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Volume 2, Issue 36: Wednesday, March 29, 2000
- "Judge Delays Verdict on Microsoft"
Washington Post (03/29/00) P. E3; Grimaldi, James V.
U.S. District Judge Thomas Penfield Jackson, after stating last Tuesday that he would issue a verdict in the Microsoft antitrust trial this week, has postponed his ruling and extended the deadline for out-of-court negotiations until April 5. However, people familiar with the antitrust case claim the two sides view the current situation quite differently and are unlikely to reach a settlement. The government, citing concerns about technical loopholes and Microsoft's trustworthiness, rejected a proposal offered by Microsoft last Friday in which the company outlined numerous modifications it would be willing to incorporate into its business strategy. Several top Microsoft executives, including Chairman Bill Gates and CEO Steve Ballmer, believe the company's proposal was more than generous and included concessions that exceed any that would be imposed should Microsoft lose the case. Regardless, Microsoft has placed certain stipulations upon any settlement, such as prohibiting the use of Jackson's preliminary findings of fact in any of the more than 110 private antitrust lawsuits pending against the company. Also, lawyers from the Justice Department and the 19 states involved in the case remain at odds over the acceptability of such stipulations and on whether government sanctions should involve the breakup of Microsoft.
- "House OKs Cyber Rules"
Baltimore Sun (03/29/00) P. 1D; Wheeler, Timothy B.
The Maryland House of Delegates, led by Del. Kumar P. Barve (D-Montgomery County), recently voted 83-50 to approve the Uniform Computer Information Transaction Act, a controversial bill that establishes rules for software purchases, including those made over the Internet. Barve said lawmakers had tweaked the bill to give Maryland consumers more rights regarding software purchases than any other U.S. state. However, critics of the bill noted that most lawmakers did not have even 24 hours to examine the bill, and they contend that the bill lacks sufficient consumer protections. Del. Elizabeth Bobo (D-Howard County) warned that the bill could make Maryland "the laughingstock of e-commerce society across the nation." Maryland lawmakers see the law as a key to fostering the growth of the state's technology industry. The state's House Economic Matters Committee marked up the bill to give consumers greater protections, including software refunds. The terms of the bill also bar software companies from electronically repossessing software from consumers. But the bill does give software companies an advantage by enabling them to request that consumer lawsuits be held in the states they operate from. "The bill doesn't guarantee that Maryland consumers will be protected by Maryland law," said Steven Sakamoto-Wengel, an assistant Maryland attorney general. State librarians are worried that the bill would interfere with library patrons' ability to copy and exchange electronic data.
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- "Software Law Could Be a Hard Sell"
USA Today (03/29/00) P. 3D; Zuckerman, M.J.
Although several states are moving to follow Virginia's lead in passing the Uniform Computer Information Transaction Act (UCITA), the bill is surrounded in controversy. Even as Virginia's legislators passed UCITA, they decided to postpone the measure from becoming law until 2001 while they study and revise the bill. High-tech firms such as Microsoft and AOL pushed aggressively for UCITA, and Virginia Gov. Jim Gilmore (R) approved the bill on March 14, in a move many people view as an effort to pass the bill before Maryland. Consumer groups are concerned that companies might be able to choose the laws of any state to govern their software licenses, so all software companies could apply the Virginia law to their contracts. Critics of UCITA say the bill provides manufacturers with too much power, essentially giving software makers permission to make poor-quality software. Meanwhile, opponents say UCITA offers little recourse for consumers. The bill would allow manufacturers to enforce licensing terms that appear on the screen while users are installing software, and which few people read, consumer groups say. The terms of these licenses could be used by manufacturers to remotely disable a user's software, critics say. Meanwhile supporters say the bill would give consumers a better understanding of their rights.
- "Bills to Protect Privacy Need Public Support"
SiliconValley.com (03/27/00); Gillmor, Dan
The U.S. has sacrificed privacy for the sake of commerce, and consumers should help remedy the situation by supporting emerging privacy bills, writes Dan Gillmor. Businesses freely share consumer's Social Security numbers and other private information, while law enforcement rarely prosecutes such crimes as cybertheft, leaving victims to repair the damage of such crimes. The Internet has made more people aware of privacy issues, as consumers recognize the danger of companies opening up databases of private information for others to use. Aiming to curb information sharing, Sen. Debra Bowen (D-Calif.) has introduced several privacy bills. SB 1767 would prohibit third parties from using Social Security numbers to identify people unless required to do so by law. In addition, the bill would outlaw sharing or obtaining a person's Social Security number without that person's written consent. Consumers would also be able to freeze their credit records so credit bureaus could not share private information with third parties without permission. Another bill, SB 1599, would prevent video providers, specifically cable and satellite systems, from gathering and selling data about a consumer's viewing habits without consent. The two bills will be evaluated by legislators at the end of April, and consumers should write or call legislators about the bills to ensure a fair hearing, Gillmor says.
- "SEC's Plan to Snoop for Crime on Web Sparks a Debate Over Privacy"
Wall Street Journal (03/28/00) P. B1; Moss, Michael
The Securities and Exchange Commission recently announced plans to create a Web monitoring system for fraud and other criminal online activities, placing the commission at the center of a growing debate over where the privacy line should be drawn when initiating crack downs on cybercrime. The SEC has already heard from several vendors who wish to build the automated system, which would scour Web sites, chat groups, and bulletin boards for suspicious activities--including speech. One vendor, PricewaterhouseCoopers, has already announced its refusal to work on the project due to privacy concerns. "We had serious concerns about the implications for the privacy of individuals on the Web, and the implications for businesses on the Web," says Pricewaterhouse's Beth Trent. The SEC's project could spawn a legal fight with ISPs such as AOL that staunchly defend the privacy of chat room and message board users. George C. Brown, assistant general counsel at the SEC, says the commission will be sure not to infringe on privacy laws and policies. The SEC plan calls for the creation of a database of collected information, including title lines and dates of postings, the user names and email addresses of those responsible for the postings, and the nature of the postings.
- "Panel-B2B Must Not Fight Over Customers"
Newsbytes (03/27/00); Fridman, Sherman
Panelists at Monday's B2B Big Bang Event, representing business-to-business software vendors or B2B exchanges, discussed the issue of who will own the customers in the future. The largest concern among panelists was setting their offerings apart from rival products and services. Two panelists, Mark Pine of OnDisplay and Mansoor Zakaria of 2Bridge, said all B2B companies use the same buzzwords and customers should ask companies to explain what differentiates them from competitors. Companies participating in B2B commerce should justify their offerings, with an emphasis on quality and availability, panelists said. In terms of alliances, panelists said partnering is most successful when a company does not have to worry that the partner will turn into a rival or assume too much control. Companies are often motivated to partner with another firm to gain access to skilled employees, panelists said. Panelists agreed that the B2B market is large enough globally to accommodate competition among multiple marketplaces or exchanges. In the future, a shakeout will occur in the B2B e-commerce market, panelists said.
- "It's Harder to Identify the Bad Guys Online"
Christian Science Monitor (03/28/00) P. 3; Bruinius, Harry
The computer hacker is evolving from a roguish "pioneer" of sophisticated break-in techniques to an almost respectable source of knowledge for Internet security companies. Most hackers separate themselves from those who are responsible for technically unsophisticated "denial-of-service" attacks or the recent attempts to extort credit-card information from Web sites. The hacking community generally sees itself as constantly testing the bounds of Internet security for the good of society, allowing companies to recognize their weaknesses and the steps they should take to seal various vulnerabilities. However, because of legislation passed in the mid 1990s that made hacking a crime, many of the so-called "white hat" hackers are legally grouped with the "crackers" who break into systems for either profit or for the sheer joy of disruption. However, because of the strong libertarian strain running through the hacker community, most of the information dispensed by hackers is available to all online. Although many hackers say this information is often used by companies to secure their networks, hackers also admit that the information could be used for ill. Regardless, many computer experts say posting the information on the Web causes other hackers to strive to go one step farther. Ironically, many hackers are now finding legitimate employment with computer security companies because of their inside knowledge.
- "U.S. Will Give Web Patents More Scrutiny"
Wall Street Journal (03/29/00) P. B1; Matthews, Anna Wilde
The U.S. Patent and Trademark Office is expected to introduce changes in how it regards applications and awards patents to various online business practices. The office has come under fire recently for giving businesses patents for certain widely-used techniques, such as Amazon.com's "one click" ordering process. The U.S. Patent and Trademark Office says that it will make the patent process more arduous for "business method" patents by implementing several more hurdles that businesses must jump through to obtain patents. These include an extra review process by a senior patent examiner, as well as a doubling of the number of patents that receive a final quality check at the end of the patent process. The office will also spend more resources on researching past practices and inventions, and will search online databases to ascertain that certain techniques are truly original and innovative. Although a 1998 federal court ruling reaffirmed the legitimacy of businesses seeking patents for "computerized business practices," there has been much concern that patents have been granted to ideas and techniques that were either too broad in scope or were not completely original.
- "Internet Encryption's Password Is 'Slow'"
Wall Street Journal (03/28/00) P. B8; Angwin, Julia
Although public key infrastructure (PKI) is considered the best method of keeping data safe from hackers, companies are waiting to adopt the technology because it is slow, difficult to install, and hard to integrate with existing systems. Last year corporate spending on PKI reached only $198 million, or about 5 percent of overall spending on security software, says International Data (IDC). PKI involves a public key stored in a central location that the sender uses to encode messages, and a private key on the recipient's computer for decoding messages. The public and private keys can also be used to create digital signatures that confirm the identities of both parties in a transaction. Most e-commerce sites use a modified version of the PKI system called Secure Socket Layer (SSL), which enables the buyer to verify the seller's identity, although the seller cannot confirm the buyer's identity. Although SSL is 10 to 100 times faster than PKI, the system requires that sellers use passwords or cookies to identify buyers. Many companies say the security of PKI is appealing, but they will not adopt the technology until it becomes faster and easier to use. Other factors blocking the use of PKI include the lack of standard software and the lack of a central authority that holds public keys. Thus far companies that use PKI have turned to add-on software from such vendors as Entrust Technologies, and have run their own certificate authorities that maintain public keys.
- "Big Business Faces E-Commerce Roadblocks"
E-Commerce Times (03/24/00); Greenberg, Paul A.
Despite companies' record investment in e-commerce, they have yet to use the Internet to its fullest potential, according to a study of America's largest companies by PricewaterhouseCoopers and the Conference Board. "It's important to remember that despite how quickly e-business has changed the landscape, it's still a new paradigm, especially for large organizations," said Cathy Neuman of PwC. Seventeen percent of respondents to the study, titled "Electronic Business Outlook for the New Millennium," consider themselves e-business innovators, though only 25 percent are still in the "brochureware" stage, and less than half have instituted any serious assessment of their e-business performance. "Understanding user needs" was cited as the greatest challenge, while marketing analysis and research investing was a low priority. The top five concerns were uncertain implementation costs, more pressing priorities, lack of proven benefits, lack of standards, and low use of the Internet by customers and suppliers. Another major issue revealed by the survey is that while 40 percent of respondents can take online orders, only 28 percent can process payments. "We saw how disconnects such as these led to serious e-biz failures over the holidays, with major online retailers getting slammed for inadequate supplies of inventory," said Neuman. On the upside, this year's survey indicated a healthy concern with raising profits and improving the customer experience. In addition, 47 percent of those surveyed indicated they have full-time e-commerce development units, as opposed to less than one-third last year.
- "Filtering Firm, Hackers Settle Copyright Case"
CNet (03/27/00); Jacobus, Patricia
The dispute between Cyber Patrol and two computer hackers accused of cracking and posting the filtering firm's code on the Web is over. The hackers had created a program called cphack to break the code, and distributed the program to others on the Web. The hackers will relinquish ownership of the program as part of a settlement reached between the two sides, which did not involve money, but imposes a large fine and potential jail time on the hackers, should they violate its terms. Conditions of the settlement also prohibit the hackers from teaching others how to break the software code. "We protected our customers and defended our intellectual property," said Cyber Patrol's Sydney Rubin.
- "CIO Czar Concept Gains Momentum"
Federal Computer Week Online (03/27/00); O'Hara, Colleen; Frank, Diane
Legislators are backing a plan to establish a federal chief information officer who will oversee the development of e-government. Sen. Joseph Lieberman (D-Conn.) and Rep. Jim Turner (D-Texas) are expected to draft a proposal to create the new office, as well as to establish greater funding for digital government projects. The legislation will be based on a report released Friday by the Democratic Leadership Council's Progressive Policy Institute, which suggests that the federal CIO report directly to the president, that new funds be directed toward e-government projects, and that a $500 million annual digital government fund be created to finance inter-agency e-government initiatives. The appointment of a federal CIO is intended to speed e-government development, as well as to bolster government computer security, according to Turner. While a CIO Council currently exists to oversee specific cross-agency IT programs and plans, a federal CIO backed by program and budget authority would better perform the job, says Jim Flyzik, Treasury Department CIO and vice chairman of the CIO Council. "We do need some authority that can put in place the things we need to do on a government-wide basis," says Flyzik. "The need for someone, something, some organization to have power is there."
- "In Spam Case, Another Defeat for State Internet Laws"
New York Times Online (03/24/00); Kaplan, Carl S.
Jack Goldsmith, University of Chicago Law School professor, says the cumulative effect of federal and state judge decisions against state Internet laws thus far could serve as a crushing blow to all Internet transaction laws that states presently have on their books. He believes the debate over state Internet laws is headed for the Supreme Court, and that the courts will ultimately turn down the argument that the constitution's commerce clause outlaws state attempts to regulate e-commerce. However, the federal and state judges that have already handled such cases have sided with the commerce clause argument. The most recent case took place in King County Superior Court in Seattle, where Judge Palmer Robinson ruled that Washington's junk email statute unduly interfered with the free flow of information over the Internet. According to the U.S. Constitution, the commerce clause gives Congress the power to "regulate commerce...among several states." Although it does not say states can regulate interstate commerce, courts have generally ruled that states cannot regulate something that occurs wholly outside of their borders, and that states cannot pass laws that overly burden the interstate flow of goods, services, or information. The decision of Judge Robinson was similar to a ruling by a New York federal district judge in 1997, a ruling by a federal district judge in Michigan last July, and a decision last November by a federal appeals court. The commerce clause was cited in each case. These four decisions in the past three years could prevent state regulation of the Internet, some lawyers and academics now believe, particularly if the commerce clause argument goes unchecked.
- "Internet Becomes Major Legislative Focus"
Roll Call (03/27/00) Vol. 45, No. 67, P. 4; McManigal, Barney
The Internet is a political issue this year in Congress, with much attention focused on expanding and reforming technology. The bill most likely to pass is a House e-commerce measure that would legalize electronic signatures for e-commerce business transactions. Other items on the agenda are Internet taxation, access protection, and information security. Congressional supporters of the electronic signature legislation think that it will bring about an explosion in e-commerce, but the bill may be hindered by the fact that Senate Democrats have not yet appointed conferees to the bipartisan committee assigned to match the bill with its Senate version. Most observers believe that the bill will pass this year. Meanwhile, legislators are still divided on whether Internet sales transactions should be taxed. The current ban on taxes ends in 2001, and some want it to be made permanent, but some state governors are not happy with the potential loss of state tax revenues. Tax ban supporters protest that there is no evidence that e-commerce has taken revenue from the states, but others feel that banning the taxes permanently would be anti-competitive and unfair to regular businesses. A Congressional advisory commission has voted to approve a second temporary moratorium, two years longer than the first one--through 2006. The House is looking at two bills that would make it a crime to steal data from online databases; one would allow database producers to seek civil penalties, while the other guarantees consumer access to some kinds of databases. However, a compromise between these two is less likely during this session. Other items in the works include anti-piracy and privacy protection legislation.
- "Cisco Now Biggest in Market Size"
Washington Post (03/28/00) P. E1; Streitfeld, David
Cisco Systems became the world's most highly valued company Monday with a market capitalization of $555.4 billion, beating out Microsoft's market cap by $13.8 billion. Cisco's stock tripled in the last year, while Microsoft's stock rose only 17 percent as it continued to fight the government's antitrust lawsuit. Cisco, which posted revenue of $17.4 billion for the last 12 months, is a supplier of routers and is one of the biggest e-commerce sites. It conducts 85 percent of its orders over the Internet. Open standards have been key to Cisco's growth, according to senior vice president Dan Scheinman. Such open standards push Cisco to operate more effectively, he said.
- "A Strange Brew's Buzz Lingers in Silicon Valley"
New York Times (03/26/00) P. 3-1; Markoff, John
When a group of computer hobbyists formed the Homebrew Computer Club in March 1975, they did not realize their passion for "playing with their toys" would indirectly spawn the sprawling monster that is the modern PC industry. Among Homebrew's first members were Frederick Moore Jr. and Gordon French, the group's founders; Dan Sokol, who in June 1975 copied Microsoft's first commercial program and subsequently butted heads with 20-year-old Bill Gates; Stephen Wozniak and Steven P. Jobs, future co-founders of Apple Computer; Alan Baum, future Apple employee; and John T. Draper, who filled his time by exploring telephone networks. Homebrew regularly drew crowds of 750 computer enthusiasts to its twice-monthly gatherings, relaxed sessions during the course of which various hobbyists discussed their latest projects, viewed a formal presentation, and then paired off to converse in smaller groups. The group's members all believed, and still do believe, in what has come to be termed the "hacker ethic," the notion that information and computer tools should be freely available to anybody seeking to utilize them. Such an ethic is a far cry from today's corporations motivated by greed to patent their technological advances. IBM's creation in 1981 of the first PC marked the informal beginning of the modern computing boom and the battle between the enthusiasts seeking to keep information free and the corporations seeking to own as many pieces of the computing puzzle as possible. The Homebrew values survive today not only conceptually, in the intentions and practices of passionate engineers and developers, but also physically, in Linux-based software and the open source movement. However, it is at best a tentative existence.