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Updated: Now that Facebook has announced its redesign, which features a new improved news feed, what will Mark Zuckerberg, the enigmatic and somewhat shy CEO of Facebook, announce when he gets on stage at the f8 conference in San Francisco tomorrow, on July23rd? No, I don’t mean a plain ole a platform upgrade.

That is a question haunting many Silicon Valley insiders, especially since there has been a perceptible cooling of investor interest in Facebook applications that fall into the “pointless” category. What’s not helping matters is that senior Facebook executives are downplaying tomorrow’s announcement, saying this is about developers and that nothing new should be expected. Having covered Silicon Valley for a long time, I know that companies use that as a diversionary tactic. Some have speculated that it might be some sort of a payment system. Update: One of my sources tells me, however, that payments won’t be on their announcement agenda.

My sources tell me that the focus of Mark Zuckerberg’s presentation will be mostly on Facebook Connect, a web ID system. It’s essentially a system that enables application and web developers to allow web surfers to sign in to their Facebook identities. The move would highlight Facebook’s desire to become a critical part of the web infrastructure, and moving away from the just-another-social-network image.

Facebook announced Facebook Connect in May in what seemed to be a response to MySpace & Google’s moves to tout their individual web ID systems. Facebook Connect also allows companies to send status alerts back into the Facebook system where they can be displayed on Facebook’s news feed. The newly redesigned feed seems to be perfectly designed for an onslaught of such personal data. In many ways the new system would be a more palatable version of the draconian and ill-conceived Beacon advertising system.

Facebook Connect in many ways is the exact opposite approach taken by the company last year when it encouraged hundreds of developers to create applications that lived inside its silo. These applications grew at a breakneck speed and created a bubble of their own. They also put the Facebook infrastructure under extreme stress and on a cost curve that only large revenue streams can support. The inane and pointless apps cost the company a lot of bandwidth, not to mention the rising hardware costs.

By asking people to take their “identification” system, the company is hoping that others will build applications on their own infrastructure, allowing Facebook to focus on developing more high-level services and focusing their infrastructure dollars properly.

As part of the Facebook Connect announcement, expect around 20-odd companies that are using the system on their end. One of the highlights of Mark’s showcase would be Digg, which would use Facebook Connect to create a personalized home page that takes into account social news recommendations from friends on Facebook.

Digg, as you might remember, was one of the first companies to sign up for Facebook Connect. The two companies share a common investor, Greylock Ventures. This new closeness might explain why Google might be finally ready to buy the San Francisco-based Digg for $200 million. Why would Google buy instead of building their own Digg? It could help block Facebook Connect, for one.

Apart from Digg, there are a bunch of other companies that are building Facebook into their products, though many of them are actually more on the “useful” end of the application spectrum. Our sources have indicated that Facebook might out-execute their much bigger and richer rivals with Facebook Connect, and tomorrow might be the first chance the rest of the world gets a chance to get a glimpse.

Bonus link: Follow tomorrow’s event on AllFacebook.

Photo courtesy of Facebook

DNS is the cornerstone of the Internet: It turns www.gigaom.com into an IP address that the routers can use to connect a browser to a web site. For this reason, it’s the subject of many attacks. If you convince someone that your server, rather than the real one, is the site they wanted, you can get up to all kinds of mischief. You can make them think you’re their bank, solicit their private information, monitor what they do, or even feed them Trojans.

Of course, DNS has protections. Each DNS request has a query ID associated with it that uniquely identifies the request. Anyone can send a response to a DNS request, but if you don’t have the right query ID, your response is ignored. Essentially, it’s a race. To hijack someone, you need to send the wrong IP address, with right query ID, before the correct address gets there. Until now, this model has protected online surfers reasonably well because the chance of a guessed QID arriving before the legitimate one shows up are improbably small.

But there may be a way around this, and Dan Kaminsky says he’s figured it out — but he’s not telling how just yet.

Releasing a hack is Big Drama. Some folks — like Kaminsky — prefer to contact the authorities and vendors, giving them time to patch their servers before publication. Kaminsky announced that he wouldn’t reveal the details of the exploit until Black Hat, but on July 9 he said anyone who figured it out could get on stage with him. Shortly afterward, he announced that the major players had patched their systems.

There are others who believe that vulnerabilities should be outed as soon as possible: Assuming the bad guys already know is a prudent course of action. Kaminsky’s announcement seems to have prompted speculation, leading to the disclosure of what some believe is the hack he was planning to announce, which Halvar Flake figured out. A description of the exploit first showed up on pasteboards — sites that publish snippets of programming. Initially, it was being deleted by system administrators. But you can’t put the genie back in the bottle, so now it’s out in the open.

Some skeptics question the impact of the vulnerability, and some say it’s an old hack that’s been around for years. But we view many more strangers’ pages these days, particularly on social sites that are increasingly plagued with friend spam, so online behavior may have changed enough for this old dog to learn new tricks.

Kaminsky hasn’t confirmed that Flake identified the same vulnerability. But perhaps as a result of the speculation, Kaminsky’s latest blog entry says simply, “Patch. Today. Now.”

Whatever the case, it’s a good day to have a smart network administrator patching your servers.

Earlier this week, Delta Airlines announced plans that will turn its boarding passes into advertising opportunities, or billboards, hawking destination-specific businesses and products. An Omaha-based startup, Sojern, is behind this advertising offer, which is going to be adopted by four airlines in addition to Delta: American, Continental, United and US Airways. Given that airlines are in such a desperate position, mostly because of their incompetency, they are ready to try anything, however strange it might seem.

Now there is word that IDT Corp., a calling-card company, is going to start using advertising messages on its pre-paid calling cards. Using technology from in-call advertising startup VoodooVox, IDT will hawk marketing and advertising messages that are matched to a caller’s demographic profile. For instance, if someone was calling the Dominican Republic, an ad for an airline would be piped in while the caller is waiting for his call to connect. IDT sells about 17.5 million pre-paid calling cards every month.

Given the razor-thin margins in the long-distance business, I am not surprised IDT is going down this path, but I wonder if they will use some of the fat CPMs from advertising to offer cheaper or near-free long-distance calls. Now that would be cool, and perhaps something to which an audience — who might get annoyed by ads intruding their calls — would be somewhat receptive.

These two examples make me ask the question: Are we getting so saturated with ads that they will just become meaningless and lose their entire effectiveness?

When we recently heard about the history of YouTube’s growth strategy from CEO Chad Hurley’s point of view, he described it as “hanging onto a rocket.” But an engineer’s take is always going to be a bit less rose-colored and a bit more about the terrifying situations you brained your way out of. So we were particularly interested to tune in to a talk at YouTube’s developer conference Thursday by Cuong Do, an early software engineer who’s now manager of the site’s Core Product Engineering group.

Do’s talk was titled “Behind the Scenes: A Look Into YouTube’s Infrastructure,” and he didn’t disappoint, with harrowing tales of outages; gory details about the specific languages, architectures, and tools YouTube uses; and a flow-chart level view on the way the site handles uploads and video delivery while undergoing the massive usage it sees on a daily basis.

“One of the key phrases we had in the early days was ‘These are good problems to have,’” Do said. “And after a while we’re like, ‘I’m going to kill the next person who says that.’”

YouTube promised it would post video from the talk on its site eventually, but I don’t see it there yet, so check out the version from my handheld camera.

Comcast has been accused of blocking traffic several times in its history and may have even admitted to more than the straight up P2P blocking we all knew about. But late yesterday, Comcast finally got it’s comeuppance. Sort of. Kevin Martin, chairman of the Federal Communications Commission and close personal friend to the cable competitors, the telecom industry, could take no more.

So this morning he’s circulating an enforcement order that says that Comcast blocked network traffic and that such traffic blocking needs to stop. The enforcement order was prompted by a complaint from the non-profit group, Free Press, and the Commission will vote on the order at an open meeting on Aug. 1. The order would require Comcast to stop blocking traffic, provide the FCC details on how and how often traffic blocking was used and give consumers detailed information on how Comcast plans to manage its network in the future.

We actually already know how Comcast plans to manage its network because Comcast CTO Tony Werner told Om how bandwdith hogs would experience slowdowns. In an emailed statement, Comcast spokeswoman Sena Fitzmaurice denied the traffic blocking.

“The carefully limited measures that Comcast takes to manage traffic on its broadband network are a reasonable part of Comcast’s strategy to ensure a high-quality, reliable Internet experience for all Comcast High-Speed Internet customers and are used by many other ISPs around the world.”

At issue here is the definition of “reasonable network management,” a phrase the FCC introduced in a 2005 policy statement to ensure broadband networks were kept open and accessible to consumers. ISPs could apply “reasonable network management” to keep traffic flowing, but Fitzmaurice said the the FCC never defined what reasonable network management practices entailed. So perhaps blocking certain forms of traffic counts? My guess is that network traffic blocking is like porn. You know it when you see it, and Martin finally chose to see it.

Update: The Open Internet Coalition and member Public Knowledge are glad Martin is taking a stand, and said in a statement, “We hope the rest of the Commission backs the Chairman’s order. It is critical for the FCC to send a strong signal to other telephone and cable companies that this kind of blocking is unacceptable, and that this behavior will be taken to task when discovered.”

About six months ago, I heard that Yahoo was contemplating offering its entire search platform as a web service, much like Amazon’s S3 storage and EC2 computing services. Since the rumor was short on details and Yahoo was already in the midst of a gut-wrenching upheaval, I didn’t put much stock in it. Apparently I should have, for Yahoo today announced the beta version of BOSS (Build Your Own Search Service), which essentially turns its core search and other related technologies into a free web service that can be used by anyone who wants to build their own search engine.

This isn’t simply access to Yahoo’s search results; Google did that ages ago, though I wonder if anyone actually uses it. Rather BOSS will allow anyone to rank, arrange and display search results that befit their own algorithm, without as much as acknowledging that the results are coming from Yahoo. 

Yahoo News Search, Image Search and Yahoo Spell Checker services will all be offered as part of this effort. Combine this with Yahoo’s recently introduced SearchMonkey tool, and you could build a search engine that is entirely your own.

Prabhakar Raghavan, chief strategist for Yahoo Search, said it typically costs around $300 million to build a search engine and its related infrastructure, which is why there are so few players. He has a point: Powerset recently sold out to Microsoft for precisely those reasons.

Raghavan hopes that BOSS could help foster a lot of experimentation around search, and more importantly, around the search experience, because startups will no longer have to spend millions on infrastructure. “The opening up of our search is a philosophical shift, and we are saying that if you can be better than us, so be it,” said Raghavan. “There is no shortage of search ideas, though the barriers were only a few hundred million dollars. You have to be willing to have your lunch eaten in order to disrupt.”

The BOSS service is being offered for free, though as part of the deal users will have to use Yahoo’s Search Advertising. Yahoo believes that by boosting query volumes, it can create more volume for its search advertising and thus begin to grow against its nemeses: Google & Microsoft.

It’s a very bold move by the hobbled online giant, as it puts its own search business at risk. “We are trying to disrupt the market by allowing people to come and build on our platform,” Raghavan admitted. Two startups, Hakia and Me.dium, have already signed on for the service.

But I think it’s a risk worth taking, for it will shake up the search status quo and offer a way in for the little guys and all their creativity. Far more importantly, however, it helps people to think of Internet search beyond the tried and tired paradigm of proactively “finding” information.

Unlimited queries, the ability to mix with other content including news, and research from universities and other such repositories could really change the game. By allowing folks to use its engines in tandem with their proprietary data (such as a proprietary social graph), Yahoo will allow them to build a different kind of user experience. “We don’t need to see proprietary data but work with them,” Raghavan said.

This isn’t a slam dunk, however. Yahoo still has some serious challenges ahead of it. The company’s hope is to show big gains in search queries and search-query related advertising revenues. Just like I hope to be the starting pitcher for the Yankees.

Yahoo executives didn’t answer my repeated questions about the potential impact on their business. Notably, they are asking startups to sign up for their search monetization system — the very same system that is going to use Google to drum up ads. That isn’t a very confidence-inspiring move. And if this monetization tool was so great, Yahoo wouldn’t be in the kind of trouble it’s in. If you’re a startup, do you want to hitch your wagon to a wanna-be ad system?

My reservations aside, this is a big, gutsy move by Yahoo to emerge from the stupor that has enveloped the company and the search industry at large. I’m looking forward to seeing the results of this experiment.

Yahoo’s Blog has more details on the new offering.

This morning’s Wall Street Journal has an extensive report on challenges facing Google when it comes to advertising, especially with its YouTube division. If anything, the article paints a rather sympathetic view of Google and its money machine. I am surprised by the timing of this story. After all, these problems are quite well known and have been subject of many tomes.

I wonder if this story and Google’s challenges are meant to portray the search-and-online advertising giant as an underdog and win it some sympathy from regulators as it goes in to get its advertising deal with Yahoo approved. As a great counterpoint to the WSJ report, I urge you to read this spectacular and refreshingly honest editorial by Richard Bennett in today’s San Francisco Chronicle. Bennett correctly points out that Google is using the Net Neutrality debate to divert attention from the real issue of how it is going to become the tyrant of online advertising.

Despite its carefully crafted public image as a naive and squeaky-clean innovator, Google is a public corporation managed by professionals, some of them longtime friends of Washington power brokers and fully capable of understanding the problems the Google-Yahoo deal poses.

The tech press has been too busy reprising its Internet Bubble era cheerleading and cooing about Google’s network neutrality “idealism” to raise questions about the demise of Yahoo as a search competitor.

Bennett’s piece meshes with my thinking about Google and its Network Neutrality/broadband doublespeak.

The deal, as currently structured, substantially alters the Internet economy. Advertising is the prime revenue stream for social networks, news sites and Internet aggregators of all kinds, and it’s closely linked to search. Instead of a search market where three players compete vigorously for eyeballs, this deal would create a status quo where the top dog enjoys an 85 percent market share and the ability to set prices for search ads with no fear of being undercut by its much weaker sole competitor. This should set alarms clanging wherever antitrust and personal privacy concerns are held dear, but it hasn’t.

While pop stars’ fortunes these days are heavily dependent on building an online fan base, the reverse is even more true. Social media sites are tripping over themselves to score the one celebrity who will shower them with rabid fans.

I’m surprised to see how often the words “The Jonas Brothers” show up in my inbox. And no, it’s not because I’m signed up for their fan club alerts or anything like that. It’s because these guys are huge. Their magical combination of luscious locks and mediocre crooning have captured the hearts of young ladies everywhere. And outside of their day jobs as Hanson 2.0, they’re also the poster children for any number of social media services.

The first time I heard about the band was last October, when Justin.tv told me the brothers were by far their most popular users, helping the startup to secure venture funding from Alsop Louie. As I noted then: “Up-and-coming band the Jonas Brothers has been the biggest hit to date, with 80,000 uniques and a maximum of 14,000 simultaneous viewers turning in for a live chat last week.”

Then a couple months later I got a pitch from widget provider Nabbr: “Nabbr has delivered more than 28 million video views in two months for the Jonas Brothers and helped their first single, ‘Mandy,’ reach No. 4 on MTV’s TRL with virtually no radio airplay.” Now it’s hard to find a startup that isn’t hawking some tie-in with the band. This week I talked to Uber, which just concluded a contest for the best Jonas Brothers fan page created with its tools. I also heard from Bebo and Kyte, who are teaming up for the official Jonas Brothers UK launch with a contest that will see the winner attend a live concert held on a bus as it drives around London. It will be broadcast using Kyte on Nokia N95s.

Wait a second, doesn’t Kyte compete with Justin.tv? These guys can’t be everywhere, can they? Well, it doesn’t appear that they’ve updated their Justin.tv channel in the last 10 months (though the chat room hasn’t stopped; members there are still arguing over which brother is cuter). And they started posting actively on Kyte about three weeks ago.

Meanwhile, back at the official Jonas Brothers home page, they don’t mess around with the all the social media flavors of the month; there are only links to Flickr, MySpace and YouTube. The Jonas Brothers have made a pretty big indent on the heavyweight YouTube: Their channel is the No. 6 most-subscribed channel of all time, and the band is ranked as and the No.1 most-subscribed-to musician of all time.

Much can be attributed to the fact that the teeny-bopping superstars actually use these services. Give fresh, original content to your fans and you can bet they’ll come back for more. Live-streaming, blogging, and contest-holding is invasive and exhausting, but feeding people’s obsessions is a remarkably easy formula for success. And having young fans doesn’t hurt, either. As Uber founder Scott Sassa notes, “[The Jonas Brothers] resonate with an audience that has the aptitude and the time to spend on social media sites.”

But scoring a celebrity user is a difficult game of relationship-building, evangelizing and luck. The hottest stars will always be in the highest demand, and there’s no easy system for figuring out whether your best bet is the celebrity, or their label, manager, promoter or PR company — and if any of them will actually call you back. And celebrity fairy dust isn’t unlimited; even the Jonas Brothers (and their staff) can’t use every single service.

My gut reaction to the news that AOL’s Platform A would offer a guaranteed CPM (cost per thousand) for applications developers building widgets for Facebook and Bebo was that it’s a subsidy and subsidies are an unnatural and bad thing for business. Then I found out the guaranteed payment was only 40 cents, which made me wonder how in the heck anyone could make real money off such a low CPM.

That translates into $400 for every 1 million visitors. Even with multiple ads and millions of page views, such a rate is unlikely to generate a venture-level return. Obviously there are plenty of people building apps (such as Scrabulous) who aren’t looking for venture returns, but it still seems awfully low. However, making money for apps developers is only a side benefit of the program.

The real goal is to encourage apps developers to use the Platform A ad network to sell their ad space, in turn boosting the entire category of online social network advertising. Obviously the bigger that category grows the better it is for the struggling Platform A (and Facebook’s attempt to defend a $15 billion valuation.) Undoubtedly Platform A will net more developers, especially for ad space that provides a CPM of less than 40 cents, but I’m not sure if this will help grow the industry as a whole over the long term.

I’ve asked Platform A how much they anticipate spending on this effort, but a spokesman declined to tell me. That, however, is the central question here, because what Platform A is doing is selling the ad space at a loss (or covering that loss). If we recall the subsidized shipping of the dot-com days, it’s remarkably easy to predict how this adventure could end if Platform A doesn’t either raising the CPM rate or limit the guarantee. For those riding the Platform A gravy train it would be nice to know when it stops.

Dietrich Bonhoeffer, a German writer, once noted that “if you get on the wrong train, running down the aisle in the opposite direction really doesn’t help.” HBO series The Wire co-creator Edward Burns used that quote to describe the drug culture, bankruptcy of the political establishment and eventual fall of some of the great American cities in an interview with Reason magazine. You might as well use the same words to describe Yahoo!

Over past few months, Yahoo’s destiny has become fodder for headlines and cheap shots including some by myself. What hasn’t really been discussed is the systematic rot that has set into the once proud company. What hasn’t been discussed is that the company isn’t really facing up to the fact that its layers of management have resulted in a state of masterful inactivity, masked perhaps as a culture of consensus. This starts at the top - from the company’s board and senior management down to VP level where people are prone to organizing and attending twenty meetings before deciding the fate of a project.

Some senior managers including the ones who are deserting the company are skillful players in this game of hiding ennui behind grandiose plans and a great future that never happens. Others who have been wishing upon a change had realized the hard way about the futility of it all. Look at some of the public statements by those who have left recently and you will realize that the rot is very deep seated in this company. In past few weeks that has emerged as the single issue many Yahoo employees have discussed with me.

Instead of addressing these issues - Yahoo is finding itself releasing memos to the media, writing letters and announcing yet another reorganization. They should have read the writing on the wall when the vice president exodus began two years ago. But instead, the company played executive version of musical chairs. Sort of how Rome’s rulers were busy reading tarot cards when the empire was collapsing.

Earlier today, Kara Swisher broke the news that Zimbra co-founder Scott Dietzen will become the new Senior VP of communications and community properties. Dietzen is a very capable executive, smart, adroit and understated. He is the right man of the job, and can crack some heads if needed be. But can he succeed in an environment that rewards medocrity. Can he bring about change, or will he leave frustrated (but rich) like some of the other founders such as Stewart Butterfield, co-founder of Flickr who sold their companies to Yahoo.

As part of changes announced today:

Yahoo! is making changes to its technology organization, led by Chief Technology Officer Ari Balogh, to better position the company to execute on its strategic priorities. Principal changes are developing a world-class cloud computing and storage infrastructure; rewiring Yahoo! onto common platforms; and creating a stronger partnership between product and engineering teams.
In order to expand its cloud computing capabilities, the Company will form a Cloud Computing & Data Infrastructure Group, charged with developing a computing infrastructure that balances scalability with cost effectiveness. It will move all consumer-facing platform teams to the Audience Technology Group, led by Venkat Panchapakesan. In addition, it is putting new leadership in place behind Yahoo!’s search group, naming Prabhakar Raghavan to direct search strategy and Tuoc Luong as the interim leader of the search product team. Both Prabhakar and Tuoc will also continue in their roles as the leaders of Yahoo! Research and Search Engineering respectively. In addition, David Ku will lead the Advertising Technology Group within Search.

New CTO Ari Balogh is jazzed about cloud computing and storage. He should be - Yahoo is a big champion of Hadoop, an open source effort that can be immensely disruptive in years to come. Despite that, I don’t buy the spin Yahoo’s PR department put out today. At our Structure 08 event yesterday, Yahoo had very little representation.

A few months ago, at the insistence of some of my team members, we switched from Zimbra to Google Apps for our own domain offering. The argument was that Google’s quality of service, thanks to its great infrastructure, would be great and that we could also use Google Docs for easy sharing of information.

And since everyone on the team (barring me) loved the Gmail interface, I acquiesced to their wishes. I shouldn’t have. Six months later we are getting frustrated by schizrophrenic nature of the Google Mail system. At the time, these ideas looked like they were all such great ideas in theory — but six months later we are all experiencing all sorts of problems with Google Mail.

Messages are either not getting sent or being lost by the system. Several people have complained about not receiving replies, even after we have sent them back. The mail system hangs up and you keep waiting for something to happen. And don’t get me started on the sub-par IMAP features of the system. How is one supposed to run a business on such an unreliable platform? The integration of Google’s services remains a distant dream, reminding us of the limitation of its competence beyond search and advertising.

And in order to get support we would need to upgrade to a premium version of the service that could set us back by $1,200 a month year. I don’t mind paying, but if their recent track record is any indication, I might as well light a cigar with 12 $100 bills. For the longest time I though we were the only ones with this problem. Apparently not. At least two other friends with startups who are using Google Apps for their domain are finding similar issues.

That is why I feel terrible for those 1.5 million Australian school kids who will now have to use Gmail instead of Exchange/Outlook. In some ways it’s like jumping from fire into the frying pan (being heated in that fire.)

Are you experiencing those issues as well? Go ahead and kvetch in our comments!