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Date: Friday, June 09, 2000, 3:22 PM -0400
From: Faulkner Information Services <mailserver@faulknerinfo.com>
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Subject: Faulkner Cyberscape Digest 06/09/00



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CyberScape Digest

CyberScape Digest is a weekly roundup of top internet stories. This issue
covers events from Monday 06/05/00 through Friday 06/09/00. 

  

Judge Rules on Remedy in Microsoft Antitrust Case
After keeping court watchers on pins and needles with a final round of
briefs from both the Justice Department and Microsoft, Judge Thomas
Penfield Jackson handed down his decision Wednesday. Long observers of the
software giant's antitrust trial anticipated that the judge would issue a
harsh penalty, and he did not disappoint anyone--except maybe Microsoft, of
course. Judge Jackson ordered the company broken into two pieces, one
controlling Windows and the other handling Office and other applications.
The company will also be subject to conduct restrictions starting in early
September. The judge insisted on the structural remedy partly because the
defense mounted by the software monopolist suffered credibility problems.
In short, he didn't believe that Microsoft could be trusted. Naturally, the
company intends to appeal, and anticipates that the appeals process could
take up to a year or longer--during which time it will remain intact. Given
Microsoft's history of getting judgments against it overturned on appeal,
this is a wise move for the monopolist. The DoJ has other plans for the
case, however; it hopes to convince the nine black-robed men and women of
the Supreme Court to directly review the case, thus bypassing a lengthy
appeal.  

Bargain Buying Spree Hits Internet Sector
Billion-dollar deals remained scarce this week, but several companies laid
millions of dollars down for the privilege of picking up potential good
deals. EarthLink found common ground with OneMain.com, laying down cash and
stock valued at $308 million to gain the company and its 762,000
subscribers. The purchase increases the number of EarthLink's dialup
subscribers to more than 4.2 million and increases its coverage of rural
communities and smaller cities. Inktomi put up a bit more--a total of
$344.7 million, mostly in stock--to purchase Ultraseek from Go.com. The
transaction will allow Inktomi to expand into customizable search and
navigation software. Internet investor Softbank branched out with the
purchase of failed Nippon Credit Bank (NCB), the first time a non-financial
firm has been permitted in Japan to enter the banking sector. One wonders
if a completely virtual Japanese bank will follow from the purchase. Number
two domain name registrar Register.com laid down $1 million and 260,000
shares of its own stock to purchase Inabox in a deal valued at $11.5
million. Register.com will use Inabox's Internet tool making software to
extend the products and services it offers ISPs and Web developers. Rumors
ran rife that European ISP T-Online was deep in negotiations to buy
Freeserve--the two were still dickering over the price. Meanwhile, two
larger deals received their day at the polls--the stockholders' polls, that
is. VeriSign's $21 billion stock offer to purchase Network Solutions was
expected to be approved by the shareholders of both companies on Thursday.
Stockholders at Terra Networks approved a massive increase in capital to
fund the company's all-stock acquisition of Lycos. Finally, just one
billion-dollar deal: Sycamore Networks agreed to purchase Sirocco Systems
for $2.88 billion in stock. The purchase will help Sycamore expand its line
of fiber-optic equipment. 

US, EU Get Closer to Online Privacy Agreement
Despite the fears of European consumer rights advocates, the European Union
endorsed the safe harbor agreement with the US. The agreement compels US
companies to take responsibility for protecting the privacy of personal
information they gather from Europeans. While the US Department of Commerce
and President Clinton are pleased with this policy, European consumer
advocates such as the European Consumers' Organization point out that the
act offers less protection to many European consumers than they are
entitled to by the laws of their own countries. The safe harbor act is
expected to strongly impact e-commerce firms, which collect vast amounts of
information.

Making Deals...
From two extremes of the alphabet...America Online made a deal with Yodlee
to allow the start-up company to offer its personalizing technology on
AOL's Personal Finance channel. Users of Yodlee's service will be able to
put all their personalized account information on one password-protected
page. B2B market maker Global Sources teamed up with PT Global Jaringan
Nusantara to build Indonesian Sources Online, an Indonesian B2B
marketplace. IBM and Lycos got together to promote their services to small
business. Three of IBM's Aptiva computers now come with unlimited Internet
access from Lycos. IBM made an even bigger deal with Hitachi, LG
Electronics, Matsushita Electric (Panasonic), Nortel Networks, Seagate,
Solectron, Toshiba, Ariba, and i2.The companies joined together to create
e2open.com, a global online B2B marketplace for the computer, electronics,
and telecommunications industries. The joint venture received more than
$200 million in funding from its founding partners, Crosspoint Venture
Partners, and Morgan Stanley Dean Witter. Sega and Motorola agreed to work
together to create mobile phones that can connect to the Internet. The
phones will use technology from Sega's Dreamcast video game machines to
send and receive data at high speeds. The companies expect to release the
phones sometime in the spring of next year. Microsoft, Cable &Wireless, and
Compaq agreed to work together to offer global e-business services. The
services will ultimately available over wireline and wireless networks. 

..Taking Stakes, Forsaking Purchases
If it's true that money talks, Barnes and Noble gave Fatbrain's Mighty
Words some mighty words of its own to think about: enough to purchase a 30
percent stake, to be exact. Fatbrain itself will retain a 26 percent stake
in Mighty Words, which it plans to spin off. Dell, Oracle, HP, TurboLinux,
Novell, and others invested a total of $35 million in Collab.Net, an online
service that connects open source programmers with companies wanting to
hire them. US WEST took a minority stake in Time Domain, a company with
ultra-wideband wireless technology which US WEST hopes to use for
high-speed Internet access. Finally, 3Com is spinning off its dialup modem
division, which it acquired in 1997--and is giving the spin-off the same
name it had before being acquired, US Robotics. The new-old firm will be
based in Chicago, employ about 200 people, and open for business in early
September.  

Government, Law, and the Internet: the More Things Change...
China continued its fight against "subversion" with the arrest of Huang Qi
and his wife Zeng Li. Huang put up information on a Web site he ran about
the 1989 Tiananmen Square massacre. Zeng Li was released earlier this week,
but Chinese police kept Huang on suspicion of "subverting state power."
Hong Kong enjoys a bit more freedom of speech. When its government released
a paper containing a wide assortment of proposed censorship regulations to
protect youths from obscenity on the Internet, Internet freedom group Free
Net HK attacked the proposals. Free Net HK stated that, if the proposals
were passed, they would be detrimental to freedom and the development of
the Internet in Hong Kong. Among other things, the proposed regulations
would hold ISPs responsible for the content accessed by their users, and
allow authorities to force ISPs to block Web sites. Meanwhile, in the US,
auction practices long ago outlawed in the offline world have surfaced
online--and the FBI is investigating. The practice in question is
"shilling," or putting false bids on an item in order to drive up its
price. Such behavior is strictly forbidden on eBay; the auction giant is
assisting the bureau with its investigation. The probe was brought on by
the revelation that the seller of a painting put up for $0.25 which sold
for over $100,000 placed a bid on his own item. eBay canceled the
transaction. Finally, the Internet does change one thing: it makes it
easier for junk mailers to send their advertisements and hide their
identity. Jason Garon surrendered to California police on charges of
forgery. According to the district attorney, he is suspected of sending
millions of e-mails to America Online subscribers about X-rated Web sites
or get-rich-quick schemes, and disguising the messages to look as if they
were coming from IBM's Internet provider, IBM.net. 

Seven Companies Plan Consumer Guidelines
Responding to recent calls for government regulation of Internet e-commerce
firms, seven large companies issued guidelines for consumer protection. The
new coalition, dubbed the E-Commerce Group, includes America Online, Dell,
IBM, Microsoft, Network Solutions, AT&T, and Time Warner. The guidelines,
introduced to the Federal Trade Commission, specify marketing practices,
information about goods and services, return and refund policies,
warranties, and privacy policies. They also encourage the use of
third-party dispute resolution. The guidelines were silent on the question
of which country's laws apply if a dispute between a merchant in one
country and a consumer in another country cannot be resolved. Consumer
advocates described the guidelines as a good start, but complained that
they didn't go far enough in protecting consumers' rights. 

Internet Companies Offer, Test New Services
Expanding beyond its role as a Web caching company, Akamai began offering
online conference call services to US phone companies. WorldCom, AT&T, and
Global Crossing leaped at the opportunity. Speaking of AT&T, it started a
six-month trial in Boulder, Colorado, to examine the technical and
operational issues involved in permitting multiple ISPs to offer broadband
Internet access over a hybrid fiber-coaxial network. The trial will begin
in November, and is a step towards providing broadband Internet users with
more ISP choices. AT&T's exclusive contract with Excite@Home ends in 2002.
Excite@Home is running some tests of its own, meanwhile. Teaming up with
Cox Communications, the ISP will test an interactive TV service designed to
enhance, rather than replace, TV. It will offer a careful selection of
Internet features well-suited to TV, most of which can be accessed via
remote control rather than wireless keyboard. Inevitably, one of the
features is Internet shopping. Of course, if your choice for alternative
Internet access device is a wireless phone rather than the TV, Nokia is
singing your song. Its RoofTop Routers and CityHopper Broadband Wireless
Access support wireless broadband voice and data services for mobile
phones. The former supports data only, while the latter supports both voice
and data. Finally, the Internet Society of New Zealand put a new spin on an
existing service by dropping its ban on the registration of domain names
using the proverbial "seven dirty words." The country's registrar for
domain names ending in .nz can drop the manual check formerly required for
all local domain names, focusing instead on those which use .govt, .mil,
.cri, and .iwi as part of their names (each reserved for specific
purposes). So far, four of the seven formerly forbidden domain names are
now registered. Is anyone taking bets on how long before at least one of
them goes up for auction? 

Two Protests for This Week
FreeIM.org and iCast.com spearheaded a group of 43 technology and instant
messaging companies calling for open standards. In a petition to the FTC
and the FCC, the companies point out that AOL's Instant Messenger is a
closed, proprietary system, which is not conducive to competition in what
they expect will become an important communications function, like e-mail.
Meanwhile, the Council of European National Top-Level Registries (CENTR)
chose to protest the $1 million bill ICANN sent by ignoring it. CENTR
manages more than two dozen of Europe's country-code top-level domains
(ccTLDs), and the organization is angry about ICANN's charging fees for
unspecified services without any formal agreement pertaining to ICANN's
authority over the registries. Additionally, as pointed out by Fay Howard,
general manager of CENTR, many of ICANN's expenditures over 1999-2000 went
towards legal bills to straighten out the contract between ICANN, the US
government, and Network Solutions, which the ccTLDs perceive as having no
bearing on them. 

Domain Name Hijackings Continue
Internet.com became at least the third victim in a series of domain name
hijackings. Like the other incidents, the hijackers grabbed Internet.com's
contact information from Network Solutions' data base and then changed and
redirected it to Tucows, another name registrar. At that point, ownership
of the domain name was transferred. Fortunately for Internet.com, an alert
employee caught the problem and corrected it before the hijackers could
alter the site. The hijacking incidents point up the problems with Network
Solutions' security systems and procedures. Observers of NSI have said that
the company suffers from weak security systems and employees who do not
follow the established security procedures. 

Dissonant Chords Remain in Online Music Biz 
In a switch for the much-maligned online digital music sector, MP3Board
filed a complaint with the US District Court in San Jose to prevent the
Recording Industry Association of America from shutting down its Web site.
Like Napster and MP3.com, which are the subject of RIAA suits, MP3Board
argues that it is, in effect, only a conduit to (potentially pirated)
music. Music lovers use links on its Web site to go to other Web sites,
some of which contain copyright-infringing material--for which MP3Board
believes it should not be held responsible. Meanwhile, yet another company
joined the dogpile on top of Napster: TVT Records, a large US independent
recording label. The company seeks damages and an injunction preventing the
online music company from listing TVT's copyrighted material in its
directories for download. Fortunately, not all the players in this case are
out of tune: MP3.com settled with Warner Music Group by entering into a
licensing agreement. MP3.com can now use Warner-copyrighted recordings on
My.MP3.com's software services. In return, MP3.com promised to pay $75
million to $100 million to the RIAA. 

Security Issues to Keep an Eye on
The latest news of security issues presents a mixed crop, not all of it
rotten. First, a warning to those who use Check Point Software's FireWall-1
product: it can be taken down by being flooded with incomplete data packet
fragments. A researcher at Sun discovered the flaw late last month, and
informed Check Point; the company came up with a quick fix, but plans to
make a more robust, long-term repair, which will be included in a service
pack before the end of this month. Second, for those connecting to the
Internet using a cable modem or DSL: be careful about movie clips. Hackers
going by the handles "Serbian" and "Badman" disguised a "zombie" program as
a movie clip and planted it on more than 2000 home and commercial PCs. When
the clip is activated, it sends passwords, network details, and other data
to the hackers, who can then use the information to break into the network
or harness the machine to launch distributed denial-of-service attacks.
Such attacks took down several prominent Web sites early this year. The
problem was detected by Network Security Technologies, a security firm
which works for the Justice Department. Meanwhile, the Computer Emergency
Response Team (CERT) found a vulnerability in Internet Explorer that lets a
malicious hacker trick victims into revealing personal information intended
for legitimate Web sites. The flaw involves the way IE handles Secure
Socket Layer (SSL) encrypted transactions. Microsoft issued a patch.
Microsoft also finally issued a patch for its Outlook e-mail program that
strengthens its defenses against viruses. The patch blocks access to file
types typically targeted by virus writers, and sets higher default security
settings than earlier versions of the software. Finally, a mildly annoying
worm targets Gnutella users. The worm stores itself as 23 different Visual
Basic files on a victim's machine. It spreads to computers when their users
doubleclick on the file to execute the code--which should encourage wise
users to look before they download. The smartest way to avoid infection
would be to refuse to download or open VBS files. Interestingly, the worm
keeps track of itself with statistics on which generation it is and when it
infected the user. As of May 31, it was up to at least its twelfth
generation. 

Not a Pretty Week for Dot-Coms
The Internet shakeout grew beyond the retail sector and began enveloping
sectors where content is king. Specialty online news company APBNews.com
revealed that its parent company ran out of money and laid off all 140 of
its employees. Several of the now-former employees agreed to continue to
update the Web site on a volunteer basis through the end of this week while
the company tries to find more financing. CBS laid off a quarter of the
staff in its Internet division, and brought in four new executives to fill
the unit's top spots. NewsWatch.org, run by the Center for Media and Public
Affairs, closed down last week due to insufficient funds. CMPA began
searching for an alternate source of funding after receiving a flood of fan
mail bemoaning NewsWatch's disappearance. Even Salon.com laid off roughly
10 percent of its staff. E-commerce companies continued to feel the pain,
too. eParties laid off its entire staff of 29 last week, and was acquired
this week, but refused to provide details. InsWeb reported that it will cut
up to 40 percent of its full-time staff over the next six months. ToyTime,
with its companion BabyTime, couldn't handle the rough play in the online
toy retailing sector, and closed down. Already-troubled companies also felt
the pinch: Linux-boosting software company Corel laid of 320 employees,
which is more than 20 percent of its workforce, and its CEO Michael
Cowpland agreed to give up his salary to help cut annual expenses. 

Outage Ticker: Sprint, WorldCom, Pacific Bell
Sprint couldn't seem to keep one of its routers in Chicago working for very
long this week. On Friday June 2, the sl-gw27 router in that city went down
at 12:20 PM, and then again the same day at 9:30 PM. AT 6:40 PM on Sunday
June 4, the company discovered it hadn't solved the problem; once again,
the sl-gw27 router went offline. Finally, on Tuesday, June 6, Sprint fixed
that problem by replacing the router in the wee hours--between 5:30 AM and
7:30 AM. All down periods were accompanied by the usual temporary loss of
connectivity to customers directly linked to the router. Strange to say,
the Chicago router wasn't the only or even the worst problem Sprint
suffered this week. At 6:45 on June 3, with Chicago calm, Anaheim's sl-gw17
router went down. At 3:38 on June 4, the sl-gw16 router in Atlanta went
offline. Worst of all, on June 6, at 7:00 AM, the company experienced a
network wide outage in the eastern region of the US. Fortunately, Sprint
was able to give the folks in Fort Worth advance warning of emergency
maintenance on the sl-s1-fw router, which the company performed in a
two-hour window on June 9 between 12:01 AM and 7:00 AM. Of course, Sprint
wasn't the only company having problems this week. UUNET operations
reportedly experienced telephone problems. Their phone service is provided
by parent company WorldCom, who is, incidentally, in the process of merging
with Sprint. Hmmmmm....Be that as it may, the good people in California
also experienced their share of outage inconvenience. Pacific Bell's e-mail
system went down Monday and stayed down for most of Tuesday, affecting
about 144,000 of its northern California customers.  

Cyberscape Delight: FreedomZone Helps Undiscovered Talent Find Fan Base
Until the advent of the Internet, large recording companies more or less
played the role of gatekeeper, and undiscovered talent often remained just
that--undiscovered. Now, thanks to the Internet, many musicians can put
their work online and let people download it for free. So many songs are on
the Web, in fact, that one has to wade through a lot of dross before
finding the gold, with the result that a lot of undiscovered talent remains
just that--undiscovered. Enter Jim Milligan. He and several of his
companions started FreedomZone.com. A money manager by trade, Milligan
points out that people have the same problem with stocks as they have with
online music: there's so much and so many different varieties available,
it's difficult to choose. This is why people invest in mutual funds.
Milligan hopes to become the musical mutual fund of the Internet, finding
the best hidden talents in country, rock, jazz, classical, and other types
of music for fans. Users can sample an artist's work, and if they like what
they hear, they can buy a CD for $1.75. The Web site makes a deal with
recording artists that permits them to distribute up to one million copies
of a CD. While neither the artist nor FreedomZone makes money off of this
CD, it allows the artist to get heard, and build a fan base which might pay
real money for the next CD. The company is examining other innovative ways
of getting an artist's music before an audience (as the soundtrack to a CD
version of an annual report, or in commercials, for instance), and plans to
try a similar arrangement with independent filmmakers and other forms of
artwork


*** Terri Wells, Faulkner Information Services *** 

  


CyberScape Digest, Copyright 2000, Faulkner Information Services. All
rights reserved. 

Should you have any questions, concerns or problems with your flash, please
contact us at:  flash@faulkner.com 

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Missy Harvey
Computer Science Librarian
Engineering & Science Library
Carnegie Mellon University
Pittsburgh, PA  15213

http://www.library.cmu.edu/usr/missy/

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