Google co-founder Sergey Brin participates in a panel discussion in Mountain View, California February 9, 2010.

Credit: Reuters/Robert Galbraith

SAN FRANCISCO (Reuters) - Google Inc said on Friday it was the target of an investigation by the Texas Attorney General’s office into the fairness of its search engine rankings.

The world No. 1 search engine company said the probe is the first by a U.S. legal authority into the fairness of its rankings, which can make or break commercial websites.

Google faces a similar probe by the European Commission, prompted by complaints from some small websites that felt they were unfairly hurt by low Google search rankings.

Texas Attorney General Greg Abbott has asked for information about complaints from a number of companies, Google said on its website. Google specifically mentioned websites operated by Foundem, TradeComet and myTriggers as challenging its results, saying they competed with the search giant.

A spokeswoman for the Texas Attorney General confirmed the probe, but would give no further details. Google said it looks forward to answering questions from the Texas attorney general.

"We recognize that as Google grows, we’re going to face more questions about how our business works," Deputy General Counsel Don Harrison said in a blog post. Harrison was not available for further comment.

In its statement on Friday, Google pointed out that two of the companies are represented by attorneys who also work for Microsoft Corp, which has publicly encouraged companies to challenge Google’s business practices. Microsoft did not immediately respond to a request for comment.

TradeComet CEO Dan Savage said in an email that Google is trying to "distract from its own antitrust problems by pointing to others and their lawyers."

A myTriggers spokesperson added that its concern "is just the harm to myTriggers done by Google’s anti-competitive conduct and bullying tactics."

Foundem did not respond to a request for comment.

PRIVACY SUIT SETTLED

Separately, Google has settled a federal lawsuit accusing it of privacy violations in connection with its Buzz social networking service, according to a court document filed on Friday.

To settle the lawsuit brought by a Gmail user, Google will set aside $8.5 million for attorneys fees and donations to organizations focused on Internet privacy, according to the court filing.

In addition, "the settlement requires that Google undertake wider public education about the privacy aspects of Buzz," the filing said.

Launched in February, Buzz initially used an individual’s email contacts from Google Gmail to build a social network of contacts that the rest of the world could see, which led to privacy concerns. Google then changed the settings so that contacts were kept private by default.

The settlement filing comes as Google also said it would simplify and update its privacy policies, according to Associate General Counsel Mike Yang on the company’s website (here).

The case is: In Re Google Buzz User Privacy Litigation, 10-cv-00672, U.S. District Court, Northern District of California, San Francisco.

(Reporting by Dan Levine; Editing by Matthew Lewis, Leslie Gevirtz and Richard Chang)

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Intel Corporation President and CEO Paul S. Otellini walks off the stage following his keynote address at the Oracle OpenWorld conference in San Francisco, California in this September 23, 2008 file photo.

Credit: Reuters/Robert Galbraith

FRANKFURT (Reuters) - Intel is to buy German chipmaker Infineon’s wireless unit for $1.4 billion, enabling the U.S. chipmaker to boost its presence in the smartphone market.

The cash transaction is expected to close in the first quarter of 2011 and the mobile unit will remain as a standalone business, the companies said in a statement on Monday.

Three people familiar with the matter had told Reuters on Friday that Intel and Infineon would likely reach an agreement on the future of Infineon’s wireless operations within the next few days.

It is the second major deal for Intel within two weeks after the company announced its $7.7-billion offer for McAfee Inc on Aug 19, its largest acquisition, bolstering the appeal of its chips as it tries to expand further into the mobile market.

Intel’s Atom mobile chips took the low-cost, no-frills netbook market by storm but are rarely found in smartphones where other chipmakers dominate.

"Infineon would make Intel an instant heavyweight (in the mobile space) and buy them three, four years in R&D," IDC analyst Flint Pulskamp has said.

But analysts also caution that while an acquisition such as Infineon’s mobile chip unit would be a step in the right direction it would take time to produce results.

Meanwhile, rivals based on UK-listed ARM chip design — which is said to be more power-efficient than Intel’s offerings — continue to grab market share.

Infineon shares were indicated down 0.1 percent in Frankfurt on Monday in pre-market trade, recouping some of the losses they posted on Friday after Intel warned that its third-quarter revenue would fall short of its own expectations due to weak consumer demand on personal computers.

Intel shares closed largely flat at market close in New York at $18.37.

SPECIAL DIVIDEND FOR INFINEON?

For Infineon the deal allows the company to focus on its core segments — automotive, industrial and chip card security.

Infineon’s mobile chip operations generate around 30 percent of Infineon’s total revenue but it ranks No. 5 in the chipset industry, far behind sector giants Qualcomm, Texas Instruments and Broadcom.

Based in Neubiberg near Munich, Infineon supplies chips to top manufacturers such as Nokia, LG and Apple.

Infineon Chief Executive Peter Bauer, who took the helm at the company in mid-2008, managed to turn around the unit, which had been loss-making for years.

Infineon investors would welcome any proceeds from asset sales because they open the door for a special dividend, a gladly received option for shareholders, who have not seen a payout in years.

In addition, Infineon could use the money to invest in its other businesses.

"The sale of WLS is a strategic decision to enhance Infineon’s value," CEO Bauer said. "We can now fully concentrate our resources toward strong growth in our core segments."

M&A MANIA

The deal comes amid a flurry of M&A activity worldwide as companies struggle to boost revenue in an anemic economic environment.

According to Thomson Reuters data, nearly $200 billion in mergers and acquisitions has been announced in August, already making it the third-best month so far this year in terms of money committed to deals.

The top bids include BHP Billiton’s $39 billion hostile offer for Canada’s Potash Corp and Vedanta Resources’ $9.6 billion stake purchase in Cairn India.

In addition, Hewlett Packard and Dell Inc are embroiled in a bidding war for 3PAR Inc with HP’s latest bid of $2 billion currently trumping Dell’s offer.

(Additional reporting by Noel Randewich; Editing by Mike Nesbit)

($1=.7861 euros)

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Businessman Paul Allen arrives for Time magazine’s 100 most influential people gala in New York, May 8, 2008.

Credit: Reuters/Lucas Jackson

SAN FRANCISCO (Reuters) - A company linked to Microsoft Corp co-founder Paul Allen is suing 11 major corporations, including Apple, Google and Facebook, accusing them of infringing on technology patents.

Interval Licensing is asserting four patents against a cluster of defendants, including also AOL, eBay, Facebook, Netflix, Office Depot, OfficeMax, Staples, Yahoo and Google’s YouTube, according to the suit.

Google, Facebook and eBay said they will fight the accusations by Interval, which owns a portfolio of technology patents but does not manufacture. Apple, AOL, Office Depot, Netflix and OfficeMax declined to comment. The remaining companies did not respond to requests for comment.

Experts say companies that lack production but utilize old patents to make broad infringement claims tend to raise red flags. But the lawsuit points out Allen’s deep history with Google, including early funding of founders Sergey Brin and Larry Page, a likely attempt to distinguish this lawsuit from other opportunistic patent litigation, Stanford professor and IP litigator Mark Lemley said.

"It’s usually an indication either that the patents are invalid, or they’re overclaiming them," said Lemley, whose law firm represents Google and Netflix in unrelated matters.

"Part of what’s going on here is the plaintiffs are going out of their way to say, ‘Hey, look, we’re really important people. We’re real innovators."

Allen, the 37th-richest person in the world according to Forbes, co-founded Interval Research in 1992 to develop communications and computer technology. The company, which employed more than 110 scientists and engineers at one point, filed patents over several years covering Internet search and display innovations, according to the lawsuit.

Interval Licensing now owns those patents.

RED FLAGS

Allen, who has been treated for non-Hodgkin’s lymphoma, in July pledged most of his estimated $13.5 billion fortune to philanthropy after his death. He co-founded Microsoft in 1975 with Bill Gates but resigned as an executive in 1983 as he overcame a first bout with cancer.

In the suit filed in the U.S. District Court for the Western District of Washington, Interval is seeking damages and a halt to the alleged violations of patents it said were fundamental to e-commerce and search.

"This lawsuit against some of America’s most innovative companies reflects an unfortunate trend of people trying to compete in the courtroom instead of the marketplace," a Google spokesman said in an emailed statement.

"Innovation — not litigation — is the way to bring to market the kinds of products and services that benefit millions of people around the world."

Interval spokesman David Postman said the lawsuit was necessary to protect its investment in innovation.

"We are not asserting patents that other companies have filed, nor are we buying patents originally assigned to someone else," Postman said. "These are patents developed by and for Interval."

Facebook spokesman Andrew Noyes said: "We believe this suit is completely without merit and we will fight it vigorously."

(Reporting by Dan Levine, Alexandria Sage, Alex Dobuzinskis and Lisa Baertlein; Editing by Gary Hill and Matthew Lewis; editing by Eric Walsh)

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NEW DELHI (Reuters) - India will take a final decision on August 30 on whether to block some BlackBerry services over which the country has security concerns, a senior government source said on Tuesday.

The maker of the smartphone, Canada’s Research In Motion, faces an August 31 deadline to give India the means to track and read its secure email that officials fear have the potential to be misused by militants.

The source, who is close to the negotiations with RIM, said Indian security and telecom agencies will hold "technical" meetings with the firm on Thursday and Friday for a solution.

"We are hopeful of arriving at a positive solution," the source said.

If RIM fails to comply then it would be cut out of one of the world’s fastest-growing telecoms market.

India’s security agencies are currently testing ways to access corporate email on BlackBerry devices by obtaining encrypted data in a readable format. India said last week it would allow the messenger service to continue beyond the deadline as it had been assured access to the services.

India is one of a number of countries putting pressure on RIM, which has built the reputation of the BlackBerry, popular with business professionals and politicians, around confidentiality.

Governments such as Saudi Arabia’s fear it could become a tool to plan militant attacks or for those breaking Islamic laws.

A shutdown would affect about 1 million users in India out of a total 41 million BlackBerry users worldwide, allowing them to use the devices only for calls and Internet browsing.

(Writing by Krittivas Mukherjee; Editing by Sugita Katyal)

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Related Video

Bidding war in tech land

12:22pm EDT

A HP Invent logo is pictured in front of Hewlett-Packard international offices in Meyrin near Geneva August 4, 2009.

Credit: Reuters/Denis Balibouse

NEW YORK (Reuters) - Hewlett-Packard Co offered $1.6 billion for 3PAR Inc on Monday, topping technology rival Dell Inc’s deal to buy the data storage company and potentially sparking a bidding war.

HP’s move to acquire 3PAR for about one-third more than Dell’s offer comes during a rush of mergers in the technology sector, with companies taking advantage of cash stockpiles and relatively low stock market prices.

For its part, HP has been looking to expand into new businesses, with acquisitions of network device maker 3Com, tech services provider Electronic Data Systems and mobile device company Palm. It has become a giant, sprawling enterprise in the process, with more than 300,000 employees.

"3PAR will further expand our strategic footprint in storage and diversify our offerings," Dave Donatelli, head of HP’s enterprise server, storage and networking business, said on a conference call.

HP’s $24-a-share offer for 3PAR marks a 33 percent premium to last week’s bid by Dell, which the storage company’s board has approved. At the time, Dell’s bid marked an 87 percent premium to 3PAR’s share price.

HP said it was awaiting a response from 3PAR. A representative from Dell was not immediately available, and 3PAR declined to comment.

HURD FACTOR

HP, faced with turmoil in its top ranks after the resignation of Chief Executive Officer Mark Hurd, said it had been eyeing 3PAR before Dell’s public announcement last week. It said its board had approved the bid.

"This has been a methodical process," Donatelli told Reuters. "We’ve given a superior offer, and we’re confident in our business case and our proposal."

Some analysts had speculated that the absence of a permanent CEO may deter HP from dealmaking, but Donatelli said it would not be a hindrance.

"I have absolutely no concerns as it relates to this deal," he said.

Shares of 3PAR, which was founded in 1999 and posted revenue of $194 million in its last fiscal year, jumped 41.3 percent to $25.49 after the HP announcement. HP stock was down 2.6 percent at $38.80.

The competing bids for 3PAR come as technology heavyweights like International Business Machines Corp and Oracle Corp are vying to become one-stop shops for all of their customers’ technology needs, including security and storage.

In particular, such vendors have been boosting investment in "cloud computing" technology, which enables users to access data and software over the Internet and corporate networks, allowing them to save space and costs.

Some analysts said HP’s offer was surprising because Dell had offered such a steep premium, but they also raised the possibility of counteroffers.

Cross Research analyst Shannon Cross said another bidder could emerge in what would be a rare bidding war in the technology industry.

"I don’t think they are making an acquisition just to hurt Dell; this is a strategic asset," she said. "Storage is a focused area for HP as well as others, and 3PAR has a good product set."

Cross said she expected to see more acquisitions like this one.

Donatelli said HP had met with 3PAR’s senior executives and felt they would be an "excellent fit." The company offered terms that it said would be similar to those proposed by Dell, but would not include a termination fee.

HP said its proposed deal would close by the end of the year.

(Reporting by Paul Thomasch, Ritsuko Ando and Soyoung Kim; additional reporting by Franklin Paul; Editing by Lisa Von Ahn and John Wallace)

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