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Date: Monday, August 21, 2000, 10:46 AM -0400
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Subject: Faulkner Cyberscape Digest 08/18/00 



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CyberScape Digest

CyberScape Digest is a weekly roundup of top internet stories. This issue 
covers events from Monday 08/14/00 through Friday 08/18/00.


Carnivore, Wiretapping Laws Continue to Receive Legal Scrutiny
Amid concerns about the <http://www.fbi.gov/>FBI's email monitoring device, 
a federal judge in Washington rejected several proposed revisions of the 
Communications Assistance for Law Enforcement Act. The judge's ruling came 
in response to an appeal filed by a loose coalition of privacy, civil 
liberty, telecommunications, and wireless industry groups angered by the 
<http://www.fcc.gov/>Federal Communication Commission's implementation of 
the 1994 act. The judge declared that the FBI could only be allowed to get 
at Internet-style data with a court order, and that law enforcement 
officials could not have access to numbers dialed after a call has 
connected--such information might let the police determine a person's bank 
account number, passwords, or other sensitive data. And what news of 
Carnivore itself? According to the <http://www.usdoj.gov/>Justice 
Department, the FBI will begin turning material related to its 
Internet-tapping machine over to the <http://www.epic.org/>Electronic 
Privacy Information Center for review in about 45 days. The bureau did not 
say how many of the approximately 3000 pages of documents it would turn 
over in the first batch, but it did state that it would hand over further 
batches every 45 days until it processed all of the material.

   Internet Marketplaces, B2B E-Commerce Rides Wave of Popularity
Many vendors found strength in numbers as they teamed up to create online 
marketplaces, business-to-business ventures, and other useful Web sites. 
For example, Japan will gain a travel Web site by the end of this year, 
thanks to a joint venture between 13 international airlines. 
<http://www.jal.co.jp/>Japan Airlines and <http://www.fly-ana.com/>All 
Nippon Airways will hold the majority stake in the venture, which also 
counted <http://www.northwestairlines.com/>Northwest and 
<http://www.unitedairlines.com/>United Airlines among its founding members. 
The new company plans to link up with 
<http://www.travelocity.com/>Travelocity to create a travel portal site 
catering to Japanese consumers interested in traveling overseas. In another 
deal involving large numbers of companies in the same industry, 16 metals 
and mining firms chose Commerce One and SAP to create for them an online 
marketplace. Based on the estimated procurement spending of the industry 
last year, the marketplace could do as much as $200 billion worth of 
business annually. This one is also expected to launch before the end of 
the year. Founding members include <http://www.alcoa.com/>Alcoa, De Beers, 
Barrick Gold, Broken Hill Proprietary, <http://www.msdw.com/>Morgan Stanley 
Dean Witter, and many others. Coming back to joint ventures designed to 
lure consumers rather than businesses, <http://www.gm.com/>General Motors 
proposed to work with its dealers to battle third-party auto sales Web 
sites. The venture's ownership would be split 50-50 between the auto maker 
and its dealers; its Web site would include information about GM's 
competitors' products and links to their Web sites. General Electric, 
meanwhile, plans to create what may be the first Web-based B2B industrial 
marketplace that isn't specific to any one industry. To be launched before 
the end of the year, Express Marketplace will give users the ability to 
order, ship, and track supplies and products. Users will be able to take 
advantage of catalogs, supply forecasting, and reverse auctions. No fees 
will be levied for membership in the marketplace, but there will be charges 
for services such as transaction handling.

AOL Battles IM Competitors, the FCC, and...Gamera?!
<http://www.imici.com/>Imici joined the long list of companies attempting 
to make their instant messaging product interoperate with 
<http://www.aol.com/>America Online's Instant Messenger. Like the others, 
AOL blocked the software from interoperating with AIM; in fact, it blocked 
Imici's product from interoperating at least four times on Thursday alone. 
One wonders if the ISP wishes it could block the suspicions of the 
<http://www.fcc.gov/>Federal Communications Committee as easily. Reviewing 
AOL's proposed merger with <http://www.timewarner.com/>Time Warner, the FCC 
insisted that both companies present documents to back up the statements 
they made last month at an FCC hearing. Specifically, the FCC wants to make 
sure that the companies leveled with the FCC on the issue of open 
access--not just to Time Warner's cable network, but to AOL's 
instant-messaging network. Hmmm...it's nice to know the FCC reads the news. 
Finally, another incident involving AOL proved the hoary chestnut that 
software isn't released, it's allowed to escape. A program the company was 
working on for Internet-linked devices made its way onto the Web. The 
Linux-based software, code-named "Gamera," is available from several Web 
sites; an administrator at <http://www.techpages.com/>TechPages.com, one of 
the sites, said that 10,000 surfers had downloaded the "extremely buggy" 
program. While many groups are no doubt dissecting Gamera already, 
observers have debated how much of a security risk Gamera's escape poses to 
AOL. Estimates range from "no real risk" to "hackers will be able to gain 
unlimited access to AOL's internal areas."

Internet Company Consolidation Continues
Some days it seems as if all the smaller dot-coms are either going out of 
business or merging with other dot-coms. This week saw plenty of action in 
the latter category, as companies in the same or complementary fields of 
endeavor linked up, hoping for a better chance to survive. To gain a 
picture of the phenomenon, examine <http://www.zing.com/>Zing. The online 
photo sharing company acquired <http://www.eframes.com/>eFrames, in hopes 
of adding an attractive set of services, such as packaged prints, frames, 
and other photo merchandise. We'll see what develops. Meanwhile, raise a 
glass for the marriage of <http://www.wine.com/>Wine.com and 
<http://www.wineshopper.com/>Wineshopper.com, two Internet wine firms. The 
combined company will keep the Wine.com name when it relaunches next year, 
hoping to become the place to go online for wine advice, ratings, and 
reviews. Of course, the folks using that Web site won't be (one hopes) the 
same folks who use <http://www.delias.com/>dELiA+s and 
<http://www.iturf.com/>iTurf, Web retailers who cater to teen-aged Web 
surfers. The strangely-spelled dELiA+s will pay stock valued at $86 million 
to merge with iTurf, which it had spun off in the first place. Both sites 
are getting ready for back-to-school sales, which inevitably brings up 
clothing...like, perhaps, red hats. Why red hats? Because a certain 
well-known <http://www.redhat.com/>Red Hat made a purchase of its own, 
spending stock valued at $44 million to buy <http://www.c2net.com/>C2Net 
Software. C2Net makes the Apache-based Stronghold Web server, which allows 
users to conduct secure transactions over the Internet. Then there are 
those who prefer to put off their purchases until the last minute. Such 
folks might be interested to know that 
<http://www.lastminute.com/>lastminute.com, an online European company 
specializing in offering last-minute travel deals, paid $89 million in cash 
and stock to buy <http://www.degriftour.fr/>Degriftour Group, a French 
e-travel firm. The purchase gives lastminute a stronghold in France and 
makes it one of the largest e-commerce companies in Europe, based on 
revenues. Speaking of e-commerce, 
<http://www.internettradeline.com/>Internet Tradeline and 
<http://www.koz.com/>Koz.com agreed to merge, linking up their offerings in 
online advertising, e-commerce transactions, and licensing services. The 
combined company will keep the name Koz.com; the transaction is expected to 
close next month. Finally, in a merger that dwarfs the rest of the ones 
reported this week, <http://www.globalnetfinancial.com/>GlobalnetFinancial, 
a UK-based online financial information firm, agreed to merge with 
<http://www.telescan.com/>Telescan, a US-based Web site development and 
hosting firm targeting financial and media companies. The firm resulting 
from the all-stock transaction will be worth about $332 million, with $80 
million in annual revenue. After the merger, the company will retain the 
GlobalnetFinancial name.

A Week of Minor Revelations from Microsoft
<http://www.microsoft.com/>Microsoft neither revealed nor received any real 
surprises in the endgame of its antitrust case with the 
<http://www.usdoj.gov/>Justice Department. After the software giant filed a 
brief insisting that its appeal should be heard by the Court of Appeals, 
the DoJ filed a brief insisting that the case holds so much national and 
economic important that it must be reviewed by the nine solemn judges of 
the Supreme Court. Microsoft will reply to the brief later this month. The 
rest of the week went somewhat better for the company, as it released the 
first public test version of BizTalk Server, e-commerce software that uses 
XML to link computer systems together. The product plays an important part 
in Microsoft's .Net strategy. The software maker also teamed with 
<http://www.compaq.com/>Compaq to show that two old dogs can learn new 
tricks. After depending on PCs to build their businesses for many years, 
the two firms unveiled the iPaq Home Internet Appliance with MSN Companion. 
Expected on the market by September, the six pound device possesses a 
10-inch screen and a wireless keyboard, and is designed to get users on the 
Internet quickly. Users sign up for MSN's Internet access service at the 
same time they purchase the iPaq. Speaking of non-PC ways to reach the 
Internet, Microsoft and <http://www.webtv.com/>WebTV reorganized, so that 
Microsoft is now directly in charge of most of WebTV's businesses. The move 
takes WebTV's operations out of the hands of its co-founders for the first 
time since it was purchased by the software giant three years ago. The 
question must be asked--does the shift have anything to do with the delays 
in bringing out Microsoft TV products? Finally, Georgi Guniniski, a noted 
bug hunter, made his own unpleasant revelation about a couple of Microsoft 
products. He warned that Microsoft Windows 2000 and later releases of 
Internet Explorer might contain a vulnerability allowing an unauthorized 
person to assume control of a computer. This can happen when folders 
accessed through Microsoft Networking are viewed as Web pages, which is the 
default setting.

The Legal Blotter: Intellectual Property
US District Judge Lewis Kaplan handed film studios a legal victory when he 
ruled that Eric Corley, publisher of <http://www.2600.org/>2600, must not 
republish a utility known as Decode Content Scrambling System, or DeCSS for 
short. The free software allows users to break the copy protection on DVDs 
and copy their contents onto any computer disk. The plaintiffs, which 
included Universal, MGM, and <http://www.timewarner.com/>Time Warner's 
Warner Brothers, hailed the decision as a win for the protection of 
intellectual property rights. The defendant vowed to appeal, saying that 
the judge's interpretation of the First Amendment would seriously interfere 
with the free exchange of information fostered by the Internet. The ruling 
comes against the backdrop of <http://www.napster.com/>Napster gearing up 
for its day in court against the <http://www.riaa.org/>Recording Industry 
Association of America, which maintains that Napster's file swapping 
service promotes copyright infringement and deprives artists of their 
income. From copyright infringement, it's just a small step to trademark 
infringement--which brings us to <http://www.yahoo.com/>Yahoo's case. The 
<http://www.wipo.int/>World Intellectual Property Association ruled that 
Uruguay resident Jorge Kirovsky must turn over four Web sites featuring 
"yahoo" as part of the domain name to the search company. In a second but 
related case, WIPO ordered six companies--three based in the US, three 
based in Belize--to turn over 36 domain names containing either Yahoo or 
<http://www.geocities.com/>GeoCities, another Yahoo-owned trademark. In a 
case of the little guy taking on more powerful opponents, a group of 
free-lance writers filed a lawsuit seeking class-action status against Bell 
& Howell, Northern Light Technology, Thomson, and two Thomson subsidiaries. 
The suit seeks back royalties from the online publishers. The writers 
maintain that they deserve to be paid whenever their work is downloaded 
over the Internet. (Your faithful reporter is on salary). Finally, acting 
in defense of his company, <http://www.bloomberg.com/>Bloomberg CEO Michael 
Bloomberg assisted the FBI in the apprehension of two Kazakhstan men 
accused of breaking into the firm's computer system and trying to force 
Bloomberg to pay them $200,000 to reveal how they did it. After leading the 
men to believe he would pay the money, Bloomberg met them in London with 
two police officers, one disguised as a company executive and other acting 
as a translator. The men repeated their demands, were promptly arrested, 
and are being held without bail. If US authorities succeed in extraditing 
the pair, they could face more than 20 years in prison and extremely high 
fines if convicted.

Here a Deal, There a Deal...
As is often the case, the Internet was awash with companies making deals 
this week. For instance, <http://www.gameplay.com/>Gameplay.com decided to 
play ball with <http://www.dixons.com/>Dixons Group to sell computer games 
online. Dixons' majority-owned ISP, <http://www.freeserve.com/>Freeserve, 
will permit Gameplay to operate Freeserve's games channel for selling and 
playing games as part of the partnership arrangement. Additionally, Dixons 
will merge its +jakarta games retail business with Gameplay, and rebrand 
those stores under the Gameplay name. IBM was all over the place this week. 
It linked up with Juno on a multiyear distribution agreement under which 
<http://www.ibm.com/>IBM will bundle <http://www.juno.com/>Juno's basic 
free Web access service with IBM's home PCs. The service will be available 
with NetVista, Aptiva, and i Series ThinkPad computers. IBM also agreed 
with <http://www.redhat.com/>Red Hat to bundle its version of the Linux 
operating system with IBM software, including DB2, WebSphere, Lotus Domino, 
Tivoli, and the IBM Small Business Pack for Linux. 
<http://www.kinkos.com/>Kinko's and <http://www.fedex.com/>FedEx teamed up 
to let customers place a print order over the Web and then designate where 
they want it delivered to, all in one transaction. Talk about the ultimate 
in convenience! Finally, <http://www.qxl.com/>QXL.com and 
<http://www.ricardo.de/>Ricardo.de reported that their agreement to merge 
is on again--but QXL will offer only $256 million in stock for the German 
online auctioneer, nearly 75 percent less than the offer it made back in
May.

The Living End and Other Departures
<http://www.amazon.com/>Amazon.com's online furniture store 
<http://living.com/>Living.com quietly closed its doors, laid off 275 
workers, and filed for Chapter 7 bankruptcy. The company had been under 
Amazon's wing for less than three months. It wasn't the only e-tailer going 
out of business. Online retailer <http://www.valueamerica.com/>Value 
America closed down its Internet store, filed for Chapter 11 bankruptcy 
protection, and fired 185 employees--46 percent of its workforce. It plans 
to reinvent itself as an electronic services business. Michael Cowpland, 
founder and CEO of <http://www.corel.com/>Corel, seemed to be looking for a 
chance to reinvent himself; he said he would leave the embattled software 
maker to work with start-ups offering the Linux operating system. Finally, 
Compaq reported a departure that brought forth a wave of online mourning, 
especially among those who measure their programming experience in decades 
(real decades, not Internet ones). The VAX server line, long used by large 
companies and universities, is being retired. 
<http://www.compaq.com/>Compaq inherited the VAX line when it purchased 
Digital Equipment. The last VAX orders will be accepted at the end of next 
month, and the last VAX will be shipped December 30. Compaq will provide 
technical support for these near-legendary beasts for the next 10 years.

Three Hacks and a Virus
A hacker reportedly broke into a <http://www.safeway.com/>Safeway data base 
and sent an e-mail that appeared to come from the UK-based supermarket 
chain. The e-mail stated that the chain planned to increase its prices 25 
percent and that unhappy customers could shop at Tesco or Sainsbury, rivals 
of Safeway. According to a Safeway spokesperson, the message does appear to 
have been sent out by the company's computer system, and a probe to 
discover the source of the message is being conducted. Meanwhile, two 
"hacktivists" ran rampant. Elsewhere in the UK, an anti-smoking hacker took 
down at least nine British government Web sites in 24 hours. The hacker 
called himself "Herbless" and claimed to be exploiting a previously unknown 
weakness in Windows NT. In the US, an ambitious 
pro-<http://www.napster.com/>Napster hacker going by the handle "Pimpshiz" 
also claimed to be exploiting a Windows NT bug as he took down 
<http://www.nasa.gov/>NASA, the French national library, and nearly sixty 
other Web sites in the past three weeks. Strangely helpful, the hacker left 
his e-mail address at the sites he hacked so that Web masters could contact 
him to find out how to undo his damage. Finally, remember the "I Love You" 
bug? The computer virus that suspended the conducting of business at so 
many companies earlier this year mutated yet again. This time, the virus 
targeted customers of a Swiss bank, trying to steal account information and 
send it off to its creator. "VBS/Loveletter.bd," as it is called, 
replicates using the now-familiar Microsoft Outlook pathway, and includes a 
resume in German for a job applicant from Zurich, Switzerland. The virus' 
new payload causes it to download a password-stealing program that copies 
online banking information. So far, the virus has done little if any 
damage, and seems to be contained.

IBM Make Quantum Leap in Computing Power
While the phrase "quantum leap" is more often used as hype than as a 
legitimate statement, IBM developed an experimental computer best described 
in exactly those words. Said to be the world's most advanced quantum 
computer, it uses five atoms as its processor and memory, and is governed 
by the laws of quantum physics. Theoretically capable of far faster 
calculations than conventional computers, a full-fledged quantum computer 
can be used for rapid data base searches, cryptography, and solving 
complicated mathematical problems. As a test, the research team involved in 
creating the quantum computer gave it a problem that would  have taken 
repeated cycles for a conventional computer to solve; the quantum computer 
solved the test problem in one step. No information was given as to whether 
the research team planned to teach it how to play chess.

Could it Be....? The Return of Internet IPOs
It's hard to keep a good industry down, particularly one that measures time 
in its own variation of dog years. Some of the most exciting offerings 
weren't for e-commerce companies so much as high-tech, Internet-related 
companies. Upstart chip maker <http://www.transmeta.com/>Transmeta filed to 
raise $200 million with its initial public offering of stock. Heavy names 
holding stock in Transmeta include Paul Allen (the other founder of 
Microsoft) and George Soros. The  non-US branch of 
<http://www.nextel.com/>Nextel, named Nextel International, filed to raise 
$920 million with its IPO. It will use the money for network expansion, 
purchasing additional spectrum, and general corporate needs. Low-cost 
computer seller PeoplePC raised $85 million from selling 8.5 million shares 
at $10 each, a little more than half of what it had hoped to raise. 
Customer service software firm <http://www.rightnowtech.com/>RightNow 
priced its IPO of four million shares at $10 to $12 per share. 
<http://www.viewlocity.com/>Viewlocity, a maker of e-business software, 
hoped to raise $67 million with its initial public offering of stock. It 
will use the money for a variety of purposes, such as paying off debt. 
Finally, a not-yet IPO story: Internet home delivery service 
<http://www.kozmo.com/>Kozmo.com chose to postpone its planned IPO until 
next year, and is laying off about one percent of its total staff--between 
30 and 40 people--from its New York City headquarters.

Outage Ticker: Furniture.com
The Web site for online home furnishings store 
<http://www.furniture.com/>Furniture.com was down on Tuesday between 12:30 
PM and 3:20 PM Pacific time. Users trying to access the site saw a message 
stating "We are currently performing maintenance on our Web site to assure 
you continued access to the best selection of furniture on the Web." The 
outage is the latest in a string of problems which have plagued the online 
retailer since June, and include nearly running out of money, laying off 41 
percent of its staff, and the loss of high-level executives and top
engineers.

Cyberscape Delight: We're Not Sure This is Legal, But...
As a responsible reporter, it behooves me to point out that I do not aim to 
promote any specific political action--particularly if it might be illegal. 
But that said, for those who enjoy a bit of political satire, it might be 
worth checking out Voteauction.com. Describing itself as "bringing 
capitalism and democracy closer together," Voteauction.com is the pet 
project of James Baumgartner, an MFA student who is using it as the subject 
of his thesis. Users of the site can literally put their votes up for 
sale--and bid on voting blocks by state. Is it criminal conspiracy--or a 
test of the Supreme Court's "money equals speech" ruling back in 1976? The 
legal agreement still needs to be worked out, but Baumgartner is 
considering having Voteauction registrants fill out absentee ballots in 
which they vote for whomever they want, except for the presidency (the sold 
vote). The auction decides the presidential vote; Baumgartner will simply 
confirm that the registrants "stay bought."  Direct vote buying does have a 
venerable history; George Washington himself, in the 1757 Virginia House of 
Burgesses race, bought a quart and a half of alcohol for each of the 351 
voters in his district to assure their support. If the auctioning off of 
votes sounds like one of those weird things that might turn up on 
<http://www.ebay.com/>eBay...well, it already has. Reaching $10,100 before 
eBay took it down, the "Vote of one US Citizen" was being auctioned off by 
said citizen. The high price was presumably inspired by the fact that the 
seller offered up his vote for the presidential election and "all other 
elections in my district, by name or by party" come November 2000. For 
those who think a person would have to be high to offer up his or her vote 
for sale, let's shift the scene to Amsterdam. Those who have visited this 
lively place know that it offers, among other things, legal marijuana--as 
long as the weed is purchased at cafes. A company called 
<http://www.itoke.co.uk/>iToke hopes to change that. Its customers will be 
able to order up to 2 grams of product through WAP-enabled cell phones, by 
using prepaid, rechargeable cards, cleverly named iTokens. A bicycle 
courier delivers the purchase within half an hour, reading the card's 
unique ID before handing over the goods. Further in the future, iToke plans 
to open cafes in certain cities, to be called iTokeos. Right now, the 
company just sells T-shirts.


*** <mailto:cyberscape@faulkner.com>Terri Wells, Faulkner Information 
Services ***


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

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