Tuesday's grok: Groupon going cheap, and a Chrome-plated virus

Tagline: Thongs, trojans and keeping your privates, private.

Take the Money and run: What’s a lazy $US24 billion between friends? Not so long ago group buying was the next, Next Big Thing on the Web lead by early market leader Groupon. Everyone from Google to Facebook was courting them, apparently. (Except News Corp. It allegedly turned down the chance to get in very early for just a squeaky million. At least that's what Grok was told by a Murdoch minion who claimed to be involved in the opportunity.)

There was speculation mid-year that Groupon would IPO at close to $US30 billion. But then, as they are wont to do, those pesky facts got in the way of a good story.

In particular, Groupon’s merchants started noticing that while they were giving huge amounts of stock away at very big discounts (in simple parlance — losing money), customers weren’t sticky at all. Instead, it turns out they are greedy, selfish, rapacious little rat bastards who simply move onto the next best deal as soon as the last cheapy, cheapy one lapses. Buyers are liars as they say in the trade.

On top of that, Groupon’s business model required more and more sales people to sign up more and more ultimately disappointed merchants, chewing into all that precious company capital, and by extension and necessity, generating an evermore aggressive sales culture. Aren’t vicious cycles grand.

Techcrunch in particular visited smackdown upon smackdown upon Groupon — you can follow it here and as early as June postulated upon the collapse of the model.

Meanwhile, given the madness around the valuations of Groupon-like outfits, it's no wonder the idea metastasized and the coupon virus eventually made its way to Australia.

Yesterday the chooks went roosting at LivingSocial as the SMH reported.

As many as 100,000 unhappy little munters put in orders for Havaianas thongs, apparently a steal at $25 a throw, only to discover that the merchant couldn’t fulfill its offer. That drew the ire and attention of NSW Fair Trading.

The lesson here: Buying cartels do not work. They tanked in dotcom 1.0, where they were called “exchanges” and unsurprisingly they are not much chop in dotcom 2.0. either.

But if it's any consolation it wasn’t just the little bloke hunting for a pair of knock-down flip-flops feeling the pinch this morning. That $80 million that James Packer and Seek founder Andrew Bassat tipped into DealoftheDay and Scoopon earlier this year must be looking pretty green right now. And for the record, that’s green like gills, not green like envy. But they can’t say they weren’t warned.

“The Evil Empire” versus “Don't. Be Evil”: Windows’s ain’t fun till Lotus won’t run — that was the maxim of Microsoft developers in the early '90s in the days before Maximum Bill came under scrutiny by the antitrust wonks. It came to mind yesterday watching the news flow, and not just here at the Grok.

Microsoft ”inadvertently” identified Google’s Chrome browser as a piece of malware — specifically the Zeus botnet trojan — and bumped it off several thousand PC’s over the weekend. Notice the inverted comma’s around “inadvertently”. They’re not ours; we copied them from any number of other reports on the topic. Given Microsoft’s long and potted history of “robust” competitive behavior (Wang anyone? Windows NT anyone?) it's hard to cut them much slack, although this does have the ring of incompetence more so than conspiracy about it.

And even had it been deliberate, it wasn’t especially effective: As Computerworld US noted, Google resolved the issue quicker than you could whistle “abuse of market power”. And the Microsofties likewise had corrected their antivirus definitions by then.

Nothing to see here, move along: Privacy advocacy groups got their shots in quickly yesterday after the federal government released the latest update on its eHealth regime. The AFR reported comments by Australian Privacy Foundation health committee chairman Juanita Fernando dismissing the government’s regime of fines as an ineffective deterrent to the malfeasance and stupidity of human nature.

Can’t imagine why she is so skeptical though, unless it's because she read this article over at the Australian about privacy breaches at other government agencies and naively added one and one together to get two.

Karen Dearne at the Australian, who has been writing about eHealth since its first visit to the community nurse, suggested health minister Nicola Roxon was being a little too clever by half releasing the latest updates to coincide with the NSW public holiday, and then burying links to the updates deep on the government’s website.

Andrew Birmingham is the CEO of Silicon Valley Investments. He's pulling a crowd together to buy Groupon stock, cheap. Get in quick @ag_birmingham on Twitter.

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