DVD rental gimmick challenged

Hollywood movie studios are challenging a gutsy startup that thought it had found a loophole to make the latest hit movies available for instant viewing online long before they are available on Netflix or Redbox.

Zediva tried to circumvent the fact that it didn’t have licenses to stream movies online. It lets customers rent a DVD and a player that are physically located in the Silicon Valley.

But the Motion Picture Association of America said Zediva’s approach is illegal. Six studios, including Warner Bros., Columbia Pictures and Disney Enterprises, filed a federal lawsuit in Los Angeles last week against Zediva’s parent company, WTV Systems and founder and CEO Venkatesh Srinivasan.

The company launched its service to the public last month, after spending two years developing its technology. It only lets one user rent a DVD at a time, so if it buys 20 copies of a DVD, only 20 accounts can watch it at the same time. It costs $1.99 to rent one movie or $10 to get 10 movies.

Pandora info sharing investigated

Online radio service Pandora has received a subpoena from a federal grand jury investigating whether popular smartphone applications share information about their users with advertisers and other third parties.

Pandora says it believes it is one of many companies to receive subpoenas in a probe into the information-sharing practices of publishers that make apps for the iPhone and other Apple Inc. devices, as well as smartphones that run on Google Inc.’s Android operating system.

Pandora says it shares information with third parties to help it track how users interact with the service and to deliver targeted advertising. The disclosure comes at a time of mounting concern about Internet privacy in Washington and growing unease about the vast amounts of personal information that companies are scooping up online.

Amazon starts music, video storage

Amazon.com wants to be more than a destination for shopping online – it also dreams of being a place where you can store your music, photos and videos and access them any time, from any computer.

The online retailer launched two new offerings last week: Amazon Cloud Drive and Amazon Cloud Player. The first lets you upload and store files like music, videos and photos on Amazon’s servers, which you can get to from a Web browser on a Mac or PC. The second lets you play songs you’ve uploaded on your computer or on a smartphone that runs Google’s Android operating software. The “cloud” in the services’ names refers to the practice of storing content online and streaming it to a computer over the Internet.

Amazon’s move is beating Google Inc. and Apple Inc., which are believed to be working on similar services.

Google to bid for Nortel patents

Google Inc. plans to bid $900 million in cash for Nortel Networks’ patent portfolio in a bankruptcy auction scheduled for June.

Nortel, the Canadian maker of telecommunications equipment and computer networking gear, has selected Google’s offer as the “stalking horse bid” to serve as the starting point in the bidding process.

Ontario-based Nortel has been selling its operations piece by piece since it filed for bankruptcy protection in  2009.