August 03, 2005 | Hot Chat Gives Lazarus a Rise

San Francisco Chronicle business page columnist David Lazarus often does great work taking on large corporations' shoddy privacy practices and predatory financial business moves, combining some reporter's legwork with a dose of indignation.

But today, Lazarus decides to get condescendingly moralistic on Microsoft and Ebay for holding minority stakes in a company that sells over-the-phone computer tech help, psychic readings and sex chats.

The two West Coast tech titans, along with the influential Washington financial firm, are investors in a small San Francisco company called Ingenio, which offers pay-per-minute telephone advice on a variety of topics.

Some of those topics, such as accounting and personal finance, will cause no eyebrows to be raised.

Others might seem, well, a bit unusual for respectable outfits like Microsoft and eBay, not to mention Carlyle, which in recent years has counted among its associates the likes of ex-President George H.W. Bush and former Secretary of State James Baker.

One Ingenio service, NiteFlirt, essentially serves as an online mall at which customers can choose from among hundreds of purveyors of pay-per-minute phone sex.

Another service, Keen, is a dial-a-psychic site that links the spiritually needy with assorted pay-per-minute clairvoyants, pet psychics, astrologers and people claiming a pipeline to "voices from beyond."

Ingenio supplies the online forum through which independent practitioners of these exotic skills seek customers, as well as the technology to facilitate calls.

The company also gets a 20 percent cut of all calls made through NiteFlirt and Keen, which typically cost between 99 cents and $4.99 a minute (although some calls can run considerably more).

Microsoft declined to comment on its relationship with Ingenio.

EBay spokesman Hani Durzy said the San Jose company's roughly $2 million stake in Ingenio resulted from an earlier promotional agreement that's since expired.

He said eBay wasn't aware of Ingenio's phone-sex business. In light of this, Durzy said, "we are evaluating this investment."

Yes, that's right. Lazarus just "exposed" that Microsoft and Ebay each have a two-percent minority investment in a company you have hardly heard of that they probably forgot they owned.

Now, oddly, I happen to know something about this operation. Back in 2001, Keen handled all of these services in one storefront where people could search for someone to talk to about what firewall to install, what game codes unlocked the tomb of death in Doom 7 or how Catholic schoolgirl skirts made them feel the right kind of funny.

Back in the days when I worked for a small search company working to make corporate search better, Keen was our only client.

I spent much time building dictionaries so Keen users could find the right person to talk to about their problem or carnal itch. It's not easy to present useful results for queries such as "word hangs" "spirit world" and "ages of empires."

Sadly, it was very clear from the search logs that while Keen really wanted to make its money from technical computer help and advice on how to cook Peking duck, people really just want to know the future and talk dirty.

Now that's not too hard to figure out from how what people were willing to pay for over the phone before the invention of a browser, but you can't blame Keen for trying to create a new market (and to some extent it has).

Now it seems Keen has broken out the sex, psychics and other phone services into several different, more focussed sites.

But Lazarus is shocked, shocked, shocked to find that sex and horoscopes are on the Interweb.

Next time, he's looking to figure out who gets paid from such tawdry pursuits perhaps he can check his own pay stub since his newspaper's online presence has, you guessed it, a horoscope page, a feature devoted to sex-based weird news, and a now dormant series devoted to the sex industry, and a page that provides the luckless and ignorant with the day's lottery numbers.

Posted by Ryan Singel at August 3, 2005 10:44 AM

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