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Volume 2, Issue 69:  Friday, June 16, 2000

  • "Microsoft Confronted by Crucial Legal Test"
    Los Angeles Times (06/16/00) P. C1; Shiver, Jube Jr.

    A federal judge today is expected to outline the pretrial guidelines for 27 of the civil antitrust suits against Microsoft, which seek billions of dollars from the software giant for allegedly using its monopoly power to overcharge consumers for Windows. Microsoft faces over 130 class-action suits altogether, and the 27 suits that will be dealt with today have been temporarily consolidated to simplify the proceedings. A defeat for Microsoft could mean a huge financial loss for the company, since so many consumers use Windows and are therefore potential plaintiffs. Consumers who bought Windows directly can seek three times their actual damages under federal law. In addition, consumers who purchased Microsoft software from a middleman rather than from a retailer can bring antitrust charges against Microsoft in 16 states. Although an Oregon judge this week dismissed a suit accusing Microsoft of charging too much for Windows 98, experts note that the decision stemmed from the fact that Oregon does not specifically allow consumers to bring antitrust charges against a company unless they bought a product directly from the company. Suits filed in states that permit such claims might be more successful, experts say. Some experts support Microsoft's claim that the government's antitrust case showed little proof of overcharging, but Judge Jackson wrote in his findings that the company charged $89 for Windows 98 when it could have charged $49.

  • "Justice Dept. Asks Appeal Judges to Let Supreme Court Act First in Microsoft Case"
    New York Times (06/15/00) P. C2; Brinkley, Joel

    The Justice Department, 19 state attorneys general, and the trial judge filed a brief Wednesday with the Court of Appeals requesting that the federal court not hear Microsoft's case before jurisdiction can be determined. Microsoft filed a portion of its appeal Tuesday with the sympathetic Court of Appeals, but the Justice Department cited in its brief that the government has asked that the case be certified by the Supreme Court, which would give the higher court jurisdiction over the case. The Court of Appeals would like to take the highest profile legal case in the nation, and Judge Jackson has already imposed a remedy order that will take effect in 90 days. But the Justice Department says Microsoft is guilty of "procedural maneuvering" by filing a stay request before the district court rules. Microsoft is still subject to sanctions even while the breakup of the company is stayed, and Judge Jackson is expected to submit Microsoft's case to the Supreme Court's direct review next week.

  • "Germany Looks Outside to Fill High-Tech Jobs"
    USA Today (06/16/00) P. 24A; Komarow, Steven

    Germany is facing the lack of a trained workforce as it seeks to take advantage of the Information Age. German companies such as Siemens and DaimlerChrysler say they need more high-tech professionals than can be found domestically. Chancellor Gerhard Schroeder will begin to address the problem by issuing 20,000 work permits for foreign IT workers beginning in August. Unions, conservatives, and skinheads alike object to the chancellor's initiative, and argue that the focus should be on training Germans rather than on importing workers. Nonetheless, the German industry and government are looking to other nations, specifically India, to address the worker shortage. However, widespread discrimination and cultural isolation, as well as what used to be the world's strictest immigration policy, deters some potential Indian workers. Many Indians prefer the U.S. because of its cultural diversity and more relaxed immigration policy. Meanwhile, the U.S. might soon admit up to 200,000 foreign IT workers, making German businesses' recruiting efforts even more difficult.

  • "Governments Cut Red Tape With Internet"
    Investor's Business Daily (06/16/00) P. A6; Benjamin, Matthew

    States are increasingly appointing cabinet-level technology chiefs, underscoring the priority being given to putting government services online, analysts say. Andersen Consulting's USA Government practice is just one of several business units dedicated to placing government services online. IBM's Institute for Electronic Government is popular with mayors and governors looking to take advantage of the Internet's money-saving potential. "Political leaders are becoming much more aware of the potential to improve services while at the same time saving money," says Ken Thorton, general manager of IBM's public sector unit. Thorton notes that government officials are especially concerned with privacy and data-security issues.

  • "Lawmakers Seek Balance in Privacy Legislation"
    TechWeb (06/15/00); Mosquera, Mary

    Online privacy was a big story in Washington this week, as the FTC provided Congress with a report on online profiling. Jodie Bernstein, director of the FTC's Bureau of Consumer Protection, testified that online advertisers are failing to provide consumers with "fundamental notice" as they collect information that can be linked with other forms of consumer data. Many in Congress, including Sen. Conrad Burns (R-Mont.), are running out of patience with the Internet industry. "The time is right for privacy legislation, whether technology companies are ready or not," Burns said. Sen. John McCain (R-Ariz.) said that online advertisers must strike a fair balance between "benefiting consumers and invading their privacy."
    For information on ACM's work in the area of privacy, visit http://www.acm.org/usacm/privacy, and for ACM's Statement on Privacy, visit http://www.acm.org/usacm/privacy/privacy.html.

  • "PC Surge Drives Indian Computer Industry Boom"
    International Herald Tribune (06/15/00) P. 24

    The Indian computer industry, fueled by PC sales to homes and offices, reported its largest boom in four years for the year ended in March, according to a recent International Data (IDC) report. Sales of computers and related products rose 30 percent to $3.7 billion for the year ended in March, due mostly to a strong home market, IDC says. Computer sales were also driven by increased Internet use and service providers' investments, the study says. In coming years, IDC predicts that India's computer industry will continue to expand at the same rate.

  • "Philippine President Signs Law to Punish Computer Crimes"
    Associated Press (06/15/00)

    Philippines President Joseph Estrada yesterday signed an anti-cybercrime law that is meant to increase the security of electronic documents and encourage data transfers and transactions via electronic media. The e-commerce law calls for fines of at least $2,350 and a prison sentence of up to three years for hackers and those who spread computer viruses. The law went into effect yesterday. Malaysia, Singapore, and South Korea are the other countries in Asia that have e-commerce laws on the books.

  • "Motorola Teams up With Three Firms for Venture Marrying Phones, Scanners"
    Wall Street Journal (06/15/00) P. B8; Tam, Pui-Wing

    Motorola has formed an alliance with Symbol Technologies, AirClic, and Connect Things for the joint development of technology that could enable customers with mobile phones to scan bar codes in print ads or on products and then have access to the associated Internet site. However, a definitive agreement has yet to be signed by the participants. The companies tentatively plan to combine AirClic's scanning platform with Symbol's bar code technology and Motorola's system infrastructure. Connect Things will also provide a database of direct bar code links to Internet addresses. The venture will then work to install tiny scanners in wireless handheld devices and make a registry of Web codes for placement in print ads and Web sites. Handhelds with installed scanners would then be able to be access Web sites by scanning Web codes. The venture will also receive capital investment from some of AirClic investors, including Goldman Sachs Group and Edgewater Private Equity Funds.

  • "As ASPs Gain Converts, Network Is the Computer"
    Investor's Business Daily (06/15/00) P. A6; Coleman, Mary

    The application service provider (ASP) market is expected to grow tremendously over the next several years, as more companies realize the benefits of outsourcing e-business projects. Although ASPs have traditionally been considered a cheap option for small firms that lack the resources to carry out their own e-business initiatives, many large companies are now looking to ASPs as well. Large businesses often lack the employees and the time needed to complete an e-business project. In the next few years the ASP market is expected to grow nearly 83 percent a year. Furthermore, the ASP market will bring in over $11.3 billion in sales by 2003, according to Forrester Research. As the market expands, all ASPs are likely to enjoy strong business in the near future, experts say. However, more companies are moving into the ASP space, including ISPs such as PSINet and consultants such as Ernst & Young. The current leader in the ASP market in terms of signed deals is USinternetworking, which claims 36 percent of the market's deals. USinternetworking took the top place in the ASP market by targeting Fortune 1000 firms and investing in the bandwidth needed to draw such clients, experts say. Oracle, which is tied with Corio for the third spot in the ASP market, is also emerging as a leader in the field with its relatively new ASP operations.

  • "New Law 'Could Lose Business $69Bn'"
    Financial Times (06/13/00) P. 9; Grande, Carlos; Shrimsley, Robert

    The U.K. government's Regulation of Investigatory Powers bill will drain confidence in e-commerce, place unfair financial burdens on businesses and the U.K. economy, infringe upon individuals' rights, and undermine the electronic security of U.K. businesses and their foreign partners, according to a new report from the London School of Economics. The report also concludes that up to 30 percent of U.K. e-commerce and Internet processing companies could leave the country for greener pastures--at a lost to the U.K. economy of 46 billion pounds over a period of five years. Indeed, the ISP Claranet has said that it may pull up its stakes and head for France or Germany if the proposal becomes law. The report also takes issue with the government's estimate that the system called for in the bill will cost $20 million a year to implement. That figure is too low, according to the report. The bill, currently in the House of Lords, is facing increasingly stiff opposition.

  • "Instant Messaging Charges Forward in Electronic Communications Era"
    Investor's Business Daily (06/15/00) P. A6; Korzeniowski, Paul

    Instant messaging (IM) technology, once thought to be a hindrance to production, is now beginning to be accepted by some companies as a tool to improve communication and knowledge transfer. However, some obstacles to widespread use remain, such as the lack of interoperability between differing IM programs and concern for security. Although it's true that IM programs weaken the outer perimeters of companies' security measures--a problem developers are working to solve--they increase security in other ways. Because it bypasses file servers, data delivered via IM is harder to intercept than traditional email, making IM a good method for delivering sensitive information. The improved communication made possible by IM is easy to appreciate. Distributed employees can collaborate in real time on a project; sales personnel can check on product availability at any time; and managers can update both staff and executives on the status of a project.

  • "Vendors Preview Web Management Standard"
    VNUNet (06/15/00); Leung, Linda

    The Web-based enterprise management (WBEM) standard, which, using XML technology, makes managing systems over the Internet possible and permits interoperability between managed systems, was given an initial demonstration at the Distributed Management Taskforce (DMTF) developers conference this week. Demonstrators of the possiblities of Web-based enterprise management included IBM, Sun, Hewlett-Packard, Intel, 3Com, and Microsoft. Microsoft Windows 2000 and Sun Solaris both include WEBM already and general products will start utilizing the standard in approximately six months. Specifications and guidelines for combining network directory services with systems and network management environments were also released by DMTF at the conference.

  • "Is the New Transora Exchange the Real Thing?"
    TheStandard.com (06/14/00); Roberti, Mark

    Close to 50 companies in the consumer goods industry announced the intention to build a behemoth online exchange called Transora. Members of the new exchange--who include Coca-Cola, General Mills, Kraft Foods, and Unilever--would use the site to purchase both production and non-production goods via auctions, reverse auctions, private negotiations, and quote requests. The exchange's partners hope that moving procurement onto the Internet they will reduce processing costs and thereby save substantial sums of money. Transora intends to provide tools to assist members and their partners to better predict product demand, and provide training tools and community services to consumers. Companies from the consumer products industry worldwide are invited to join the marketplace, which could be one of the first online marketplaces to support a wide variety of transactions due to the number of partners in the exchange. Critics believe that actually getting the exchange online and working may be difficult due to partner rivalries and the low chance that every partner will agree on how to implement the new site. To ensure that no single company would control the site, none of the founders were permitted to take more than a 5 percent stake in the marketplace.

  • "Top 10 System Security Threats Are Familiar Foes"
    Government Computer News (06/12/00) Vol. 19, No. 15, P. 3; Jackson, William

    A group of computer security experts recently published a list of the 10 greatest threats to network security, and the report states that all of the problems have been around for years. The number one problem is technical flaws in the Berkeley Unix Internet Name Domain System that allow hackers to obtain administrative access to domain name servers; poor choice of passwords is ranked number eight. The group's suggested remedies for the problems are also familiar: keeping up-to-date with security software and patches and shutting off unnecessary services and features, among others. The report suggests that many systems are still replete with weaknesses because network administrators are too busy and need to focus on priorities, securing the most potentially devastating vulnerabilities first. The top 10 list, available at www.sans.org, will be sent to all federal CIOs, who will be asked to pass the information along throughout their agencies. Security professionals say administrators also need to be more aggressive in asking senior managers, who are often unfamiliar with network protection, to support security upgrades.

  • "Distributors Switching Focus to Web Business"
    Computerworld (06/12/00) Vol. 34, No. 24, P. 6; Vijayan, Jaikumar

    Distributors Southern Marketing Affiliates (SMA) and ICM are discrediting the popular notion that Internet companies will make traditional intermediaries unnecessary and too costly. "We keep hearing words about the disintermediation of [distributors] by Internet companies," says John White, director of global business processes for manufacturer Parker Hannifin. "The fact is that they are the customer service interface point," which makes them valuable. SMA will soon launch SMALink to connect its 300 suppliers and 2,000 dealers via the Internet. The plan is to combine SMA's established advantages--demand-aggregation capability, logistics infrastructure, and customer relationships--and the value-adding capabilities of the Internet hub--flexible ordering options, more product choices, and fast access to information--to drive higher demand from its suppliers and dealers. ICM plans to set up a similar site linking its 1,000 dealers and 1,500 suppliers. These sites "radically decrease the amount of time and expense involved in trying to coordinate the commmunication that is required" between various members of a supply chain, says ICM CEO Brian Nelson.

  • "Internet Reality Check"
    Industry Standard (06/19/00) Vol. 3, No. 23, P. 122; Perine, Keith

    The Markle Foundation this summer is conducting a study aimed at learning the average American's views on Internet issues such as privacy, security, and regulation. Markle intends for the study to help influence political debate as legislators struggle with online dispute resolution, legalization of electronic signatures, online voting, and several other Internet-related issues. Last month Markle held focus groups and conducted surveys over the phone and Internet, finding that people tend to distrust the government and the Internet industry alike. Groups were skeptical of the privacy policies Markle presented on mock Web sites, noting that phrases such as "trustworthy third party" cannot be verified. Although most participants felt confident in the American Medical Association (AMA) seal on a mock site containing health information, few trusted the TRUSTe or BBB Online seals; this is attributed to the fact that most participants were familiar with the AMA, while none knew of TRUSTe. Meanwhile, the FTC's recent proposal for federal online privacy laws received favorable reviews from participants. Most participants approved of laws governing basic privacy protection, but expressed concern about government regulation of the Internet. The focus groups said they were hesitant to use their credit cards online, and few people were aware of the laws protecting them from credit-card fraud. Finally, most participants approved of the idea of a global Internet regulatory group.

  • "A Secure Place"
    InternetWeek (06/12/00) No. 817, P. 109; Sweeney, Terry

    Corporations are increasingly outsourcing their IT security to application service providers (ASPs), as security looms ever larger in the public--and investors'--minds. However, ASPs are realizing that they need to prove that they can provide appropriate levels of security if they want customers to outsource their applications to them, especially because ASPs have not yet become as legitimate and familiar to companies as other more traditional outsourcing firms like EDS or IBM. Companies can use consultants such as PriceWaterhouseCoopers or Ernst & Young to search for and give their stamp-of-approval to an appropriate ASP. Dataquest expects ASPs to generate revenues of $2.7 billion by year's end, and $22.7 billion by 2003. Their popularity is due mainly to the fact that they allow companies to bypass the expense of purchasing application software, firewalls, and servers, as well as pay for the staff to manage those devices. ASPs often work very differently from one another, with those that handle many type of applications, such as USinternetworking and Verio, typically overseeing their own secure Web hosting, authentication, and encryption services. For those ASPs that deal with the most secure applications, public key encryption is usually required, meaning that the ASPs must contract with an outside digital certificate provider such as Entrust Technologies or VeriSign. Many ASPs are also investigating the use of smart cards to increase the security of their clients' data, which would utilize a token issued either by the ASP or the client's IT department, to verify and authenticate users.

  • "Who Will Snag Europe's Web Surfers?"
    Fortune (06/12/00) Vol.141, No. 12, P. 236; Nee, Eric

    The loyalties of 100 million Internet users are at stake in the battle for Europe's Internet market. Strapping U.S. Web companies such as AOL and Yahoo! face a far different challenge in Europe than the one they faced at the outset of conquering the American market. The Americans may be bigger, but the road ahead is treacherous, as entrenched competitors--Deutsche Telekom, France Telecom, and Telefonica--promise to turn the fight for pan-European dominance into a free-for-all. Local startups such as Freeserve, World Online, and the fast-rising Tiscali also stand in the way of an American victory in Europe. Meantime, formidable telecom companies such as Vodafone AirTouch are threatening to enter the ring to establish control of the wireless market. Still, the Americans have something the Europeans lack--a wealth of experience, including know-how in the areas of content aggregation, e-commerce, and advertising. Many analysts and industry members predict the intense competition will eventually produce rounds of consolidation, with Deutsche Telekom's T-Online--the biggest ISP in Europe--one of the most likely aggressors. AOL is Europe's second-largest ISP and third-largest portal. Europe's rapidly falling telecom access fees are good news to AOL and other companies that know how to provide great content and services. "That's our single biggest competitive advantage," said AOL International President Michael Lynton. Lynton's assessment appears to be on the mark. Statistics show that AOL users average about 25 minutes a day on the AOL site, compared with just 10 minutes for T-Online users and five minutes for Wanadoo users. When all is said and done, AOL and Yahoo! will almost certainly be among the few companies to survive the eventual consolidation of the European Internet market.

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