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Volume 2, Issue 146: Wednesday, December 27, 2000
- "Number of Dot-Com Job Cuts Climbed 19 Percent in December"
Wall Street Journal (12/27/00) P. A2
Dot-coms said they would lay off 10,459 workers in December, marking a 19 percent increase over the previous record of 8,789 layoffs in November, according to a recent study from Challenger, Gray & Christmas. The number of layoffs has risen for seven months in a row, as dot-coms faced with a slowdown in the economy and the disappearance of venture-capital funding try to cut costs, the study says. Between July and December the number of dot-com layoffs reached a total of 36,177, a drastic increase over the 5,097 layoffs between January and June. Dot-coms that offer consulting, financial, and information services terminated the most jobs, with layoffs reaching 19,535. Online retailers ranked second in terms of layoffs, cutting 9,523 jobs.
- "Labor Department Unveils Revised H-1B Regulations"
Computerworld Online (12/26/00); Dash, Julekha
The U.S. Department of Labor has added several new regulations to the H-1B visa program, which lets skilled foreign workers hold a job with U.S. firms for a set period of time. Earlier this year Congress expanded the number of H-1B visas issued each year to 195,000. The new regulations, which become active on the last full day of President Clinton's term, offer protection for H-1B workers who report any abuse of the program committed by their employer. Also, the new regulations stipulate that companies that have had trouble abiding by H-1B regulations in the past or that employ H-1B workers for more than 15 percent of their workforce must show that H-1B workers are not being hired in place of U.S. workers. The regulations also mandate that companies pay H-1B workers even if they are laid off or otherwise not engaged in work. Critics say this provision is unfair to U.S. workers, who would not receive the same treatment under these circumstances.
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- "Bush Probably Will Consider Tech Czar Post"
Los Angeles Times (12/25/00) P. C1; Shiver, Jube Jr.
President-elect George W. Bush may appoint a technology czar to his administration, aides to the next president say. The technology czar would be modeled on a position created by Virginia Gov. James Gilmore, an ally of Bush. Gilmore's technology czar, former Litton/PRC executive Don Upson, oversaw the state government's technology policy and tried to lure high-tech firms to the state, which already includes such heavyweights as America Online. Those close to Bush say a technology czar would play a similar role in the Bush White House. The czar would also help maintain a steady high-tech policy should Bush have trouble assembling his administration in short order. However, many tech analysts say the industry will not be as prominent a concern for Bush as it has been for President Clinton. Political analysts agree, saying Bush would rather focus on issues such as Medicare reform, on which he may build support for a bipartisan solution, rather than contentious issues such as privacy and taxes on online sales. Still, Bush's greatest impact on the tech industry will be his appointments to the Justice Department, the Federal Communications Commission, and the Federal Trade Commission, observers say. These departments will be more pro-business under the Bush administration, analysts believe.
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- "Microsoft Waits for Bush's Position on Its Antitrust Case"
New York Times (12/26/00) P. C1; Brinkley, Joel
The Bush administration appears unlikely to aggressively pursue the government's antitrust lawsuit against Microsoft, observers say. When President-elect George W. Bush was campaigning, he expressed concern about Judge Thomas Penfield Jackson's decision to split the software giant in two. "I stand on the side of innovation, not litigation," Bush said. Bush's aides speculate that a Bush administration would never have brought the suit against Microsoft in the first place. Although the Bush administration is likely to follow the case through the current appeal, the Justice Department will probably not appeal to the Supreme Court if Microsoft wins, observers say. While the attorney general-designate, Sen. John Ashcroft (R-Mo.), questioned some of Microsoft's business practices in the past, he also appears to disapprove of government intervention in the high-tech industry. In addition, the Bush administration could further weaken the government's case by shedding attorney David Boies, widely credited with the government's earlier victory against Microsoft, because of his role in helping Gore contest the election results in Florida. Nonetheless, even if the Justice Department abandons the suit, the 19 states suing Microsoft intend to continue pursuing the suit until they are satisfied with the outcome, says Iowa Attorney General Tom Miller, who is leading the states in the suit.
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- "Law Provides More Labor for Tech Industry"
Baltimore Sun (12/23/00) P. 7A; Roche, Walter F. Jr.
The high-tech industry could receive an additional 50,000 H-1B visa holders beyond the recently increased limit as a result of two measures in the bill. Congress in October lifted the H-1B cap from 115,000 to 195,000, but the bill will also provide a one-time bonus in the number of skilled foreign workers allowed to work in the U.S. One measure in the bill calls for the Immigration and Naturalization Service (INS) to process all the backlogged H-1B applications filed before Sept. 1 without including them as part of the new 195,000 limit. The INS says 29,000 applications were filed between March 22, when the visa limit for the previous fiscal year was reached, and Aug. 1. The INS is not yet sure how many applications were filed in August. Meanwhile, a second provision says the 21,888 H-1B visas that the INS mistakenly granted beyond last year's limit will also be exempt from the new limit. Although these extra visas could count against the increased cap under the current law, the new law specifically exempts them, says INS' Eyleen Schmidt.
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- "Highlights, Lowlights of Year 2000"
SiliconValley.com (12/24/00); Gillmor, Dan
The year 2000 has seen both highs and lows in the high-tech industry, writes Dan Gillmor. Clearly, the lowest low point has been the collapse of the dot-com boom. Although this has taught the industry that it cannot escape the laws of economics, it has brought misery and financial pain to many people. Gillmor lauds this year's most notable high-tech court decision, Judge Thomas Penfield Jackson's finding that Microsoft is acting as a monopoly and must be broken up. However, Gillmor is disturbed by the rash of mergers in the industry, particularly between America Online and Time Warner, and believes that these mergers will lead to further anti-competitive behavior. Gillmor is also bothered by the number of patents filed by tech companies and by the way media companies used the Digital Millennium Copyright Act of 1998 to trample individual users in the name of corporate copyrights. However, he is pleased that this year saw the emergence of peer-to-peer (P2P) computing, a technology that will change how intellectual property is protected and transmitted, regardless of Napster's fate. Also, P2P computing will lead to the distribution of large computing tasks among many individual desktop machines. Meanwhile, 2000 was not a good year for security and privacy, Gillmor contends, as several major hacking attacks exposed flaws in companies such as Microsoft and e-commerce sites such as Amazon. Meanwhile, politicians did not seem too keen on offering greater privacy protection for citizens. Overall, Gillmor feels that advances in the technology that few consumers ever see, in fields from bandwidth to nanotechnology, will be the developments of this year with the longest-lasting effects.
- "Pollinating Viruses Help Set Record for Outbreaks"
Investor's Business Daily (12/26/00) P. A5; Deagon, Brian
Computer-security experts claim that 2000 was the worst year on record for viruses. The Love Bug virus was the greatest epidemic in 2000, according to MessageLabs. Within 24 hours of its first appearance in May, the virus struck 47 million users. The Love Bug virus was an example of a pollinating virus--a virus that can replicate and spread itself. Security experts believe that the rise of pollinating viruses, coupled with the increased use of email, was the prime factor in most virus outbreaks this year. Experts say many users do not upgrade their anti-virus software frequently enough. Furthermore, many users now access their email over multiple platforms, giving hackers even more ways to spread viruses. Experts also cite the vulnerabilities of Microsoft's Outlook email program as a cause for virus attacks. Not only is Outlook the most popular email program in the world, but it comes with the Microsoft Office suite, which also provides the Microsoft Visual Basic programming language, a favorite tool among hackers for designing new viruses.
- "New Year Brings No Worries of 'Y2K'"
Washington Times (12/26/00) P. B9; Glanz, William
Although 2001 is the actual start of the new millennium, the threat of Y2K glitches is over, says John Koskinen, former chair of the President's Council on Year 2000 Conversion. The last day for potential problems relating to the data change was Feb. 29, because many programmers failed to take the Leap Day into account. However, Leap Day, like New Year's Day, passed uneventfully. Many computer glitches arise every day, and those that occur around Jan. 1 should not be blamed on the date change, says Bruce Webster, former head of the Washington D.C. Year 2000 Group. Y2K had some positive side effects, such as spurring high-tech spending as companies updated systems to prepare for the rollover, Koskinen says. Global spending on Y2K upgrades reached an estimated $300 billion to $600 billion, Koskinen says. In addition, Y2K increased awareness about the need for companies to take inventory of their high-tech equipment, says Koskinen.
- "Privacy Heats Up But Doesn't Boil Over"
CNet (12/22/00); Jacobus, Patricia
Online privacy became a mainstream issue this year, with lawmakers introducing several privacy bills but ultimately passing none. The FBI's Carnivore email surveillance system underwent intense public scrutiny, as did the consumer data-collecting practices of DoubleClick, Toysmart.com, Amazon.com, and other Internet companies. Concerned about public opinion and the specter of government regulation, the industry began reviewing its privacy policies, appointing privacy officers, and continued to push self-regulation initiatives. Over the past couple of months MatchLogic, Avenue A, and Pharmatrak have been targeted by lawsuits alleging that the companies broke their privacy policies. Larry Ponemon, senior partner at PricewaterhouseCoopers, says companies are beginning to spend large amounts of money to ensure they are complying with privacy rules and not alienating their customers. A spokesman for Milberg Weisss Bershad Hynes & Lerach, which is handling the lawsuits, says that privacy has become "a strong new area of interest." Congress has vowed to make privacy a big issue during the upcoming session. The number of lawsuits are expected to increase if lawmakers pass privacy laws. "We know privacy is an issue," says Andrew Shen of the Electronic Privacy Information Center. "What we need now are laws."
- "Internet Companies Shift Strategies to Survive"
Washington Post (12/27/00) P. E5; Irwin, Neil
Although in 1999 the media and the public saw the Internet and e-commerce as the next big thing, this year has seen the bubble burst. Many dot-coms are struggling to stay afloat, others have collapsed completely, and investors are no longer willing to shell out millions of dollars for dot-coms with no plan to make a profit. Analysts say 2001 will likely see more of the same. They expect that the numerous dot-coms that have shifted their business plans from consumer services to business-to-business (B2B) services, will discover that market is as tough to succeed in as any other. Analysts also believe that dot-coms that do not have a large corporation funding their efforts will probably fail. "I think for most stand-alone Internet companies there simply isn't a bright future," says Jupiter Research analyst Robert Hertzberg. For example, Varsity Group, a company that began by selling college textbooks online but has since added B2B options such as a direct-marketing service to its portfolio, may soon be delisted from the Nasdaq. Varisity's stock, which began trading at $10 a share, is now trading for 19 cents. In contrast, dot-coms connected to larger firms, media firms in particular, may have a better chance at surviving but will have to move closer to their partners or parent companies. Discovery.com, which had been planning an IPO earlier this year, has instead laid off staff and returned to being a subsidiary, rather than a spin-off, of Discovery Communications. Many analysts are looking to the impending merger of America Online and Time Warner to see how a large firm will try to profit by producing and distributing content for the Internet. Some analysts expect 2001 will see many firms that produce content for both traditional and online media will combine their work and send much of the same content to each.
- "Hong Kong Police Advise Hackers to Think Twice"
Agence France-Presse (12/25/00)
Hong Kong law enforcement officials on Monday reminded computer hackers that they face up to 10 years in prison if they break the territory's laws on computer crime. The number of Hong Kong citizens with Internet access has increased by 300 percent over the past two years, according to official statistics. The statistics show that upward of 1.85 million Hong Kong people of the age 10 and above have used the Internet in the past year, while more than 36 percent of households in the territory now have access to the Internet. Raymond Lau Chi-keung, police commercial crimes bureau senior superintendent, explained that many hackers do not mean to commit criminal acts, but succumb to peer pressure and begin experimenting with hacking attacks.
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- "IRS' Internet Review Worries Groups"
Associated Press (12/26/00)
- "China to Protect Intellectual Copyrights on the Net"
Newsbytes (12/22/00); Gold, Steve
The Supreme People's Court of China has ruled that copyrights are subject to enforcement on the Internet, a ruling that should prompt greater enforcement of online intellectual material by the Chinese government. The court also stated that copyright owners have the right to receive payment for the licensing of their material. Compensation for the unlawful licensing of copyrighted property on the Internet would be enforced by penalties of up to $60,000, according to the China Daily. China has long been criticized for being too lax in enforcing intellectual copyrights. The China Daily says that there are currently 30 million Internet users in China, much higher than other statistics, which placed the number at 17 million in August.
- "Domain Name Infringement on Increase"
Net Imperative (12/22/00); McQuay, Martha
Since 1998, there has been a 5 percent increase in domain name infringement, a 2,200 percent increase in the number of parody sites, a 1,650 percent increase in online counterfeiting, and a 1,280 percent increase in metatags infringement, according to a Net Searchers survey. Copyright infringement rose 105 percent. The .co.uk domain came in second to the .com suffix, which contained 90 percent of the infringements. Upward of 50 percent of the survey respondents spent large amounts of money to acquire a required domain name. Some 96 percent of the respondents thought the Universal Dispute Resolution Policy should cover disputes relating to country code domain names. The new .eu TLD was supported by 81 percent of the respondents, and 75 percent of those who back .eu think domain names based on well-known names should be offered to their namesakes. Despite the increases in infringement, a mere 66 percent of the respondents leverage "domain name watching," and 50 percent utilize a renewals management service.
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- "Dot-Com Parties Dry Up"
Los Angeles Times (12/25/00) P. A1; Huffstutter, P.J.
The decline of the dot-com party scene may be the surest sign that the industry has moved from hot to cold, observers say. Although the early dot-com gatherings were generally open to all and offered lavish buffets and free drinks, including a few bashes that featured rock bands and movie stars, today's parties are often open only to company employees and those on the guest list and hardly ever live up to the lavish standard set in the prime of the dot-com boom. Still, San Francisco party planning firm Key Events reports that the city hosts as many as 20 dot-com parties each week, each with an average cost of as much as $60,000. The young partygoers who make a habit of crashing these parties, only some of whom are actually involved in the tech industry, report that they have a difficult time gaining access to these parties now and almost never receive the handfuls of free stuff that the hosts once gave away. One partygoer reports that she once walked away from a party with several free T-shirts, two Palm handhelds, and a snowboard. Now, she would be lucky just to get in the door.
- "Paying for IT 2001"
Computerworld (12/18/00) Vol. 34, No. 51, P. 48; Ulfelder, Steve
Most IT managers will have larger budgets in 2001, with business-to-business (B2B) e-commerce accounting for much of the spending, according to a recent Computerworld survey of 100 managers at firms with at least 400 workers. About 59 percent of respondents say their budgets will grow an average of 10 percent next year, while 29 percent predict no change and 9 percent expect smaller budgets. Recruiting budgets will increase for 37 percent of respondents and remain flat for 45 percent. Meanwhile, 46 percent of respondents intend to boost spending on training. Security and privacy will be top priorities next year, and 29 percent of respondents say security budgets will jump an average of 10 percent. B2B e-commerce will be the most critical project for 29 percent of respondents. E-business this year accounts for 12.7 percent of IT budgets, and is expected to claim 15.5 percent next year, says the Gartner Group. Other areas cited as next year's most critical project include data center management, enterprise resource planning, intranets, and security, each listed by about 18 percent or 19 percent of respondents. Wireless is expected to consume more of the IT budget next year, with 40 percent of respondents predicting an average 10 percent budget growth in this area. Still, Gartner notes that wireless now represents less than 5 percent of U.S. IT budgets, and experts say 2001 will not be wireless' big year. Meanwhile, just 17 percent of respondents plan to boost spending on application service providers (ASPs), and experts attribute this slow growth to skepticism about the future of ASPs.
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- "Now UCITA, Now You Don't"
eCFO (12/00) Vol. 16, No. 15, P. 13; Ford, Kathy
The Uniform Computer Information Transactions Act (UCITA) is causing conflict between software vendors who support the bill and corporate users who believe the act allows vendors too much control over software contracts. UCITA is designed to bring uniformity to software licensing contracts, and the bill has already been approved in Maryland and Virginia. However, corporate users say UCITA allows vendors to alter contract terms unilaterally and makes clickwrap and shrinkwrap contracts legally binding. Furthermore, users cannot pass software licenses to acquired firms under UCITA, critics say. Meanwhile, UCITA supporters contend that the bill actually increases protections for users. For example, UCITA requires that both sides in a contract specifically agree to a self-help provision that allows vendors to turn off software remotely, while current laws do not require vendors to inform users if an application includes embedded self-help technology. Furthermore, vendors and users are free to modify UCITA's provisions as they see fit during contract negotiation, supporters say.
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- "IT Unions Would Do More Harm Than Good"
eWeek (12/25/00) Vol. 17, No. 51, P. 88; Taschek, John
The information technology industry should prepare for the inevitable unionization of IT workers, writes John Taschek. IT is particularly ripe for unionization, with employees working long hours under stressful conditions. In addition, IT salaries are handsome for many, but not as rewarding for women and minority workers who are often paid less for doing the same work as white males. Just two weeks ago, employees of San Francisco-based eTown won a petition to vote for unionization. ETown overworked its employees and then tried to compensate them with stock that would ultimately become worthless, says Taschek. Although unionization will solve these short-term labor problems, the move would also stifle the innovation that the IT industry needs to foster its rapid pace of development, Taschek argues. "Unions reduce IT workers to assembly-line professionals, something that should scare the wits out of anyone who grew up in the computer industry," writes Taschek.
- "A New President, a Different Country"
Industry Standard (12/25/00) Vol. 3, No. 52, P. 42; Wasserman, Elizabeth; Perine, Keith
The high-tech industry may ask President-elect George W. Bush to make good on his promises of personal and corporate tax cuts if the U.S. economy slides into a recession. "One of the first things he's going to have to do is stimulate the economy with tax cuts," says Scott Rayder, a technology policy analyst at the conservative Heritage Foundation. However, Steve East, an economist with investment banking firm Friedman Billings Ramsey, says those cuts will be smaller and targeted, adding that there will be modest spending increases. For many market experts, it now appears that states and localities will have a hard time gaining support for taxing e-commerce. With many dot-coms foundering, brick-and-mortar businesses can no longer argue that their businesses are threatened by Internet-based startups that have a tax advantage. Although it now seems that high-tech companies do not have to worry about having the moratorium on Internet taxes extended, the industry can expect a fight on the issue of online privacy. Meanwhile, Microsoft could fare much better under a Bush administration. In fact, Robert Litan of the Brookings Institution believes there is "a better-than-even bet" that a Bush Justice Department would reopen settlement talks. Pro-technology Sen. Spencer Abraham (R-Mich.), who lost his re-election bid, could become the nation's technology czar. Amid all the changes, Federal Reserve Chairman Alan Greenspan will remain a constant fixture until his term ends in four years.
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