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The Roundup June 19

AIG building and sign

If venture capital firms are made exempt from new regulations, will that be a loophole big enough to drive something as big as AIG through?

Venture capitalists to Obama: hands off our picnic basket!

Venture capitalists said on Wednesday they should be exempt from President Obama’s proposed changes in financial regulation, arguing they were not part of the problem. . . .

The industry said it “does not utilize leverage on a significant scale nor does it trade stocks or derivatives in the financial markets. Investors in venture capital do not rely on their invested funds for short term liquidity.”

(“Venture capitalists want regulation exemption,” Reuters, June 18) And get one they will. In targeting private equity funds, which, indeed, significantly leverage their deals and trade in complex financial instruments such as derivatives, Obama’s regulatory zeal will overreach if it includes strictly venture capital firms, and drive venture capital back to the hodgepodge, catch-as-catch-can of individual investors that characterized venture capital before the 1970’s. The problem, though, is what to do with venture capital arms of larger institutions. Would granting an exemption to venture capital firms provide a fire escape for the AIG’s of this world to offload investments to newly-formed venture capital arms?

Safe search is on. Google is off.

China has ordered Google to suspend part of its search operations on its local website, in a show of force which could disrupt the company’s growth in the country and underscores the political risks of operating in China.

State media said on Friday that the authorities had “punished” Google China for linking to pornographic content. On Thursday, in a “law enforcement talk”, the government announced that Google China would be punished with orders to suspend foreign webpage searches and automated keywords, Xinhua, the official news agency, and China Central Television, the main state broadcaster, said.

(“China orders Google to restrict searches,” Financial Times, June 19) Baidu, the Chinese state-sanctioned search engine with almost 60% of market share in the PRC, easily turns up foreign Web sites and porn just like Google, but no crackdown there. Why? The Chinese are well aware that Google exercises a great deal of power in the United States and Europe over the Web and its content, so they’re going to give them a series of body checks before they can reach the same goal in China. Look for Google to be a perennial bridesmaid, never the bride, in China. So, if you’re Chinese and you want your porn, sorry, you’re going to have to get it through the state-sanctioned search engine.

And this is somehow a surprise?

Apple said that devices made by competitors may not work with updates to its iTunes music software, dealing a potential setback to Palm’s new Pre phone.

Palm has touted the Pre’s ability to transfer music and videos from iTunes as a selling point for its device. The touch-screen phone, which went on sale this month, is a challenger to Apple’s iPhone.

(“Apple iTunes may not work with rival devices, dealing blow to Pre,” San Jose Mercury News, June 19) You never, never, never depend on Apple for anything, especially when you’re a competitor. And, although Apple is in all things the junior version of the Evil Empire (being the Kim JOng-un to Microsoft and Google’s Kim Jong-il) still, what should Palm expect? You think Apple is going to let its software run on a rival phone? Why would they do that? And, to add to Palm’s woes, the Pre Apps store has only racked up 660,000 apps downloads, putting it on target for somewhere around a million downloads in its first month of operation. The iPhone apps store in its first month of operation chocked up 60 million downloads. So, unless a miracle happens, it looks like the Pre will be a short-term project.

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