This morning, we got news that Microsoft had unequivocally ripped off design and code from marginally successful microblogging service Plurk . Now, we're seeing reports - and seeing for ourselves on the Microsoft website - that the knockoff site has been unceremoniously ganked from the tubes. Did a major corporation get caught red-handed stealing intellectual property from a startup? Say it ain't so! More interestingly, is the site's removal an admission of guilt? And are these side-by-side source code screenshots incriminating or what? Sponsor We received an email from a Plurk co-founder Amir Salihefendic this morning calling MSN China's Juku an obvious counterfeit . The proof is in the pudding. And the screenshots. And the source code: Currently, the Microsoft microblog site reads something along the lines of "We regret to inform you that the service is temporarily not available due to system maintenance. Please visit the site again later. We apologize for the inconvenience." Perhaps they ought to be apologizing to Plurk for the inconvenience. "We were absolutely shocked and outraged," wrote Plurk rep Dave Thompson, "when we first saw with our own eyes the cosmetic similarities Microsoft's new offering had with Plurk... "We're still in shock asking why Microsoft would even stoop to this level of wilfully plagiarizing a young and innovative upstart's work rather than reach out to us or innovate on their own terms." Microsoft has issued this press release that passes the buck on to an unnamed third-party contractor. Is it likely that the Microsoft executives in charge of producing the microblog were a) unaware of Plurk's existence and design to the extent that they wouldn't recognize a clone as such and b) that they didn't simply point at Plurk and tell their vendors to "make us one of those"? Having had some experience in both startup development processes and corporate application deployment, I personally know very well that a (literally) criminal amount of IP theft goes on every day in Silicon Valley and around the world. Most of the time, the offending parties are operating under the belief that they won't get caught. And a great deal of the time, they're not caught. We must, however, applaud Microsoft's taking the site down to investigate the matter rather than being defensive or litigious. Still, the software giant should be accepting more accountability for the attempted theft that was conducted in its name and under the auspices of its brand. What do you think? Who is to blame in this situation? Cast your vote below, and tell us what you really think in the comments. How Do You See the MSFT/Plurk Situation? ( polls ) Discuss

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Microsoft Caught With Hand in Plurk's Cookie Jar?

Last week, we told you about peer-to-peer and torrent file-sharing sites were being systematically shut down all over China . Not too long before that, we let you know about file-sharing being monitored by a major ISP in the UK. Now, Israeli ISPs are throttling P2P network access, too, as confirmed in a report just released by an Israeli cyberlaw attorney and a partner news site. Whether you consider file-sharing an affront to content creators and copyright-holders everywhere or whether you see P2P networks as a permissible and valid way for users to exchange data, this trend is gaining considerable momentum around the world. Where will P2P restrictions pop up next? Sponsor In their research, tech attorney Jonathan Klinger and researchers involved with the Israeli website Ynet found that two of the three major ISPs in Israel are interfering with user traffic and might be conducting deep packet inspection. Traffic shaping is a practice sometimes used by some ISPs to discourage the use of certain applications. A couple of years ago, Comcast caught some heat from users and media for filtering user traffic when torrent files were being downloaded, even causing some to speculate that the ISP was violating U.S. law by prohibiting this traffic. Eventually, Comcast did strike a deal with BitTorrent to allow protocol-agnostic traffic management, but only after the sparring had been brought to the attention of the Federal Communications Commission. It's currently unclear whether Israeli ISPs are filtering traffic due to piracy concerns or simple due to bandwidth concerns, as shared files can often amount to multi-gigabyte, hours-long downloads. However, traffic-shaping that blocks P2P protocols can also apply to VoIP calls, IM clients and other applications. Although P2P traffic is associated with illegal downloads, nothing about the protocols themselves is inherently illegal. "The element common to all P2P services," reads the Israeli report, "is the lack of economical benefit to the ISP." Klinger noted that although complaints have been brought to media outlets and ISPs since 2007, the ISPs have typically ignored these criticisms. Netvision and Internet Zahav were the two ISPs determined by this research to be blocking file-sharing traffic. Bezeq International was the third ISP investigated. Although Bezeq was cleared by this particular investigation, a plug-in introduced last year from popular bittorrent client Vuze shows that this ISP, too, throttles and disrupts file-sharing network traffic. In response to the findings presented by Ynet and Klinger, all three of the investigated ISPs gave typically canned responses claiming to offer users excellent surfing experiences. Israeli Communications Ministry rep Dr. Yechiel Shabi told Ynet, "The research materials relayed to us paint a picture which arouses the need for thorough examination. After we become familiar with the study's findings, we shall consider the need for interference, supervision or regulation of the matter." So, while we wait to see what results this report will yield in Israel, we are left to ponder the perturbing question: Where will traffic-shaping pop up next to prevent P2P activity? Take another look at the findings from Vuze's traffic-monitoring plug-in . You'll see that ISPs around the world - including Verizon, BellSouth, AOL, AT&T, Charter, Road Runner and ISPs in France, Italy, Germany, Poland, the UK and the Middle East, to name a few locations - are already interrupting traffic. Vuze's researched was released in April 2008; in August, the FCC declared that ISPs should not be allowed to target and interrupt P2P applications. Still, suspicious Americans and other users around the world should consider using a tool such as the EFF's Switzerland to determine whether torrent downloads and VoIP calls are being interrupted by their ISP. Do Israeli or other ISPs have the right or the moral imperative to throttle traffic in this manner? Do they have the need or right to examine the applications, files, and protocols being employed by users on their networks? Or do ISPs around the globe need to read the wiki on net neutrality and get their act together? Let us know your experiences and opinions in the comments. Discuss

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P2P Sharing Being Blocked Around the World, Where Next?

In our yearly wrap-ups of the best products of 2009 , we cannot but notice the shadow that falls over the editorial desk. We are chilled and saddened by the ghosts of the past year - the apps that should have been, the startups that failed to launch, the brilliant ideas that were throttled, the great minds that were fired, the tech heroes that committed tragic gaffes. But some failures were so monumental that they require specific enumeration and commentary. Here are the 10 worst tech failures of 2009. Sponsor Google Wave Sucked This is one case where the hype was as noisy as the app - and both were deafening. We have to hand it to Google's publicity team; we don't know one geek who wasn't positively salivating for a Wave invite. The ReadWriteWeb back channel was a complete melee when the first invites were rolled out to team members. But once we got there and saw the new tech tricks, like watching one another type, we started thinking about use cases. And the more we struggled to understand and use this product, the more frustrated and bored we became. Blame it on the steep learning curve. Blame it on our misunderstanding the product. Mount whatever feeble defense you like, but techies know Wave was a flop. The TabletPads Went to the Deadpool All we wanted was a $200-500 flat piece of glass and plastic with some fancy gizmodgery inside so we could look at the Internet from the comfort of our couches. And what did we get? Rumors, Photoshopped gadget porn, promises - lies, all lies. We'd have been better off if we'd spent those months drawing the Yahoo! home page on an Etch-A-Sketch. Although the Crunchpad has resurfaced as the JooJoo , the price has been marked up considerably, and the whole project just seems wrong to us now. Moreover, five will get you ten that Michael Arrington, father of the Crunchpad and a former attorney, is fixing to get litigious right about now, which might significantly delay the product's appearance on the market. Powerset Resurfaced as Bing In 2008, Powerset was one of the stealthiest, sexiest startups on the Silicon Valley block. About five minutes after launching, Powerset got snatched up by Microsoft to the tune of $100 million. When everyone had retrieved their dentures from the ground and changed their pants, they noticed that Powerset's ever-so-sexy tech had been folded quietly into the Borg for assimilation. And about a year later, Bing was born, reportedly from the tech that Microsoft scraped off the infant carcass of Powerset. And Bing sucked. We had such high hopes. Twitter Failed to Innovate While some of us had our money on a Twitter sale in 2009, others were simply waiting for the company to debut a radical, interesting, mutually beneficial revenue model. At the very least, most users were hoping that the scalability issues and downtime that made Twitter the tragic heroine of 2008 would be put to rest. Twitter's failures this year were less about the headlines they made than the ones they didn't make. Rumors to the contrary notwithstanding, Twitter didn't capitalize on their massive adoption increase (a.k.a., their Oprahtization) and sell. Worse yet, they didn't buy. When one recalls the purchase of Summize and then contrasts it with this year's explosion of excellent Twitter apps, one wonders why none of these small startups or one-off side projects were acquired. Perhaps this was a case of "Hey, we can do that!" as Twitter certainly seemed intent on pilfering features (such as lists and retweets) from third-party developers. Too bad the "official" Twitter features suck a lot more than the original third-party designs. But worst of all, we are still consistently experiencing downtime at a level that is unacceptable for any major web app. Google couldn't get away with this kind of failure; why should Twitter be allowed to do so? The Great Firewall of China Drama Continued and Worsened To date, China's "Golden Shield Project" restrictions on Internet use are throttling traffic from that country to websites such as Twitter, Facebook, Bing, and many, many more. Banned sites include news organizations that cover controversial events, pro-democracy sites and blogs, any site acknowledging the existence of Taiwan, YouTube, most blogging websites (WordPress, Blogger, etc.) and anything the government deems to be obscene or profane. In countries where creative self expression and the ability to browse, learn and make decisions independently are freedoms too often taken for granted, these restrictions are indeed unthinkable. The project began in 1998 and still made plenty of headlines this year for its renewed affronts to freedom on the Internet. For example, in June, the Chinese government announced it would be rolling out censorship software on every new computer sold in the country. Microsoft Dumped Don Dodge Not too long ago, we at ReadWriteWeb were shocked to learn from startup guru and longtime Microsoft ambassador Don Dodge that the Big M had given him the kiss-off. Dodge was seen by many as an intelligent, approachable personality in front of a huge, out-of-touch, unpopular brand. It was the tech industry equivalent of FOX cancelling the Simpsons. It's been noted that Microsoft makes its paper from the enterprise, not startups, which would make Dodge a natural candidate for the chopping block. Still, the move was hugely criticized by bloggers, VCs and others. Microsoft's PR plot thickened a few days later when Google snatched up the briefly unemployed Dodge. Spotify Didn't Launch in the US... Yet It tops our list of Most Highly Anticipated Products Yankees Can't Get Their Mitts On. Streaming music service Spotify is changing the world - with the exception of the United States. We've already got a crowded market of players here, including Pandora, Last.fm and Imeem. Call us greedy, but we want the new hotness that is Spotify, too. The Web 1.0 Comeback Campaigns Were Embarrassing to Watch Now, we at ReadWriteWeb have no desire to kick a company when it's down, but a couple of the mastodons of the mid-nineties dotcom boom have been valiantly attempting to stage comebacks, some more successfully than others. Yahoo! did some good things for developers this year, but AOL/Aol's rebranding was pitiful. And don't get Dana Oshiro started on the affront to end-user dignity that is Friendster. Oracle Acquired MySQL Open-source geeks have been sporting metaphorical black armbands for the loss of MySQL, the world's largest open-source database, to Oracle, the largest pay-to-play database, following that company's acquisition of Sun Microsystems. We reported last week that MySQL usage is expected to drop by around 10 percent over the next 5 years. Here's another handy stat: Oracle also this year raised their own prices by 40 percent . Will MySQL remain free-as-in-beer and open source? Or will it succumb to corporate lameness? And the Worst Fail of 2009... LeapFish Made a God-Awful Promotional Video Tonight, we dine in hell! LeapFish's bombastic promo clip (which you have to watch in 10-second segments to avoid waves of misplaced inspiration alternating with waves of nausea) is as horrifying as the company itself is sketchy . The startup says it made $10 million before it even launched, and the CEO Ben Behrouzi is an infamous contrepreneur with a background in lead generation and threatening employees . So, there you have it: our list of the worst tech-related disasters of 2009. What did we omit? Let us know in the comments below, and don't hold back. Clearly, we didn't. And to the companies mentioned in this report: 2009 isn't over yet. You've still got three weeks to make it right with end users. Discuss

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Top 10 Failures of 2009

Creathor Venture is a 25-year-old venture capital firm based in Germany and Switzerland. That makes it unusual. In 1984, when it started, not a lot of VC funds were in Europe. So, we decided to speak with Cédric Köhler in Creathor's Zurich office. As innovation accelerates and globalizes, we wanted to find out how a smaller regional fund like Creathor can compete with much larger Valley-based firms that have a global footprint. And of course, we wanted to find out what's hot on the European tech scene. Read on to find out. Sponsor Aka Aki: European Play in the Web's Golden Triangle First, what's hot? In short: mobile + social + real time. That sounds like it was created by a random buzzword generator. But the combination can be very powerful. This is what Fred Wilson calls the Web's golden triangle . When Fred talks about this, Foursquare is probably at the front of his mind. He is an investor, and Foursquare is as hot as it gets. This area is hot for a reason. Mobile devices reach more people and occupy more of their time than desktops or laptops could ever do. But to reach people effectively on mobile, you need mobile-native services, built for the limitations and advantages of the small screen. (Standard HTML apps retro-fitted to mobile are like the talking heads in early television.) Mobile is inherently social: you use it to communicate with people. It has to be real time (or "just in time" if we want to be accurate), because the small screen demands a filter that shows only what is relevant right now. (Yes, that does pre-suppose great filtering capabilities.) When Cédric talks about mobile + social + real time, he is thinking about Aka Aki, in which Creathor has invested . The way Cedric puts it, Aka Aki "adds the dimension of time" to location-based services. This addresses the question, "Which of my friends is within shouting distance right now ." FourSquare is from New York, and Aka Aki is from Berlin. With location-based services, location matters. Specifically, density matters. People will use the service if it connects them to people they know locally. If I am in Rhinebeck, New York, discovering that I have friends in Manhattan, Zurich and San Francisco who are online right now does not help me. I am only interested in the friends in Rhinebeck. This is an argument for a territory-based expansion model. You become dominant in one area, and then expand to neighboring areas. This is the way business worked for centuries before the Internet. Then the Internet heralded the death of distance. You could create a site and get readers from all over the world. With mobile location-based services that connect you to people in the real world, the old territory-based expansion is returning - with a twist, of course. German, Then French, Then English? Aka Aki started in Berlin. As this blog from March 2007 shows, it was early to the game of mobile + social + real time. It got its first round of funding from Creathor in December 2007. Then, in October of this year, it got a second round from INNOVACOM , the leading French VC (with Creathor joining in that round as well). That is a natural expansion model. Aka Aki did well enough in Germany to raise a second round and then uses that to grow geographically. In this context, bringing on a French VC made a lot of sense. Insta-Site: The No-Barrier-to-Copying World Cédric gave us a good perspective on the early-stage investing scene in Europe. Like other European VCs, he pointed to the rash of copy-cat ventures in the Web 2.0 era. These have been referred to, more politely, as "concept arbitrage": someone sees a service doing well in one location and creates a version for their location. While "copy cat" is a derogatory term, Cedric was keen to point out that it has been a valid strategy in the past. As he puts it, "If I have a successful pizza shop in one location, I could probably create a successful one in another location". In the Internet business, many successful exits have been based on this model. But VCs around the world who we have spoken with tell us that this game is pretty well over. The reason? Well, it's all our fault. Bloggers and tweeters spread ideas so fast that the time needed to exploit a concept arbitrage has shrunk to nothing. The tools for building and deploying a website have also dramatically shrunk the time and cost to market. 1. Get idea on Monday, 2. Launch on Friday, 3. Move out of dorm room on Sunday. In the world of close-to-$0 insta-sites, the copy-cat model is being challenged. This is just like the arbitrage strategies on Wall Street. When friction goes, profits eventually wither as well. But Don't Underestimate Local Nuance We can still see big wealthy countries where the US Internet giants have not become dominance for one reason or another. For example, Google does not dominate search in Korea or China. What looks like a tiny bump from 30,000 foot can be a massive obstacle when you are in the war on the ground. This is even more true in the world of social media. By definition, social involves cultural norms, and they differ around the world (thank goodness for that, homogeneity is terribly boring). When social + mobile + real time connects people in the real world, the differences can be even more striking. We are all humans with similar basic needs, but the cultural differences between, say, Germans, the French, Americans, Brits, Chinese, Indians and Koreans (to name just a few) are significant. The Globalization Challenge for VCs The top-tier VCs on Sand Hill Road know that innovation is going global and that the biggest markets and best ventures may no longer reside within a few miles of their office. So, the big VC funds are setting up branch offices around the world. This is the traditional multi-national model. The problem is that it might not work as well in the VC world, where personal relationships matter so much and yet you have to make decisions very fast. The multi-national model does not easily square that circle. Venture capital is not a naturally scalable business. VC funds have to decide between staying local (i.e. being a small firm of partners who can meet face to face every Monday in their office) and going global. The business does not scale well. If you bring in more partners, you won't be able to maintain the situation in which all partners agree on every deal. That would create way too much overhead and friction. Fast decision-making overrides the standard layers of corporate management approval. On the other hand, if local partners are making the investment decisions, what value would they get from being part of a big global fund (one in which the folks way over at head office take a big chunk of their profit)? Is branding really that important? Smart entrepreneurs know that a fund's name (i.e. its brand) is much less important than the individual partner who they deal with. This is a strategic dilemma for big funds. Federated Best-of-Breed VC Creathor, along with other smaller regional funds, is moving towards a federated model. As Cedric puts it, "We are partnering more with other funds." In one sense, this is nothing new. VCs have always worked together on deals. But in the past, this usually meant two VCs on Sand Hill Road meeting at a Palo Alto coffee shop. Now, it means a Swiss fund working with a French fund (or a New York or Indian or Chinese fund). European VCs have to innovate in this way. They cannot win on the multi-national model: their funds are not big enough for that. As the markets move East - to China and India, for example - VCs have to "be there." Similarly, a VC in Asia needs to work with VCs in Europe and America. It will be interesting to see how the globalization of innovation plays out and what new models emerge. Discuss

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Creathor Venture: European VC Moving to Federated Model for Global Expansion (RWS Interview)