Schmidt added a bit of nuance to that message today, noting that the company had been surprised to see its European business bounce back as quickly as it has. Here’s my transcript of his opening statement.

We are clearly seeing aspects of recovery, and what is notable is that we’re seeing aspects of recovery not just in the United States but in Europe. I had been in error in assuming that there would be a lag, that it would the U.S. first and Europe second. Asia, of course, was never significantly hit in the first place.

So that means from a Google perspective that…we never stopped hiring, but we told our team internally and again, we’ve said to many other people that we are increasing our hiring rate and our investment rate in anticipation of a recovery.

Schmidt and Google co-founder Sergey Brin covered a lot of ground in the hour-plus press conference, and I’ll try to go back and break out out some of the other highlights. A few items worth noting in summary:

• Brin expressed contrition over recent Gmail outages and said the company was working both to prevent future failures and to react more quickly if and when they do happen. But he reiterated the argument, common among cloud-computing fans, that conventional email systems fail much more frequently.
• Schmidt repeatedly defended the proposed settlement Google had reached with authors and publishers regarding its book archive. Recurring theme: It’s not a perfect settlement, but it’s workable.
• Schmidt stressed the importance of porting Google’s Chrome browser to Apple’s Mac platform and said this would happen within months.
• Schmidt said Google was working on ways to help publishers sell their work on the Web (via one-offs or subscription). But he said he had no interest in promoting one publisher’s results over another, as Associated Press officials had recently suggested: “We have to be very very careful not to favor one media organization over another, with regard to speed or latency.”
• Schmidt, who’d previously noted that he expected Google to start making an acquisition per month, said that these would likely be small, five-to-ten-person companies. He added that it was unlikely the company would be in the market for something the size of a YouTube acquisition, which cost Google $1.65 billion. Translation: Don’t expect us to pony up billions for Twitter.

Earlier: My live coverage of the press conference:

Google (GOOG) co-founder Sergey Brin is sitting down with about a dozen reporters in Google’s New York City headquarters for a Q&A session. Tune in for live coverage. This should be a wide-ranging conversation, which I’ll attempt to cover live as well as I can. Please consider everything below to be a paraphrase unless it’s in quotes.

Brin is joined by Google CEO Eric Schmidt. Brin gives an unofficial intro.

Schmidt adds his own informal introduction.

Schmidt: We’re here because we have a global sales meeting in New York, and we’re winding that up right now. A series of internal talks, and the mood was “very, very positive.” We told them that “the worst is behind us” (which Schmidt has said before). We’re seeing recovery not just in the U.S., but in Europe as well. I had been in error in thinking it would be U.S. first, then Europe second. Asia is less important, obviously. We’re increasing our hiring rate and investment rate in an anticipation of a recovery.

Brin discusses some tweaks to search. Do you feel that Microsoft’s innovations with Bing will cause you to accelerate your innovations?

Brin: Competition is healthy. Microsoft (MSFT) has made its contributions. So has Cuill. Many of the tweaks in Bing we’d already seen from Microsoft Live earlier in the year.

Schmidt: I agree!

But do you think Bing is really different? Or just a rebranding.

Brin: [Demurs]

Schmidt: You guys should judge us and our competitors. We’ve been criticized for having a self-referential view of the world. But I’d argue that our success so far proves that’s been a good strategy.

Please talk about Android and other mobile plans.

Brin: We started with Android because it was a problem for us, as an end-user and a developer, that phones lacked powerful browsers and the ability to install powerful apps. I think Android has addressed this very well, but it has also pushed the market. It has pushed Apple (AAPL) with the iPhone and RIM (RIMM) and Windows Mobile. I’m pretty excited about the future; they’re getting increasingly capable browsers, and you can now write native applications across five platforms that will cover most smart phones. I think that having the software platform has freed the hardware makers from spending time on that, and they can rejuvenate their efforts on hardware.

Please talk about enterprise efforts.

Brin: We started in enterprise, like mobile, to address our own needs. When we started with mail in ‘04, Web email was like a toy. We really focused on something that would work in an enterprise and then made it available to consumers. We feel we’re farther ahead (than competitors) both in email and in collaborative document-editing. We’re moving toward eventually having everything (all our applications) available everywhere. “I just think the cloud model is a better model….I do think this install-less model of a cloud is better….It’s definitely made me more productive.”

More on enterprise from Brin: We’ve been successful with both SMB [small and medium business] and increasingly with enterprise. We’ve got a big implementation with Genetech (DNA), and in Washington D.C. We’re specifically adding features for enterprise. That’s part of the Postini acquisition–to add some of those email features for enterprises. You’d be surprised to hear some of the things businesses ask for.

Please talk about recent Gmail outages.

Brin: Certainly we’re not happy with any outages. With those outages we’re at the “three nines” level, which is not where we want to be. Targeting “four nines” by end of quarter. We’ll let you know how we do. Focusing not only on outages, which we don’t like, but recovery time. Second outage could have been resolved in five or ten minutes, but we made errors in handling it, and it extended over an hour. But if you look at a typical enterprise today, those outages tend to add up to more than even these kinds of outages that we had in Q3. Also, we’re working on the number of people affected by outages. Trying to group people into pods so that if one goes down it doesn’t affect others.

You’re adding more complexity to search. It’s more confusing than it ever was. Same thing with site links. Is that an issue (it is for Danny Sullivan)?

Brin: I’d like to see all the options, available in all the corpuses. We don’t have all the same options in each offering. In terms of the links and snippets that we’re offering, we’re trying to experiment with that.

On Google book deal: If the judge asked you why he shouldn’t be concerned by the concentration of Google’s power, what would you say?

Schmidt: It’s an error to answer a theoretical question from a journalist. But anyway, we won’t get that kind of question. With respect to book search, we were doing something that we thought was appropriate. We were sued, and after three years of discussion, we’ve come to a settlement. This is perfectly normal. From our perspective, this is a settlement we like, it’s a settlement we think they’ll like, and we’ll hear what the court says, within minutes. Let me reframe your question: There’s nothing particularly exclusive about what we’re doing. The rights registry we’re doing is for the benefit of orphan works. “It’s not a particularly good business for us. We’re going it because we think it’s the right thing to do.” We don’t think the settlement is perfect, but we think it’s good.

What are plans to expand book search?

Schmidt: We’re already huge. There are millions of books that have never been read, and we’re going to deliver readers to those books.

Brin: We want as many works as possible in some form, because that’s of tremendous value.

Schmidt: This doesn’t cover all international books, all books in the world. [Some disagreement about this between Brin and Schmidt]. It will take time to get the registry up and running, so for the near future I think that’s all we can achieve.

Back to the economy, please.

Schmidt: We’ve tried for a while to figure out if Google is an accurate predictor of the economy, and we can’t prove it. If we could, we’d brag about it. Last early in the year we saw a decline in U.K., which surprised us. From our perspective, the low point was somewhere in the spring. Which is why I said worst was behind us in May, June. We noticed a recovery “June-ish.” The conventional wisdom is that U.S. recessions are 18-24 months. Bernanke sees a recovery too, which we agree with. Conventional wisdom was that Europe would lag by three-five months, which we’re not seeing. Europe is not one country, and it varies a great deal depending on which country we’re in. I won’t go in to specifics but it’s the obvious stuff–the countries that didn’t have a big bump did not have a big fall. More on being a leading indicator: Obviously we’re a leading indicator in advertising.

Brin: And we’re good indicator for consumer spending, and you can see for yourself by looking at Google trends.

It seems as if Chrome isn’t having the impact with consumers that you would like.

Brin: [Starts, then stopped by Schmidt]

Schmidt: Some of your premise about Chrome is incorrect, in terms of adoption, and we’re going to get that message out.

Brin: It’s actually exceeding our benchmarks.

Schmidt: I see a lot of Macs in this room, and a lot of very sophisticated people are using Macs now and we need to get a version of Chrome out for that, which we’ll have in a couple of months. Key to browser strength is speed. In general, we announced Chrome OS and Chromium product. Everything is linked together: Cloud, chrome, etc.

At one point do Android and the Chrome OS come together or not come together?

Schmidt: Current definition of use platforms has to do with use patterns. Android for mobile, delivered via telecom store, heavily integrated with telco offerings, like our Verizon (VZ) deal, which we’re enormously excited about. The analog for Chrome is that it’s designed for a 10, 12-inch form factor. They both use Linux, etc. But they’re designed for different uses. [Netbooks?] May be some overlap there.

Is Google being too nice? Is there a rethinking of relationships with aggrieved groups?

Schmidt: In many ways we’ve always wanted to be this Google as opposed to the way we were perceived a few years ago. We’re particularly proud of the way we’re working with advertising agencies, which is very important to us. With the media industry, we’re having success with YouTube and YouTube monetization, and we’ll have more on that coming forward….”We have always wanted to have these partnerships….We’re learning how to do them in a way that they win, too.”

Brin: People can now differentiate between us and the Internet.

Schmidt: Google is an innovator. The Internet is causing collisions. Innovation plus collisions equals opportunity. For instance, the fact that Verizon has embraced most of the open principles that we put forth five years ago is shocking. “It’s pretty amazing. This is Verizon. It’s not some itty-bitty telecom start-up.”

Are you uncomfortable with Google employees’ sense of entitlement? [Per new Ken Auletta book]

Brin: [Refers to layoffs--Schmidt corrects him: "We did not have layoffs."] [Addendum: Schmidt was talking about Google closing engineering offices in Phoenix and other locations; Google did have layoffs last winter.] You’re right:

What do you think about publishers requiring pay walls, and how will you help surface that.

Schmidt: We’re starting with that YouTube. Overall, “there’s clearly a market for free content, and that market is the size of the Internet.” Also a market for subscription/paid. The analogy I would offer is TV. We all grew up with “free” TV. Now almost everyone pays for cable, and some people pay for pay-per-view, “which is ridiculously expensive,” but people will pay for particular events, like boxing. I think all three of those uses will emerge. We’re working on payment models, subscriptions, to enable that.

But what about surfacing paid content in search [this comes from WSJ.com editor Alan Murray]? Will you factor the desire of someone to pay for content into results?

Schmidt: We’re not going to use the price you use as our ranking in results. That’s not going to be our signal. But we’ll incorporate the price people are paying for your content into results. But I’m not going to answer this precisely because I don’t want to discuss how we produce results. The most interesting improvement you could make is that to the degree that we have more of the marketplace data available, we could take that information and reflect some of that in our rankings.

The AP CEO said Google or Microsoft might be willing to pay a premium for an advance look at the news.

Schmidt: We have a deal with the AP, and I don’t want to talk about any specifics of any deal. I don’t think that’s proper. “We have to be very very careful not to favor one media organization over another, with regard to speed or latency.” We are staying out of the media business. “You guys are very good at it, and we’re not.”

[Apologies for tech error; I missed the specific question and part of the following exchange, but the subject is entitlement.]

Brin: We cut down on snacks, etc. to “reset expectations” regarding entitlement.

Schmidt: “Google pays very well. Google is clearly a growth company. People at Google don’t work for those reasons at Google. We don’t want them to come to work for Google for those reasons. We want people to come to Google to change the world. Life is short.” The tightening in the last year has been good for this, by the way, the controls put into place by Patrick Pichette, who is our hero, have been very helpful.

Please talk about M&A plans and goal of one acquisition per month.

Schmidt: That’s been our historic pattern. I think we will be buying small companies–five, ten people. That’s where some of our best stuff has been. One day Larry and Sergey bought Android, and I didn’t even notice. Think about the strategic opportunities that has created. Sergey found Google Earth one day while he was surfing on the Web. And then he walked into my office and told me he bought them. “And I said, ‘for how much, Sergey?’ And it turned out to be a few million.”

Would you buy a YouTube?

Schmidt: Is there another one to buy? The problem with that size of acquisition is that you have to make your money back. I think that DoubleClick and YouTube will be two of our best acquisitions. DoubleClick is already close to paying back, and YouTube will get there soon. But bear in mind that any major acquisition now will involve a regulatory review, because of our size and because our competitors will make sure of that.

[Sorry, missed another question]

Do you anticipate making large upfront commitments for new or renewed search deals [as you did with MySpace and AOL]?

Schmidt: I’d rather not comment on search deals. We are in discussions with both of those companies. “Some of our best friends are in those companies.”

[Missed yet another one]

What will new tablet machines [like Apple's] mean for you? And to content producers?

Brin: Hardware is getting amazing with regard to cost. Used to be that display was expensive. Now that’s cheap, and so are chips, etc. Now, the main cost is broadband connection, or cellular, or however you get to the Internet. That’s why wide broadband availability is important to us. Think about how much you spend on access costs compared to the amount you spend on your handset. The phone cost is negligible.

Schmidt: Not sure how to answer question. We provide the infrastructure below what you’re talking about [touch interfaces, etc.]. Kindle is a good example. Don’t think about current one, think about one two or three years out. I think there will be many kinds of things like Kindles, and that’s a material change in the way people will interact with hardware, media.

Brin: I think it’s better if hardware isn’t locked down to specific platforms.

[Long exchange between Schmidt and Danny Sullivan that I'll have to pick up later]

Should Google be required to lease servers and access to Google checkout numbers to deal with “lock-in” issues that broke up the telcos?

Schmidt: Google Checkout isn’t interesting. But I think your analogy is wrong and that there are no data to support your theses.

[I missed the next question on the book settlement about orphan works, etc.]

Schmidt: A lot of these complaints are being made by people who don’t want a solution.

What are the reasonable book settlement proposals you’ve seen?

Schmidt: Goal is to get all the books to everyone and to get all the authors compensated properly. Some of the proposals make sense to me, but I don’t want to characterize them. Not a perfect solution, but the best one we can do.

How will book settlement affect international users?

Brin: It won’t. We’d love settlements that work across a range of countries.

Why won’t you be like Microsoft with regard to antitrust?

Schmidt: Many reasons. Culture, for one. Another reason is that majority of users are one click away from moving away from us. Third: If we went into an “evil room” and had an “evil light” shined on us, and we then behaved in an “evil way” we would be destroyed….There is a fundamental trust between Google and its users.”

Schmidt walks through “ludicrous” thought experiment whereby Chrome takes 80 percent of market share and then tries to lock consumers in, noting that it wouldn’t work due to open source.

Do you think you’ll take another stab at moving into radio, print?

Brin: We are quite optimistic on the TV front. Radio and print didn’t pan out as well as we thought initially. One of the reasons is that those mediums are moving online and consumers are moving online and the publishers/producers want to work with us there. “We were kind of at the dock where the ship had already left.” But TV is quite similar to the Web in terms, potentially, of measurability, so we’re excited about those prospects.

Is page rank broken? People are gaming it, etc.

Brin: No. We have to continually develop. Part of the issue is span, but the main issue is that everything changes. We’re doing a much better job of ranking than we did a decade ago. If we just rested on our laurels with what we wrote in paper from 1998, we’d be in big trouble.

Maybe, says CNET’s Greg Sandoval. He reports that Viacom’s attorneys have unearthed emails that indicate that YouTube employees uploaded copyrighted material to the site and that “managers” knew there was copyrighted stuff on the site but didn’t do anything about it.

Those allegations happen to be key parts of Viacom’s (VIA) suit against Google (GOOG) and YouTube, and a good part of what the company has been looking for in the discovery/deposition process that has stretched on for more than a year and is slated to extend through the end of 2009.

Viacom has argued that senior YouTube employees, including cofounders Chad Hurley and Steve Chen, knew full well that their site was full of copyrighted material and not only didn’t try to prevent it, but at some point even encouraged it.

So what exactly do the emails say? I don’t know. Sandoval is summarizing the documents, not reproducing them. And if I’m reading his story correctly, he may not have seen them either, but may be relying on someone else’s description of them. (That said, in a separate story, Sandoval does reproduce parts of Google CEO Eric Schmidt’s deposition from the same case.)

Here’s his description:

Lawyers working on a $1 billion copyright lawsuit filed by Viacom against Google’s YouTube may have uncovered evidence that employees of the video site were among those who uploaded unauthorized content to YouTube.

In addition, internal YouTube e-mails indicate that YouTube managers knew and discussed the existence of unauthorized content on the site with employees but chose not to remove the material, three sources with knowledge of the case told CNET.

The e-mails, according to the sources who asked for anonymity because of the ongoing litigation, surfaced during an exchange of information between the two sides of the legal dispute.

I’ve asked Sandoval for more information about the emails he’s referring to, but I don’t expect him to say much; anyone who released documents from discovery would be violating a court order. Viacom had no comment. Here’s YouTube’s comment, via CNET: “The characterizations of the supposed evidence, made in violation of a court order, are wrong, misleading, or lack important context and notably come on the heels of a series of significant setbacks for the plaintiffs. The evidence will show that we go above and beyond our legal obligations to protect the rights of content owners.”

Unless I’m told otherwise, I’m only going to do this once. But for the record, Yahoo is going with the following spelling for its new slogan: “It Starts With Y!ou.” I don’t think that’s going to fly with consumers or copy editors, but we’ll see.

Also undetermined: Whether there will be any news unveiled at Yahoo’s press conference to roll out said slogan. But I’ll be here for you just in case. And in the meantime, you can find glimpses of the coming campaign at the bottom of this post.

The event begins: Boilerplate intro remarks from Yahoo (YHOO) CEO Carol Bartz, followed by CMO Elisa Steele. Steele shows off a Venn diagram that shows the intersection of “my world” and “the world.” Yahoo, apparently, is that intersection. “That’s where the yodel is.”

Steele reminds us that this is Yahoo’s first global marketing campaign. That’s old hat for Microsoft (MSFT) and something Google (GOOG) has never done. Ad campaigns will roll out in 10 countries, branding campaign will be in all territories.

Steele runs through some imagery that will be used in campaign. Yahoo users, apparently, comprise many races and creeds. But all of them are buff and/or skinny. Unless they’re pregnant. A video ad, meanwhile features an upgraded yodel.

OK. Time for Q&A:

Onstage: Bartz; Steele; EVP Hilary Schneider; Tapan Bhat, SVP Integrated Consumer Experiences; Penny Baldwin, SVP Global Integrated Marketing and Brand Management.

What’s the budget for the campaign?

Steele: “Over $100 million.”

Status of ad market? Also, what won’t you sell?

Schneider: Starting to see a stabilization. “Wouldn’t go so far as to say as we’re seeing a full recovery.”

Bartz: We’re still “bumping along the bottom.” Regarding sales, she dodges/reframes the question, talking about “focus” instead. “We’re just revisiting everything.” Is there anything you won’t sell? “Of course.” But no specifics. Will improve photo, video, “much, much better email.”

Please talk about the launch of Google Ad Exchange and its threat to you.

Schneider: “The reality is that the display marketplace is fragmented.” Our exchange (Right Media) is biggest, but it’s intuitive that there will be other exchanges. “We welcome Google.”

Why do a relaunch at all? Are consumers actually unhappy, or is it just advertisers and press and investors carping?

Bartz: “Advertisers follow consumers” and we need to “build circulation.” By doing this approach, “we get really good micro-insights for our advertisers.” She doesn’t explain how this will happen, though.

Steele: “Consumers want more from online advertising.” They’re asking for it.

What about video plans?

Bartz: “Video snacks” are crucial to consumers and advertisers. “A big emphasis” inside Yahoo. A “big cornerstone of our strategy.”

How long will campaign run? How will you measure success?

Steele: It’s funded for 15 months, and I expect it will run longer than that. Vague answers about management.

Some chat about search, which formally debuts today.

Will there be product-specific ads?

Steele: Launch of the campaign in each market will start with brand, and over time you’ll see more product ads, as “people get familiar with Yahoo again.”

One more time: Is Zimbra being shopped?

Bartz: No comment. But “what I will tell you is that Zimbra technology is very, very important to our mail system, and that’s one of the prime reasons that Yahoo bought Zimbra when it did…[but] the technology is already integrated into our system.”

How is this campaign different than other campaigns? You’ve had a lot of campaigns in the last 15 years.

Steele: I haven’t been here in past, but I’ve reviewed every campaign that has been done and this is radically different because it’s more than a campaign. Carol and Carol’s staff are all behind the concept of “you.” Everyone’s on board. “If this was just a marketing campaign or a slogan, then we’ve really failed.”

Bartz: This should remind you of the past, actually. That’s not a bad thing. On search: Search has evolved from the “10 blue links” days. She views background of search much like an Intel (INTC) chip, which everyone uses. But Dell’s (DELL) experience with that chip is different than HP’s (HPQ) experience, etc. Yahoo is stable at 19 percent of search business because users are on Yahoo and they like Yahoo search. “Yahoo search is great. It’s not Bing, it’s Yahoo search….What’s most important is that we drive upstream and provide a great experience, even though the plumbing is down here.”

Do users really like to customize their search (premise behind overhauled homepage)?

Bhat: Core group of 15 percent of users really into customization. Most other people say they want that but aren’t willing to do the work. So we’re doing incremental customization on the homepage. “This will be something that keeps growing over time.”

Will you be integrating text-messaging and other short messaging services into the homepage?

Bhat: Yes.

How is the antitrust scrutiny going (with regard to Microsoft search deal)?

Bartz: Just as we predicted. We stand by our original prediction that the deal will close early 2010.

Are we too obsessed about what’s new here?

Bartz: Yes. “People just decided to put a cloud over Yahoo’s head”…and decided that if we’re going to remove the cloud we had to show off something shiny and new. “If you get out of New York and Silicon Valley, everybody loves Yahoo.” I travel a lot and everyone loves it. “I just want to transport you guys out of this cynicism you’re in….Why are you so cynical? Why not be cynical about fricking Google? See…you got me…you got me pissed off.”

[Note. Some debate about whether Bartz used "fricking" instead of an actual curse. We'll go to tape later. Update: Apologies (and thanks to Business Insider's Nicholas Carlson, who shared his video with me). Bartz appears to have said "fricking" or "frigging" Google.]

[Sorry about interregnum there. Cursing got me wound up. Back to real-time.]

Where do you want to be in two years?

Bartz: Yahoo is the only site where you when you wake up in the morning and you want to know what’s going on everywhere about everything, you can find it one place. The company is unified around that spirit, “not about technology for technology’s sake, but about what that delivers.”

Why doesn’t Wall Street buy the Yahoo turnaround story even though Google has fared okay during this recession? 

Bartz: “Yahoo and Google are different companies. They are in different businesses…investors are somewhat like you guys, where they’re saying ‘let’s wait and see.’” About this direct comparison with Google: “We aren’t a comparable company. They aren’t us and we aren’t them.”

So whom would you like to be compared to?

Bartz: “Yahoo.” But the closest analog is AOL, actually. Google is a white page with a search box. We’re very personal. When you go to our page in India, it feels like India. Relevance is important. Personalization is important. That’s not Facebook’s strategy. That’s not Twitter. “Not to say we’re not part of the greater tech sector, and you’ve got to find some compares.” But Yahoo is unique. We’re doing okay with the world side; we have to work on the easy personalization that is the core of our product focus.

Please address the stock sale, Carol.

Bartz: “I didn’t sell anything.” I got restricted stock throughout the year; when it vests, it gets recorded as a sale. “I haven’t sold one penny of Yahoo stock. Thanks for asking, because it pissed me off when they said I sold. I wouldn’t do that.”

Q&A ends. More in a bit.

Finke moved Deadline Hollywood Daily, her one-woman operation, from LA Weekly to Penske’s burgeoning Web empire in June. At the time, she promised to hire a “senior” journalist, based in New York City, within three months.

Now Penske tells me that the new hire, whom he describes as a “well-known figure from established media,” has been locked up, is finishing paperwork, and will be on board within two weeks. Finke also promises to have hires in “London, Paris, Mumbai, Hong Kong, and Sydney” within the next year.

Not that long ago, it would have been inconceivable to see a big-name media macher go to work for a one-woman blog owned by a white-label email services provider. But now that Web publishing has lost most (but not all) of its reputation as a backwater for second-raters, wannabes and has-beens, and now that traditional publishing is on life support, it’s a whole lot more believable.

So. Who’s making the leap and jumping into the digital pool with the rest of us? (It’s great fun! You’ll love it! Unless you hate it!) A few of us have been guessing at names for a bit, but there’s no reason to keep our parlor game to ourselves.

Feel free to speculate in comments below, though you’ll have to use your real name if you do. If you’re feeling shy, you can reach me directly at peter@allthingsd.com. And if you want to be completely anonymous, which is understandable but less useful to me (I won’t have any way of reaching you for follow-up) you can use the blind tip box here.

In a post from co-founder Biz Stone, the company counsels users that, with the exception of a single account, none of their personal information seems to have been exposed as a result of the hack. But before establishing that, Stone goes out of his way to explain that Twitter’s security problems are Twitter’s security problems, not cloud computing’s security problems or Google’s (GOOG) security problems.

This attack had nothing to do with any vulnerability in Google Apps which we continue to use. This is more about Twitter being in enough of a spotlight that folks who work here can become targets. In fact, around the same time, Evan’s wife’s personal email was hacked and from there, the hacker was able to gain access to some of Evan’s personal accounts such as Amazon and PayPal but not email. This isn’t about any flaw in web apps, it speaks to the importance of following good personal security guidelines such as choosing strong passwords.

That last line seems directed at the likes of analysts like yours truly, who suggested this morning that the hack would raise concerns about the security of services that place work data on shared servers accessed via the Web. (Though the Twitter guys did seem to like my underwear-drawer metaphor. Cool!)

Stone then goes on to rattle a sword, gently but pointedly, at Web sites that have published stuff pilfered by the hacker.

We are in touch with our legal counsel about what this theft means for Twitter, the hacker, and anyone who accepts and subsequently shares or publishes these stolen documents. We’re not sure yet exactly what the implications are for folks who choose to get involved at this point but when we learn more and are able to share more, we will.

Note that while it’s easy enough to find this stuff on the Web, only a handful of mainstream Web sites, including TechCrunch, Gawker and Silicon Alley Insider, have published it, and most of what they have published is banal. I’ve asked all three sites for a response to Twitter’s response.

In the meantime, TechCrunch’s Mike Arrington, who has promised to publish more, announces in a new post that he is in the midst of “negotiations” with Twitter’s lawyers about his plans. Happy to hear from a First Amendment specialist, but I don’t think Twitter has a case against Web publishers here; the issue is an ethical one, not a legal one.

UPDATE: Here’s Gawker Editor-in-Chief Gabriel Snyder’s “bring it on” retort:

It’s hilarious to see Twitter, which has become a conduit for real-time, unauthorized information from places like the New York Times’ internal meetings, now get prissy about corporate privacy. Ev Williams seems to have learned a lot about the mores of the institutional elite during his stay in Sun Valley. As for Twitter coming after us for publishing the docs, the only thing I’m upset about is that the leaker didn’t come to us with them first.

Now Twitter, which has suffered multiple security breaches in the past, has been punctured again. Someone has gotten into the personal Web services accounts of co-founder Evan Williams, his wife and at least one other Twitter employee, and used that access to make off with a pile of confidential company documents. He’s now distributing them on the Web, and TechCrunch promises to publish many of them.

The media ethics colloquy is well underway and will go on for a while (Boomtown’s Kara Swisher is holding her session, appropriately enough, via Twitter). Beyond that, I’m pretty sure Twitter is going to be okay when this dies down.

Based on Williams’s description of the attack (see the bottom of this post), as well as both TechCrunch’s and the hacker’s descriptions of what got pilfered, this looks roughly akin to having your underwear drawer rifled: Embarrassing, but no one’s really going to be surprised about what’s in there.

The hack certainly will be worrisome for people who are using, or thinking about using, any kind of “cloud computing,” whereby work data/documents are stored on servers accessed via the Web. Google (GOOG) in particular is going to get some scrutiny, both because it’s Google and because it appears that a lot of this stuff was stolen after the hacker used Google’s “password recovery” system to root around. UPDATE: Twitter is now going out of its way to say that the attack isn’t Google’s fault, but Twitter’s fault for using passwords that are easy to guess.

Albert Wenger, a partner at Twitter investor Union Square Ventures, says in a post that his shop is currently considering moving its systems to Gmail and Google Docs, but notes the big problem: “The threat of access by a third party increases exponentially with the move to the cloud, because the machines that now contain the documents and the links to those documents (as sent by email) are accessible to the Internet at large.”

But cloud computing isn’t going away, so someone’s going to need to figure out how to make security better, yet still practical. There’s a reason no one follows the standard advice about having a different, impossible-to-remember password for every account you have. Wenger takes a stab at it in post–he suggests something tethered to a mobile phone. But whoever figures it out is going to have a lot of fans.

Williams’s description of the hack, via TechCrunch:

Yes, we did suffer an attack a few weeks ago and are familiar with this list of stuff. This is unrelated to the hack of twitter where someone gained access to user’s accounts. This had nothing to do with the security of twitter.com, and there were no user accounts compromised here.

Some notes:

- He did not actually gain access to my @ev Twitter account (or any Twitter accounts) nor any administrative functions of the site.
- There is also no evidence that he gained access to my email. There was one administrative employee who’s email was compromised, as was my wife’s Gmail account, which is where he got access to some of my credit cards and other information.
- He also successfully targeted a couple other employees personal accounts (Amazon, AT&T, Paypal…)

In general, most of the sensitive information was personal rather than company-related. Obviously, this was highly distressing to myself, my wife, and other Twitter employees who were attacked. It was a good lesson for us that we are being targeted because we work for Twitter. We have taken extra steps to increase our security, but we know we can never be entirely comfortable with what we share via email.

[Image credit: Wikimedia Commons]

And if you are that kind of person, chances are you’re interested in the new phone’s “tethering” function, the ability to plug it into your laptop and use it as a modem. But you’re going to have be patient–and affluent.

If you’re an AT&T customer, you’re not going to get the chance to do this in the near future. The wireless company has announced that it’s going to offer tethering, but hasn’t said when. Meanwhile, it has said that it will offer MMS, the ability to send videos and photos from the phone without using email, this summer. So reading between the lines, it’s reasonable to assume that tethering won’t be showing up for the next few months at the very least

And if you’re an AT&T customer, chances are that when you do get the chance to tether, it’s going to be very expensive. Like most carriers, AT&T (T) has said it is going to levy an additional charge for tethering, but hasn’t said how much. Web reports out today suggest that AT&T plans to charge $55 a month. on top of its $30-a-month iPhone data plan. As Daring Fireball’s John Gruber notes, that’s much more than wireless customers outside the U.S. pay for tethering. But it’s cheaper than the rates other AT&T customers already pony up: Blackberry owners currently pay the carrier an additional $60 a month for tethering. UPDATE: Thanks to reader Rob Campbell for catching my error: AT&T charges Blackberry users an additional $15 a month for tethering. So if AT&T really does charge tethering iPhone users $55 a month, it’s likely to be an all-in-one charge that includes the phone’s $30 data plan. We’ll see when the company finally announces pricing, whenever that is.

For what it’s worth, I’m not in the chorus of those who think that’s outrageous: I currently pay Sprint (S) $60 a month for a (pokey) wireless EVDO card with a 5GB data limit, on top of the $100 I pay for an unlimited voice/data plan for my BlackBerry.

ANOTHER (!) UPDATE: Earlier in the day AT&T refused to comment on the $55 pricing plan. Now, via their Facebook page (!), the company confirms that tethering will not cost $55 on top of standard data plans. But it doesn’t actually say how much tethering will cost. So we’re back where we started.

[Image credit: PR 1001]

The Barclays analyst figures that Amazon will be generating some $700 million a year from the oversized Kindle by 2012. Overall, he says, the Kindle line will be a $3.7 billion business then.

I still think observers are underestimating the amount of effort it will take to get colleges–which move about as quickly as a DMV line at lunchtime–to adopt the Kindles. But let’s say the gadget does make headway with administrators and faculty. Who’s going to shell out $489 a pop for a gadget when that money could go to essentials—like beer.

For starters, let’s assume that the devices will see a big price drop in three years, just like every other consumer electronics device. It’s also possible that Amazon (AMZN) works out student discounts with college campuses in the same way that Apple (AAPL) used to many moons ago.

But even at $489, Anmuth argues, the Kindle DX would pay for itself in less than three years since it could (theoretically) save students $195 a year in textbook costs.

His math:

Of course, these numbers only work if you don’t have to replace your Kindle periodically because it falls victim to a beer bong or whatever else the kids are up to these days. But what do I know? I graduated from college in the pre-email days. Maybe the young people of today take exceptionally good care of their consumer electronics…

But COO (and temporary CEO) Tim Cook’s dismissal of the netbook market will continue to spark speculation that the company is readying something that sits in between a laptop and an iPhone (which is itself a computer, of course). Silicon Alley Insider’s Dan Frommer got more of Cook’s response than I did so I’ll reprint his quote here:

“When I look at what is being sold in the netbook space today, I see cramped keyboards, terrible software, junky hardware, very small screens, and just not a consumer experience and not something we would put the Mac brand on. So it’s not a space–as it exists today–that we’re interested in, nor do we believe that customers in the long term would be interested in. That said, we do look at the space and are interested in how customers respond to it. People who want a small computer than does browsing and email might want to buy an iPod touch or iPhone. We play indirect basis. Then of course if we find a way where we can deliver an innovative product that really makes a contribution, then we’ll do that. We have some interesting ideas in this space.”

EARLIER:

Apple (AAPL) just turned in a strong quarter and followed it up with conservative guidance. A fairly typical performance for the company. Now investors will want to know about new product lines, Steve Jobs’s health and other matters. I’ll be covering the call live. Please refresh this page for the most current information. Click here if you want to listen in yourself.

Joining call now. Tim Cook CFO Peter Oppenheimer going over info that’s already in the release.

Mac products: 2.2 million Macs, a three percent decline year-to-year. Tough comparison from last year. But better than the seven percent drop in PC sales overall. “We feel very positive about our Mac performance.” Began and ended quarter with three-to-four weeks of Mac inventory.

iPod: People still buying ‘em! iPod touch selling well, and so are apps. Claims people like the new shuffle player. [Dubious about that]. We own the MP3 player market. [Duh.] Began and ended the quarter with four-to-six weeks of inventory.

iTunes store: 35,000 apps available in store, up from 15,000 a quarter ago. “We are within hours” of one billions app downloaded.

iPhones: Unless I’m missing something, absolutely no new data here. Praising new iPhone 0S 3.0 that’s in the works. Apple delayed the start of revenue recognition of all iPhones sold after the company announced the new OS, which was March 17. Will start up again once OS is released.

Stores: Half our Macs sold to people who had never owned one before. Average revenue per store is down year over year, because the economy is lousy.

Gross margins: Commodity and other component costs lower than expected. Higher-margin sales better are also than expected. Apple also spent less on operating expenses than expected.

Guidance: Forecasting is “challenging” in macroenvironment. Again, noting delay in revenue recognition for iPhones (see above). Excited about new products in pipeline, etc.

Q&A

Outlook for pricing on component supply? Mostly favorable, but some commodities, like NAND, will increase sequentially. Cook does not expect to see the level of reduction seen in calendar Q1. Will it be down? It will be “in a similar range as last quarter.”

Cash flow issues? Not really, for several reasons: 1) Apple made prepayment to…. [sorry, I didn't catch who that was]; 2) accounts payable were down, from holiday quarter to spring quarter, which is standard; 3) at $1.3 billion, tax payments were up “significantly” from last year.

Mac business: Desktops selling well, but average selling price down quite a bit. What’s going on? Sales accelerated in March after Apple announced new product launch. Higher-end Pro products sold to professionals are down a bit, which is related to economy for obvious reasons. Education sales also down a bit, for same reasons. Hoping Federal stimulus funds will help with that.

Back to netbooks–why won’t Apple sell them? Cook is still criticizing netbooks. The ones available today are ”just not a consumer experience and not something we would put the Mac brand on, quite frankly. It’s not a space today that we’re interested in, and it’s not a space we think that customers in the long-term are interested in.” But… a slight hedge with regard to smaller computers, which are, of course, what the iPhone and iPod Touch are. We “have interesting ideas in this space.” Today’s netbooks really shouldn’t even be called computers, really.

App store: What’s the mix between paid and free downloads and the iPod and iTouch mix? Nope. Apple won’t say. Again, Cook notes that we’re just “hours away” from the one billionth download. Cook: One of the keys behind the growth of iPod has been that sales of the iPod touch “more than doubled year-over-year.” The iPod and iPod Touch have reached sales of 37 million units, a big platform for developers. So there’s a virtuous cycle there.

[Sorry, missed two questions here.]

Why is Apple still doing an exclusive with AT&T for the iPhone? And how’s Steve Jobs? AT&T (T) is the best wireless provider in the U.S. “They have done a very good job with iPhone….We’re very happy with the relationship we have and do not intend to change it.” Structurally, we’re using GSM architecture, and Verizon (VZ) uses CDMA, and we wanted a world phone.

And Steve Jobs? Apple CFO Peter Oppenheimer: “We look forward to Steve returning to Apple at the end of June.” [Translation: No news.]

[Yet another question missing here. Apologies.]

Any info on DRM-free/”iTunes plus” sales? Too early to tell.

How much impact did Wal-Mart (WMT) have on Apple sales? Very key partner for the iPod. The company believes Wal-Mart provides extended reach. Pleased with results, but “early going, and not much to report there yet.”

So many iPhone Apps. How can you make them easier to find on iTunes? (Same problem as music.) Any kind of unusual patterns? Nonanswer here.

Please talk about competition for smartphones–i.e., please discuss the Palm (PALM) Pre. “Difficult to comment on products that aren’t shipping. So there’s nothing intelligent I could say on the Pre.” But “we think we’re years ahead.” We see things through software lens and that has benefited us and customers very well. Power of device and ecosystem enormous and we’re now just scratching the surface.”

What about suing Palm re: patents on the Pre, etc.? “We think that Apple’s innovation is leading the industry by years. We think competition is great; we think it makes all of us better as long as other companies invent their own stuff.”

Editors’ Note: December 22, 2008
Earlier this morning, we posted a letter that carried the name of Bertrand Delanoë, the mayor of Paris, sharply criticizing Caroline Kennedy.

This letter was a fake. It should not have been published.

Doing so violated both our standards and our procedures in publishing signed letters from our readers.

We have already expressed our regrets to Mr. Delanoë’s office and we are now doing the same to you, our readers.

This letter, like most Letters to the Editor these days, arrived by email. It is Times procedure to verify the authenticity of every letter. In this case, our staff sent an edited version of the letter to the sender of the email and did not hear back. At that point, we should have contacted Mr. Delanoë’s office to verify that he had, in fact, written to us.

We did not do that. Without that verification, the letter should never have been printed.

We are reviewing our procedures for verifying letters to avoid such an incident in the future.”

Expect this story to generate a lot of new media rulz! from the blogosphere. But you can file that in the same place you put the “Twitter is like a news wire, only better!” arguments. I’m just glad the Times can afford to have a staff big enough to verify the authenticity of every letter it prints. And I worry that this won’t be the case in the near future.