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Volume 2, Issue 60:  Wednesday, May 24, 2000

  • "In Airline's Suit, PC Becomes Legal Pawn, Raising Privacy Issues"
    Wall Street Journal (05/24/00) P. A1; McCarthy, Michael J.

    Federal courts are increasingly allowing prosecutors to search the hard drives on defendants' home PCs for evidence, but the resulting flood of digital information poses difficult questions about privacy. In one ongoing suit, Northwest Airlines obtained court approval to copy the PC hard drives of about 20 flight attendants and the flight attendants' union for suspected involvement in organizing a sick-out. The searches yielded a huge volume of material, since new technology makes it possible to unearth almost all activities that have ever taken place on a computer, including all the Web pages ever visited, email drafts that were never sent, and deleted files. Two flight attendants whose drives were copied, Ted Reeve and Kevin Griffin, say the searches violated their privacy by forcing them to relinquish possibly thousands of pages that did not pertain to the order. Reeve and Griffin are appealing the computer-search order, saying that files on a PC "may be uniquely private" since they can be retrieved even after they are deleted, unlike paper documents that can be destroyed. Reeve says Northwest is trying to smother the Internet's potential as an organizing tool. The flight attendants accuse Northwest of violating their right to free speech and their privacy rights.

  • "Privacy Challenges E-biz, Even Without New Laws--Experts"
    Newsbytes (05/23/00); Bonisteel, Steven

    Online privacy is a legitimate concern to 94 percent of Internet users, according to an Arthur Andersen survey of 365 Internet users carried out by Knowledge Systems & Research. Nearly three of every four users surveyed said they would part with personal data in order to receive an item or service of some value in return. Roughly 20 percent of those surveyed said they have become more worried about online privacy issues over the past six months. Just 18 percent of respondents said they would be somewhat likely or very likely to share their Social Security number with an online company, while 60 percent say they are less likely to open marketing emails due to concerns over computer viruses such as the Love Bug. Arthur Andersen's Russ Gates, global managing director of the company's technology risk consulting practice, said many companies are finding it difficult to carry out the terms of their posted privacy policies. Online privacy becomes a major issue with Internet users once consumer trust is violated, Gates said.

  • "Microsoft Turns Tables on Justice"
    Financial Times (05/23/00) P. 5; Wolffe, Richard

    Microsoft yesterday submitted an unexpected brief to Judge Thomas Penfield Jackson quoting a document from the earlier antitrust suit in 1995 in which the Justice Department strongly opposed splitting the company. In the earlier case, the Justice Department said a breakup would "act against the public interest," harming consumers, the marketplace, and the software industry. Microsoft also said the government has not adequately shown a legal precedent for a breakup. In response to Microsoft's brief, the Justice Department said the arguments against a breakup were made before the current trial proved Microsoft's ongoing disregard for antitrust laws. Government lawyers noted that the software giant violated competition laws within months after the earlier trial ended in a consent decree that restricted Microsoft's business practices. Microsoft's continued antitrust violations demonstrate the need for a more drastic solution, government lawyers said. Hearings on the breakup proposals will begin tomorrow.
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  • "Is the Shakeout for E-Business About to Start?"
    Investor's Business Daily (05/23/00) P. A6; Coleman, Murray

    Signs of the long-expected shakeout in the business-to-business (B2B) e-commerce market appeared on Monday, as leading companies WebMethods and Vignette announced plans to spend over a billion dollars each acquiring smaller players. WebMethods, a leader in making XML-based software, agreed to buy Active Software in a $1.3 billion stock swap. Active Software links different business applications to help data flow more smoothly among computer systems. The deal is expected to allow WebMethods to offer more types of business software. Meanwhile, Vignette agreed to purchase OnDisplay in a $1.7 billion stock swap. Vignette is a pioneer in personalizing Web sites, while OnDisplay integrates office management software with software that enables information to be sent online. The acquisition will provide Vignette with the technical knowledge needed to compete in the B2B market. Although B2B shares have recently fallen as investors worry that the stocks are overvalued, companies that provide new kinds of technology are still in strong demand. Meanwhile, profitable companies are well positioned to buy up smaller competitors, experts say.

  • "Bill Is a Sneak Attack on Our Digital Liberties"
    SiliconValley.com (05/22/00); Gillmor, Dan

    Dan Gillmor believes that the Clinton administration is attaching provisions that violate the Bill of Rights to bills that are currently being voted on, and using vague language to disguise the true content of the provisions. The first provision is attached to a bankruptcy bill. The provision would allow the government to "enter your house, apartment or office with a search warrant when you are away, conduct a search, seize or copy things such as your computer hard drive, and not tell you until months later," says a letter written by the ACLU and National Association of Criminal Defense Lawyers. Another bill called the "Methamphetamine Anti-Proliferation Act," created to restrict individuals who manufacture speed, also includes provisions written in vague language that would break the First and Fourth Amendments, says Gillmor. The provisions would require ISPs to remove information or links deemed offensive to the government--primarily information discussing illegal drugs or drug paraphernalia--without due process, according to Gillmor. These bills can still be stopped, although time is limited. The bankruptcy bill is in the conference committee and is quickly approaching final passage. The methamphetamine bill is scheduled for the House Judiciary Committee on Wednesday.

  • "France Gags Yahoo on Nazi Bids"
    Reuters (05/22/00)

    A French judge has placed a gag order on Yahoo! that forces the Web portal to come up with a plan to keep French Internet users from accessing sales of Nazi memorabilia on the Web. French law outlaws the exhibition or sale of merchandise associated with racism. The judge took offense to a Yahoo! auction site that had been selling hundreds of items related to Nazism and the Ku Klux Klan. Yahoo! has until July 24 to explain to the court how it will fulfill the terms of the gag order.

  • "Long-Awaited Showdown Is at Hand in Battle Over China's Trade Status"
    Investor's Business Daily (05/23/00) P. A10; Levaux, Janet Purdy

    The House this week is likely to vote on whether to grant China permanent normal trade relations (PNTR) status, but the issue remains controversial and the vote's outcome is difficult to predict. Advocates of PNTR for China gained the support of two major congressional committees on Wednesday, arguing that the U.S. needs to capitalize on trade opportunities with China. High-tech companies argue that giving China PNTR status would provide businesses with access to an expanding market for technologies such as servers. PNTR status would give U.S. firms reduced tariffs and fewer limitations on operations and investments in China. The IT market in China is expected to reach $174 billion by 2004, up from $48 billion in 1999, according to the Information Technology Association of America. Although the U.S. and other nations are now blocked from a large part of China's IT market, PNTR status and entry into the World Trade Organization would open the market. If the U.S. rejects the trade pact, all other WTO members will have access to the Chinese market while the U.S. and American workers fall behind, business groups say. However, organized labor and other critics of the trade pact say the move would harm U.S. workers who cannot compete with China's enormous and inexpensive workforce. U.S. firms would move jobs overseas, including skilled work in areas such as research and development, critics argue. Opponents also contend that China should be required to improve its human rights record and become more democratic before gaining PNTR status.

  • "World Tests U.S. Net Dominance"
    USA Today (05/23/00) P. 3B; Lynch, David J.

    American e-commerce companies are beginning to face stiffer competition from overseas. The number of European Internet users is booming faster than expected, and there are projected to be twice as many Europeans as Americans online by the middle of next year. Foreign companies that have survived this long like their prospects, and talented individuals who came to the United States to work for Internet companies are beginning to return to their home countries having gained valuable experience. The European Union has promised to promote e-commerce in Europe, and in Asia, American manufacturers are demanding that their local suppliers conduct business online. Furthermore, labor costs in Asia are far less than in the United States. All of this has led some to predict that the era of U.S. dominance of the Internet may be drawing to a close. However, others point out that American companies are still among the best financed, and hold some of the most recognizable brands. Also, despite moves toward reform, European companies remain hindered by bureaucracy and tax laws.

  • "Parties Squabble Over Digital Signatures Bill"
    New York Times Online (05/23/00); Clausing, Jeri

    Congress would like to have a reconciled digital signatures bill ready for debate before the end of the week. Democrats are unhappy with the legislation's consumer-protection language, which was added by Republicans. The two parties are squabbling over what kind of precedence the law should have over state laws that address financial firms' responsibility for delivering paper copies and postal notices to consumers. Democrats and Republicans alike say that the bill is key to ensuring the viability of e-commerce. Meanwhile, a bill proposed by Sen. Charles E. Schumer (D-N.Y.) and Sen. Orrin Hatch (R-Utah) has come under fire by the Center for Democracy and Technology (CDT). The Internet Integrity and Critical Infrastructure Protection Act applies federal law to "minor computer abuses not previously thought serious enough to merit federal resources," the CDT says. The Senate Judiciary Committee is expected to vote on the bill this week. The CDT warns that the bill would give the Justice Department and the Secret Service more power over investigations. Schumer argues that Congress must take legislative action to address online crime and computer viruses such as the recent "I Love You" virus.

  • "Internet Seems Well-Suited for Selling Ideas"
    Philadelphia Inquirer (05/21/00) P. Q6; Moylan, Martin J.

    Businesses that deal primarily with intellectual capital and often intangible services, such as public relations firms, law firms, advertising professionals, and consultants, are using the Internet to conduct business more efficiently, reduce costs, increase productivity, and enhance profits. Minneapolis-based advertising agency abDillon creates and modifies all of its marketing work using computers, enabling the company to easily share works-in-progress with clients. The agency also holds Web-based videoconferences with clients and manages advertising campaigns through online organizations that offer extensive media research and buys. Uniscape, which helps companies translate their Web sites into foreign languages and currencies, is an entirely Internet-based business. Uniscape maintains an online translation database, counsels clients on how to avoid unintentionally making a cultural blunder, and encourages clients to submit projects electronically, which are then sent to the appropriate translators located worldwide. Public relations firm Epley Associates has embraced the Web as a vital tool for its business. "It helps us do myriad of things that are essential to the success of our business: confirm meetings; clarify points; submit drafts of press releases, speeches, and communications plans; and conduct research," says vice president of marketing James Novak. Law firm Cozen & O'Connor views the Internet as an invaluable resource for prospective clients seeking information about the business, its clients, and its capabilities. Cozen & O'Connor also encourages clients to submit legal assignments electronically and uses the Web to coordinate individuals dispersed across a wide geographic area who are working on the same project.

  • "The Dot-Com Invasion"
    Federal Computer Week Online (05/22/00); Caterinicchia, Dan; Haubold, Natasha

    As Web-based federal government initiatives evolve, numerous ASPs are stepping in to offer the technical expertise required to undertake such massive IT projects. Government-focused ASPs typically offer either transaction support or Web portal services. Early market players are concentrating primarily upon electronic procurement; the National Information Consortium now offers electronic procurement software while FedCenter.com launched last December an e-marketplace for government contractors. In contrast, newcomers to the market are focusing primarily upon building government portals that provide comprehensive information on a variety of topics. Some dot-coms have begun offering collaborative services that include both transaction and portal services. Among them is ezgov.com, which intends to partner with systems integrators and other companies to help the federal government to prepare such conveniences as online payment services and electronic forms. Yet federal officials and other experts believe the evolution of federal e-government will be vastly different from that of state and local e-government. The financial structure of the federal government is quite different, which means that ASPs will be unlikely to profit by offering e-government services directly. Another debate concerns which tasks are acceptible to outsource, as many balk at the idea of outsourcing such responsibilities as tax collection, adjudication, and criminal punishment. Additionally, there are security and privacy issues that have yet to be addressed. Nonetheless, if the United States Postal Service provides any indication, federal agencies will be unable to avoid outsourcing at least portions of their operations.

  • "Renting Software and the Skills to Go With It"
    New York Times (05/22/00) P. C4; Flynn, Laurie J.

    Application service providers (ASPs) are sparking fundamental changes to the way information technology is purchased and delivered, according to Tom Kieffer, CEO of Minneapolis-based ASP Agiliti. Indeed, market research firm Dataquest predicts the ASP market will generate $5.3 billion in revenues by 2001, up from $400 million in 1998. Fundamentally, ASPs allow companies such as construction firm Morrison Knudsen to lower their IT costs while freeing them to concentrate on the core areas of their business that generate profits. Morrison rents its email, online travel booking, and travel expense accounting applications from Unisys. ASPs lower IT costs for their customers by assuming the responsibility for software purchases, maintenance, and upgrades, allowing the customer to use the latest applications and platforms without having to pay up-front for them or keep a staff to manage them. As larger telecommunications companies and Internet service providers (ISPs) become more active in the ASP market, analysts predict everything from email to network access will be treated by businesses as a service to be contracted rather than an application or platform to be bought, much like phone services now. Analysts expect that eventually, consumers will turn to ASPs for their application needs as well.

  • "AOL Error Underscores Spam Filter Challenge"
    CNet (05/22/00); Hu, Jim

    Congress has been slow to produce anti-spam legislation, so ISPs have been forced to use filters and other technologies to protect their users from bulk emailings. These technologies can sometimes mistakenly filter out legitimate email messages, as was the case recently when AOL's computers accidentally blocked out email newsletters from Topica. "As part of our efforts to protect AOL members from junk emails, we took some anti-spam action that inadvertently resulted in some legitimate Topica email not being delivered to AOL addresses," said AOL's Rich D'Amato. The problem has now been resolved, D'Amato said. But the incident highlights just how tricky it is for ISPs to act as guardians against spam. Many anti-spam advocates criticize filtering technologies for being too untrustworthy. John Mozena of the Coalition Against Unsolicited Commercial Email says online companies should not be burdened by spending time and money to ward off spam. Rather, spam must be nipped in the bud with legislation, Mozena argues. However, recent court decisions in Washington and Oregon have jeopardized state efforts to enforce spam laws. Several anti-spam bills await review in Congress, spearheaded by the Unsolicited Electronic Mail Act of 1999. That act, sponsored by Rep. Heather Wilson (R-N.M.), would task the FCC with overseeing a list of people who decide to opt out of receiving junk email.

  • "Indian Tech Minister Makes Pitch in Valley"
    SiliconValley.com (05/23/00); Heim, Kristi

    India's first IT minister, Pramod Mahajan, this week is visiting Silicon Valley to encourage U.S. businesses and venture capitalists to invest in India's high-tech industry. Majahan said he plans to tackle India's infrastructure problems, with one of his main goals being to boost the electricity supply and increase Internet connections. The high-tech sector is critical to India's development, and the country's largest trading partner is the U.S. Still, U.S. investors have not moved as strongly into India as in other countries because of India's high tariffs and primarily state-run economy. To encourage U.S. investors, Mahajan and a group of Indian business and government leaders visited a number of Silicon Valley firms that have made large investments in India, including Compaq, Cisco, Hewlett-Packard, Oracle, and Sun. Mahajan, who urged a cut in mobile phone tax and helped pass the first law legalizing e-commerce in India, is expected to help remove some of the red tape that currently hampers investors.

  • "Economist Intelligence Unit: US Most E-Business Ready Country"
    NUA Internet Surveys (05/18/00)

    The United States is the top "e-business ready" country in the world, according to a list created by the Economist Intelligence Unit (EIU). Sweden, Finland, Norway, and the Netherlands round out the top five. Other European countries on the list include the U.K. at six and Switzerland at 10, followed by Ireland, Denmark, Germany, France, and Belgium, filling out slots 11 through 15, respectively. E-commerce readiness was measured by inspecting the attractiveness of the general business environment in each country and analyzing each country's communications infrastructure. The EIU found that the list can be broken up into three distinct groups. The top group contains highly connected countries with excellent business environments, and consists mostly of countries in Western Europe and North America. The second group is formed mostly by Latin American and Eastern European countries. The last group consists predominantly of countries in the Middle East, Africa, and Asia.

  • "Slow Train Coming"
    CIO (05/15/00) Vol. 13, No. 15, P. 224; Hapgood, Fred

    The use of electronic data interchange (EDI) has been limited for many years because companies believe implementation is slow and time-consuming, but the Internet and XML could extend the use of EDI. In the past, EDI carried the extra costs of hardware, software, software management, and access to a value-added network (VAN) that were beyond the reach of many companies. With today's lower computer prices, easier-to-manage software, and the Internet as a low-cost alternative to VANs, EDI is becoming a more viable option. The Internet is expected to carry up to half of all EDI data over the next few years, while VANs carried nearly all EDI data as recently as 1997, experts say. Furthermore, XML seems poised for adoption as a standard way to code EDI standards. By standardizing on XML, companies could eliminate the need to focus on technical and syntactical factors, says Kendra Martin of the Data Interchange Standards Association. In coming years, EDI will help produce online Java objects like catalogs or regulatory information, Martin says. EDI could expand from two-party transactions to many-to-many collaborative interactions, contributing to the development of a global marketplace, says Martin. However, Tim Cronin of e-commerce consulting firm Avicon.com does not share Martin's forecast for EDI, noting that the technology has always been most effective between partners trading well-defined data sets.

  • "Can Windows Open Doors?"
    CFO (05/00) Vol. 16, No. 6, P. 29; Leibs, Scott

    Windows 2000 is Microsoft's major push into the data center market, but the software giant cannot yet gauge the success of its efforts as many corporations are taking a wait-and-see attitude toward the new operating system. Windows 2000, which shipped in February, offers significant improvements in scalability, reliability, performance, and security--all of which appeals to corporate users. However, some companies are holding off on Windows 2000 because major components such as Data Center have not yet shipped. In addition, some corporations are concerned that the new features in Windows 2000 will make the OS incompatible with existing applications, while others worry about the amount of training required to implement Windows 2000. The 63,000 known bugs that shipped with Windows 2000 are another factor postponing implementation for some companies, which are waiting to see the effects of the bugs and how Microsoft handles the problems. However, some early adopters say Windows 2000 cuts costs significantly with management features that let a company serve more users with fewer administrators. In terms of power, Windows 2000 Data Center this year outstripped a rival product from Sun, setting a record for transaction processing. Furthermore, an independent lab test was unable to crash the OS.

  • "E-Commodating the Disabled In the Workplace"
    Fortune (05/15/00) Vol. 141, No. 10, P. 502; Schrage, Michael

    The suit that the National Federation of the Blind filed against AOL last November is an indication that high-tech companies will have to create a more accommodating virtual environment for the digitally disabled. Like AOL, which was sued for being too slow in making its services accessible to the blind, intranet-dependent companies may find themselves in similar legal disputes if they do not move quickly to upgrade their sites. In fact, the courts may increasingly become involved in disability and discrimination conflicts as companies rely even more on the Internet. Companies will need to take a virtual approach to the Americans With Disabilities Act (ADA), which requires companies to make stairs, bathrooms, public spaces, and the like more accommodating for physically challenged individuals. Companies may now have to modify their browsers and servers or redesign screens. Some companies may even be faced with having to provide faster tech support for emotionally frustrated technophobes who claim they have personality disorders that are protected by the law. Walter Olson, a legal analyst and skeptic of the ADA, believes commercial Web sites will have to face "accessibility complaints by the cartload" from "entrepreneurial litigators" if they do not take the issue seriously. Web advisory groups are already discussing proposed regulations for the disabled. Voice access has been mentioned among the possible solutions, as well as customized technology for individual needs. Still, Adam Powell of the Freedom Forum says proposed standards may not fully protect e-commerce sites from such suits. Moreover, company management may have to deal with resentment from workers who perceive the accommodations as preferences for disabled workers. Some critics may even dispute how effective "special needs networks" can be in leveling the playing field.

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