By Michal Lev-Ram

Sprint CEO Dan Hesse has been in office for just three months, but he’s already starring in the company’s latest television commercial — an ad for its new unlimited pricing plan, which offers both voice and data for $100 a month.

The black-and-white ad is the first in Sprint’s (S) new branding campaign, which will emphasize a more “immediate approach” to customer service and highlight the “capabilities” of the company’s products, according to a release issued by the company early Monday.

Last month, Hesse told Fortune that his number one priority is improving customer service, followed by rebuilding Sprint’s brand. The key to the company’s new identity, he said, would be building on its wireless data services like text messaging, Web surfing, videos and music and navigation.

“Every carrier in America does voice well — it’s really not a differentiator anymore,” Hesse said in a phone interview late last month. “You need to define what position you can occupy that is different and then execute around that.”

Sprint’s unlimited “Simply Everything” plan was announced after Verizon Wireless (VZ), AT&T (T) and T-Mobile unveiled similar plans. But Sprint’s was the only one to include full data services in addition to unlimited calls.

But even Hesse, who implies that the new unlimited plan is revolutionary in the new ads, admits that “Simply Everything” is not enough to fix the company’s many problems. Last month, after Sprint posted a fourth-quarter loss of $29.5 billion and a continued decline in subscriber numbers, Hesse told investors that a turnaround will not happen for “many quarters.”

By Yi-Wyn Yen

Microsoft on Friday bought Rapt, a San Francisco-based online ad management firm, for an undisclosed sum. The move came three days after Google cleared its $3.1 billion acquisition of the ad serving company DoubleClick.

Both acquisitions are a sign of the heated battle between the search giant and the software giant for a share of the growing display advertising market. Microsoft (MSFT) has made aggressive moves into that market ever since Google (GOOG) announced its intention to buy DoubleClick last April. Since then Microsoft has spent $6 billion to buy aQuantive, an ad network that competes with Google’s AdSense, and last month made an unsolicited offer of more than $40 billion to take over Yahoo (YHOO). The Wall Street Journal reported that executives from both Microsoft and Yahoo met near Yahoo’s headquarters in Sunnyvale on Monday to have informal talks for the first time.

Microsoft sees its newest acquisition as a way to compete with Google’s DoubleClick, which serves ads for both advertisers and publishers. By adding Rapt, an inventory management software service for publishers, Microsoft now works with half of the top 25 online publishers, including Yahoo, CNET, and Fox Interactive Media (NWS).

“This is certainly an interesting and relevant move for Microsoft,” Rapt CEO Tom Chavez told Fortune. “Our approach is that publishers are customers. They need to know what their inventory is, where they’re losing and making money. We’re betting that publishers are going to need access to the technology to manage that. Microsoft’s approach is that we need to give folks choices.”

By Michal Lev-Ram

The virtual world is looking for a new real-life leader. Linden Lab chief executive Philip Rosedale, the man who created popular online community Second Life, announced Friday that he is relinquishing his CEO duties but will remain at the company as chairman.

According to San Francisco-based Linden Lab, Second Life users spend nearly 30 million hours on the site per month, interacting with each other through avatars, or three-dimensional computerized versions of themselves, and creating and selling virtual goods like real estate and clothes. Many companies have used Second Life for marketing purposes or to create online storefronts, and several countries even operate virtual embassies on the site.

But the rate of new members has slowed recently, and the company has struggled with Second Life scams like virtual bank defauls.

Linden Lab, which launched Second Life in 2003, said it is looking for a new leader with more “management and leadership expertise” who can expand the business.

“This is a normal and natural evolution rather than a crisis-driven move,” current Linden Lab chairman Mitch Kapor told Fortune Friday. Kapor added that a key requirement for the company’s next leader will be his or her “chemistry” with Rosedale.

In a blog post titled “Changing my Job,” Rosedale said relinquishing his post would allow him to focus more on product strategy and vision.

“Second Life is my life’s work, and I am not going anywhere,” wrote Rosedale.

By Yi-Wyn Yen

Its $1.9 billion bid to buy rival Take-Two (TTWO) having been rejected by management, video game giant Electronic Arts took its case directly to the shareholders Thursday morning.

At stake is the future of Grand Theft Auto, a relentlessly violent action-adventure that has grown into one of the most valuable video game franchises in the business. Earlier this week, Take-Two raised its sales estimates for the current quarter to $400-$500 million, based on pre-orders for the next version of the game, Grand Theft Auto IV, due out April 29.

With the new release just weeks away, EA (ERTS) wants to close a deal quickly. The company has been on a buying spree of late to replace its own aging franchises — such as the Madden Football series. It is offering Take-Two shareholders the same $26 a share that the company’s management had already turned down. Its offer is set to expire on April 11, the day after the Take-Two’s annual shareholder’s meeting — putting maximum pressure on the company’s leadership.

Take-Two executives have repeatedly said that $26 a share is too low, but their shareholders may disagree. Take-Two’s two biggest, Oppenheimer and Fidelity, have sold a significant portion of their shares for less, it was revealed earlier this week. Oppenheimer has cut 50% of its holdings to 8.8 million shares and now has an 11.5% stake in the company. Fidelity’s stake is now down to 2.75% from 14.7%.

“EA may have offered more if Take-Two had come to the negotiating table,” said Colin Sebastian, a gaming analyst with Lazard Capital Markets. “But there was no bidding war going on. EA thinks shareholders may be more favorable to the deal.”

“This is a great opportunity for Take-Two shareholders,” said EA chief executive John Riccitiello in a statement. “We believe Take-Two investors will see our tender offer as the best way to maximize the value of their investment.”

Shortly after, Take-Two urged shareholders to “take no action.” Take-Two’s board said it would review the offer and instruct shareholders of its decision within 10 days.

By Michal Lev-Ram

After over a year of development, testing and refining, online video service Hulu launches Wednesday and viewers will get to chance to see if it lives up to all the hullabaloo.

A joint venture between News Corp.’s Fox (NWS) and NBC Universal (GE), Los Angeles-based Hulu says it aims to bring together the widest selection of free, “premium” videos on the Web. But unlike Google’s YouTube (GOOG), where unauthorized clips often end up, Hulu’s content is the result of pre-established partnerships with entertainment companies like Lionsgate (LGF) and Sony Pictures Television.

When plans for the then-unnamed site were announced last year, many ridiculed the idea, saying “old media” doesn’t get the Internet. But when Hulu gave select viewers a look at the site, some critics changed their tune. The company received rave reviews for its site’s ease-of-use and simplicity.

The site features more than 250 television shows and 100 full-length feature films from Fox and NBC as well as content from companies like Warner Bros. Television Group (owned by Time Warner (TWX), the parent company of Fortune and CNNMoney). Clips of other shows — including Saturday Night Live — will also be available on the site.

So far Hulu has failed to sign on two other big television networks: ABC (DIS) and CBS (CBS).

Still, industry insiders say the marketing potential of Fox and NBC — makers of hit shows like “Deal or No Deal” and “24″ — is huge.

“The networks have the power to do big things with online video,” says Morgan Guenther, CEO of interactive media startup AirPlay and the former president of TiVo. “If they do it right this thing will definitely have legs.”

Unlike YouTube, Hulu has an ad network already up and and working at launch time, though its lineup of advertisers is still limited. Hulu is experimenting with letting viewers choose which commercials they watch, and doesn’t let them fast forward through ads.

But like its rival YouTube, Hulu is also encouraging viral distribution. People can edit shows down to a few seconds and then e-mail those clips to friends. They can also embed videos on blogs and their MySpace or Facebook pages.

By Yi-Wyn Yen

There’s a lot riding on video game publisher Take-Two’s launch of the highly-anticipated game, Grand Theft Auto IV.

The game is Take-Two’s bargaining chip in its efforts to block Electronic Arts’ (ERTS) hostile takeover bid. Take-Two (TTWO), which rejected EA’s $1.9 billion buyout offer last month, raised its current quarter guidance for profits on the expectation of strong sales for Grand Theft Auto, which will be released April 29.

Take-Two on Tuesday reported net revenue of $240 million for the first fiscal quarter, which beat analysts’ estimates of $211 million, according to Thomson Financial. Take-Two forecasted $450-500 million for the following quarter with the bulk of revenue coming from GTA sales. The company’s shares rose 2.65% to $25.30 in after-hour trading Tuesday.

Take-Two thinks EA is low-balling with its offer to buy the company at $26 a share. “The EA proposal failed to value Take-Two’s extensive portfolio of top-selling brands and our extraordinary creative and human assets,” said chairman Strauss Zelnick on the company’s earnings call Tuesday afternoon. “[EA] ignored the tremendous operational progress we’ve made in the past year and our solid plan going forward.”

The company notified the Securities and Exchange Commission last Friday that it would sweeten severance packages for its full-time employees if a change in ownership results in layoffs. Yahoo (YHOO) has made similar moves with its efforts to block Microsoft’s (MSFT) hostile bid. And like Yahoo, Take-Two has been slapped with a shareholder lawsuit for rejecting an unsolicited offer.

Take-Two reiterated its position that it does not plan to talk to EA until after the release of Grand Theft Auto. When pressed by UBS analyst Ben Schachter if the company plans to change its stance, Zelnick replied, “We disclosed everything. It’s all out there in the public. There’s nothing new to say.”

By Yi-Wyn Yen

With the European Commission blessing Google’s $3.1 billion purchase of ad network DoubleClick, the question on everyone’s lips is, what now?

After nearly a year of waiting to close its largest acquisition, Google chief executive Eric Schmidt is wasting no more time folding DoubleClick into the company. “That work will begin in earnest now,” he said in a blog post.

Schmidt said that the Mountain View-based company will begin the integration process by seeing how many of its nearly 17,000 employees overlap with the 1,500 at DoubleClick. Google (GOOG) says it will sort out the staff integration by early April and that there may be layoffs. Schmidt did not indicate how many jobs will be cut and if the company plans to move DoubleClick, headquartered in the media capital of New York City, to the Googleplex.

Beyond Googlers with jobs at stake, many industry watchers wonder how a Google-DoubleClick merger will change the online advertising landscape. Google, which built its business with search advertising, can now aggressively move into the graphical advertising market with DoubleClick. A Google spokesperson says the company is currently not providing further details of the integration.

Privately, some ad networks say they fear a two-headed Googzilla. Google’s DoubleClick is one of the leading companies which targets banner ads for both advertisers and publishers with its Dart technology platform. Google’s AdSense is the leading ad network that supplies text-based ads for both advertisers and publishers. Some speculate that Google won’t keep DoubleClick as a separate entity and will join to create a super-sized ad network. These people say they worry that Google now has too much information and can use it to squeeze out other players like AOL (TWX) and Yahoo (YHOO) that primarily focus on the display ad business.

Even if an explicit integration doesn’t happen, a Wall Street analyst estimates that Google will instantly gain a huge share of the graphical ad market, which will reach an expected $28.6 billion by 2010. “Google will now have behavioral data from search, e-mail, video, and web usage on network sites,” JP Morgan analyst Imran Khan wrote in a report. “We believe this will allow the company to provide much better ad targeting, leading to increased CPMs on DoubleClick sites.”

Microsoft (MSFT), Google’s chief opponent of the DoubleClick must speed up its proposed takeover of Yahoo if it has any hopes of catching up to Google. A Microsoft spokesperson reiterated on Tuesday that Google’s acquisition of DoubleClick justifies a need for a powerful No. 2 player.

That echoes what Brad Smith, Microsoft’s general counsel, said last month: “The reaction from publishers, which includes a lot of the media companies, has been very positive. They have been encouraging us to make this kind of acquisition…. This is the right kind of step that is going to create a more compelling and competitive number two in the marketplace.”

By Michal Lev-Ram

Yahoo said Tuesday that it is opening a new R&D lab in Haifa, Israel. Its new digs will be located in the same high-tech park where both Microsoft (MSFT) and Google’s (GOOG) Israeli research and development operations are located.

Yahoo (YHOO) has recently increased its business activities in Israel, inking a strategic deal with Israeli portal Walla and buying up a local online music startup called FoxyTunes last month. But the real motivation for opening a lab — its first in the region — is to use the country’s technological know-how to explore and develop new search and advertising technologies.

“The Yahoo Research Israel Lab, which opens today, will focus on boiling down complex technology problems into simple solutions to change the game in web search,” Yahoo said in a statement Tuesday.

The company opened another research lab in Bangalore, India, earlier this month.

By Michal Lev-Ram

A New York federal judge has ruled that Viacom will not be able to collect punitive damages in its $1 billion copyright suit against Google’s YouTube.

Viacom (VIA) sued YouTube (GOOG) for copyright infringement in March 2007, saying the popular video site has “built a lucrative business out of exploiting the devotion of fans to others’ creative works.” At the time, Viacom also said that almost 160,000 “unauthorized” clips — snippets of programs like “The Daily Show” — had been available on YouTube.

But Viacom’s recent attempt to add a claim for punitive damages — sometimes awarded on top of compensatory damages to discourage the defendant from engaging in similar conduct again — was denied. U.S. District Court Judge Louis Stanton ruled that copyright law does not allow for punitive damages, saying that “…the Supreme Court has long held that ‘the protection given to copyrights is wholly statutory.’ “

Of course, the recent ruling doesn’t say anything about the final outcome of the court battle between the two companies, which is still a long way from over. And if Viacom wins the case, it can still collect statutory damages ranging from $750 to $30,000 per violation (and up to a whopping $150,000 if they can prove the infringement was committed willfully).

Google has maintained that it is working with big media firms to resolve copyright issues with YouTube. Some companies, like Universal Music Group, have decided to partner with the search giant. But Viacom said last year that after a great deal of “unproductive negotiation” its only option was to “turn to the courts.”

Neither company could be reached for comment.

By Yi-Wyn Yen

European regulators are expected to clear Google’s $3.1 billion purchase of online ad company DoubleClick, as early as Tuesday.

Despite Google’s dominance in online advertising, which will likely increase once it acquires DoubleClick, regulators argue there’s still plenty of room for competition in the nascent market. Microsoft hopes to challenge Google by combining forces with Yahoo. However, a potential Microhoo may run into resistance from European regulators who view Microsoft as a software market abuser .

While Google (GOOG) would not speculate on the ruling, industry watchers have been expecting the European Commission to approve the merger since the Federal Trade Commission cleared the deal of antitrust issues in December. A Google spokesman in London said the company anticipates an announcement sometime before the April 2 deadline because European regulators typically do not wait until the final day to make a ruling.

An EC approval removes the last obstacle Google needs to complete the DoubleClick acquisition.

Privacy advocates and rivals like Microsoft (MSFT), have been trying to block merger. Privacy watchdogs have warned that a combination of Google, which keeps logs of a user’s searches, and DoubleClick, a technology platform that tracks which sites a person visits, would be disastrous. But both the FTC and EC have stated that it will only rule on antitrust issues, not privacy concerns. Microsoft has argued that a merger with DoubleClick, which serves ads, would make Google too powerful and prevent competitors from serving and selling ads.

Despite Microsoft’s efforts, the EC is expected to side with Google. The Mountain View, Calif.-based company has argued that nothing prevents one customer from switching from one ad platform to the next. If you want to go to Microsoft or Yahoo (YHOO), no one is stopping you. When Viacom (VIAB) dumped Google to strike a major ad deal with Microsoft, Google was quick to spin it as a positive. “We have argued all along that the online advertising space is highly competitive and that there are no barriers to switching,” a Google spokesman said last December about the deal.

Others agree that Microsoft had a weak case. “The possibility that Google could increase its market power with DoubleClick is quite limited. Internet advertising is a very active market,” said Juan Delgado, a former antitrust official who now is a research fellow at Bruegel, an independent economic think thank in Brussels. “Google is a very powerful player in online advertising, but there’s no secret to this business. It’s similar to MSN or Yahoo. Google’s just more successful.”

Some analysts say that Microsoft’s bid to buy Yahoo for more than $40 billion could raise tougher antitrust concerns, especially in Europe. Last month Europe’s antitrust director Neelie Kroes slapped Microsoft with a record $1.3 billion fine for overcharging competitors for information on how to develop products for Microsoft’s dominant Windows operating system.

“Microsoft has a long history of abusing its market power in certain markets. Google, on the other hand, doesn’t,” said Rebecca Arbogast, a regulatory analyst with Stifel Nicolaus.

Both advertisers and publishers have said that they would like an alternative to Google, even if that means combining the forces of No. 2 and No.3 Yahoo and Microsoft. Should the marriage happen, Google will likely lead an effort to oppose it. Beyond a combined advertising network, MicroHoo would share other broader services that include 90% of free e-mail accounts and a majority of instant messaging accounts, portals and browsers.

Said Arbogast: “The European Commission is concerned about the concentration in online advertising. They are also concerned about privacy. They have a general unease about these American companies bulking up and that the U.S. [government] hasn’t been more vigilant. They’re suspicious of Microsoft and view it as a bad apple. It’ll be interesting to watch their analysis if Microsoft and Yahoo strike a deal.”