Microsoft is finally embracing the push towards open software (sort of). In a conference call which failed to mention any progress on the Yahoo front, Microsoft executives unveiled a "strategic shift" in the company's business practices, the broader push of which is to bring Microsoft's flagship products-the Windows OS and Microsoft Office-further into the realm of Web-based computing. CEO Steve Ballmer said the move was partly to address Microsoft's sticky legal situation with the European Union-EU regulators demanded that Microsoft share technical information about its software with outside developers-but was also about adapting to "the opportunities and risks of …

Hollywood, which is preparing for the 80th annual Academy Awards this weekend, has largely ignored the looming threat/opportunity of the Internet. This is a mistake, the mag says, because media is slowly being assumed by the Internet. Hollywood, whether it wants to or not, will be required to embrace the digital revolution. Once upon a time, Tinseltown worried that TV would destroy the movie business. It did not. That said, DVD sales are down 3 percent year over year, while box-office revenues are flat. But production costs keep going up as writers, directors and actors demand more money …

We've got a "rough" next few quarters ahead of us as the U.S. economy dips into recession, and Web giant Google is as badly exposed as anybody else. Google is at risk because a significant portion of its advertiser base is at risk. Consumers will spend less during a recession, which means Google ROI will drop for advertisers, forcing them to spend less with the search giant. One digital agency insider, who does not have access to Google data, estimates the following: there are 1.2 million total AdWords customers, approximately 800,000 of which are active; approximately 60 percent …

In the wake of Owen Van Natta's departure, Facebook is eyeing a big management shakeup. Unnamed sources tell her the social network is looking to add a well-known tech exec as its second-in-command behind CEO Mark Zuckerberg, a move that's being pushed by Zuckerberg himself. The departing Van Natta played that role in his earlier days with Facebook, although Zuckerberg later changed his title from COO to Chief Revenue Officer. Those in the running for the post are former AOL exec Chamath Palihapitiya, current VP of product marketing and operations; CFO Gideon Yu, a former YouTube and …

VideoEgg, a video advertising network, is launching a new ad metric where advertisers only pay if a user interacts with their ad. The units appear like standard display ads, but when users mouse over them they open a Flash window that plays a full advertising clip. Called AdFrames, the new service costs between 20 cents and $1 per interaction. Microsoft is one of its first test advertisers. AThe software giant is paying under 50 cents per view when users interact with ads of comedian Amy Sedaris showing off new features for Office 2007. The …

Microsoft chairman Bill Gates indicated that Yahoo's engineering talent was one of the main reasons his company lodged a $45 billion bid for the Web giant (although that bid has now been reduced to $41 billion). But an exodus of top engineering and management talent often accompanies even the friendliest of takeovers--and this one is far from friendly. How unfriendly? Microsoft now plans to submit its own board of directors at the next Yahoo shareholder meeting, which takes place in June; the deadline is March 13. The software giant may also bring its cash and stock offer directly …

Yahoo wants so badly to avoid a Microsoft takeover (or at least, avoid a takeover at $29 per share) that the Web company has enlisted four or five executives from MySpace owner News Corp. to try and hammer out a deal that would combine Yahoo with News Corp.'s Fox Interactive Media. A News Corp. bid would look this: Yahoo would assume FIM (which includes MySpace, IGN, Scout Media, Photobucket, Fox Sports, AmericanIdol.com, Flektor, Ksolo, and investments in Hulu, Simply Hired and Snocap) along with a cash infusion from News Corp. and a large third-party investor for …