Web annotation is a sexy and increasingly crowded space in the market. As in any such pool, the amount of elbow-rubbing between individuals and similarity between products can lead to suspicion of theft.

Annotation startup Reframe It, a 14-person team, claims that Google’s (GOOG) hot new product Sidewiki crosses the line between competitive innovation and IP infringement.

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According to a Bloomberg report this morning, early-stage startups have a new friend in very high places.

The U.S. Commerce Department is establishing a new Office for Entrepreneurship and Innovation specifically to help entrepreneurs develop great ideas into workable business plans by giving them training, funding, advisement, access to data, and a big pair of federal-sized scissors for cutting through the red tape of starting a new business.

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Some people go to Washington to try to make the government more honest; others try to make it smaller. Technologist Tim O’Reilly is spending time in Washington, and bringing Washington officials to San Francisco, to do something different–perhaps something more realistic. O’Reilly is trying to help government become a platform for innovation.

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Recently, Palm (PALM) came under fire when programmer Joey Hess discovered the Pre’s smartphone OS was sending users’ GPS locations back to Palm on a daily basis. Although this information was disclosed in the company’s privacy policy, the majority of the phone’s owners were unaware. The incident raised questions about consumer privacy and the extent to which both handset makers and developers were gathering data on mobile users.

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Security firm Symantec (SYMC) has identified the top 100 searches conducted by children online. Popular items in the list include some expected entries like YouTube, Facebook, and MySpace as well as queries for popular pop idols like Michael Jackson and Miley Cyrus. However, what’s surprising about the children’s list is how similar it looks to that of any other online adult–something which seems to imply that our online activities aren’t all that age dependent after all.

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In the Web world, you know that a trend has major traction when IBM (IBM) is all over it. Like any large Internet company, Big Blue is careful about which trends it latches onto. It was a good couple of years before they were spotted at the Web 2.0 conference, for example. However in the case of Internet of Things, IBM is proving itself to be an unusually early adopter.

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Sociologist and ethnographer Liz Pullen spent a month tracking the top 500 Twitter users (as ranked by number of followers) as well as the much-contested suggested users list. In tracking these accounts, she also closely analyzed the behaviors of new adopters and their expectations of the service.

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A few days ago, the social web browser Flock released version 2.5 of their software, integrating Facebook Chat, improving Twitter functionality, and adding a new broadcasting feature called “Flockcast.” As we evaluated the upgrade, a thought occurred to us: this browser should be the epitome of everything we love about the social web and yet the company has seen only moderate success.

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Techmeme is on fire this morning with discussion of Rafe Needleman’s CNet post about Twitter’s supposed plans to index the content of links shared over the microblogging service. Ex-Googler turned Twitter exec, Santosh Jayaram, said as much last night, as well as mentioning plans to rank search results by the reputation of the author.

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The White House is making unprecedented use of consumer web technologies but those technologies aren’t always well suited to fit the government’s needs. They aren’t always well suited to fit anyone’s needs–but maybe if Obama leans on them a little bit things will change.

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University of Wisconsin-Madison biomedical engineering doctoral student Adam Wilson has successfully tested a “brain wave monitor” to the Twitter publishing interface, allowing him to compose a message merely by thinking and publish it to the arguably too-popular microblogging service.

Either the gates of Hell have begun to open or this is a grad student who really knows how to publicize his work by riding the bandwagon of popular culture. Both are probably true.

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During the “Launch Pad” session, five start-ups took a grilling from developers, journalists and venture capitalists, then faced a crowd vote at the Web 2.0 Expo’s version of “American Idol.”

As attendees texted their votes, moderator John Battelle, founder of Federated Media Publishing, jokingly asked: “Want to have a dance-off?”

None were necessary. The techies in attendance were starry-eyed for all things mobile, picking Nitobi’s PhoneGap, an open-source tool for building mobile apps, as the People’s Choice winner. Life-tracking site zeaLOG was a close second.

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Looking at a regular graph of traffic data from Digg and Facebook, it would be easy to assume that Digg is lagging far behind Facebook’s staggering growth. However, Compete just produced a very different graph that compares traffic at Digg and Facebook since their respective launches, and according to this data, Digg is actually doing better than Facebook. Facebook is obviously older than Digg, so while it has more traffic now, Digg’s growth since its inception has actually been faster than Facebook’s.

As you can see from the graphs, Digg and Facebook had very similar growth curves for the first four years of their existence, and according to Compete’s historical data, Digg’s traffic was actually greater than Facebook’s for 33 out of 51 months.

It needs to be said, though, that Facebook’s user base has exploded over the last year, while Digg’s traffic “only” grew by about 50 percent, according to Compete. During its fifth year, Facebook’s traffic more than doubled from about 28 million visitors to over 73 million.

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In a recession, budgets are tightened, jobs are cut, and those who remain are expected to do more with less. Given this type of economic reality, it’s surprising to hear of an industry reporting an increase in spending on anything, much less on something as new as social media. Yet that’s exactly what’s occurring. According to a new Forrester Research survey of 145 global interactive marketers in both B2B and B2C companies with more than 250 employees, the use of social media as a marketing tool is on the rise. What’s more, Forrester reports that over 50 percent of marketers said they will be increasing their spending on social media marketing in the coming months.

Part of the reason for this increased spending is the low cost of social media tools. Compared with larger expenditures like advertising, social media requires much less investment. In fact, three-quarters of those surveyed who knew their budgets said they allowed for $100,000 or less for social media tools over a 12-month period.

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Whether you call it “social networking,” “social media,” or “online collaboration” depends on your point of view. In business, the term tends to be “online collaboration,” which suggests complex jobs getting done more efficiently by teams of people wherever they are located. The productivity gains–which are substantial, albeit often hard to measure–have drawn lots of companies into the market. As the market matures, we will see consolidation. And we’re interested in seeing what form this consolidation will take.

Historically, the game was to lock in users and then “sell” to that user base. That may be changing. The game is now all about user adoption, and lock-in is minimal. User interface magic may matter more than balance sheet clout. In this post, we’ll take a look at what features and services make up online collaboration in the enterprise and what will likely drive their consolidation.

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