After a two-year legal battle, Target has agreed to pay $6 million and make its Web site more accessible to the blind in a class action settlement with the National Federation of the Blind.

Quite a few retailers have been involved in site changes to make the Web more accessible to those with vision difficulties, but Target has been the most aggressive in fighting such efforts. As such, Target’s settlement has an especially strong chance of pressuring retailers to aggressively embrace such changes. Read more.

A retail IT lesson from the world of politics? Maybe. Web tracking firm Keynote studied the text message blast sent by the U.S. presidential campaign of Barack Obama, the one in which his campaign promised to tell supporters his VP selection before it was broadly announced.

That message didn’t quite work out politically, as CNN broadcast the choice hours before the text blast was supposed to start. As a result, the campaign immediately triggered the blast, which didn’t work well, either. About 50 percent of people who subscribed to receive the text message from the Obama campaign regarding the VP pick may not have received it “in a timely fashion and perhaps not at all,” Keynote said. Does this mean Common Short Code SMS messaging won’t work for large national blasts? Not necessarily. But if you’re relying on getting your data out to prospects, it’s probably a good idea to vote for a different transmission method.

JCPenney is testing the Australian waters a bit with an online push. The retailers has a local URL and an Australian company handling all operations, but it’s still shipping merchandise from the States and asking Australian shoppers to wait “12 to 14 working days. This “request” prompted one Australian publication to ask “whether Australians would be prepared to wait two weeks to receive something purchased online, especially when goods shipped from Amazon in the U.S. generally arrive within a week if in stock.”

But any online attention is a good thing, that story said, given “the ambivalence shown to online shopping by Myer, Target (Australia) and David Jones.” Sharon Hooker, operations manager of JCPIC Australia, said global currency fluctuations may prove helpful: “All prices on the JCPenney Australia site are shown in Australian dollars. With many items priced comparatively lower in the United States, buyers are in for some very pleasant surprises.”

In an overall down market where the 150-store Nordstrom chain is seeing a 4.3 percent sales drop, online operations are jumping 15 percent–accounting for almost 8 percent of all sales. Company execs now project online to soon top 10 percent. Even more intriguing: Nordstrom is reporting a sharp increase in the number of multi-channel shoppers, who now represent almost a third of all sales.

But Nordstrom is doing online differently, according to this wonderful profile in The Puget Sound Business Journal (Seattle). First, Nordstrom is delivering the identical merchandise online and offline, a tactic quite different than many other cross-channel retailers. Secondly, its call center staffing has not been outsourced, a move that the customer service-intensive chain said gives it a competitive advantage.

While North American retail execs are planning for trivial—if any—IT investment increases this year, with “more than one-quarter of retailers expecting lower IT spending,” more than half of their Asia Pacific counterparts are preparing for significantly higher IT spending, according to new Forrester numbers released this week. A bit of the Tortoise and the Hare perhaps?

In North America, “the mean estimate for share of IT budget devoted to innovation in 2007 was 35 percent,” the Forrester report said. “But a lower median at 30 percent and mode at 20 percent suggest that a few retailers planned heavy funding of innovation, while most planned much less investment.” Read more.

It seems Circuit City has concluded that the Web isn’t just a fad, after all, with a major E-Commerce revamp coming just a couple of weeks after the chain confirmed a substantial multimedia push for its employee-training extranet.

Beyond alliances with a host of publishing companies to share their content on circuitcity.com, the changes announced Tuesday (Aug. 13) acknowledged that most Circuit City customers use the Web to decide if they’ll go to a store. “The Internet is our new front door,” said Brian S. Bradley, Circuit City’s senior vice president for multi-channel. The changes include blog entries, more demos and an interactive forum for talk with each other and Circuit City sales reps. Love how the interactive forum is painted as a CC innovation. Wonder if these guys ever heard of Usenet?

A Web site performance survey from the U.K.’s Retail Bulletin shows the larger, better known sites—including Staples, Amazon and Laura Ashley—delivering much weaker Web performances than sharply smaller rivals.

“What is surprising is that the top 15 sites are typically much less reliant on the Internet for their revenues than the bottom 15,” said Lawrence Shaw, founder of Sitemorse, which co-created the study. “If the table was reversed, then it would make more sense.” Read more.

If it makes U.S. retailers feel any better, their U.K. counterparts aren’t faring any better in making cross-channel and especially merged channel efforts work. The percentage of online sales among those merchants has plateaued, holding steady at 4.4 percent for the last two years, according to a Martec report.

What makes those numbers look even weaker is that those figures have flat-lined while the percentage of U.K. retailers offering E-Commerce sites have been sharply increasing, hitting 68 percent this year, compared with 58 percent in 2007.

Senior members of the House Energy and Commerce Committee have instructed top brass from several companies with strong Web interests–including Google, Microsoft, Comcast, AT&T and Verizon–to report back on whether they’ve tweaked their ads to match consumers’ online habits. Although no E-Commerce companies were initially contacted, if Congress tries to restrict Web sites from customizing their content, it will have a huge retail impact.

There’s not much of a real distinction between a traditional banner ad on MSN pushing the latest Disney movie and using the same technique on Macys.com to make sure that purses appear on its homepage and–for this particular customer–all are displayed as pink. As long as the focus is placed on permission rather than banning, the damage should be minimal. Nothing to worry about then. When’s the last time you heard of Congress overreacting to something it doesn’t understand?

It’s the kind of issue that never existed in brick-and-mortars. When a physical store discontinues a physical product, gremlins don’t typically sneak into customers’ homes and take back the paid-for products. And yet, in effect, that’s what Yahoo inadvertently did when it shut down its music download service.

Yahoo announced a few months ago that it was shutting down its online music store, which includes killing the “servers used to validate that the music customers play is not violating copyright laws,” said a report in Forbes. Although Yahoo said that “music purchased on its music service will still work, users may not be able to move files to ‘new computers or devices.’ As a result, Yahoo is encouraging customers to burn CDs to back up the music they purchased.” Last week, Yahoo decided to offer customers coupons to pay for consumers to “replace their music collections on Rhapsody’s music store or give them a refund. Customers will have until the end of the year to take Yahoo up on its offer.”

A possible new slogan for Borders.com in New York: “You give us 90 seconds. We’ll give you a lottery ticket.”

At least that seems to be the idea, as the book chain is trying to get consumers to spend 90 seconds on its newly launched E-Commerce site. For those willing to give it a try, the bookseller will enter them in a lottery to win $1,000. Hardly MegaBucks, but what do you expect from a bookseller? The only problem: Will this attract prospective customers or non-prospects who just want the money?

When Amazon.com and Tivo on Tuesday (July 22) said they would be selling E-Commerce merchandise directly from Tivo screens, it was the most visible sign yet of an imminent radical change in merged channel. Move over mobile, call center, catalog, in-store and online: Make Room For TV.

Deals like the Amazon-Tivo arrangement will present context-relevant ads to appear right alongside—or embedded within—various entertainment and information shows. For advertisers, this is merely the next logical step following obvious product placement in entertainment shows. (”Gosh, Grandma, what a large Apple logo you have!”) For retailers, though, it’s a way of getting that profitable E-Commerce site somewhere other than on a PC or on a smartphone. Read more.

As retailers watch the crucial social networking space, overwhelmingly dominant leader MySpace is very comfortably holding onto a 72 percent market share, according to stats covering June. But Facebook saw its growth soar 40 percent, which might be a bad omen for MySpace in a few years.

MySpace is still in a very comfortable position, holding a marketshare that is more than four times as large as Facebook’s 17 percent, according to figures released Wednesday (July 23) by Hitwise. Statistics, though, can be misleading, especially when the base numbers are small. A much smaller site called MyYearBook.com is only at 1.54 percent marketshare, but that was enough for it to register a 318 percent increase, compared with its 0.33 percent marketshare recorded last June.

New stats out of India show three things: a sharply growing acceptance of the Internet (27 percent year-to-year increase); embracing of American sites (the top three most popular sites were from Google, Yahoo and Microsoft); and huge growth potential, given that barely 3 percent of its people today use the Internet.

The latest data points, courtesy of a report issued Monday (July 21) by Comscore, have several encouraging points for global e-tailers looking to tap India’s 1.1 billion people, which is more than triple the U.S.’s measly 303.8 million people. Read more.

In an eerie snapshot of where some top marketers want to take the next generation of search engines, a Japanese government-backed research project is working on a search that is based on what a user does, not a keyword a user types in.

But the specific tactics being considered—and detailed in a Web site for the group officially dubbed the Information Grand Voyage Project—includes searching history of game programs, blog postings, surreptitiously captured video segments from TVs and computers, tracking Wi-Fi locations and using an RFID reader connected to a cell phone to identify a consumer’s activities “based on data captured by mobile device camera.” Read more.

Despite an almost universal embrace of the idea of merged channel, most retailers aren’t getting any closer to making it a reality, with overly restrictive inventory reserve policies, inconsistent data and political resistance getting most of the blame, according to a new Forrester Research report.

“How many smart people are out there who are simply not reserving inventory” for all channels, asked Forrester Principal Analyst George Lawrie. “You never know where demand is going to crystallize.” He cited morale—not to mention inventory—problems caused by “reserving inventory for stores that could have been sold by the catalog or online channel.” Read more.

Consumers older than 50 are rapidly growing fond of the Web, with such users checking news, for example, more frequently than those younger than 20 as well as participating in online communities more. But the new university study found that instant messaging and video downloads were “still tools for young users. Only 9 percent of users 50+ said IM was important or very important compared with 48 percent of users younger than 20.”

“The perception is that Americans over 50 only dabble on the Internet, but we are finding that they are increasingly spending time online becoming involved in robust Internet activities, such as online communities,” said Jeffrey I. Cole, director of the Center for the Digital Future at the USC Annenberg School for Communication. “In specific areas, there is often little difference in use of online technology between older users and some of the youngest users.”

For those e-tailers wondering if video is an effective way to reach American consumers, here’s the latest video stat, courtesy of Comscore: In May alone, U.S. Internet users viewed more than 12 billion online videos, representing an increase of 45 percent versus one year ago.

Nearly 142 million U.S. Internet users watched an average of 85 videos per viewer in May. Google Sites also attracted the most viewers (83.8 million), who watched an average of 50 videos per person. Fox Interactive attracted the second most viewers (60.8 million), followed by Yahoo! Sites (40.2 million) and Microsoft Sites (29.5 million).

A new E-commerce payment system at UrbanOutfitters.com allows users to complete purchases in one screen, boosting cart conversion rates by 19 percent, according to an Internet Retailer story that quoted Dmitri Siegel, managing director of Urban Outfitters Direct.

The original approach forced customers to use several pages to handle payment, address and other purchase details. “We were losing a lot of customers with that,” Siegel said.

J.C. Penney customers are twice as likely to say they are highly satisfied with their in-store shopping experience if they are working with store employees who are accessing the company’s Web site while standing next to them. That according to an Internet Retailer story quoting Kevin Gebhardt, the chain’s director of multi-channel coordination and implementation.

It’s been almost two years since the chain connected all 35,000 of its point-of-sale systems to the Web, giving associates in its nearly 1,100 stores access to the retailer’s e-commerce site, JCP.com, the story said. “J.C. Penney also has tested placing Web-enabled kiosks in stores so that customers can access JCP.com on their own, but decided against deploying them,” Gebhardt said. He added that “the retailer is focusing on helping employees provide better service rather than on self-service technologies, with the exception of kiosks that customers use for accessing online gift registries.”

In one of the first wide-scale studies of SMS’ capability to hold up under volume pressure, the technology fared “surprisingly” poorly, according to Keynote Systems. This has particular significance for retailers, who are exploring the technology’s use for mobile communications connecting to both online and in-store.

“Response times for some short codes degraded severely during the busiest hours of the day. One CSC (common short code) showed a 60 percent peak-period slowdown every day, indicating a major capacity issue was present,” Keynote said. “Many of the CSCs monitored showed significant reliability issues. Several (experienced) more than 10 hours of outage while one (experienced) more than 50 hours.” Read more.

The Moody’s Investor Service has upgraded how important a retailer’s E-Commerce activity is when assessing that retailer’s overall economic health.

Although this isn’t a radical change for the financial firm—and the thought that E-Commerce is important is hardly surprising—it’s one of several recent moves suggesting that the young teen-age Web is starting to be taken a wee bit more seriously. Read more.

E-tailers in continental Europe are just now starting to get hit by slower growth, but they are still shining much more brightly than their U.S. counterparts, according to new figures from eMarketer.

In the first five days of sales earlier this year, French trade group FEVAD noted a 25 percent rise in revenues from nine leading online retailers in 2008, compared with the same period in 2007. “The group predicts that B2C e-commerce will grow 30 percent this year,” eMarketer said. “That is down from 35 percent in 2007, but still quite healthy.”

E-Commerce leader Amazon.com completely crashed for almost three hours on Friday afternoon (June 6), with one Web site performance tracking firm attributing the crash to excessive site complexity.

“One thing that is true about Amazon’s site is that it is very complex, utilizing numerous backend database, proxy servers, distributed application and Web servers, lots of dynamic images, etc.,” said Shawn White, director of external operations at Web site performance tracking firm Keynote. “Even accessing the homepage involves complex multi-step interactions between the Web browser and a number of backend systems within Amazon.” Read more.

Welcome to E-Commerce Semantics 101. Your philosophical question for the day: When is a site truly mobile-friendly? Mobile commerce today is in that familiar classic battle of Chicken.com versus Egg.com: Retailers know the mobile users are out there, but they also know that few are trying to use the devices for making purchases. Consumers are open to making such purchases, but they can’t because so few retailers support it.

Major retailers won’t invest in a truly robust mobile deployment until they see most of their rivals doing so. Yes, this is why American business is in the global position it’s in today—that grand American Can-Do-But-Only-If-You-Do-It-First attitude. Read more.

New York State has started pushing to collect sales tax from e-tailers that have no physical presence in the state, prompting Amazon and Overstock to fight back. But as this BusinessWeek story describes, e-tailers are fighting back with different legal strategies.

All are hoping against the odds that other states don’t pull the same revenue-generating attempt. If New York gets legal greenlights, several more states will quickly mimic its efforts, leading to a flood of almost every state within two years. If it’s going to happen, better it happen quickly. With one or two states, consumers will feel the tax pain and will look elsewhere. When it’s universal, though, it will blend into that amorphous cost of doing business and will cease changing behavior.

Borders this week officially stepped out of the shadow of Amazon and re-launched Borders.com, with an effort that scores points for creativity. The physical side of Borders (as in brick-and-mortar as opposed to Olivia Newton-John) has been trying to arrange its bookshelves to display more of the covers. This takes up more space and theoretically means that fewer books are displayed. But it also makes a more compelling “sell” for that book.

The dotcom side is trying something similar, but the virtually infinite nature of online means that the Borders site can display as many books as it wants. The ability to drag the shelf to the left or right keeps the cover images flowing. Called the “magic shelf,” that feature “is way more robust than it was before” in beta testing, said Kevin Ertell, the Borders E-Commerce exec who is in charge of the site. Read more.

Shoppers at Gap.com will now be able to use a single shopping cart and consolidate shipping at any of the chain’s four brands, the Gap announced on Tuesday (May 27).

But the change for The Gap, Banana Republic, Old Navy and PiperLime is delicate, as the company still wants those brands to maintain their distinct personalities. Those conflicting goals give the new site a bit of a Jekyll-and-Hyde feel, as though a long-time favorite clothing store suddenly stopped remembering to take its medication. Read more.

Barnes & Noble on Wednesday (May 28) launched its mobile E-Commerce site, which is pretty much a super-slimmed down version of its regular site.

B&N Mobile includes search, store-finder, book availability and order tracking. It’s not an especially sophisticated site, but it puts the world’s largest physical world bookstore on a very short list of major e-tailers who have bothered to design a version of their site for the cellphone.

About 36 percent of all E-Commerce shoppers who abandon their shopping cart did so because the purchase total was a lot more than they had expected. That’s one takeaway from an April PayPal survey of U.S. e-tail consumers.

The survey offered few surprises, but the quantification of the stated reasons was intriguing. The top cause was the expected “shipping charges were too high” (43 percent). The remaining cart surrender reasons were the consumer wanted to do more comparison shopping (27 percent), the prospect “could not contact customer support to answer questions” (16 percent) and some 14 percent said they gave up because they had forgotten their username and/or password.

Nordstrom on Tuesday (May 20) said they would support buy-online-pick-up-in-store for the first time. This e-commerce cross-channel classic has been popular for several years, but Nordstrom–with its stronger than average commitment to customer service–has resisted until now.

The chain is initially testing it with Women’s apparel, Men’s apparel, Women’s Shoes and Cosmetics, with Nordstrom saying that it “plans to offer this service for all merchandise categories by September.” It will be interesting to see how the chain’s legendary customer service handles it. The expectations of a Nordstrom’s customer will be much higher than the customers for most chains that have tried buy-online-pick-up-in-store. Read more.

Microsoft’s announcement this week that it would offer rebates for purchases made through its search engine is shaking the E-Commerce world. But the very lengthy list of gotchas—including making consumers wait potentially 11 weeks after purchases before seeing the rebate checks—is raising questions about whether this approach will work.

The idea of offering consumers financial bribes if they use a particular search engine has been tried before, without success. But Microsoft’s entry into this field—the latest in a series of Redmond gambits to try and breathe life into its search engine—is different from earlier efforts. Read more.

The 59-year-old Mervyns department store chain, with 177 stores in seven states and about $2.5 billion in annual revenue, certainly can’t be accused of rushing into technological fads. On Tuesday (May 20), some 15 years after the World Wide Web launched, Mervyns announced that it would launch an E-Commerce site sometime “in the fourth quarter of 2008.”

The site—which a Mervyns statement said “could quickly grow into a $50 million business”—will be outsourced to an unspecified “nationally recognized provider of turnkey order entry and fulfillment services.” What’s next? Maybe next year they’ll explore these new-fangled push-button telephones.

As more consumers use search engines to find products filtered by a single attribute–such as price–shopping cart abandonment rates are increasing, according to E-Commerce vendor MarketLive, which tracks such matters.

The shopping cart abandonment rate went up 2.7 percent, from 57.88 percent in Q1 2007 to 59.43 percent in the first quarter of this year, while “one-and-out” visits to E-Commerce sites jumped 18.9 percent, from 32.94 percent to 39.15 percent, based on MarketLive Performance Index figures that rely on activity from nearly 100 E-Commerce sites, according to this Internet Retailer story. The piece quoted Jaye Sullivan, senior Internet strategist at MarketLive, as saying that about two-thirds of consumers now start their research at search engines, “which means many visitors are new to E-Commerce sites and more likely to click off quickly if they don’t find what they want. More people are doing research and they’re price-sensitive, so they’re opening up more carts to check out the price.”

Facing a much tighter financial picture (the latest quarterly report saw comparable net income almost cut in half), Sears has turned to online operations as its best hope for better margins. Sears on May 15 announced “a large-scale expansion of its online store” with a “nearly quadrupling (of) the number of products available on sears.com.”

Sears is in a fascinating online position. On the one hand, the $50 billion 3,800-store-chain says its online numbers are soaring, with the number of unique visitors in February 2008 reportedly rising 20 percent in that month. But Sears.com has also run into quite a few speedbumps. Read more.

Thanks in no small part to soaring traffic on YouTube, Google for the first time took the top slot in American consumer reach in April 2008, besting Yahoo.

But it took that top slot just barely, reaching 141 million Americans in April. Yahoo ranked second with 140.6 million visitors, followed by Microsoft Sites with 121.2 million visitors.

With its sites being unavailable for barely one hour over four months, MySpace has the best uptime of any major social networking site and Twitter (more than 37 hours of downtime during the same period) has the worst. Those stats come courtesy of Pingdom’s periodic uptime surveys, which tracked some 16 social networking sites from January 1 through April 30 of this year.

Not only was Twitter’s 37 hours and 16 minutes of downtime the worst in the group, it was almost double the amount of downtime from the second worst-performing site (Reunion.com, with 18 hours and 55 minutes of downtime). But even Twitter’s numbers amounted to an uptime that sounded good: 98.72 percent. Pingdom’s Peter Alguacil said those percentages can be misleading. Read more.

Like it or not (place this father defiantly in the “not” category), children are using the Internet’s social network sites at a younger age, with retail marketers hovering close by. How young?

New stats show 17 percent of boys aged 10-12 used such sites last year, which is more than double the 8 percent who used social sites in 2006, according to the Harris Poll. For 10-12-year-old girls, the figure is 27 percent, more than 2-and-a-half times the prior year’s 11 percent. In the 13-15-year category, boys jump to 46 percent and girls jump to 54 percent. Oddly enough, that 54 percent for 13-to-15-year-old girls actually dropped three percent from 2006.

Microsoft is “leaning toward going hostile in its pursuit of Yahoo,” with an announcement “likely” on May 2, according to a report in that day’s edition of The Wall Street Journal.

Although such a move would not likely have a direct impact on the IT side of E-Commerce with major retailers, it could sharply impact tens of thousands of smaller merchants that rely on Yahoo to sell their wares.

Google says it has concocted a better way of searching for Web images, one that involves image-recognition to “see” what the image depicts as opposed to just reading the accompanying text.

This technique, called Visual Rank, has tremendous potential to shake up E-Commerce, which heavily relies on product images. The details were discussed by Google last week at the International World Wide Web Conference in Beijing, where two Google scientists described Visual Rank as “an algorithm for blending image-recognition software methods with techniques for weighting and ranking images that look most similar,” according to this New York Times story.

Pizza Hut is taking the “other people who bought also liked” approach mastered by Amazon.com and is trying to apply it to pizza and breadsticks and their Web site.

The new feature—dubbed Virtual Waiter and introduced by the fast-food chain on April 24—is based on “technology that gathers data from millions of online orders and suggests menu items that best match customers’ orders.” But a demo showed that the technology was much more sophisticated than that suggested. Read more.

We’ve been seeing a bizarre trend this national recession. It seems to be hitting hard the companies that expected to be hit, the ones that cut back spending in anticipation of the downturn. Lo and behold, after cutting back on customer service and marketing programs, they see revenues fall. Did they correctly predict the sales drop or did they unintentionally cause the sales drop?

This question comes to mind when looking at some recent earnings reports. Wal-Mart’s been faring well, but it points to increased grocery and other low-cost items, suggesting that they may be taking sales away from higher priced grocery rivals. That might be a recession sign. But this week’s Amazon figures raise questions about such analysis. Read more.

When North Face—a unit of the $7.2 billion VF Corp. and a major manufacturer of athletic gear and clothing—officials started looking at the tidal wave of consumer-generated Web videos being created, they saw consumer passion. It’s the same kind of passion that exists in sports enthusiasts, which is who the retailer needs to reach.

Those North Face executives are far from alone. As retailers and consumer goods manufacturers have been watching—mesmerized—consumers watch more than 10 billion U.S. Web videos in February, they have tried to figure out ways to make it work for them. Read more.

In case there are two or three of you who are still skeptical about whether Web video will have an impact, consider these new figures. In February, U.S. Internet users viewed more than 10 billion online videos, which represents a 3 percent gain versus January (despite February being two days shorter) and a 66 percent gain versus February 2007, according to ComScore.

Google/YouTube was overwhelmingly the top source (at 35.4 percent), following by Fox (5.8 percent), Yahoo (2.9 percent), Microsoft (also 2.9 percent), Viacom (2.2 percent), Time Warner non-AOL (1.3 percent), Disney (1.3 percent), AOL (1.1 percent), ABC (1.0 percent) and Comcast (0.9 percent).

One more stat: Nearly 135 million U.S. Internet users spent an average of 204 minutes per person viewing online video in February.

Wal-Mart is pushing to create online communities for its customers, where Wal-Mart employees can sit on the sidelines, take notes and be influenced, or so suggests the chief marketing officer for online operations at the world’s largest retailer.

“Consider 130 million customers in a community sharing information on products they buy and use,” said Cathy Halligan, in this Marketing Daily story. “We learned you need to listen to these customers and implement the top-requested features.”

The Web world defies prediction—or does it? Conventional wisdom would have the new up-and-coming retailers faring better online, while the old-style bigbox merchants lag behind. And yet, Starbucks has had far more online troubles than it should have while Sears, according to this intriguing Chicago Tribune feature, is soaring online.

The number of people who visited Sears.com and Kmart .com at least once in February—an industry metric known as unique visitors—rose 20 percent, to 14.7 million, from the same period last year. That makes Sears’ Web business the second-fastest-growing site among mass merchants in 2007. Sears clearly has some serious challenges, but go tell that to the company’s Web people.

The European Commission is cracking down on search engine data-retention, with a new proposed rule that search engines should delete personal data about their customers within six months.

The BBC News site said this recommendation is likely to be accepted by the European Commission and could lead to a clash with search giants like Google, Yahoo and MSN. “Google and MSN anonymise user data after 18 months, while Yahoo does the same after 13 months,” the BBC reported.

ISPs have been quietly expanding their use of deep-packet inspection. They are capturing everything a user does–to the point where “at least 100,000 U.S. customers are tracked this way, and service providers have been testing it with as many as 10 percent of U.S. customers, according to tech companies involved in the data collection,” said a new report in The Washington Post.

The service providers exploring and testing such services have largely kept quiet–”for fear of customer revolt,” according to one executive involved who was quoted in the Post story. Each company allows users to opt out of the monitoring, though that permission is buried in customer service documents.

Microsoft’s board has given Yahoo’s board three weeks to either agree to a takeover deal or Microsoft threatens it will go hostile.

In a Saturday letter from Microsoft CEO Steve Ballmer to the Yahoo board, Ballmer strongly hinted that if the deal goes hostile, the original $44.6 billion offer would be reduced. “During these two months of inactivity, the Internet has continued to march on, while the public equity markets and overall economic conditions have weakened considerably, both in general and for other Internet-focused companies in particular. At the same time, public indicators suggest that Yahoo!’s search and page view shares have declined,” the letter said. Yahoo responded Monday, countering that Microsoft’s stock drop could make their offer less valuable. Read more.

Amazon.com on Wednesday rolled out a new service called TextBuyIt, which allows consumers to comparison shop online working solely with fast text messages. But the move may not sit well with other retailers, who could see this making it easier to find better deals elsewhere, especially in bookstores.

The service can also support Web searches—but that’s hardly new—and is being positioned by Amazon as an easier way for consumers to make Amazon purchases. The transactions can be almost solely done via text, with an old-fashioned phonecall used to verify the purchase. Read more.

Social networking giant Facebook suffered a major privacy glitch this week, where strangers were able to download members’ supposedly private restricted photos.
The Associated Press broke the story this week. “The Associated Press verified the loophole Monday after receiving a tip from a Byron Ng, a Vancouver, Canada computer technician. Ng began looking for security weaknesses last week after Facebook unveiled more ways for 67 million members to restrict access to their personal profiles,” the story reported. “But the added protections weren’t enough to prevent Ng from pulling up the most recent pictures posted by Facebook members and their friends, even if the privacy settings were set to restrict the audience to a select few.”

Saks is seeing how far it can take Web multimedia, by trying to morph its online catalogue with live video and creating a live model runway show.

The test focuses on Saks’ three best-selling departments: Contemporary ready-to-wear, handbags, and shoes, according to this MediaPost story. “Since Saks knows that about 99 percent of its shoppers have broadband access, ‘it’s been great for us,’” said Denise Incandela, president of Saks Direct. “You can have movement, voice-over, music and information, with narrators talking about what’s important in each look.”

When Starbucks used its shareholders’ meeting on Wednesday to roll out several new initiatives, the new coffee makers and blends got much of the attention. But two of the new plans—a revised CRM program and a new Web site—illustrate nicely how well Starbucks understands customer service and how it still hasn’t figured out the Web.

The change to the Starbucks Card Rewards program shows not just an understanding of customer service, but a realization that the best way to make a CRM program successful is to focus on benefits—true benefits—for both the customer and the retailer. Instead of merely tracking purchases and offering small discounts (adjusting the price of a cup of flavored coffee down from ludicrously overpriced to merely absurdly overpriced. Buy one more croissant and tomorrow you can enjoy a cup of Joe that is only insultingly overpriced), Starbucks is getting creative about rewards. Read more.

Among the retailers that are referenced as most intelligently embracing merged channels–the true channel-agnostic merchant–is Borders, whether it’s with their new concept stores or their breakup with Amazon.com.

It’s therefore an especially troubling note that they are having financial difficulties, as detailed in this New York Times piece. It’s an age-old business belief that few chains truly buy into and adopt major strategic changes until it’s too late. I hope that Borders turns out to be the exception.

The European Union has given the greenlight to Google’s multi-billion dollar takeover of Doubleclick, saying that there will still be plenty of online ad competition.

The European go-ahead followed a similar decision by the U.S. Federal Trade Commission late last year. “Google is hoping to offer a fuller set of online-advertising offerings and capitalize on DoubleClick’s relationships with Web publishers and advertisers to sell ads on behalf of more sites, with Google taking a commission,” the Wall Street Journal reported.

With so many companies today relying on the Internet as the guts of their communication strategy–a reliance that is only getting more intense as VoIP deployments soar–another Internet vulnerability came to light this week, when a Pakistani telecom firm unintentionally blocked some two-thirds of the world’s access to YouTube.

This move comes on top of an incident earlier this month when an undersea cable was cut near Dubai, also wreaking havoc with global Internet traffic. Are more robust safeguards needed? Is these kinds of disruptions can be happen so easily by accidents, how vulnerable would they be to deliberate terrorist efforts? Read more.