Snapchat’s ads, Yahoo cuts staff and Twitter sues the government

Snapchat to introduce ads

In 2013, Snapchat rejected a $3 billion buy-out offer from Facebook. Investors questioned the move, wondering where Snapchat would go next.

Today, the company is valued at $10 billion and has the backing of prominent investors like Kleiner Perkins Caufield & Byers and reports this week suggest Yahoo will join them, with the tech giant committing a reported $20 million more.

Under pressure to monetize (Snapchat has yet to turn a profit since it was founded in 2011), Spiegel announced this week at the Vanity Fair New Establishment Summit in San Francisco that Snapchat would be featuring advertising very soon.

The ads will be untargeted, according to Spiegel. The company will not utilize consumer data to cater to consumer’s tastes, and ads will be integrated in between the pictures and videos that users share with each other.

The adverts will be inserted into Snapchat’s “Stories” function, which allows users to string together photos and videos that can stay live for up to 24 hours and reach hundreds of thousands of users in just seconds.“People are going to see the first ads on Snapchat soon,” Spiegel said. “We’re cutting through the new technology around ads to the core of it, which is telling a story.” Embedding the ads in between these videos has some, including Jerome Jarre, a Snapchat user with 1 million followers, referring to Snapchat as the “mobile Youtube.”

Spiegel says that it will be the user’s choice to view the ads or not. That claim, if true, could go a long way in a social media market saturated with advertising. Ad-free social media platform Ello has had a recent growth spurt, accusing Facebook of turning users into products with so much targeted clutter.

The move marks a milestone for Snapchat. Emarketer projects Google to secure close to 50% of mobile ad spending and Facebook to take 22%. But overall growth in ad spending suggests Snapchat could quickly jump towards profitability and compete with the current incumbents for mobile dominance.

Yahoo downsizing

In the biggest staff reduction since CEO Marissa Mayer took over Yahoo in 2012, 400 people, or one-third of Yahoo’s Bangalore office and 3% of the company’s global workforce, lost their jobs on Tuesday.

Marissa Mayer was handed the task of rectifying Yahoo’s shortcomings in 2012. The company’s popularity as an internet search tool has faded and it failed to meet the predictions of Wall Street analysts last quarter. Yahoo’s revenues are down 4.5% year over year, with core business display advertising down 6.9% from 2013. Competitors such as Facebook and Google have eroded Yahoo’s market share.

With additional pressure from active investors such as Starboard Value to cut expenditures and merge with AOL, Mayer is consolidating the company by relocating more workers from India (mostly product team and engineers) to offices closer to the tech giant’s Sunnyvale headquarters.

“As we ensure that Yahoo is on a path of sustainable growth, we’re looking at ways to achieve greater efficiency, collaboration and innovation across our business,” the company said in a statement to CNBC. “To this effect, we’re making some changes to the way we operate in Bangalore leading to consolidation of certain teams into fewer offices.”

The pressure is on Mayer to stimulate growth and pay back her investors, as Yahoo threatens to fade as a giant online player.

Twitter sues U.S. government

Since Edward Snowden brought the issue of government digital surveillance to the attention of the world, the issue has sparked much debate about personal privacy. Social media giants such as Twitter and Facebook, which collect so much personal data, have long expressed concerns about how much information is disseminated to the government, without any transparency for the end user.

Currently, it is against federal law (as stated by the Stored Communications Act) for U.S. companies to disclose information about national security letters and FISA orders to its consumers.

Twitter took the U.S. government to court on Tuesday to win the right to be transparent with its users.

In a statement, the company wrote “It’s our belief that we are entitled under the First Amendment to respond to our users’ concerns and to the statements of U.S. government officials by providing information about the scope of U.S. government surveillance.”

Twitter is not the first media giant to take legal action against the U.S. government. The likes of Microsoft, Google, Facebook, and Dropbox face an ongoing battle to withhold personal information from the government. Apple has gone so far as to encrypt personal data to make it inaccessible for law officials.

For Jameel Jaffer, legal director at the American Civil Liberties Union, it comes down to an obligation on the part of tech giants to protect the rights of its users.

“Technology companies have an obligation to protect their customers’ sensitive information against overbroad government surveillance, and to be candid with their customers about how their information is being used and shared,” he said in a statement.