ARTS & FARCES internet

Business

If you’re not quite sure that we’re in the middle of another tech bubble, LinkedIn’s initial public offering (IPO) should quash any doubt. The professional social networking website set the target for its IPO offering at US$32-US$35 per share, raising it at the last minute to US$42-US$45 per share. The stock debuted on Thursday at US$45 per share and more than doubled, closing at US$49.25 per share for an outrageous valuation in the neighborhood of US$9 billion. Analysts and the secondary market—which value LinkedIn at about US$2-US$3 billion—are off by at least a factor of three. But the big news is that LinkedIn’s underwriters—Bank of America Merrill Lynch and Morgan Stanley—allegedly scammed the company out of more than US$130 million by undervaluing the stock. Ujala Sehgal, writing for the Atlantic, has the best analysis.

ESRD

In what appears to be an inordinate level of customer gouging in the name of record profits, the gravy train for many health insurers will likely end in September when they will have to start justifying rate increases of more than 10 percent. Robert Pear, writing for the New York Times, cites Kathleen Sebelius, the US secretary of health and human services, as saying, “Insurers are seeing lower medical costs as people put off care and treatment in a recovering economy, but many insurance companies continue to raise their rates. Often, these increases come without any explanation or justification.” The justification is part of the Patient Protection and Affordable Care Act (PPACA) which calls for annual reviews of unreasonable premium increases. Only individual and small group rates will be reviewed as the Obama administration believes that large employers can take care of themselves in negotiations with the insurers. Many—but not all—states have the authority to block unjustified rate increases. Pear reports the “a rate increase is unreasonable if it is excessive, unjustified or ‘unfairly discriminatory.’ An increase is deemed excessive if it is ‘unreasonably high in relation to the benefits provided.’”

Internet

Sandvine reports that Netflix is now the largest single source of internet traffic in North America, accounting for 29.7 percent of peak downstream traffic. Most of that traffic is cached on edge networks and does not travel through the backbone.

The US government published its International Strategy for Cyberspace (.pdf; 2.4MB) this week containing mostly a lot of cheerleading for the value of networks but warns that bombs may fall if the country is hacked. “Certain hostile acts conducted through cyberspace could compel actions under the commitments we have with our military treaty partners,” reads the report. “When warranted, the United States will respond to hostile acts in cyberspace as we would any other threat to our country. ... The United States will ensure that the risks associated with attacking or exploiting our networks vastly outweigh the potential benefits.”

Ninety-five percent of spam credit card transactions are handled by three financial companies. Cut off these financial companies and you’d likely cut off the vast majority of spam on the internet. So writes John Markoff, of the New York Times, reporting on the work of researchers at the University of California (.pdf; 2.4MB). Markoff cites Steve Kirsch, chief executive of Abaca Technology: “If the credit card companies wanted to shut down the spammers, we can easily aid them in rapidly and unambiguously identifying the merchant accounts used by spammers.”

Law

The US Supreme Court has ruled, in an 8-1 decision (.pdf; 201KB), that police don’t need a search warrant to enter a home if they knock on the door and hear what sounds like it might be the inhabitants destroying evidence inside. The Kentucky Supreme Court had found the search to be illegal in that the police had created their own emergency and could have just gotten a warrant beforehand. Justice Alito wrote in his opinion for the majority that, “We reject this interpretation of the exigent circumstances rule. The conduct of the police prior to their entry into the apartment was entirely lawful. They did not violate the Fourth Amendment or threaten to do so.” Justice Ruth Bader Ginsburg dissented, writing that police needed a warrant to enter the home.

Leaders in the US Congress have agreed to extend two sections of the USA Patriot Act without change until 1 June 2015. The extension will take place, by agreement, without much debate in either chamber of the US Congress. “Roving wiretaps” that allow individuals (rather than specific communications channels) to be surveilled under court order and the section allowing “any tangible things” to be seized in an investigation were both extended. Additionally, the “lone wolf” provision of the Intelligence Reform and Terrorism Prevention Act allowing investigations of individual suspected terrorists unconnected to any state was also extended. All of these provisions were originally scheduled to sunset in December 2009. This is the third extension of the legislation by the US Congress, which has repeatedly failed to reach a compromise on reforming the odious law.

Privacy

US Senator Patrick Leahy has proposed legislation that would update the Electronic Communication Privacy Act (ECPA) for the 21st century. Leahy’s Electronic Communications Privacy Act Amendments Act of 2011 (.pdf; 66KB) requires law enforcement agencies to obtain a search warrant—based on probable cause—before accessing your mobile phone, email, or private instant messages. This reverses the existing ECPA provision that allows the government to acquire email and other stored content from internet service providers without warrants. This giant move forward is partially offset by expanding the use of National Security Letters to obtain transactional information about who you communicate with and when.

Publishing

Amazon now sells more ebooks than print paperbacks and hardcovers, combined. This, a mere four years after introducing its Kindle ereader device. “Since April 1, for every 100 print books Amazon.com has sold, it has sold 105 Kindle books,” says Amazon in its media release. “This includes sales of hardcover and paperback books by Amazon where there is no Kindle edition. Free Kindle books are excluded and if included would make the number even higher.” Amazon has also apparently answered the question of whether or not readers would tolerate advertising-supported ebooks. The company says that the US$114 advertising-supported Kindle is now its best-selling ereader.

Sustainability

In the San Francisco Bay area in the mid-1970s there were a lot of “Briarpatch” businesses that formed around the idea of right livelihood. The Briars were incredible people; and they did incredible things. Now comes Panera Bread, a franchise restaurant chain with a “pay what you can” business model experiment in three of its outlets. Gregory M. Lamb, writing for the Christian Science Monitor, reports that most people pay the whole price (or more) “in essence subsidizing a meal for someone who can’t pay the full amount. Panera says about 60 percent leave the suggested amount; 20 percent leave more; and 20 percent leave less. The largest single payment so far? One person paid US$500 for a meal.”

User experience

Websites suck because user experience professionals lose sight of why the sites exist. That’s where user research becomes critical. “We get distracted, lose sight of priorities, and end up with sites that don’t do the most important things users want,” writes Lou Rosenfeld in “Sweat the important things.” “Such a site is kind of like [a] Swiss Army knife without the, um, knife.” Rosenfeld provides a user research diagram that’s quite simple but effective.