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Volume 2, Issue 40: Friday, April 7, 2000
- "Software Licensing Bill Clears Senate"
Baltimore Sun (04/07/00) P. 1C; Wheeler, Timothy B.
The Maryland Senate has passed the Uniform Computer Information Transactions Act (UCITA) by a 37-8 vote. The Maryland House of Delegates approved a version of the act last week, and now the competing bills must be quickly reconciled before the General Assembly adjourns Monday night. The pressure is on because the act is considered the foundation upon which the state's high-tech industry will be established. The main backer of the bill, Sen. Leonard H. Teitelbaum, said the bill would establish technology rules in the state and help usher in a "new Industrial Revolution." The Senate version of UCITA underwent considerable markup before being approved. The bill has been criticized for not going far enough to protect consumers, and several state Senators, including Sen. Martin G. Madden (R-Howard County), are urging their peers to delay the bill for a year so it can be thoroughly examined. Both versions of the bill prohibit software companies from electronically disabling a consumer's computer. A spokesman for Attorney General J. Joseph Curran Jr. says vast improvements have been made to the bill since its original drafting. Virginia has already passed its own version of UCITA, and at least two other states are considering similar legislation.
- "Clinton May Seek Microsoft Briefing"
Washington Post (04/07/00) P. E1; Grimaldi, James V.
The Clinton administration might ask to meet with the Justice Department for a briefing on the remedies the department plans to pursue against Microsoft in the antitrust case, a White House spokesperson said yesterday. Presidents usually avoid involvement in antitrust matters, and FTC Chairman Robert Pitofsky says Clinton has not been known to participate in antitrust issues in the past. Beyond stating that the White House might be briefed on the case, spokesperson Jake Siewert did not specify how the administration might become involved. President Clinton welcomed Microsoft Chairman Bill Gates at a White House conference on Wednesday to discuss the "new economy," and the trial was not mentioned during the summit, according to Microsoft and administration officials. Clinton commended Gates' charitable donations as examples of how wealth spawned by technology can help society. Also on Wednesday, Microsoft launched a campaign aimed at boosting its public image, involving prime-time television ads featuring Gates. "Our goal at Microsoft is to create the next generation of software, to keep innovating and improving what we can do for you," Gates says in the ad. State and federal attorneys in the Microsoft trial must submit a proposal for the penalties they seek by April 28 at the latest, with Microsoft responding to the proposal in May. Judge Thomas Penfield Jackson will hold a hearing on May 24, and is likely to rule on the remedies by this summer.
- "'Digital Storm' Brews at FBI"
Washington Post (04/06/00) P. A1; O'Harrow Jr., Robert
The FBI is asking Congress for more than $75 million in funds for a gargantuan expansion of the agency's computer and information technology systems. The FBI has plans to establish three new systems. One is called "Digital Storm," a digital surveillance system that can monitor telephone calls and computerized recordings much more efficiently than the agency's current system. Another system would digitize the collection system for wiretaps that are requested under the Foreign Intelligence Surveillance Act. The third initiative would establish an "enterprise database" that would seriously increase the amount of data that the agency could analyze, and would also allow the information to be shared among FBI agents on an intra-office, Internet-style secure network. Although the FBI insists that its initiatives would simply bring it into the digital age and would not expand any of the agency's powers, critics of the plan are concerned about the massive increase in the agency's data collection and analysis capabilities. Privacy and civil liberties groups, as well as many other detractors, also contend that the new initiatives would increase the FBI's surveillance power and would also hurt constitutional protections against search and seizure.
- "Role in Net Control Up for Vote"
USA Today (04/06/00) P. 3D; Weise, Elizabeth
The Internet Corporation for Assigned Names and Numbers (ICANN) and the composition of its board is one of the more popular topics of discussion at the Computers, Freedom, and Privacy (CFP) conference, sponsored by the Association for Computing Machinery, in Toronto this week. By November, Internet users will have the chance to elect at least five at-large members of ICANN's board. Jerry Berman of the Center for Democracy and Technology notes the importance of participating in the vote. "ICANN could end up making important policy issues affecting how the Internet is run," Berman says. Technology executive Karl Auerback scoffs at the ICANN election process, dubbing it "faux democracy." Many people believe that ICANN has already set its most important policies and that the vote will change nothing, Auerback says. Another subject on everyone's lips at CFP is the recent federal appeals court ruling that computer code is protected by the First Amendment, a decision that is very popular with the many civil-liberties activists and white hat hackers in attendance. John Gilmore of the Electronic Frontier Foundation says the ruling covers not just encryption, but all software source code, including DVD. The ruling could be used as a legal defense by programmers who are being sued by movie and music companies for publishing security-cracking programs on Web sites, Gilmore says.
- "Valley Cool to Cybercrime Plan"
Associated Press (04/06/00); Mendoza, Martha
Attorney General Janet Reno did not make much of an impression on Silicon Valley CEOs at the recent cybercrime conference at Stanford University Law School. Although Reno asked executives for increased information sharing between private and public entities, high-tech companies realize that the federal government does not have the resources to prosecute most cybercrimes. Therefore, because the Justice Department admits that only one cybercrime gets prosecuted for every 50 complaints (1998 Justice Department statistics), it is not worth reporting such crimes and facing the resulting governmental scrutiny of their operations. Most companies have a lot of proprietary information that they do not want the government or their competitors to see. That is why most companies report only the most serious cyber-intrusions to the FBI. Instead, many companies such as eBay and Oracle use private consultants to help fight their cyberwars, in an effort to avoid negative publicity and to keep company secrets out of the hands of government and competitors.
- "Librarians Are Heroes of Net Censorship Fight"
SiliconValley.com (04/06/00); Gillmor, Dan
The 160,000 librarians in the U.S. on Thursday received well-deserved recognition for their fight against library censorware, software that filters Web content to prevent children using library computers from viewing what is considered to be inappropriate material, writes Dan Gillmor. Librarians argue the software also filters out perfectly acceptable material and is therefore unfair to users whose only access to the Internet is through public library computers. On behalf of "librarians everywhere," Shenendehowa Public Library's assistant director for technology Karen G. Schneider accepted the Electronic Frontier Foundation Pioneer Award, presented during the ACM-sponsored Computers, Freedom & Privacy conference. Also, free-software advocate and technology civil-libertarian John Gilmore surfaced again recently with his proposal to create an alternative to the existing patent system, one in which innovations and ideas form a sort of shared "patent pool." For instance, if Gilmore himself thought of a patentable idea, he says individuals who do not have patents, or those who have patents but decide to instead make their ideas freely available, would be permitted to use his idea. Gilmore believes others would begin patenting ideas on the same terms once they discovered sharing ideas fosters innovation to a greater extent than does hoarding them.
- "E-Commerce and the Law"
Maclean's Online (04/10/00); Wood, Chris
The Mattel legal dispute with hackers involving the popular software filter Cyber Patrol underscores how difficult it will be for governments to resolve conflicts involving the Internet. In this case, Mattel filed one suit against a hacker in British Columbia, another suit against a hacker in Sweden, and then sued them both in Massachusetts. The company sued Matthew Skala of Canada and Eddy Jansson of Sweden because they posted a program on the Internet that showed the list of Web sites protected by Cyber Patrol and the registered secret passwords of adult users. In this incident, as in several others, the Internet has shown that lawmakers have some new legal issues to address. The Canadian government has tried to do just that with its new federal Personal Information Protection and Electronic Documents Act, which is likely to go into effect in January. Essentially a privacy law, the legislation would bring Canada up to par with the European Union on issues related to personal information of customers and employees. The legislation seeks to treat digital documents and electronic signatures like paper documents and signatures in ink. Companies doing business on the Internet would be required to have a formal policy for handling personal information and to name an official who would be held accountable. In addition, companies would have to disclose what they collect and why, and give Web surfers the choice not to provide personal information without having to lose the opportunity to buy goods and services. Fines would be as costly as $100,000 for failing to cooperate with investigations. Opposed by e-commerce and privacy advocates, the bill is even more controversial because it would set a precedent by allowing provinces to enact laws that mirror the federal requirement. Some provinces are working on matching legislation but none have been presented as of yet. Nevertheless, the issues addressed in the Canadian legislation may not fully apply to a case like Mattel's.
- "ACLU Appeals One Ruling, Lauds Another"
Newsbytes (04/05/00); Kelsey, Dick
The ACLU and the Electronic Privacy Information Center are appealing last month's court ruling that found in favor of Cyber Patrol and precluded Internet users from publishing the "cphack" code-cracking program on the Web. The ACLU is carrying out the appeal on behalf of three Web sites that published duplicate copies of the program, which enables Internet users to access a list of Web sites that are blocked by Cyber Patrol Internet filters. ACLU Attorney Chris Hansen contends that Cyber Patrol's filtering software inadvertently blocks sites that have no business being blacklisted. Cyber Patrol does not disclose the identities of the approximately 50,000 blocked Web sites on its list, but Hansen says Internet users are entitled to know the identity of the sites. The ACLU is attempting to win a stay of the order while the appeals process is underway, and will go to a federal appeals court if necessary. The ACLU had a much more favorable opinion of another recent court decision, this one involving an Ohio court's ruling that computer-programming languages are protected by the First Amendment. Ohio ACLU Legal Director Raymond Vasvari says the ruling gives programming languages the same protections as music, scientific articles, and other varieties of "technical expression."
- "Intel Plans Five E-Business Laboratories"
Financial Times (04/07/00) P. 18; Grande, Carlos
Intel plans to invest millions of dollars in the development of five e-business testing centers in Europe, in a move aimed at boosting the company's role as an Internet infrastructure provider. As part of the plan, Intel has teamed with 10 Web consultancies to help e-businesses test technology in France, Germany, the Netherlands, Sweden, and the United Kingdom. Intel's partners in the venture include Swedish Internet incubator Icon Medialab and French incubator Integra. The announcement follows similar moves by other hardware makers, such as Dell, into the services arena. Companies will need to implement Intel products, particularly Internet equipment, in order to use the new testing facilities. "These centers are designed to give companies the benefit of our technology, testing an e-business in 30 to 60 days," says Intel's Rob Ecklemann. Intel's new focus on Internet infrastructure positions the firm as a rival to Cisco, a major supplier of Internet networking gear, and Sun, a provider of e-commerce servers.
- "Report: Supply Chain Not Net-Ready in Europe, Says IDC"
IDG News Service (04/06/00); Sayer, Peter
The market for Internet-based supply chain management services in Europe is still in the early stages of development, according to a new International Data (IDC) study. The report, called "Internet Impact on Supply Chain Management Services," said that European companies have largely resisted Web-enabled supply chains because of concerns regarding security. "Security issues dominate the underlying lack of enthusiasm," said IDC European services expertise center manager Mirko Lukacs. Lukacs said that although European service providers are eager to develop online SCM systems, lack of interest from corporate customers has limited their offerings. He said that smaller companies often prefer private EDI systems to Web-based supply chain systems, which in turn makes their larger partners reluctant to implement Web-based processes. Yet European companies will see a greater need for some measure of Web-enablement to cater to the increasingly customer-centric business atmosphere, warned Lukacs. He said that consumers are quickly becoming the most significant link in the supply chain by expecting greater product variety and availability and strong reliability of order fulfillment.
- "European Online Sales Set to Soar"
Newsbytes (03/30/00); Gold, Steve
Europe will be in the same e-commerce league as the U.S. by 2005 suggests a new report by Forrester Research. Entitled "Retail's Pan-European Future," the study estimates that online retail sales in Europe will reach $170 million over the next five years, at an annual growth rate of 98 percent. If so, online sales would account for 7 percent of total retail sales across Europe. A gap would no longer exist between the U.S. and parts of northern Europe like Germany, Sweden, and the United Kingdom. In fact, Germany is expected to surpass the U.S. in travel-related e-commerce and the United Kingdom is projected to overtake the U.S. in the groceries category. Germany will account for 26 percent of all online sales in Europe, while 9.3 percent of Sweden's total retail sales will be made online. Although e-commerce is not expected to take off at such a pace in southern Europe, France is expected to represent 14 percent of all online sales in Europe. Companies seeking to become leaders in the European e-commerce market in the next few years will have to develop cross-border strategies that will attract pan-European sales, says Forrester senior analyst Matthew Nordan. A large number of Internet pure plays are expected to succumb to a wave of consolidation, which could leave as much as 75 percent of online sales to traditional retailers. And the future is not promising for multi-country online retailers because cross-border strategies must balance local requirements with a pan-European scale. Service providers will offer many of the cross-border solutions involving logistics, payments, and customer service needs. Traditional retailers have the potential to become e-commerce leaders if they move quickly, says Nordan.
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- "Will E-Commerce Stay a Tax-Free Haven?"
Interactive Week (03/27/00) Vol. 7, No. 12, P. 14; Brown, Doug
The members of the federal Advisory Commission on Electronic Commerce (ACEC) met for the final time last month but were unable to attain enough votes to achieve the two-thirds consensus required to make formal recommendations to Congress regarding the issue of e-commerce taxation. However, the board will be allowed to present its majority findings to Congress, which center around a plan, agreed upon by 11 of the ACEC's 19 members, that would make it nearly impossible for online sales to be taxed. Some board members, including Washington Gov. Gary Locke, Utah Gov. Mike Leavitt, and Dallas Mayor Ron Kirk, caution that allowing the Internet to remain tax-free will likely result in tax increases in other areas, such as cigarette taxes or property taxes, or in the discontinuation of certain state-funded services. States typically gain 50 percent of their revenue from sales taxes, and the inability to tax Internet sales means states will lose an enormous amount of income. Figures from Forrester Research show that nearly $525 million in online sales taxes were owed to states in 1999 but never collected. The main stumbling block to e-commerce taxation is the fact that, due to state sovereignty in taxation matters, there are nearly 7,500 different sales tax schemes currently in existence across the nation. This patchwork quilt of sales tax laws needs to be greatly simplified and made universal across states before any Internet sales taxation system can be successfully implemented.
- "All Yours"
Economist (04/01/00) Vol. 355, No. 8164, P. 57
Manufacturers are trying to join the mass customization revolution, but many are discovering that they may have to change their entire production process to do so. In many ways, mass customization is based on the Internet because of the one-to-one marketing that the technology allows. Companies no longer have to rely on a direct sales force to find out what consumers want. Using the Internet, companies can communicate more effectively with consumers and address the specific needs of their customers. Although the services industries have embraced catering to the specific needs of customers, the concept may prove to be more problematic for manufacturers. In the auto industry, for example, the thinking of Henry Ford was to make the car then sell it afterwards. However, as Dell Computer has shown, the time may be now for manufacturers to allow consumers to pay first, and then make the product. Dell allows consumers to design their own computers at its Web site, and then the company makes the computers. The company outsources much of its production, and its inventories are low. Dell has been able to avoid running out of parts or the building up of inventory because of good communication and speed. Frank Piller, mass customization expert at the Technical University of Munich, says manufacturers will have to change the order in which they assemble products, as well as the design and the construction of products. One particular problem for automakers, for example, is how to allow consumers to customize a car when body color is determined early on in the production process. Each group of steps in modular production processes will have to be separated or clipped together "like Lego blocks," he says. At the same time, manufacturers must figure out how to manage customers because mass customization is less about what companies can produce than about what consumers want. As a result of the Internet, mass customization could be to the 21st century what mass production was to the 20th century.
- "Digital Wheels"
Business Week (04/10/00) No. 3676, P. 114; Thornton, Emily
The car is considered to be the next big thing for the Internet with auto manufacturers, software makers, Internet-based companies, and consumer electronics giants all lined up to transform the driving experience. The major players involved have plans to outfit cars with the latest digital gadgetry, which could range from real-time videos of traffic, Web-surfing and audio email, to backseat video displays, controlled acoustics, enhanced digital videodisk systems, and Internet-based games. Japan has taken an early lead in digital automobiles and some $642 million is being spent on smart-car research each year. Still, less than 1 percent of all cars sold in Japan have onboard computers with Internet access, according to Matsushita Communications Industrial. However, by 2003 as many as 40 percent of all cars in the country could feature the technology. These days, Toyota is investing in a new telecommunications company, Mercedes is working Deutsche Telekom, and General Motors is partnering with AOL as the major players try to positions themselves to come out on top in the next big frontier of the Internet. Toyota currently offers the Monet system that allows digital pictures and maps to be downloaded from the Internet and sent to friends and colleagues, even those who are also driving. European companies are getting more involved as well; the new Mercedes S-class sedan will notify police automatically if there is an accident. DaimlerChrysler is also working to have a system provide hospitals with medical information about drivers. In the U.S., GM and Ford Motor both have plans to produce cars with an Internet link this year. Global technical standards for all the in-car equipment are expected to be a major hurdle for progress in digital cars. Most major players would want an open architecture to avoid a Microsoft scenario of having to pay a Windows-like toll. For American automakers, there are concerns of all the extras distracting drivers and an unwillingness of consumers to pay an extra $1,000 for new features.
- "Challenge of the Millennium"
Manufacturing Systems (03/00) Vol. 18, No. 3, P. 10; Nesdore, Paul
Many manufacturers will work on developing effective e-business strategies this year. Some manufacturers rushed into e-commerce without first working out a strategy. To move smoothly into e-business, companies should focus on establishing a reliable internal infrastructure before launching an e-commerce site. The major technology issues that manufacturers should consider when moving into e-business are integration, visibility, analysis, and optimization, says Manugistics' Lori Mitchell-Keller. Many non-technology issues should also be addressed, including the reactions of employees and partners to the internal reorganization that accompanies e-business. For example, salespeople are often concerned that e-business will allow a company to circumvent the usual sales channel. E-business also condenses planning cycle times, forcing companies to move more quickly. Another challenge is that e-business requires companies to share information with customers, suppliers, and partners, and many companies are reluctant to do so. Software vendors are beginning to recognize that manufacturers do not want to completely rebuild their infrastructures, and are offering modular solutions that are flexible enough to be customized for a particular business. In response to manufacturer's concerns about integration, vendors are offering software that is easier to integrate with existing systems. For example, J.D. Edwards OneWorld development environment product uses an object type component structure that simplifies integration.