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Volume 2, Issue 35: Monday, March 27, 2000
- "Bevy of Deals Bring Businesses Together Online"
USA Today (03/27/00) P. 1B; Cox, James
E-business is reversing some traditional business models as companies form surprising partnerships in a bid to stay competitive in the Internet age. Rivals are joining together to form online marketplaces in an effort to boost buying power while lowering costs. In the aviation and defense manufacturing industry, Boeing, British Aerospace, Lockheed Martin, and Raytheon plan to build an electronic marketplace for buying materials and parts. In addition, 50 large consumer-products firms, including Heinz, Nestle, and Kraft are creating an online system that will enable suppliers to bid and receive price quotes. "Almost everybody is going to be simultaneously competing and cooperating with someone else in the same industry," says Paul Almeida of Georgetown University's McDonough School of Business. Some traditional companies, such as Ford and General Motors, plan to increase their share prices by launching a business-to-business exchange and then spinning it off. Meanwhile, some companies are partnering with firms they would not ordinarily deal with at all. For example, online classified ad network Trader.com brings together 234 publications in 17 countries to form an international marketplace of classified ads. Finally, Internet startup TradeCard says it has eliminated the need for a letter of credit, replacing the traditional business practice with a paperless transaction-settlement process, which the company says could cut fees by as much as 90 percent.
- "Microsoft Is Said to Offer Plan to Restrain Business Practices"
New York Times (03/25/00) P. A1; Brinkley, Joel
Microsoft on Friday submitted a formal proposal to alter its business practices that is currently being reviewed by Justice Department lawyers and 19 state attorneys general to determine whether it is an acceptable settlement for the ongoing antitrust case. Judge Thomas Penfield Jackson earlier agreed to postpone his verdict on whether Microsoft's activities violated antitrust laws in order to give Microsoft and the government more time to reach a settlement, but has said he is unwilling to allow the two sides to continue to negotiate beyond this week. Government and state officials disagree on the sanctions that should be imposed upon Microsoft should Jackson rule against the company, as many believe he will. Some lawyers advocate the breakup of Microsoft, an action Microsoft adamantly opposes, while others feel such a penalty to be too harsh and instead are pushing for sanctions that would require the company to significantly change its business practices. The lawyers want to ensure they thoroughly understand the many technical details of the proposal before making any decisions regarding its acceptability. The lawyers want to avoid overlooking items that may appear unimportant but that could potentially become legal loopholes for Microsoft, as resulted from the settlement terms of a similar government antitrust case against Microsoft in 1994. If officials decide the proposal is worthy of further consideration and the settlement talks proceed, the government lawyers and state attorneys general will probably meet with Microsoft this week face to face instead of through Judge Richard Posner, who has mediated the settlement talks since they began Nov. 30.
- "Attorneys General Strive for Net Privacy, Crime Solutions"
The National Association of Attorneys General (NAAG) voted on Friday to put computer crime and consumer privacy at the top of its agenda. The NAAG hopes to see Internet companies at the negotiating table rather than in court in order to force them to protect consumers' privacy, says NAAG President Washington State Attorney General Christine Gregoire. Efforts to pass laws protecting consumers' privacy from online companies, financial firms, and insurance companies have failed in 16 states thus far, according to Gregoire. Several state attorneys general are currently negotiating an end to their privacy battles with DoubleClick.
- "Internet Patent Disputes Pile Up"
Deseret News (03/22/00)
The growing number of patents being issued to Internet companies has many concerned about the future of business and innovation. Critics of Internet-related patents fear companies will begin devoting more attention to obtaining patents than to satisfying consumers, which translates into higher prices for products, severely restricted Internet growth, and a business environment devoid of intellectual creativity. Internet companies argue that patents encourage progress by rewarding designers and engineers for new ideas, and several traditional companies view the patent explosion as a unique business opportunity. The U.S. Patent Office is trying to assuage public patent worries by hiring more tech-savvy examiners and experimenting with methods to thoroughly research claims using commercial databases.
- "TV Cop Puts eBay on Trial"
E-Commerce Times (03/23/00); Enos, Lori
In a high-profile example of the growing problem of Internet fraud and identity theft, actor Jerry Orbach of NBC's "Law and Order" this week filed a lawsuit against online auctioneer eBay, accusing the company of violating his privacy rights by posting his name and social security number on its Web site without his knowledge or consent. Experts claim the Internet makes it easy to obtain personal information such as an individual's name, address, social security number, and credit card numbers. Because of the anonymous nature of the Web, it is just as easy for a thief to use that information in a fraudulent manner, purchasing goods online with somebody else's money. Internet companies often ignore fraud alerts or fail to verify the identity of an individual using a credit card, which frequently means both e-tailers and consumers discover a fraudulent purchase only after it has occurred. As a result, e-tailers lose vast sums of money and consumers face huge debts and sudden poor credit ratings. "The potential harm caused by an identity thief using the Internet is exponential," says National Fraud Center CEO Norman A. Willox, Jr. Possible solutions to the problem of Internet identity theft include requiring people to enter PINs when making Web purchases, and using digital signatures and biometrics to confirm a buyer's identity.
- "Stamp of Approval Needed for E-Business"
Globetechnology.com (03/23/00); Geist, Michael
E-commerce growth can be hindered by excessive regulation, but some laws are needed both online and off to ensure regulatory fairness. The best strategy for regulators is consumer education and fraud prevention, allowing people to make informed choices. Michael Geist, a law professor at the University of Ottawa School of Law, recently completed a study for the Ontario Ministry of Consumer and Commercial Relations. The study investigates the impact of e-commerce on a number of provincially regulated sectors, identifying current e-commerce business models and looking at the rules governing them before making recommendations. Different sectors use a number of different models; for instance, the motor vehicle sector has at least five models--online referral sites, direct online sales through manufacturer referrals, private car sales, reverse-auction referral sites, and direct online sales through third-party sites. One single legal solution is unrealistic; online referral sites are unregulated, though in the U.S. some states have rules to protect consumers. Existing legislation handles private motor vehicle sales, but direct online motor vehicle sales worry regulators the most. Any changes to the regulatory system must be balanced between facilitating e-commerce and maintaining consumer protection. The semi-private regulators could sponsor a seal-of-approval program, with an icon for sites to display--North America's first regulator-backed seal program. But regulatory cooperation across the continent would be necessary.
- "Filtering Firm Employs Copyright Law Against Webmasters"
CNet (03/23/00); Jacobus, Patricia
Lawyer Chris Hansen of the ACLU has come to the rescue of three Webmasters accused by Cyber Patrol of publishing the filtering company's source code on the Web, in violation of copyright law. The codes allow users to bypass Cyber Patrol's filtering software. "The way these guys obtained the source code, we consider it to be a slam-dunk copyright infringement case," says a spokeswoman for Cyber Patrol. The case began about two weeks ago, when the three defendants posted the decoded information on their Web sites. Cyber Patrol asked for and received a restraining order forcing the defendants, and others who had publicized the data, to remove the information from their Web sites. The case is expected to test the limits of the Digital Millennium Copyright Act, which outlaws most types of code cracking, but permits code cracking that is part of research efforts. The ACLU's Hansen has offered to represent the defendants. Hansen claims the court may have no authority over the issue of filtering. A hearing regarding the case will take place Monday.
- "Internet Tax Leadership Up for Grabs"
E-Commerce Times (03/21/00); Hillebrand, Mary
In November, Republican Tom Bliley will retire from his position as chairman of the House Commerce Committee, and many are wondering whether his successor will be as active an Internet advocate. During his tenure as committee head, Bliley introduced tax moratorium legislation, steadfastly opposed any form of e-commerce taxation, criticized the Internet Corporation for Assigned Names and Numbers for usurping control of the domain name registration process from Network Solutions, and introduced an electronic signatures bill that has already received House approval. Candidates for Bliley's position are current Commerce Committee members Billy Tauzin (R-La.), Mike Oxley (R-Ohio), and John Dingell (D-Mich.). Tauzin co-authored the Internet Freedom and Broadband Deployment Act of 1999, attended a recent COMDEX computer industry convention, and has been vocal on issues regarding the cable and satellite TV industries. However, his views on Internet taxation are unclear. Oxley has opposed Internet sales taxes and was a prominent figure in last fall's House effort to promote global tax-free e-commerce, but has otherwise remained quiet on Internet issues. Dingell will most likely be named Bliley's successor only if the Republicans lose control of the House.
- "Common Criteria for Increasing Confidence in Security"
Network World Fusion (03/20/00); Brusil, Paul
Security vendors, including Cisco, Check Point Software, IBM, Lucent, and Oracle plan to meet at the First International CC Conference in May to ratify the Common Criteria (CC) security standard. CC, which has also gained support from companies in the financial services, health care, and telecommunications industries, provides a common way for customers to describe their security needs and for security vendors to describe and guarantee their products. Network World's Paul Brusil says that CC will help build consumer trust in security products, which is necessary to spur growth in the e-commerce and online services markets. The National Information Assurance Partnership will validate security vendors testing results and mark successfully tested products for international sale.
- "Keeping Tabs"
Washington Techway (03/13/00) P. 31; Baker, Chris
Legal analysts say employers are legally allowed to monitor employees' Internet use without telling them that they are doing so. A recent survey by SurfWatch says "cyberslacking" costs U.S. companies roughly $1 billion every year, and that 30 percent of all workers spend at least one hour a day using the Internet for personal use while on the clock, and 80 percent write personal email while at work. And the American Management Association reports that the number of large companies that monitor their employees' email increased to 27 percent in 1999 from 15 percent in 1997. Although most employment law experts say companies should have a written policy describing exactly what the rules are for personal Internet use on the job, some civil libertarians contend that employers go too far in monitoring their employees' computers, which leads to low worker morale and higher turnover. Some mental health experts also say employers should be sympathetic to the possibility that some employees are addicted to the Internet. A 1999 ABC News Survey last year revealed that about 6 million people are addicted to surfing the Web.
- "Data Warehousing Market Surges on All Fronts"
Washington Technology (03/20/00) Vol. 14, No. 24, P. 28; DeJesus, Edmund
Governments lag behind private organizations in implementing data warehousing systems, according to industry officials. But factors such as the end of Y2K compliance spending, the sheer volume of agency transaction data, directives on oversight and reporting, and pressure from constituents to offer more services, are driving governments to begin addressing data warehousing issues. Data warehousing systems provide both short- and long-term benefits to governments. Short-term benefits include improved reporting on how agencies use resources and cost reductions by exposing patterns of fraud and waste. Long-term benefits for agencies, particularly those in health care, law enforcement, and welfare include better understanding of the impact of programs and improved planning for new programs. Experts say that it is wise for governments to work with an experienced, proven technology partner to implement a data warehousing system. IBM, Andersen Consulting, and Unisys are leading systems integrators while IBM, Informix, Microsoft, Oracle, and Sybase are major database vendors. State and local government data warehousing spending is expected to reach $1.1 billion in 2004, up from $550 million in 1999, according to Dataquest. On the federal level, spending will reach $911 million in 2004, up from $579 million in 1999, according to Input, an IT market research firm.
- "Censor Census"
Business 2.0 (03/00) Vol. 5, No. 3, P. 358; Taggart, Stewart
The battle between openness and censorship on the national level is destined to be one of most important clashes involving the Internet in the years to come. The Paris-based organization Reporters Without Borders (RSF) says that as many as 45 countries place restrictions on the Internet access of their citizens. Burma, Libya, North Korea, Syria, and the countries of Central Asia and the Caucasus are among the 20 states RSF considers to be the worst national "Enemies of the Internet." Such countries have banned Internet access or offer access through government-controlled ISPs. Because the Internet could be a facilitator of economic growth, the RSF sees such countries losing out in the "information age." These countries tend to fear a destabilization of the status quo particularly if their citizens are exposed to everything on the Internet. As a result, some Syrians continue to travel to Lebanon to read their email, while some Singaporeans dial up through ISPs outside of their countries to get around some of the online blocking that is being carried out by the government. And Australians are thinking differently about the Internet, now that the government has given its version of the CIA the authority to secretly change the files of private computers that the intelligence organization spies on. Even if governments try to crackdown on open Internet by controlling conduits, filtering flows, and punishing purveyors, email may be a problem because almost any kind of material can be sent this way. For Anonymizer CEO Lance Cottrell, technology that filters the Internet according to the laws of a particular country may not be out of the question. But that would lead countries to punish citizens for crimes of knowledge, a losing proposition much worse than the initial problem. Censorship researcher Richard Greenfield agrees. "You could have a 'cyber brain drain' where people don't even leave a country," says Greenfield. "They just conduct all their online activities in a different jurisdiction."
- "The Net-Net on Net Taxes"
Industry Standard (03/27/00) Vol. 3, No. 11, P. 61; Mowrey, Mark A.
The Internet allows online shoppers to avoid paying taxes and leads to lost revenue for states, according to a report by University of Tennessee professors William Fox and Donald Bruce. States have trouble collecting the use taxes imposed on catalog and Internet purchases if a company does not operate in the buyer's state. Last year states lost $1.2 billion in use tax revenue because they typically collect only about 40 percent of the use tax owed, according to Fox and Bruce. Business-to-business commerce accounted for $798 million of that lost revenue. By 2003 lost revenue from online commerce will increase to $10.8 billion, Fox and Bruce predict. Without an Internet tax, online sellers have a distinct advantage over their offline competitors, says Fox. Seventy-five percent of Americans polled in a survey sponsored by the U.S. Conference of Mayors and the National Association of Counties believe online retailers gain an unfair advantage by not collecting taxes. Sixty percent of the respondents support Internet taxes, and 80 percent would not support an increase in other taxes to make up the difference. However, a survey from BizRate.com found that 60 percent of respondents would buy fewer items online if taxed. BizRate.com also found that 87 percent of online shoppers do not buy over the Internet just to avoid being taxed.
- "Banks Eye Linux From Sidelines"
Bank Technology News (03/00) Vol. 13, No. 3, P. 1; Wijnen, Renee
Although Linux is gaining popularity in capital markets, bankers are exercising caution in adopting it. Mostly, banks are using Linux with peripheral parts of their information systems, such as firewalls and Web, mail, file, and print servers, but not on critical business applications. "A lot of banks look at back-end technology as part of their regular cost of doing business, not as a place to get a technical advantage," says International Data analyst Daniel Kusnetzky. "That's why they have been waiting to see, rather then taking the leading edge." "There are always zealots about new technology, but we feel [Linux] is not really ready for full-scale use with the servers," said Frank Robb, executive vice president of Wachovia, where a limited adoption of the OS has begun. Among the things bankers believe that Linux needs before it is introduced to servers is stronger change management tools, a wider selection of applications, the reliability and scalability of Unix, and better technical support. The last of these raises some debate from Linux proponents, who point out that the global community of open-source users and code writers is the best tech support on Earth. As for comparisons to Unix, Linux companies point out that althouh Linux specific applications are few, the OS is close enough to Unix to employ its software. Regardless of its current functionality, Linux has dramatically altered the OS market: Sun Microsystems has decided to allow its Unix-based Solaris operating system to become open-sourced, and the general feeling that Windows NT was inevitable has dissipated, leaving the future of operating systems up for grabs.
- "Expanding OS Wars Target Developers"
Application Development Trends (03/00) Vol. 7, No. 3, P. 73; Waters, John K.
The application development arena has become ground zero for the ongoing battle between Linux and Windows 2000. Although Microsoft's Windows NT and the long anticipated Windows 2000 operating systems occupy a significant majority of corporate desktops, the open source Linux platform is quickly gaining support. International Data says Linux accounted for 25 percent of all server operating system units shipped in 1999, while Windows NT comprised 38 percent. In choosing a development platform, IT development managers must now consider the rising importance of Linux, as well as the growing influence of business on IT decisions. Industry observers are beginning to report that business has replaced technology as the top factor driving platform development decisions, due to the importance of e-business. "People care about solving problems," said AMR Research analyst Dennis Gaughan. "They say, 'This is the functionality I need. I don't care about the box, just get me up and running before my competitor Amazons me.'" The significance of business in determining which development platform to use has lent credibility to Linux, which is now being positioned as a cheap, reliable, and flexible e-business solution.
- "The Changing Foundations of Power"
e.gov (03/00) Vol. 1, No. 1, P. 12; Harris, Blake
The Internet promises to be an influential force in government, offering the potential to transform not simply government processes, but the very foundation of government and society as a whole, writes e.gov's Blake Harris. Harris says the Internet has sparked a revolution that eventually will change the way citizens relate to governments and each other, the way governments interact, and the way communities view their nations. Just as the Industrial Revolution transformed society by instituting economic centralization, which in turn prompted centralized political rule, so too will the ongoing information revolution shift the very core of society and government, says Harris. Harris says that the Internet is engineering a revolution by making information, rather than work, the key component driving society. The increasing emphasis on information could change the notion of community by uniting individuals worldwide around a common idea, and could even transform the concept of war by using information, rather than physical weapons, to disrupt a population, says Harris. Harris says that the Internet is sparking a trend toward decentralization by empowering and uniting individuals, regardless of geographic location. Harris says that the main challenge facing an e-government is the task of integrating increasingly fragmented communities while at the same time breaking down its approach to deal with individuals, rather than social groups.
- "How Green Is My Silicon Valley"
PC Computing (03/00) Vol. 13, No. 3, P. 56; Van Scoy, Kate
As a result of the November 30 World Trade Organization protests, many people are recognizing the Internet has renewed the spirit of social activism in the United States. Although social organizations such as Greenpeace and the World Wildlife Fund have been online for years, their Web sites typically contain reams of information only the most dedicated supporters care to click through. Young, passionate activists who formerly relied upon mass emailings to promote their causes are now turning their attention toward the Internet, attracting huge audiences with their tech-savvy Web sites featuring such things as live videos, live reports, and online donation capabilities. These next-generation activists stand united against the modern corporate dominance of society but ironically frequently use corporate Web sites to further their own causes. For example, Eactivism's Web site features a "Click for the Cure" button visitors can click on to donate funds for cancer research. Eactivism founder Tristan Zajonc came up with the idea after viewing The Hunger Site's per-click donation campaign targeting corporate advertisers. It appears activists and corporations may inadvertently be partners after all.
- "High-Touch Through High-Tech"
Business Finance (03/00) Vol. 6, No. 3, P. 35; Krell, Eric
Financial departments play a significant role in the success or failure of a customer relationship management (CRM) system. CRM implementations rely on financial departments to conduct thorough, low-tech research into their business to determine where CRM systems might be of most use. Also, financial staff are needed to educate the rest of an enterprise on concepts such as return on investment and the specific costs associated with a particular corner of the enterprise's business. Once implemented, CRM systems simplify the education process, but firms must be willing to accept what the data tells them and make changes accordingly. "Companies should decide whether they're going to take action based on better information they're getting on customer profitability," says Tom Anderson of KPMG. "If they're not prepared to make difficult decisions about customers, then getting more detailed and better information probably won't help them." Common changes that result from CRM implementations are call center reorganization, redistribution of marketing dollars, and sales force automation. Finance departments hold the ultimate responsibility of ensuring that all departments understand the value of chasing "bang-for-the-buck" rather than basic profitability. CRM implementations "require tens and tens and tens of millions of dollars to pull off, so you absolutely have to make sure the return is there," says Pitney Bowes' Russ Wilson.
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