Bitcasa, snake oil, etc

I’ve watched with some amusement the controversy between CrunchFund and TechCrunch and whether Mike Arrington can successfully / fairly cover the startups that he writes about / promotes. On the general question, I have no idea, and I do think Mike has unfairly taken the brunt of the firestorm here when lots of other publications or their parent companies have investments in venture funds. (The NY Times and Giga Om among them.) Also AOL not just approved of the situation, they invested $10m in the fund, so it’s a little disingenuous to give Mike a hard time about it now.

But on the other hand, let’s take a specific case:

Here are some great quotes from the article:

But Bitcasa is not like any of those services. It doesn’t move files around. It doesn’t sync files. It deals in bits and bytes, the 1′s and 0′s of digital data.

I’m sure I shouldn’t make fun of technology reporters who obviously don’t understand anything about technology. Here’s another great quote:

And because the data is encrypted on the client side, Bitcasa doesn’t even know what it’s storing. […] Even if the RIAA and MPAA came knocking on Bitcasa’s doors, subpoenas in hand, all Bitcasa would have is a collection of encrypted bits with no means to decrypt them.

While this is highly unlikely, it is technically possible. However:

Sharing files via Bitcasa is simple too: just copy and paste a file’s or folder’s link (a URL, available on right-click)

One wonders how Bitcasa can deliver an unencrypted version of the file or a URL that contains one if they don’t have the secret key. And finally there is this:

Using patented de-duplication algorithms, compression techniques and encryption, Bitcasa keeps costs down (way, way down, but that’s it’s secret sauce)

Oy. “Patented” (I’m guessing they mean patent pending) proprietary encryption algorithms that somehow let you de-dupe files without knowing what files you actually have. This seems almost certainly like snake oil. You could be comparing encrypted files if all your users share the same encryption keys but of course this means that it would be very easy to figure out which files each user was really storing and the benefit of encryption is lost.

That a startup would be making somewhat overblown claims is not so surprising to me, but what bothers me is the breathy press-release quality of the post. And at the end of the post you see it:

Disclosure: CrunchFund is an investor in Bitcasa. 

It turns out Sarah Perez claims she didn’t know Bitcasa was an investment of CrunchFund when she did the interview. I’m assuming that’s true. But the optics are certainly bad. Imagine a hypothetical meeting where Mike Arrington says, “Hey Sarah, will you interview these Bitcasa guys? They seem great.” Sarah might get positively biased without even realizing that she’s talking about a company her boss has invested in.

Certainly this kind of situation makes me less likely to take what TechCrunch writes seriously.