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Volume 2, Issue 39:  Wednesday, April 5, 2000

  • "Microsoft Appeal May Go Directly to High Court"
    Washington Post (04/05/00) P. E1; Grimaldi, James V.

    During a conference convened yesterday afternoon between attorneys for the government and for Microsoft, U.S. District Judge Thomas Penfield Jackson stated once he decides upon sanctions in the Microsoft antitrust case he may bypass the U.S. Court of Appeals and instead directly petition the Supreme Court to hear Microsoft's appeal of the verdict. Jackson said such a course of action is meant to avoid "a number of months of additional proceedings" that would further "disrupt the economy or waste any more...time." An expedited appeal may conclude litigation by the end of this year and consequently assuage fears that Microsoft intends to delay a resolution long enough for marketplace changes to render proposed sanctions irrelevant. However, there are certain prerequisites involved in speeding the appeals process. Either Microsoft or the government has to request an appeal to the Supreme Court, and the request must then be considered by the Justice Department solicitor general and possibly the DOJ attorney general and the president. Additionally, Judge Jackson has mandated the government and Microsoft present the court with the final settlement offers formulated prior to the termination last Saturday of out-of-court negotiations. Despite the ongoing legal conflict, Microsoft Chairman Bill Gates is scheduled today to participate in a White House panel on the digital divide and also meet with various Republican and Democratic members of Congress.

  • "Europe's Antitrust Probe of Windows 2000 Is Expected to Continue Despite U.S. Ruling"
    Wall Street Journal (04/04/00) P. A16

    Yesterday's ruling against Microsoft in the U.S. is not likely to make the European Commission drop its own antitrust probe of the software giant. The commission plans to announce its views on the ruling today, but says its own investigations are separate. The commission's investigation centers on possible antitrust violations of Microsoft's Windows 2000, and a decision against Microsoft could force the company to alter its newly released operating system. Meanwhile, Microsoft says any solutions imposed as a result of the U.S. trial will be applied worldwide. Restrictions on Microsoft's behavior could benefit some European tech companies, experts say. European computer users are more knowledgeable of Linux, Unix, and other open-source technologies than their U.S. counterparts, says International Data's Tony Picardi. Among the European companies experts say could gain from Microsoft restrictions are webfair, a German company that makes business-to-business management software, and Psion, a U.K. maker of operating software for handhelds and wireless devices.

  • "You've Got Inappropriate Mail"
    New York Times (04/05/00) P. C1; Guernsey, Lisa

    The number of companies monitoring employee email has increased from 27 percent in 1999 to an estimated 38.2 percent in 2000 due to a combination of more advanced monitoring software and employers' concerns about the volume of network traffic, widespread employee use of corporate equipment for personal business, and the circulation of offensive or obscene email messages. Despite its growing popularity, the practice does raise some difficult questions. Perhaps the most troubling issue is whether email monitoring is an invasion of employee privacy. A handful of lawyers have argued email messages are akin to telephone conversations and should therefore be similarly protected from unknown or unauthorized review. Monitoring policies frequently receive mixed reactions from employees--some staunchly oppose the practice, others accept it once they know the reasons for its implementation, and still others appear relatively indifferent or unconcerned. Many employers feel a monitoring policy will foster the least amount of resentment or anger if employees fully understand its content and the reasons for its adoption before monitoring commences. Such disclosure may soon be required by law. Companies must also decide which employees to monitor, how extensively to monitor, and how to decide what is offensive or obscene. Another concern is how to ensure the monitoring system is not abused by its managers. "Whose opinion draws the line?" asks Ritvik Toys' systems manager Andrew Quinn.

  • "Free Speech of Programmers Cited"
    Washington Times (04/05/00) P. A6

    Computer programmers, computer scientists, and privacy and intellectual freedom advocates won a big victory yesterday when the 6th U.S. Circuit Court of Appeals reversed a lower court ruling and determined that the First Amendment protects computer encryption programs. Never before has a federal appellate court determined that computer programming is protected by the First Amendment, says Raymond Vasvari, legal director of the ACLU in Ohio. The ruling stems from a lawsuit filed by Cleveland law Professor Peter D. Junger, claiming that his First Amendment rights were infringed upon by the government's mandate that licenses are needed for exporting encryption programs.

  • "Consumer Groups Warn Over US/EU Data Privacy Act"
    Newsbytes (03/31/00); Dennis, Sylvia

    The Transatlantic Consumer Dialog (TACD) group, representing the interests of both European and U.S. consumers, is unhappy with the Safe Harbor data privacy accord agreed to by U.S. and European Union negotiators. Consumer privacy protections provided by the safe harbor agreement compare unfavorably with those guaranteed by the EU data protection law, according to the TACD. Under the EU directive, privacy is a legal right, whereas under the safe harbor proposal, enforcement of privacy is mostly left up to industry self regulation, the group contends. U.S. consumer groups are skeptical that self-regulation will sufficiently protect Europeans' personal data, says the TACD. The TACD is lobbying for the agreement to be restricted to a time period of finite duration, during which a full independent audit of the agreement can be undertaken.

  • "Study: U.S. CIOs to Hire More IT Staff This Spring"
    InfoWorld.com (03/31/00); Rohde, Laura

    More than one-fourth of 1,400 CIOs surveyed intend to hire more IT personnel during the next three months, while only 2 percent of respondents expect to reduce the size of their IT staff, revealed a study conducted and published quarterly by RHI Consulting. The figures from the Information Technology Hiring Index also show that 34 percent of CIOs at companies located in Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, Washington, and West Virginia plan to hire IT staff. CIOs at companies located in New Jersey, New York, Pennsylvania, Connecticut, Maine, Massachusetts, Rhode Island, and Vermont expect to increase by 28 percent their number of IT employees. In terms of overall hiring activity, 51 percent of respondents intend to hire more employees, and only 5 percent intend to reduce staff size. RHI Consulting attributes the demand for IT professionals to an increase in the number of businesses entering the e-commerce market.

  • "E-Tail Gets Derailed: How Web Upstarts Misjudged the Game"
    Wall Street Journal (04/05/00) P. A1; Bulkeley, William M.; Carlton, Jim

    A shakeout among dot-coms seems imminent as startups continue to lose money and investors become disillusioned with Internet stocks. CDNow, which at one time seemed poised to lead online music sales, recently announced it might not have enough money to stay in business. Online retailer Value America has reduced its workforce by half and cut the number of products it carries, while BeautyScene.com yesterday sold its name and assets to new investors. The Internet's efficiency has turned out to be one of the largest problems for online retailers, since the Web allows consumers to comparison-shop so easily. Beyond advertising expenses, online retailers are forced to offer extremely low prices, free shipping, and special promotions to keep customers from clicking to a rival site. On average, Web companies spend $45 "to acquire a customer who generally spends $35 and never comes back," says Maurizio Zecchione of clothing retail site StyleClick.com. Meanwhile, some experts estimate the average amount spent to gain a single customer is closer to $200. Furthermore, some online retailers now find it necessary to build warehouses and hire service representatives, eating into the anticipated cost savings of online business. Although dot-coms predicted unprofitable beginnings, most expected to finance their losses through sales of equity, based on the success of Internet IPOs six months ago. However, investors have now lost their enthusiasm for dot-coms, and venture capitalists are not likely to rush to finance such unprofitable companies. Still, well-funded online companies like Amazon.com and online grocer Webvan Group are likely to succeed in Internet retail, and offline stores that already have a reputable brand are likely to survive online as well. In addition, online sales are expected to rise 53 percent to $23 billion this year, says Jupiter Communications.

  • "House Panel Questions Automated Surveillance by SEC"
    Reuters (04/04/00)

    The privacy of American citizens is jeopardized by a Securities and Exchange Commission plan to set up an automated system for monitoring online fraud, according to members of the House Commerce subcommittee on finance. Rep. Michael Oxley (R-Ohio), chairman of the subcommittee, and panel member Edolphus Towns (D-N.Y.) aired their concerns about the SEC's plan in a letter to SEC Chairman Arthur Levitt. The subcommittee is calling on Levitt to explain how the SEC has the legal authority and the constitutional right to monitor private online transmissions and how the agency will determine probable cause before reviewing transmissions. The SEC's response to the inquiry will go a long way toward determining if Oxley and Towns hold public hearings about the proposal.

  • "Browser Wars, Version Two: Netscape's Back"
    Wall Street Journal (04/05/00) P. B1; Wingfield, Nick

    Netscape today will release its long-awaited Netscape 6, the first new version of the browser since the company was acquired by AOL early last year. Although the announcement closely follows Monday's ruling in the Microsoft antitrust trial, AOL's Barry Schuler says the timing is a coincidence. However, a former Netscape executive suggests that AOL did not rush to release a new browser during the trial, since a major issue in the trial was the impact of Microsoft's business practices on the Netscape browser. Microsoft overwhelmingly defeated the once-dominant Netscape in the browser market when the software giant began giving away its Internet Explorer. Netscape 6 is almost a year behind schedule, with the delay stemming from the problems Netscape encountered in trying to manage the open-source project as well as the many departures of Netscape employees after the acquisition by AOL. Netscape 6 is designed to be faster and easier-to-customize than its predecessor. The new browser runs on a program called Gecko, which is smaller and faster than comparable programs, and quickly renders text, images, and other Web page content onto computer screens. Users will be able to easily link to AOL's instant-messaging service, and the browser will also connect to the Netscape site, which will target users with ads and shopping opportunities. Observers are watching to see whether AOL will abandon Internet Explorer in favor of Netscape 6. AOL has long offered Internet Explorer to AOL subscribers in exchange for Microsoft including AOL's software on Windows desktops. AOL and Microsoft both say they expect to continue their distribution agreement.

  • "Online Trading Grows Up"
    Washington Post (04/05/00) P. G4; Swoboda, Frank; Brown, Warren

    Traditional brick-and-mortar businesses are turning their attention toward the Internet and e-commerce as a means of capitalizing upon their established brand names and vast buyer power. Online marketplaces were recently announced between American retailer Sears and French retailer Carrefour, and between automobile mammoths General Motors, Ford Motor, and DaimlerChrysler. Each exchange has the potential to dwarf its respective industry in terms of total volume of business and generate enormous savings for participants, which could be passed along to consumers in the form of reduced prices. "The bottom line is that suppliers and retailers are going to be able to communicate directly and competition is going to be enhanced," says Sears' Joe Laughlin. Many market analysts agree but caution the new B2B exchanges will likely receive attention from federal antitrust regulators. As buyers are given more power to choose their suppliers, buyer-supplier relationships are likely to shift in favor of the buyers. As a result, commodity suppliers unable to cope with new pressures and new forms of competition may be forced out of business. Some analysts also fear companies with financial interests in an exchange may misuse confidential information provided by suppliers in an attempt to gain the economic upper hand. They believe B2B marketplaces should be run by independent organizations outside of the specific industry in which the exchange participants operate. However, some companies, such as BMW, are not keen to jump on the Internet bandwagon. This reluctance could prove damaging to the new B2B exchanges, whose success may depend primarily upon securing support from a sufficient number of buyers and sellers.

  • "Throwing Rocks at ICANN"
    Industry Standard (04/03/00) Vol. 3, No. 12, P. 114; Perine, Keith

    The controversial practices of the Internet Corporation for Assigned Names and Numbers (ICANN), a nonprofit organization created by the government to oversee the technical administration of the Internet, frequently make it a prime target for heated discussion and public outcry. Although ICANN can boast certain accomplishments, including opening domain-name registration to competition, formulating a dispute resolution policy for conflicting domain-name claims, resolving conflicts with Network Solutions, and working out an operating budget, its shortcomings inevitably receive more time in the public spotlight. For instance, ICANN's Domain Name Supporting Organization has been unable to reach agreement upon whether to create more domain names to ease the current crunch, deadlocked primarily because it seeks to please competing corporate and noncommercial interests. ICANN has also been criticized by those who view the organization's extensive worldwide travel as extravagant, and by those who feel the organization does not have the legislative authority to either alter existing Internet policies or impose new ones. Regardless of its unpopularity, ICANN does intend to achieve certain goals. It expects to become an international entity and foster beneficial relationships with governments and officials affiliated with country-code domains. ICANN also plans to create a system for electing at-large board members, rebuild its ailing reputation, portray itself as above the influence of politicians and fat wallets, and secure support from government, industry, and the Internet community.

  • "Rewiring the 'Old Economy'"
    U.S. World & World Report (04/10/00) Vol. 128, No. 14, P. 38; Holstein, William J.

    Business-to-business (B2B) e-commerce is revolutionizing even the most traditional U.S. companies, allowing them to increase efficiency and cut costs. For example, Aeroquip, a maker of parts for companies such as John Deere and Caterpillar, recently implemented a B2B system that allows customers to go online to see what parts are available and to order customized products that are shipped the same day. Before implementing the system, Aeroquip hand-sorted its sales slips and manually entered information into a computer system that did not display the data for 24 hours, leaving the company with no immediate way to determine what it had sold. As other companies join the B2B trend, B2B transactions will reach $2.8 trillion by 2004, up from $237 billion this year, Gartner Group predicts. The B2B move could result in productivity gains, allowing companies to cut 10 percent of their procurement costs, says investment bank Dresdner Kleinwort Benson. In addition, B2B offers old-line companies a chance to increase their stock valuations, and the trend could stimulate economic growth. Consumers are likely to benefit from B2B in terms of lower prices, a wider range of choices, and faster delivery. Cisco Systems, which makes B2B hardware such as routers and switches, is perhaps the paragon of an effective B2B company. Cisco's customers can research products and place orders online, with the information being routed through Cisco to suppliers. Sixty-five percent of Cisco's orders pass directly from the supplier to the customer, and inventory is kept at a minimum since products are built after they have been ordered. Developing a business model like Cisco's is easier for companies working from the ground up, but traditional companies should make the effort to transform their businesses to survive in the B2B era, experts say.

  • "Can the ITU Become Internet Caretaker?"
    Interactive Week (03/27/00) Vol. 7, No. 12, P. 24; Ploskina, Brian

    The International Telecommunications Union (ITU), a public-network standards-setting body, has undertaken efforts to transform itself from an organization that merely approves standards for Internet equipment and processes developed by others into one that quickly and efficiently formulates, approves, and implements its own Internet standards. Frustrated by the snail-like pace of the ITU approval process, equipment manufacturers, carriers, and ISPs have been utilizing proprietary approaches to designing Internet equipment, processes and networks. Also, several groups exist to bypass the ITU and set standards for specific aspects of the Internet, such as the ATM Forum, formed in response to the advance of asynchronous transfer mode technology, and the Internet Engineering Task Force. Potential revisions to the practices of the ITU are being discussed by the 27 members of the newly formed ITU Reform Advisory Panel and include increased private-sector membership, more frequent communication between the ITU and telecommunications standards groups, and the separation of the ITU Telecommunication Standardization Bureau from the rest of the ITU. The Reform Advisory Panel is scheduled to issue its recommendations following its final meeting in November 2001.

  • "Deadly Embrace"
    Economist (04/01/00) Vol. 355, No. 8164, P. 58

    One of the obstacles to an out-of-court settlement in the federal government's antitrust case against Microsoft has been an encryption technology known as Kerberos. Originally developed by computer scientists at the Massachusetts Institute of Technology, the open source code program is based on the Unix operating system and has so far successfully stumped hackers seeking to obtain confidential information transmitted over the Internet. Until recently, Microsoft had been using the technology in a manner that enabled computers running Windows to connect to servers running Unix. However, the software giant's new Windows 2000 incorporates an altered form of Kerberos that renders PCs running Windows incompatible with Unix servers, a move critics say is evidence of Microsoft's attempt to "embrace, extend--and extinguish" rival technology in the Internet server market. They argue Microsoft is attempting to unfairly establish the same dominance in the server market it holds in the PC operating systems market by providing users with an incentive to avoid rival server software and bypass compatibility problems by adopting Windows for both their PCs and servers. Although designers can get Windows 2000 and Unix to work together, the process is complicated, costly, and time consuming, and consequently not a viable option for many organizations. Microsoft refuses to admit any wrongdoing and claims it will soon make the source code for its revised version of Kerberos publicly available.

  • "Construction Boom"
    InformationWeek (03/27/00) No. 779, P. 59; Wilder, Clinton

    Electronic marketplaces are growing rapidly, with hundreds of online exchanges expected to emerge in the next six months. By 2004, online marketplaces will conduct $2.71 trillion in global sales transactions, accounting for 37 percent of all business-to-business commerce on the Internet, according to Gartner Group. Companies planning to launch an online marketplace should choose their strategies carefully, since many of the marketplaces that spring up in coming years will fail. To succeed in the marketplace arena, companies must quickly make decisions about funding, equity ownership, revenue models, industry partnerships, supply chain relationships, and sales transactions. Only after these issues have been decided should a company begin to make decisions about technology, experts say. Launching a marketplace with less than $10 million is dangerous, most experts say. Marketplaces have a variety of ownership structures, with many independent marketplaces selling equity positions to reputable brick-and-mortar companies to gain capital as well as credibility in the industry. Brick-and-mortar firms trying to launch marketplaces should remember the importance of appearing neutral, and should consider partnering with competitors. Marketplace operators typically receive revenue from transaction fees, keeping 0.5 percent to 5 percent of each transaction. During the first year, gaining a critical mass of traffic should be the marketplace's main objective since major players in established industries are not likely to switch to a different marketplace once they have already selected one. In launching a marketplace, companies should buy technology rather than building it themselves. Ariba, Commerce One, IBM, Oracle, and SAP all offer marketplace applications. In general, speed is the most important issue in building an online marketplace, followed by scalability, experts say.

  • "E-Benchmarking: The Latest E-Trend"
    CFO (03/00) Vol. 16, No. 3, P. 27; Frieswick, Kris

    Consulting firms are beginning to offer Internet startups e-benchmarking services that evaluate the effectiveness of a Web site and e-business strategy. PricewaterhouseCoopers offers the E-Business Maturity Model, which assesses an e-business model using over 700 practice statements in nine areas, such as security and strategy. Clients can also pay an extra fee for help in meeting their e-business objectives. Meanwhile, Forrester Research will soon offer an online tracking tool called E-Business Voyage that compares a client's e-business maturity to that of the industry overall. The tool bases its assessment on 20 questions that users answer in four operational areas. Gartner Group's GartnerServices, the consulting and management division of the company, offers an e-channel effectiveness overview assessment. The six-week program evaluates business-to-consumer e-businesses, and GartnerServices helps clients carry out e-business strategies for an extra fee.

  • "E-Strategies Need Expansion"
    Frontline Solutions (03/00) Vol. 1, No. 3, P. 10

    The majority of e-commerce strategies lack sufficient planning and leadership, according to a new KPMG-sponsored survey of 48 firms working in nine industries, including automotive, aerospace, consumer packaged goods, and chemicals. Only 26 percent of respondents could identify one designated e-commerce decision-maker in their organization, despite 65 percent listing e-commerce to be one their most important initiatives. The survey found that consumer packaged goods and chemicals industries are the most active in e-commerce, while e-procurement systems are the leading cost-reduction e-business initiative. "What we found is that most e-business activities are very customer- and revenue-driven, which is a fundamental change from past technology-enabled projects focusing on internal operations and cost reduction," says Debra Hofman, managing director of Benchmarking Partners, which conducted the survey. "This brings a new set of decision-makers to the table such as sales and marketing executives." Overall, the survey identified many well-funded e-business technology initiatives but saw few strategic enterprisewide initiatives benefiting from real leadership.

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