Apple wants their device on the largest carrier in the country (Verizon), but they’ll also undoubtedly will have to make sacrifices to make that happen. And Apple doesn’t like to make sacrifices.

Much has been written about how Apple will probably have to take a lower subsidy from the other U.S. carriers if they move beyond their exclusive deal with AT&T (which gives them an outrageous subsidy that adds billions of dollars to their bottom line). But there’s not a lot of talk about the more fundamental thing Apple may have to give up by putting the device on Verizon: control.

Remember, when Apple first launched the iPhone in 2007, the first carrier they went to talk to about a deal was Verizon. The two sides could not come to an agreement at the time, and the main issue was undoubtedly control. Apple had basically no leverage at the time as they were the new player in the space with zero market share. Verizon knew that and probably laughed at some of Apple’s demands. So Apple went to AT&T, and the rest is history.

Those Apple/Verizon discussions have undoubtedly been had many times since the massively successful launch (and subsequent updated version launches) of the iPhone. Both sides know that it makes sense for the most popular smartphone to be on the most popular network. But the question remains: who is willing to give up something to make that happen?

The past week, I’ve written a number of posts with the same basic refrain: the carriers suck. Each of those posts was in the context of Android, and specifically how the carriers are taking advantage of the openness of that mobile OS to take us back in time 5 years where they had complete control over the U.S. market — the time before the iPhone. Verizon is the worst perpetrator so far. Is there any doubt they want to do the same thing with the iPhone?

Back in 2007, Verizon probably thought Apple’s ideas of an App Store and user experience completely controlled by them but run on Verizon’s network were insulting. If there was going to be an app store, it was going to be a Verizon app store. If there was going to be a new user experience, it was going to be a Verizon new user experience. AT&T probably wanted those things too, but they saw what Apple had done with the iPod and were likely willing to take the chance — provided they got the exclusive on it. No less than Apple CEO Steve Jobs has credited AT&T with having this foresight.

Verizon can no longer laugh at Apple’s ideas, but instead the prospect of the iPhone as it is currently constituted on their network probably scares the hell out of them. Sure, they’d add billions in revenues from new contracts, but they’d essentially be a dumb pipe for this device. As they’ve proven with all of their other devices — including the RAZR and now their Android phones — they don’t want to be that. They want to be in control of not only the network, but at least some of the content on that network.

So now the question in my mind is whether or not Apple is willing to make any concessions to Verizon? Would Apple allow them to include a V CAST app standard on every iPhone, for example? One that couldn’t be deleted? What about apps in the App Store that only work with Verizon iPhones and not AT&T iPhones (just like Skype for Android)? What about interface changes (either software or hardware) that show more prominently that this is a Verizon phone? Or what about a cut of all apps sold and all music/movies/tv show downloaded?

It’s hard to imagine Apple allowing Verizon to do any of that. But they may have to if they want to deal.

All I’m saying is that I’m still not sold on the rumors of an iPhone on Verizon’s network being a slam dunk. It certainly might come, but I suspect Apple will have to make some concessions they would never make in normal circumstances to make it happen.

If they’re not ready to do that just yet, might we see a T-Mobile and Sprint version of the iPhone first? That would certainly give Apple some more leverage by making Verizon the only carrier in the U.S. without the iPhone. And Verizon is probably okay with that right now as they watch Android sales explode and watch their power over that OS — which they can control — expand.

Apple gets a lot of shit for not being as “open” as Android. But as always, things aren’t as black and white as they seem. Verizon’s repurposing of Android is starting to show this very clearly. That level of outside manipulation, wrapped in the faux cloak of “openness”, is something that Apple is never going to allow on a device that they make.

And no matter how badly we all want the Verizon iPhone, we don’t want that.

[image via TiPb]

Years ago, I came to the conclusion that bundled software — those applications that piggyback alongside the applications you’re actually trying to install — are the spawn of the devil. They often trick users into installing software they don’t want (they’re the reason millions of people installed WeatherBug years ago when they really didn’t mean to). So when I first heard about OpenCandy, a startup that actually facilitates the distribution of bundled software, my initial reaction was, “Yech“.

“No, we’re the good guys!” they said, explaining that they were only distributing high quality software, and that users would always have to opt-into downloading a piggybacking app, which meant that there wasn’t a chance that they’d accidentally install something. And I warmed up to them, watching as they worked with a number of respectable companies and eventually closed a $5 million funding round from Google Ventures. Alas, it seems that they’re trading in their halo for a bigger market.

For those that aren’t familiar with it, OpenCandy is a service that lets application developers generate more money from their apps. Developers add a small piece of code provided by OpenCandy to their install process. Then, when a user installs the developer’s software, they’re prompted to install a second, promoted application that’s served up by OpenCandy’s recommendation algorithm. Before now a user would only install this promoted software if they explicitly clicked a box indicating that they wanted to — there was almost no chance of it happening accidentally, which is what shadier app bundles rely on.

This week OpenCandy is announcing that it’s going to offer developers the option to make these bundled app installs opt-out. In other words, if the developer chooses to make an opt-out offer in their installer, it will be up to the user to manually uncheck a box if they don’t want to install whatever software OpenCandy is hawking, which is exactly what OpenCandy said it wasn’t doing. Ugh.

I spoke with OpenCandy CEO Darrius Thompson, who says that the company had the same reaction when it first considered the idea. Asked if OpenCandy is doing this to make more money, Thompson claims that the answer is “no” — he says that OpenCandy is making the change because the data supports it as a fair thing to do. Here’s a portion of the explanation he’s posted on the company blog:

We are a metrics driven company and data strongly influences our decisions. When we started OpenCandy, we assumed that users who opted-in to software offers were more likely to use that product than users who did not opt-out. It's an assertion we've been trying to validate since day one. We've studied this carefully and, with the help of our partners, we've found that users who opt-in are only slightly more likely to use the software than those who do not opt-out. It's a little confusing but essentially means that even though more users get software through opt-out than opt-in, they still end up using it at about the same rate. This is not what we expected, but it is what the data has shown, and has various implications for our business.

Numerous developers have asked us to support opt-out so they could earn more money and advertisers have asked the same so that they could reach more users. By allowing our partners to choose opt-in or opt-out, we can help them do this in the best way possible. Keep in mind that opt-out offers are enabled only when both the advertiser and the developer involved with a given offer chose to do so. We have always held ourselves and our partners to a high standard when it comes to transparency and protecting users. Our Network Policy (link) is one of the ways we enforce this. http://www.opencandy.com/software-network-policies/

Despite what Thompson says, this will obviously have a positive impact on OpenCandy’s bottom line, and it’s hard to believe that the company based its decision independent of that fact. This will expand OpenCandy’s potential market to a new set of developers, and it will generate more revenue as more users install bundled software.

That said, OpenCandy isn’t really evil (at least, it’s no worse than its competition). The stats OpenCandy has reported are certainly counterintuitive and seem to indicate that these opt-out installers may not be that bad. Users can cancel the OpenCandy download manager if they accidentally agree to install an application (provided they click ‘Cancel’ before the app is finished downloading). More noble developers out there can still elect to make their installs opt-in (advertisers can also choose to only allow their apps to be opt-in). And plenty of big companies offer their software in a similar opt-out fashion.

Finally, in the hopes of retaining its “good guy” status, the company says that it’s keeping the Opt-in/Opt-out dialog clear (see the screenshot above), and it’s exploring ways to make sure users don’t accidentally opt into software they don’t want (for example, they are considering defaulting to ‘opt-in’ if the user is obviously just rapidly clicking through the installer).

Recommendation engine Hunch usually asks you a few questions and can then help you decide things like whether or not you’ll be happy with a porsche. Or they can look at data another way, and show that TechCrunch readers tend to be optimists, for example.

But sometimes Hunch likes to show off a little and prove that they know you even before you answer those questions. Their Twitter game was one example. Now they’ve released a Facebook game. Hunch will predict your answer to questions like whether or not you like comic books (it nailed it, I just don’t like them). And that’s without any tuning to start – Hunch just looks at your Facebook likes and makes its predictions from there.

Play Hunch Predic-o-matic on Facebook here.

It’s eerily accurate. During beta testing with 30,000 or so users they’ve seen 83% accuracy for U.S. users and about 75% for non U.S. users. The data, says Hunch CEO Chris Dixon, comes from 400,000 Hunch users who’ve logged in via Facebook Connect and have answered around ~150 questions each. That’s created the Hunch “taste graph” and served as a starting point for their prediction engine.

“As more people use Hunch (either on hunch.com or via our API) we collect more data and the system gets smarter. The Predictor Game is meant to be a tech demo but we can also use the same technology to recommend practical things like restaurants, movies, clothing, gifts, travel destinations, daily deals, etc.” says Dixon.

The best thing about the game is when you subconsciously lie, answering what you want to be true about yourself, and Hunch comes back with the actual answer. Sure I like to think of myself as the kind of guy that’s passionate about hiking. But in reality, not much hiking actually ever happens, and Hunch knew it. Oh Hunch. You just get me.