Following an email from CEO Satya Nadella stating that hard choices would need to be made, Microsoft has made a lot of announcements about changes to the structure of the company. Unfortunately, the details of those changes seem to have been misunderstood by many in the press. In some cases, the people writing about the topic seem to have not actually read the press releases from the company at all. Because of this, I feel it is important to set the record straight, so let's get started.
It has been reported by many institutions that Microsoft has sold its online display ad business to AOL. Unfortunately, except for the names of the companies and departments, nothing else is accurate. In fact, Microsoft has expanded its online display ad business by entering into a 10 year sales and search partnership with the content creator. Microsoft will provide AOL with search for their platforms, powered by Bing, while AOL will serve as the sales force for Microsoft's advertising service.
This partnership provides AOL with a fully customized advertising platform for their sites, like Huffington Post and Engadget. It also provides AOL with recurring revenue from sales of advertising services to other sites, all without having to build or maintain the technology. What Microsoft gets is a dedicated sales force for its advertising business, a guaranteed revenue stream from AOL's own advertising needs, and a new outlet to build the reputation of its Bing search capabilities.
At a time when Bing is quickly gaining ground on Google, partnerships like this are essential. Apple uses Bing as its search provider within iOS and OS X, and even powers Siri with Microsoft's data. Adding AOL, another major content producer and
recent addition to the Verizon family, will help them edge ever closer to Google in search popularity.
Nadella was openly against the
purchase of Nokia right from the beginning. He famously spoke out against it even as he was being considered to replace Ballmer as CEO of the company. As soon as he was given the job, he publicly changed his tune, though it was no secret that he still personally thought that producing phones was outside of Microsoft's core competency. Because of that, early into his tenure, the Lumia team was cut by a lot.
This week, it was announced that a $7.6 billion write-off was being filed as a result of the Nokia purchase. In addition, 7,800 employees would be cut form the company, mostly coming from the Lumia team. Many tech sites have reported that this signals the end of Windows-powered phones, which is obviously laughable. Microsoft is betting big on the One Microsoft philosophy, which includes Windows devices of all sizes, including smartphones.
What this does indicate is that the Lumia team was far too big for the plans that Nadella has. It is likely that, like the successful Surface line, Microsoft's new intent is to produce a small number of flagship Windows-powered Lumia devices whose intent is to push other manufacturers to try big things in the market. Before the Surface line, the idea of a convertible was insane, while today nearly every manufacturer of computers offers one. It is unlikely that this push would have happened if it weren't for the Surface.
With the idea of producing only flagship devices, the design and implementation teams do not need to be large; certainly not large enough to produce all of the phones that Nokia was making. With that type of shift comes layoffs, which is what was announced this week.
The shift from flooding the market with lots of Lumia phones to producing only industry spec flagships would put Microsoft into an interesting middle ground between Apple and Google's philosophies. On the one extreme, Apple gives its customers absolutely no choices and controls every aspect of the ecosystem: a philosophy that once nearly collapsed their company and today leaves them in 2nd or 3rd place, depending on the country. Google, on the other hand, controls absolutely no aspect of the ecosystem, except for the platform name. Devices can be of any size, shape or quality, can look or function in any variety of ways, and have a huge discrepancy in user experiences. This model has put Google in 1st place worldwide, but it also opens users up to any number of issues.
Microsoft has positioned themselves in the middle for the tablet space and are likely aligning their Lumia business with this move. Microsoft would control the ecosystem and offer a set of devices that set a standard, while licensing their platform for other manufacturers to expand the ecosystem. It is an interesting gamble, but one that could pay off huge if successful.
Anyone who has ever interacted with YouTube knows about copyright notices. Whether you are a content producer who has had a video muted because there was music playing in a room during an interview with a company that sells speakers, a musician whose music is being used without permission or a user who has encountered ads for music in the video, you likely have some experience.
What most people don't know is that there are companies who represent audio copyright holders on YouTube. These companies scour YouTube looking for audio that infringes copyrights held by their clients. This is great for artists of any size, from local indie to international superstars. It is no wonder a number of these companies have emerged to help artists monetize their music on YouTube.
From time to time, however, these companies can get a little over-anxious. For example, this week, a company called Adafruit that produces Arduino-based products posted a simple video. It was basically an Arduino spinning to the song "America the Beautiful." YouTube copyright protector Rumblefish took issue with the music used and filed a copyright notice against Adafruit. YouTube contacted them to inform them that they could not monetize the video and Rumblefish could run their own ads on the video.
The problem? Rumblefish has no rights to the music. As it turns out, the song "America the Beautiful" is no longer protected by copyright. It was recorded at another time when copyright laws had fast expirations, and it has expired. Of course, just because a song has lapsed doesn't mean a particular recording can't be protected. Unfortunately for Rumblefish, the recording used here was by the US Navy Band. Since the Navy is a government organization, their recordings are all public domain.
Clearly Adafruit has disputed the claim. They chose the song and recording specifically because it was entirely in the public domain, so this is quite a shock. It is not, however, the first time Rumblefish has made a ridiculous claim. In 2012, a video of a guy walking in a park and eating leaves had a takedown notice because Rumblefish claimed to own the birds chirping in the park.
Perhaps YouTube should have a better process for verifying claims before taking down videos or issuing copyright notices.
Reddit is an incredibly popular community on the Internet, referring to themselves as "The front page of the Internet." I have personally never understood the appeal of the site, but I have understood that it is a place where people can go and have frank, open discussions about topics of the day. The topics tend to be based on opinions that are not based in reality, but people are welcome to talk about whatever they like.
The community is falling apart, however, because of the decisions of interim CEO Ellen Pao. For those who follow the tech industry, that should be a familiar name, as she is the woman who lost the gender discrimination case against venture capital firm Kleiner, Perkins, Caufield and Byers. The same attitude that led to the tenuous case also led to some decisions inside the company that is pushing the community away.
The turning point was the way the company handled firing Victoria Taylor, a popular admin on the site. In solidarity with Taylor, many boards closed to the public, making Reddit a very quiet place to be. As criticism mounted against the company and Pao in particular, she made a public statement, saying,
The bigger problem is that we haven't helped our moderators with better support after many years of promising to do so. We do value moderators; they allow reddit to function and they allow each subreddit to be unique and to appeal to different communities. This year, we have started building better tools for moderators and for admins to help keep subreddits and reddit awesome, but our infrastructure is monolithic, and it is going to take some time.
We hired someone to product manage it, and we moved an engineer to help work on it. We hired 5 more people for our community team in total to work with both the community and moderators. We are also making changes to reddit.com, adding new features like better search and building mobile web, but our testing plan needs improvement. As a result, we are breaking some of the ways moderators moderate. We are going to figure this out and fix it.
While an interesting statement, it does not address the issue at hand at all. The community, in particular the moderators, have issues with how the firing went down, not about how hard it is to moderate. In addition to the privatizing of boards, a petition is also circulating asking for Pao to step down as interim CEO. Based on her poor handling of her own life, followed by her handling of the company, in addition to the public backlash received, that might just be the best idea right now.