Data Sheet—Tuesday, June 16, 2015

Good morning, Data Sheet readers. Virtual reality will be a big theme at this week’s big entertainment technology shindig, but is society ready for the implications? Both VMware and Microsoft have Docker on the brain. Plus, Facebook is applying artificial intelligence to photo curation, its latest algorithm for controlling the digital content that appears on profiles without people entirely realizing it. By the way, I’m working remotely for the rest of the week at a conference and then a long weekend in New Hampshire. I apologize in advance for being more terse than usual. Enjoy your Tuesday!

TOP OF MIND

The business of games. The E3 conference, aka the Electronic Entertainment Expo, is now two decades old and nearly 300 companies will crowd the event this week—hawking everything from mobile games to smart toys. Two companies with an especially notable presence, Microsoft, which is fighting back in the game console segment; and Bethesda Softworks, a respected developer that is “leveling up” to take on Electronic Arts and Activision.

One uber theme at the gathering is virtual reality. With new technologies from Oculus and Sony vying for attention, you can expect the debate over etiquette to mature. If you thought competing with smartphones and tablets in meetings was distracting, imagine what’s next. Headsets in the boardroom?

“It creates these lifelike experiences in a space pretty abstracted from the real world,” one venture capitalist told The New York Times. “That has the opportunity to amplify both the positives and negatives of human nature.”

Europe’s proposal for a union-wide data protection policy advances. The new regulations, which must be considered by the European Parliament, carry stronger provisions for safeguarding personal information shared via online services. They limit “profiling” and also require service providers to delete information if requested.

VMware, business mobility innovator? As it faces tougher competition from new approaches to data center management, particularly “containers,” the software company is talking up its mobile portfolio. Its biggest investment so far was last year’s $1.2 billion buyout of AirWatch. Now, VMware is hiring mobile sales specialists and investing in identity management.

Facebook is teaching computers to see. Its new Moments service uses artificial intelligence for facial and image recognition applications. The initial goal is to help people organize group photos and let them decide whether or not certain ones should be posted or obscured. Over time, however, the technology could become instrumental in curating images and content people see on their profiles.

An important heads-up from LastPass. The popular password “vault” service disclosed a troubling security breach. Among the information compromised: email addresses and password reminders.

That’s pretty crafty. For its next act, Etsy plans to loan merchants funds for making new products. “What are the best ways to help them grow and scale? A lot of sellers identified financing as a big hurdle to growth,” Etsy product manager Joe Lallouz told The Wall Street Journal.

Female CIOs expect bigger budgets next year than their male counterparts. One possible reason: they tend to push for deeper digital resource investments.

Piracy versus profit. Livestreaming apps like Periscope and Meerkat are creating new tensions between mobile gadget users and digital rights owners. An intellectual property attorney and video streaming executive discuss this new form of media infringement.

THE DOWNLOAD

Why it makes sense for Microsoft to buy hot cloud startup Docker

A successful acquisition of Docker could give Microsoft Azure a good measure of credibility both in open source projects and containerization. Fortune’s Barb Darrow and Jonathan Vanian report on why the union would mean for businesses.

If Microsoft is not weighing a bid to buy hotshot container startup Docker, perhaps it should be.

The idea, talk of which cropped up late last week, is intriguing and a purchase would be a bold move by Microsoft CEO Satya Nadella, who is trying to position the company's Azure cloud as the cloud-of-choice for businesses, but as part of that effort also a first-class home for containers and for open-source software.

Docker is an open-source container technology that lets companies package up applications in a lightweight way so that they can run on different sets of infrastructure with minimal tweaking. To confuse matters, Docker is also a venture-capital-backed startup, once known as DotCloud, that is commercializing this technology and is reportedly valued at over $1 billion.

Businesses are excited about containers, a type of virtualization technology, because it can make developing applications easier while streamlining data-center operations.

Neither company would comment, but a source close to the container ecosystem said a Microsoft acquisition of Docker, would give the software giant huge container credibility, provided it was handled right. An acquisition would also mean that Microsoft wouldn't have to align itself too closely with Google, which is leading its own charge with a container-management service called Kubernetes.

“Google is broadly partnering but wants to be the best place to run containers. If Microsoft, however, can own Docker, keep it open source and build a quality orchestration layer, it could win on the PR front and look very good on the tech front,” said one source who keeps close tabs on the container ecosystem. Microsoft works with Kubernetes, he added ,but “I doubt it wants to bet its future on Google/open-source tech that it does not own.”

ALSO WORTH SHARING

Music to the industry’s ears? Apple is refuting reports it negotiated sweet deals with music owners and publishers for its new streaming music service, aka the Spotify rival. It wants people to know it will pay approximately 70% of its revenue in rights, reports Re/code.

Why Facebook is putting its next European data center in Ireland.

False alarm. Dropbox still needs a chief product officer, because Google’s Neal Mohan is staying put, reports Re/code, which started the rumor in the first place.

Meanwhile, digital note keeping service Evernote is seeking a new CEO, according to the current one.

Diversification? The European investment arm for tech manufacturing giant Foxconn just led a $25 million round in a French Internet of things startup.