A big boring patent deal, Google-friendly scraping, and the recruiting Panopticon

Google’s Intrinsically Boring Patent Deal

Google is buying Motorola Mobility for $12.5bn. There are three parts of this deal: the assets Google will immediately liquidate (low-margin phones, cash), the assets they’ll reluctantly liquidate (the set-top box business), and the assets they only bought in order to avoid being sued (the patents).

It’s unfortunate that Google’s big recent M&A pushes have involved scooping up patents—they tried to buy Nortel’s patents a few months ago. This might be the natural behavior of companies with $40bn in cash on hand and a large number of businesses that either don’t require much capex (comparatively) or throw of ludicrous amounts of free cash flow.

A few other views on the deal:

• Dan Frommer at Splatf has ten [good] questions about the deal, mostly assuming Google bought Motorola Mobility for the phone business.
• Henry Blodget points out that it could be a disaster, again assuming Google keeps the phone business.
• FT Alphaville rounds up analyst reactions.
• GigaOm notes that Microsoft was bidding, too.
• This blogger predicted the deal a few weeks ago. Smart!

The Microsoft bid is notable. Our theory on large-scale technology mergers has been that they’re a worse deal than partnerships, and that they only make sense as a way to keep someone else from getting a partnership. With enough cash on hand, and sufficiently low interest rates, there are plenty of deals that look “strategic” by that measure.

MarketBrief’s Google-Friendly Auto-Generated Scraping Strategy

MarketBrief (formerly known as SECWatch) has launched an auto-generated content strategy that perfectly illustrates the paradox of Google’s opposition to content farms. Here’s their model: whenever the SEC publishes some new content, they tend to put it in a fairly unreadable format. MarketBrief applies some algorithms to guess the most interesting content, and phrase it in a human-readable way. So a table of Microsoft’s latest earnings turns into a few paragraphs about revenue, income, and margins.

Companies already do that in press releases, but they only highlight the good or good-sounding news. By providing more neutral content, at scale, MarketBrief should naturally show up for search queries like [obscure company name] + [earnings].

That is, of course, content mostly designed for search engines, that isn’t written by people, and fits a simple template. But it’s better than the alternative. If Google is just looking at quantitative measures of search quality, MarketBrief will be fine. If they listen to people who are vocally opposed to content farms, they might decide that MarketBrief is a problem. Hopefully, for the good of MarketBrief and Google users alike, Google does this one by the numbers.

(There are a few companies built in part or in whole on the fact that SEC documents have great data that’s hard to access. It’s a little like the music business in that respect, although the SEC hasn’t gotten around to charging royalties.)

Web Video Cannibalizing TV Ad Profits

The WSJ has a decent story on people shifting from TV to the web, with attendant decreases in revenue per viewer. This trend has a good shot at continuing due to weaknesses in accounting treatment: it’s easy to point to specific revenue from online TV shows, but a loss in traditional revenue could be attributed to any number of factors. Plus, over time there’s a good chance that the kind of hyper-specific targeting that led to the display ad renaissance will also reach online TV.

The Twitter Hedge Fund Puts Up Good Numbers

Market-timing fund Derwent Capital Markets timed the market well in its debut month, beating the S&P by about 3.5%. It’s more of a gimmick than a fund at this point—at least judging by their PR, they’re using a single sentiment indicator derived from published research. But this is also an indicator that Twitter is fairly mainstream, both in terms of who uses it and in terms of what they’re talking about.

What M&A Scoops are Good For

Felix Salmon puckishly lauds the death of the M&A scoop, since it means more journalistic resources devoted to real stories. That’s not quite fair, though: M&A scoops are a great signalling mechanism; they’re a way for business journalists to show that they’re worth talking to. This comes soon after Salmon reconsidered everything Michael Lewis has written recently on the grounds that it might be too much of a narrative. Clearly, the objectivity of scoops is worth something.

Yet Another General News Site

Blogging remains a small business in a big bull market. Based on the success of their recent ad sales, TPM is launching more general-interest news sites. As more ad dollars move online to media outlets with lower cost structures, this should happen more often.

Fake Groupon Panic

Jason Calacanis suggests panicking over Groupon’s solvency. Negative working capital is not exactly a crisis—it just means the company’s growth is in part self-funding. It’s still not useful to extrapolate forward from Groupon’s current P&L. If the argument against them is “I don’t understand why people keep funding these guys, so people are going to stop,” there are two possibilities: either the investors are stupid and it is going to collapse, or it’s just hard to understand. Without articulating why the investors think it’s a good deal, this isn’t even an argument.

RescueTime’s Clever Panopticon-Style Recruiting Strategy

RescueTime, a tool for tracking how people spend their time online, is offering free accounts to college students, and connecting them with employers. It’s not stated explicitly in this landing page, but it sounds like RescueTime is going to share student’s browsing habits with potential employers, in order to let students showcase their intellectual interests online. (RescueTime is, of course, something they’re choosing to opt-in to, and can opt out of at any time.)

If so, this would not be the first time companies tried to hire people based on their browsing habits.

Flash Sites Keep Evolving

A few interesting stories on flash sites. First, Experian Hitwise reports that the well-known sites aren’t necessarily the ones getting all the traffic (though Gilt can probably monetize their traffic better than most). Meanwhile, the NYT reports that recession chic is out—Gilt is offering expensive stuff at full price, with editorial content. That makes sense. Gilt basically used the recession to ensure that it was one of the only growing luxury companies. Now that the recession isn’t such a big story (or at least now that that market is saturated), Gilt can be just another luxury retailer.

Apple Is Still the Macro Situation

RKG has another useful study out: the iPad is 96% of tablet traffic. (Digital Due Diligence daily does its part to contribute to that trend; each issue probably involves 2-4 hours of iPad-only reading.) Apple continues to build products that people like to buy but love to use.

Hotmail Takes Linkbait for a Spin

We’ve long tracked companies that use their data to write unique linkbait content (the all-time champion of this is OKCupid, but the Compete blog is a recent and compelling contender). Now, Hotmail is trying it out by categorizing emailers based on their email retention and filtering habits. It’s easy for them to turn this into a sales pitch, since email companies tend to build features around their users’ habits.

An Important New Buyer in the Private Company Stock Market

Peter Thiel of Clarium Capital is now interested in investing in private company shares. Since Thiel invested in Facebook at a $5mm valuation, that’s probably a good sign. But it gets better:

• Clarium is very well-connected; plenty of ex-Paypal employees are now in prominent positions at well-regarded startups.
• Thiel is already an investor in some of these companies. One of the major barriers to new investors is the 500-shareholder rule; if Thiel can do something analogous to what he did with the Founders Fund and Facebook, he may be one of the only buyers available for some of these stocks.
• Although Clarium itself is much smaller than it used to be, the firm may be able to raise capital at advantageous terms to pursue some of these new deals.