After failing to compete with search giant Google on nearly all fronts, Microsoft and Ask have opened up another one: privacy. On Sunday, Microsoft and Ask.com jointly announced a call for industry cooperation in keeping search data more private. No one believes for a minute that Ask and Microsoft sincerely believe in protecting users' privacy, but exploiting the ever-growing fear of Google is a wise move. And thus far, Google's distant rivals appear to have won an early marketing battle in the undecided war. Why this privacy move is just a publicity stunt — and why it might work nonetheless — after the jump.

The good news: Microsoft's annual revenues clocked in at a record $51 billion for the just-ended fiscal year. The bad news? Windows XP, Microsoft's six-year-old operating system, will still account for more than one in five copies of Windows sold next year. Previously, Microsoft thought XP would only be 15 percent of the mix. XP sales, in other words, are 40 percent higher than Microsoft had predicted. That's the clearest sign yet that the millions of programmer-hours Microsoft threw into Vista have been largely wasted. Aside from the people getting Vista automatically — without any choice, really — with a new PC, there's just not a lot of demand. The "Wow" is no.

Here's what's new on the Valleywag Calendar:

Having watched Little Britain, I understand this a bit better: A study by Superbrands, a survey firm, found U.K. consumers ranked Microsoft as the top brand. Microsoft? Yes but no but yes but no but yes. Microsoft. And the much-loathed software company ranked ahead of Coca-Cola and Google. Then again, the addled Brits also ranked Lego ahead of Guinness.

Shoshana Zilberberg-Winter, founder of the "original social networking site" Six Degrees, joins personal video sharing service Motionbox as chief marketing officer. Microsoft refugee Chris Brown joins as vice president of engineering.

Compete, the website-measurement startup, announced that Microsoft had boosted its share of U.S. search queries by two-thirds from May to June. Microsoft's share is still small: It grew from 8.4 percent to 13.2 percent of the total market, largely at Google's expense. So how did it do it? The answer is simple: payola. Microsoft's Live Search Club offers prizes to search users. But other search engines have offered similar payoffs to spur traffic with far less dramatic results. Here's why Live Search Club is succeeding as a payola scheme — but failing as a business maneuver.

Literal-minded naming is a helpful trait in a programmer. For a brand marketer, it's utter disaster. The geek-centered culture at Microsoft has produced such monstrosities as "Windows XP 64-Bit Edition For 64-Bit Extended Systems." Paging the Department of Redundancy Department! News.com explores how David Webster, a recently hired branding expert, is upping Microsoft's name game. Last year, Robert Scoble talked to Webster about how he was trying to ban supposedly "cool" codenames that didn't pop on Google searches; now, Webster's trying to advance consumer-friendly names like Silverlight, Popfly and Surface. Certainly an improvement over past atrocities like Microsoft Desktop Optimization Pack — oh, wait. That's a present atrocity. Back to work, Webster.

Everyone's still talking about Henry Blodget's facile guess on his Internet Outsider blog that Microsoft might offer $6 billion for Facebook, the social network of the moment. And Facebook investor Jim Breyer, the Accel Partners venture capitalist who's on Facebook's board, tried to stoke hopes for such an outsized valuation by casually mentioning at Fortune's iMeme conference that Facebook was on track to do $100 million in revenues and turn an operating profit, by some financial measures, this year. But you shouldn't buy Blodget's musings, or Breyer's shilling, for a moment. Here's why.

Windows Vista... pretty much sucks. [San Jose Mercury News]

Microsoft is looking to put Blockbuster out of business. How? Having added 100 gigabytes of storage to the Xbox videogame console, enough to store dozens of high-definition movies, it's now undercutting Blockbuster's rental fees for download-to-rent movies. Microsoft's rental charge — about two bucks — is low enough that some think it will hurt DVD sales, too. [MonstersandCritics.com]

Okay, okay. We don't know if Microsoft cofounder and tech-investing dilettante Paul Allen has actually moved into it. But the Dubai Luxury blog reports that he's shelled out $12 million on a yellow submarine. A 40-foot-long yellow submarine. You're a Beatles fan, Paul; we get it. But Paulie, baby, want to know why your net worth is only a third that of fellow Microsoftie Bill Gates? Dumbass purchases like this.

Sun Valley, the quiet Idaho ski resort town, is about to get a charge from Silicon Valley. Allen & Co., the New York investment bank, has been holding an exclusive conference there for 25 years, but until recently, the invite list has been limited to old-media moguls. On the invite list for this year's conference, which kicks off tonight: Jay Adelson, CEO of Digg, the social-news website, which he cofounded with Kevin Rose. Here's why we think Adelson's on the list — and who else might show up.

Yahoo leads Microsoft and Google (in Asia) [ComScore.com]

In elections, some voters matter; some don't. And Hillary Clinton has just told a powerful Silicon Valley constituency — graduates of India's most prestigious technical school — that they just don't rank an in-person visit. Clinton was supposed to give a keynote speech in Santa Clara today at the Indian institute of Technology 2007 Global Alumni Forum, an event sponsored by Google, Yahoo, Cisco, and Microsoft. But earlier this week, she announced that she'd be MIA. What's she doing instead?Why, she headed off to New Orleans, where she's vying with Barack Obama for African-American votes at the Essence Music Festival. Good luck with that. Sure, Clinton's still going to address the IIT conference — by satellite. That will hardly lessen the sting for the IIT alums, a brainy group which includes venture capitalist Vinod Khosla and Rajeev Motwani, the Stanford professor who advised Google cofounders Larry Page and Sergey Brin. And it also can't send a good message to sponsors like Google, which surely counted on Clinton's presence to score them points with the IIT engineers who make up a good portion of their staff. (Photo by Getty Images)

Microsoft looks to take advantage of Canada's immigration policies, announces plans to open a software development center in film- and drug-friendly Vancouver. [AP]

Earlier today, Valleywag pointed out that it's the perfect time to release bad news. But what if you want and need to release good news into the vacuum left in iPhone's wake? Scheduled to hit the one million unit milestone, Microsoft's Zune group is facing this very decision. With little over two days left in June, did they miss their projections, decide to skip an announcement entirely, or are they waiting to position their release squarely against the din of iPhone mania?

Late to the blogging game and caught in the throes of newbie enthusiasm, Netscape cofounder Marc Andreessen hasn't yet learned the virtues of thinking before clicking the "Publish" button. Here's the story of the post he quickly came to regret.Andreessen picked up a recent Valleywag item on Microsoft's "people ready" ad campaign. In an ethically questionable deal, Federated Media bloggers agreed to tout the slogan. That, in turn, inspired him to claim that blog.pmarca.com is "so not people-ready." (A Google search still shows the missing post.) The Andreessen of the '90s was a famous Microsoft trash-talker, and this seemed like a reversion to form - but not for long. Almost as soon as he wrote it, he reconsidered and deleted the posting. Could his cowardice have anything to do with the booming business that Opsware, his boring but modestly successful software company, does with the giant of Redmond?

Google v. Microsoft can only help Apple. [Forbes]

They couldn't get it together, leaving Rupert Murdoch's offer the only bid on the table for now. [WSJ]

Ever caught yourself saying you Googled something, then realizing you were talking to a Yahoo developer? Or wondered whether it's okay to talk about iTunes to a friend from Microsoft? Obviously, not everyone gets worked up over corporate rivalries. (Most, but not all, of my Yahoo friends don't give a damn about whether I like using Google.) Here's a guide to which feuds are real and which are trumped up, by rating each rivalry on the 5-point tension scale.