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hawn Fanning, best known for founding Napster, has a new job. He will be working at Electronic Arts, which is about to buy his social-network-gaming startup Rupture for $30 million, according to sources with knowledge of the deal. His co-founder Jon Baudanza will also join Electronic Arts. We first heard of a possible deal back in February, but did not know who was the buyer. Rupture’s first product was a social network for players of the online video game World of Warcraft, but it only came out with a beta version and kept delaying its public launch.

Electronic Arts is buying the company for its technology, since it doesn’t have a lot of users (it was only ever in beta) and never launched the second version of its service. Presumably, creating social networks around massively multiplayer video games is a key component of its online strategy. The company has not yet officially announced the acquisition, but it is expected to do so soon. [Update: The closing of the deal is imminent, but there are still some papers to sign].

Rupture had previously raised only $2.5 to $3 million in an angel round last summer from investors including Ron Conway, Joi Ito, Reid Hoffman, and Baseline Ventures. Although this is not Fanning’s first startup, it is his first real payday. Napster helped change the music industry, but it went bankrupt doing so. And although he just sold his second startup SnoCap to Imeem, that was more of a mercy acquisition. It is doubtful that he made more than a few pennies on that sale. You know what they say. Third time’s the charm.

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Will you do a search advertising deal with Yahoo? How will you do it in a way that avoids antitrust objections? Are you relieved that Microsoft withdrew its offer for Yahoo?

The questions were asked again and again by a group of reporters meeting with Google’s top three executives Thursday. Eric Schmidt, the chief executive, and Larry Page and Sergey Brin, the company’s co-founders, answered roughly: We’d like to; we can’t tell you; and yes.

Beyond that, the three men shed little light on their role in the Microsoft-Yahoo merger talks, which ended Saturday when Microsoft withdrew its $47.5 billion offer to buy Yahoo, or on the status of their own negotiations with Yahoo.

“We’re very excited to work with them,” Mr. Brin said of Yahoo.

If conversations were to lead to a deal, Mr. Schmidt said, “We would anticipate structuring a deal to address antitrust concerns.”

“We had a brilliant test,” he added, referring to a limited two-week trial that the two companies conducted and that ended about 10 days ago.

The questions kept coming in different forms; the answers stuck to the same line.

Mr. Schmidt, who had raised concerns that a Microsoft-Yahoo combination could reduce competition on the Internet, said he was relieved that Google would not have to face that prospect, at least for now.

“Obviously we are happy that that is not going to happen,” Mr. Schmidt said.

Mr. Brin also said Google’s offer of a search advertising partnership with Yahoo was not an effort to scuttle the Microsoft-Yahoo deal, but rather an attempt to give some options to Yahoo, which faced a hostile bid from Microsoft.

“We really believe in companies having choices about their destiny,” he said.

So is the Microsoft-Yahoo saga over?

“You never say never in this business,” Mr. Schmidt said, adding that he was not privy to any information suggesting that merger negotiations might resume.

The meeting, at Google’s Mountain View, Calif., headquarters, adjourned as Mr. Schmidt, Mr. Page and Mr. Brin headed to another building for Google’s annual meeting with shareholders.

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The device has some pretty nice interface tech that they’re calling TouchFLO 3D that heavily emphasizes one-touch browsing and single-finger dialing. They emphasized web accessibility, zoom-in navigation with “just one hand” and not too many fingers. As expected, the device is loaded with Windows Mobile 6.1, a VGA screen and HSDPA 7.2, among other nice specs.

As expected, the Diamond is loaded with prettiness and specs, including:

• Windows Mobile 6.1
• VGA Screen
• Quad-band HSDPA 7.2
• One-touch navigation, including single-finger dialing
• An accelerometer that rotates pictures as you rotate the phone
• One-touch music playback with an animated music browser
• A heavily-animated weather forecast app
• Full-featured desktop-like web browser (Opera) with zoom-in tech that actually reformats to fit the screen upon zoom, although Microsoft promises IE 6 coming soon for it
• Youtube app and content playback
• Available in June in Europe via Orange and the “rest of the world” sometime later
• Orange music store, games, wallpapers, and ringtone downloads
• Orange mobile TV with up to 61 channels
• No normal headphone jack - gotta use HTC’s proprietary USB dongle
• “Better battery life” than their other devices will offer a bigger battery at a later time for those who are experiencing battery life issues

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Grand Theft Auto IV, the latest iteration of the hit video game franchise, racked up first-week sales of $500 million, Take-Two Interactive, the game’s publisher, plans to announce on Wednesday. The report exceeded the sales expectations of analysts.

The company is expected to report it sold six million copies of the graphically violent game, 3.6 million of them on the first day.

The sales exceed projections of industry analysts who were estimating that some five million consumers would purchase the game in the first two weeks.

The significance of the sales extends beyond buoying Take-Two, a company that has had its share of legal, financial and management struggles in the last few years. The company is the subject of a $2 billion hostile takeover effort by Electronic Arts, which is offering Take Two shareholders $25.74 a share for control of the company. If Take-Two can exceed sales expectations on Grand Theft Auto IV, it has the potential to drive up the share price and force Electronic Arts to raise its offer.

On Tuesday, Take Two’s shares closed at $26.35, up 29 cents.

Electronic Arts’ takeover bid turned hostile after Take-Two management said that it would not negotiate an acquisition agreement with Electronic Arts — or any suitor — until after the release of Grand Theft Auto IV. Now that the game is out, Take-Two may well have entered discussions with Electronic Arts and possibly other suitors who covet the Grand Theft Auto franchise, but Take-Two has declined to comment on whether such discussions are taking place.

If Take-Two and Electronic Arts wind up doing a deal, there is pressure on Electronic Arts and also on some Take-Two shareholders to get one done quickly. Electronic Arts has said that it needs to get a deal in time to subsume Take-Two’s assets before the holiday selling season.

Take-Two’s management has said that the success of Grand Theft Auto IV is awakening shareholders to the long-term value of the company’s stock and that if investors can be patient it can command a higher price in the long term.

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Craigslist’s CEO Jim Buckmaster believes that eBay’s lawsuit is an exercise in hypocrisy, in no small part because the online auction giant has taken many of the same measures Craigslist did in order to protect itself. Buckmaster made yet another post to the Craigslist Blog over the lawsuit, addressing some of the points that eBay raised in its recently-unsealed complaint. While Buckmaster’s points may be true, though, his post seems to dance around the overall point of the lawsuit—that Craigslist has diluted eBay’s stake in the popular classified site through its actions.

Buckmaster’s most recent blog post came not long after details about eBay’s lawsuit against Craigslist were made public. In the suit, eBay alleges that Buckmaster and Craigslist founder Craig Newmark breached their fiduciary duties by engaging in a series of transactions that would ultimately benefit themselves “to the detriment of eBay.” This included holding a series of meetings without eBay’s knowledge, despite eBay’s ownership of more than a quarter of the company. During these meetings, the two implemented measures that would prevent eBay from selling its shares to anyone but Craigslist, gave themselves more decision-making power, and appointed a new board designee.

Buckmaster immediately shot back by saying that every measure was taken in order to protect “the long term well-being of the Craigslist community,” accusing eBay of being “obsessed with dominating online classifieds.” Buckmaster promised at the time that Craigslist would file a formal response through the court system, but couldn’t keep himself from responding himself.

In his latest blog post, Buckmaster starts out by noting that eBay opposes Craigslist’s implementation of a “poison pill” policy that was meant to prevent eBay from using its shares to make decisions that could hurt the company. However, eBay itself has implemented similar policies that allow the company to shift around shares with the intent of protecting company interests.

Buckmaster also says that eBay is suing Craigslist because it offers its other shareholders the right to first refusal to purchase additional shares in the company. eBay no longer has that privilege because it engaged in competitive activity when it launched Kijiji in the US, and Buckmaster believes the auctioneer is unhappy about this unbalance. Additionally, Buckmaster claims that eBay is suing over Craigslist’s indemnification agreement that lets the company pay legal fees for Craigslist directors in the event that they are sued, and for Craigslist’s holding of staggered board elections. Both of these things are policies that eBay itself has implemented in the past.

Of course, these are all points that dance around the ultimate objection that eBay has. eBay isn’t suing over the fact that Craigslist now has a poison-pill policy or that eBay has lost its right of first refusal—it’s suing because Buckmaster and Newmark made all of these decisions themselves without the knowledge or consent of the only other significant shareholder in the company. One has to wonder, though, why Buckmaster is airing the companies’ dirty laundry in the public. Is he looking to gain public support? To intimidate eBay into dropping the case (and perhaps its shares in Craigslist)? Either way, Craigslist is probably best served by fighting the case through the legal system and laying off on the blog rants.

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Businesses should be on their guard against agencies who offer them information on their competitors, following the jailing of a team of private investigators who used spyware to steal information on behalf of legitimate companies.

According to media reports, four members of the Israeli Modi’in Ezrahi private investigation firm have been sentenced after they were found guilty of using a Trojan horse to steal commercial information.

The Trojan horse, which was designed and marketed by London-based couple Michael and Ruth Haephrati, was said to have been used by a number of different private investigation firms to spy on companies including the HOT cable television group and Rani Rahav PR agency (whose clients include Israel’s second biggest mobile phone operator, Partner Communications). Another alleged victim was Champion Motors, which imports Audi and Volkswagen motor vehicles.

Asaf Zlotovsky, a manager at the Modi’in Ezrahi detective firm, was given a 19 month jail sentence. Two other employees, Haim Zissman and Ron Barhoum, were sent to prison for 18 and nine months respectively. The firm’s former CEO, Yitzhak Rett, escaped a jail sentence after admitting the allegations under a plea bargain - he has been fined 250,000 Israeli Shekels (UKP 36,500) and will face ten months on parole.

“It’s understandable that firms would want information on what their business rivals are planning to do, and try to seek a competitive advantage over them. What isn’t acceptable is to hire firms that will use illegal methods, such as computer spyware, to gather that information,” said Graham Cluley, senior technology consultant at Sophos. “Firms need to be very careful about the third parties they hire to help them grow their business, and seek assurances that their partners will not be behaving unethically or illegally. If they do not, the consequences could not only be a swathe of bad publicity, but also a spell in prison.”

Michael Haephrati, who honed his computer skills during three years’ military service in the Israeli army, and his wife, Ruth, were fined and sentenced to jail by an Israeli court for their involvement in the case in 2006.

“Regular cybercriminals may be attempting to steal your employees’ credit card details, but spyware can also be used for corporate espionage designed to steal your business plans and customer databases,” explained Cluley. ” Firms should be on their guard and have proper defences in place to avoid falling foul of this kind of attack.”

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Microsoft and Yahoo were pushed to the brink of a multibillion-dollar marriage and then to a sudden breakup this weekend by the same player.

It was Google, in the odd dual role of both unwitting matchmaker and self-interested spoiler.

Google’s phenomenal rise, after all, prodded Microsoft, the dominant technology company for more than two decades, to court Yahoo. And Google’s success also weakened Yahoo enough to give Microsoft the sense that it could buy the company at a good price.

A combined Microsoft-Yahoo would create a powerful competitor, and Google early on indicated that it would fight the merger on antitrust grounds in Washington and Brussels.

But Google played a part in killing the deal, for now at least, by acting more as friend than foe. It offered to let Yahoo use its more sophisticated search advertising technology, which by some estimates would have meant $1 billion in additional cash flow a year for Yahoo. The partnership would also bring Google more revenue.

The prospect of such a partnership emboldened Yahoo’s board to demand more money for the company and eventually caused Microsoft to rethink its strategy.

Steven A. Ballmer, Microsoft’s chief executive, cited the proposed Google partnership as the main reason for not pursuing a hostile bid and instead walking away on Saturday.

“Such an arrangement with the dominant search provider would make an acquisition of Yahoo undesirable to us,” he wrote Jerry Yang, Yahoo’s chief executive, in a letter, and cited five specific reasons Google would be bad for Yahoo.

Yahoo may well pursue the partnerships with Google, its main rival, to bolster its depressed stock price. Yahoo shares dropped 15 percent, or $4.30 Monday, to $24.37. The two companies refused to comment.

Not surprisingly, analysts are saying the Microsoft-Yahoo story has one clear winner: Google. And its stock price reflected that thinking Monday. More than $4 billion was added to Google’s value as the stock price rose 2.34 percent.

Not yet 10 years old, Google has emerged as a powerhouse that is wielding tremendous power in the world of technology and beyond. It was able to influence a government auction of broadcast spectrum. It nudged several cellphone companies into opening up their networks to the phones of rivals.

Its influence is all the more surprising, because its economic power is still derived largely from a single, seemingly prosaic business: the ability to place interesting text advertisements in front of people when they do searches. Advertisers pay for those ads — sometimes $1 or less — only when users click on them. In a sense, Google has built a highly profitable $16.6 billion empire a dollar at a time.

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