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Date: Friday, September 29, 2000, 2:08 PM -0400
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Subject: Faulkner's Cyberscape Digest 09/29/00



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CyberScape Digest

  CyberScape Digest is a weekly roundup of top internet stories. This issue
  covers events from Monday 09/25/00 through Friday 09/29/00.

   
Microsoft Catches a Break from the High Court
Following months of stinging defeats in its antitrust imbroglio with the US
government, Microsoft copped a major victory Tuesday when the Supreme Court
ruled that the company's appeal should be heard at the lower appellate
level. The government wanted the case fast-tracked so that it would
leapfrog over the Court of Appeals and go directly to the Supreme Court,
which federal law permits, contingent upon approval by the justices. In an
8-1 vote, the justices turned down the government's request. A court that
has been historically friendlier toward Microsoft is now assigned to hear
Microsoft's appeal of Judge Thomas Penfield Jackson's order to split the
company in two as a means of precluding its use of anti-competitive
business practices in marketing PC operating systems. This turn of events,
coupled with the resulting increase in the time and complexity of the
appellate process, is a stroke of good luck for Microsoft, in that it
increases the likelihood that the case will conclude with a less-drastic
negotiated settlement. 

  
Worldcom Appeals EU Ruling on Sprint Merger
Petitioning the European Court of First Instance in Luxembourg Thursday,
Worldcom, the second largest US long-distance phone company, asked the
Court to annul the European Commission's June 28 decision blocking
Worldcom's proposed $115 billion merger with Sprint, the third largest US
long-distance carrier. The EC opposed the deal for fear that it would
afford the merged entity dominance in the global Net connectivity market.
Basing the annulment request on jurisdictional, substantive, and procedural
grounds, Worldcom hopes to show that the EC's analysis of the potential Net
market impact of  a merged Worldcom-Sprint was flawed. Worldcom claims, for
instance, that the EC used an analysis that failed to account for
significant changes in the Internet market over the last two years,
including emergence of a number of new entrants and new technologies that
restrain the ability of a single competitor to exercise market dominance.

   
Much Ado About AOL
America Online accomplished a number of  tasks that made observers sit up
and take notice. For instance, take its deal with major Japanese cell phone
player NTT DoCoMo. The two companies agreed to jointly develop and market
mobile Internet services. Not only does this extend AOL's reach, but as
part of the deal AOL Japan will get a $100 million infusion of cash from
NTT DoCoMo. The cell phone maker will also take a 42.3 percent stake in AOL
Japan, promote the company as its preferred ISP, and offer AOL services to
users of DoCoMo's i-mode wireless Internet service. In another
international deal, AOL made an agreement with Carrier1 for the use of two
of the carrier's points of presence, in London and Manchester. The PoPs
will be used to provide dial-up access services for AOL in the UK.
Eventually, up to eight PoPs may be involved in the nonexclusive
arrangement. Meanwhile, in Brazil, AOL introduced "AOL Mobile," a service
which will allow users of Internet-ready wireless phones to access online
content and services from America Online Latin America. Of course, a big
company like AOL wouldn't dream of neglecting new services for all of its
users. For music fans, the ISP unveiled EclecticXL, which will feature
interactive chats with artists and track play from soon-to-be-released
recordings. Lest anyone forget, AOL owns 150 Internet radio channels
through Spinner.com. Two older AOL services apparently gained an
undocumented "feature" when users of the ICQ messaging service discovered
that they could contact other users of ICQ through AOL's Instant Messenger.
While many observers took this as a sign that the company planned to
integrate the two systems, AOL denied this. The ISP stated that it did not
plan for ICQ to interoperate with AIM before it granted rival instant
messaging companies access to AIM subscribers. Perhaps--but the specter of
138 million instant messaging users all linked together on a proprietary IM
system is enough to make both competitors and antitrust regulators nervous.
The European Union began consulting with experts from its 15 member states
to determine what effects the proposed merger between AOL and Time Warner,
and between Time Warner and EMI, would have on competition. The companies
have already offered concessions to the European Commission to encourage
the regulatory agency to let the mergers be completed. While the EU is
concerned about the combination reducing competition in the music arena, US
regulators are worried about open access to Time Warner's cable pipes.
Rivals of the companies want regulators to make merger partners' promises
to open their broadband lines to competing ISPs a binding condition of the
merger. The Federal Communications Commission and the Federal Trade
Commission are both reportedly considering the matter--and AOL and Time
Warner are up in arms about it. Their objection: why should they be forced
to open their network to competing services when their rivals are not
required to do the same? The companies have a point. Imposing such a
condition on the deal without requiring it of rivals is akin to something a
regulatory body would do to a monopoly--and whether AOL Time Warner would
be a monopoly, and therefore forced to play under different rules,  has not
yet been determined. 

  California Governor Gray Davis Just Says No to Internet Taxes
Internet retailers in California and elsewhere rejoiced when California
Governor Gray Davis vetoed a bill that would have obligated businesses with
brick-and-mortar stores in California to collect sales taxes on purchases
made by California residents from the business' Web site. Assemblywoman
Carole Migden, who introduced the bill, promised to reintroduce it next
session. She maintains that the bill simply reaffirms existing laws; Davis,
however, stated in his veto that burdening Internet transactions with sales
taxes would harm California's image as an international Internet company
incubator. 

Acquisition and Joint Venture Agreements
Reviving negotiations that were scuttled two months ago, when merger
rumblings inflated stock values, raising the price of the deal, Exodus
Communications Wednesday evening inked a definitive merger agreement to buy
Global Crossing's GlobalCenter Web hosting business in a stock transaction
valued at approximately $6.5 billion. Left without a major broadband
networking alliance following Worldcom's recent $6 billion acquisition of
Digex, Exodus also agreed to a 10-year, $4 billion-plus commitment to
utilize Global Crossing's worldwide fiber optic network for most of its
traffic. In addition, the firms will collaborate on establishing a Web
hosting and managed services joint venture in Asia. The transaction is
expected to close in the first quarter of 2001. Also, putting up cash and
stock valued at $120 million, DoubleClick agreed to buy online market
research firm AtPlan. The Internet advertising company said the move would
help it to develop its own research division for guiding its customers in
targeting their advertising. The deal is still contingent upon the approval
of AtPlan's shareholders. In joint venture activities, Bertelsmann and
US-based iSyndicate teamed to create a Europe-based content syndication
services and technology venture. Dubbed iSyndicate Europe, the venture will
take advantage of Bertelsmann's multimedia expertise and iSyndicate's skill
in providing syndicated media to Web sites and wireless devices.
Bertelsmann will take a four percent stake in iSyndicate and a seat on
iSyndicate's board of directors as part of the deal. In addition, Com Dev,
a digital wireless offerings developer, licensed QUALCOMM's High Data Rate
technology and modem cards for its high-speed Internet system. Com Dev will
incorporate the technology into wireless base stations and mobile modem
cards. In return, QUALCOMM agreed to purchase a stake in Com Dev for an
disclosed amount of cash.

  IPO Activity Perks Up
Still giddy from scoring a multi-year, multimillion dollar contract to
supply optical switching equipment to Qwest Communications International,
Tellium filed a registration statement Friday with the Securities and
Exchange Commission for an initial public offering. Although number of
shares and price range have not been determined, Tellium said that the deal
was worth an estimated $250 million. Leading underwriters of the deal are
Goldman Sachs and Thomas Weisel Partners. In a similar move, Loudcloud, the
Internet infrastructure firm created and chaired by Netscape co-founder
Marc Andreesen, filed for an initial public offering estimated to be worth
$150 million. The company's SEC filing did not disclose the price range or
number of shares involved in the transaction. Goldman Sachs agreed to serve
as lead underwriter for Loudcloud. Also, technology data provider AMR
Research also filed for an IPO estimated to be worth approximately $75
million. The price range and number of shares to be offered were not
specified. The Nasdaq may be smiling a bit more upon IPO fortunes these
days. Software maker AvantGo saw its stock prices double as it went public
on the Nasdaq on Wednesday. Via the offer, the company raised $66 million,
which is earmarked for its marketing, administration, and product
development initiatives.

  Online Security: Holy Grail or Oxymoron?
The never ending battle against hackers and other threats to security
continued this week. Network Associates unveiled its latest weapon in the
war: CyberCop Network 5.0, a product from its PGP Security unit. The
network-based intrusion detection tool  monitors devices running multiple
operating systems. Also on the "good news" front, a 16-year-old hacker
sentenced to six months at a juvenile detention center for breaking into
NASA and Pentagon computers swore that he'd never hack again--it wasn't
worth getting caught and going to jail. As part of his sentence, the youth
will not be allowed to use the Internet except for schoolwork. Hacking
doesn't pay even for former FBI informants. A confidential FBI source on
computer criminals pleaded guilty to one felony charge of unauthorized
access to protected (government) computers. He faces a maximum sentence of
five years in prison and a fine up to $250,000. The convicted hacker was
accused of breaking into computers at the Department of Energy's Argonne
National Laboratories and the Brookhaven National Laboratory; NASA's
Marshall Flight Center; the office of the Secretary of Transportation; the
office of the Secretary of the Department of Defense; and unspecified
facilities of the DoD (wonder if he found records of Area 51?). California,
meanwhile, created a law that comes down hard on those who intentionally
spread computer viruses. Signed this week by Governor Gray Davis, the law
imposes a fine up to $5000 on those convicted for the first time of
releasing a virus into a computer system. If the malicious program causes
more than $10,000 worth of damage, the lawbreaker will spend up to three
years in prison. Sadly, such actions may only lead to a false sense of
security. Internet Security Systems, for example, reports spotting new
versions of Trinity and Stacheldraht, distributed denial-of-service
utilities that were used to take down eBay, Amazon, and other major Web
sites last February. ISS adds that the new variants were spotted in the
wild, both in corporate networks and PCs with high-speed network
connections. The tools' presence on computers with high-speed connections
only worsens the threat of DDOS attacks. As if a repeat of February wasn't
enough to worry about, the General Accounting Office released a report to
Congress sure to send shivers up and down the spines of frequent fliers
everywhere. According to the GAO, the Federal Aviation Administration has
not addressed weaknesses in its computer security precautions, leaving its
systems potentially vulnerable to hackers. Specifically, the GAO says that
the FAA has not performed adequate background checks on those it hired to
detect system vulnerabilities or repair Y2K problems. It has also allowed
background checks for a significant percentage of senior employees with
top-secret clearances to lapse, and failed to properly regulate access to
its air-traffic control facilities. Meanwhile, E*Trade redefined
"securities trading" when it sealed one security hole, only to be told it
suffers from another one. A spokesperson for Internet security consulting
firm @Stake pointed out that it uses a six-character limit on passwords,
leaving its accounts open to "brute force" password cracking attempts.
Other companies dealing with sensitive financial information, such as
online payment service PayPal, require nine character passwords. Finally,
hackers found a new target for viruses: personal digital assistants. A
virus dubbed PalmOS/Phange was discovered. As the first of its kind, it is
not particularly nasty. It fills an infected PDA's screen with a dark gray
box. The virus can be killed simply by deleting any file named Phange.prc,
and the device can be fixed by turning it off and then on again. If such
viruses follow the same "evolution" as PC viruses, one can expect more and
nastier bugs to come.  

  Colleges to Metallica: Don't Tell us What to Ban
Ironically, while a number of colleges have chosen of their own free will
to ban usage of Napster's digital music sharing software on campus, lawyers
for Metallica and Dr. Dre have had no luck convincing other universities to
ban or at least restrict access to the program. The heavy metal band and
the rapper are engaged in a lawsuit against Napster that accuses the music
company of copyright infringement. Many of the colleges refusing to ban
Napster from their campuses cite a lack of legal grounds and support for
uncensored access to information. Universities deciding against the ban
include Duke University, Stanford University, and the Massachusetts
Institute of Technology. 

  SAP, Compaq, Nokia, TIBCO Going Mobile for E-Business
At Microsoft's Enterprise 2000 launch on Tuesday, SAP AG and Compaq
reported that they had forged a strategic partnership to collaborate on
extending business applications such as mySAP.com offerings to remote
workforces worldwide. Toward that end, SAP is internally deploying the
mySAP.com Mobile Workplace on Compaq IPAQ Pocket PC devices running on the
latest version of Microsoft Windows CE to its sales, consultant, and senior
management teams. In another mobile alliance, Finnish mobile phone firm
Nokia and infrastructure applications provider TIBCO Software struck a
deal, whereby TIBCO will shill a new offering, TIBCO MobileConnect, which
enables mobile commerce (m-commerce) by allowing large enterprises to
communicate with customers and business partners through wireless devices.
TIBCO and Nokia reported that the new application will be based on Wireless
Application Protocol (WAP) and will be designed to enable ultimate
transition to 3G networks, affording access to digital information such as
music, video, TV, and photographs to mobile users.

  Aimster: Song Swapping Makes Good?
While Napster battles for survival in court, Aimster, a song-swapping
service that piggybacks on America Online's Instant Messaging service, is
making nice with recording labels. For instance, EMI, set to merge with
Time Warner (which in turn is trying to merge with AOL), teamed up with
Aimster for a two-day promotion of a new recording by the band Radiohead.
Rumor has it that Trans World Entertainment is also planning to unveil an
alliance with Aimster. A spokesperson for Aimster noted that the company
has been talking with many other firms, including Intel. Could it be that
the music industry finally sees the potential in this new technology and
will start exploiting it instead of trying to sue it out of existence?  

  Government, Internet Companies Address Privacy Issues
After examining nearly a dozen proposals, the Justice Department chose the
IIT Research Institute to conduct a technical review of the FBI's Carnivore
e-mail surveillance system. The non-profit research and development group
will include faculty members from the Chicago-Kent College of Law on its
review team. After the review, a report will be made available for public
comment in December of this year. The examination of Carnivore was prompted
by concerns voiced by Congress and consumer privacy groups that the system
violates Fourth Amendment protections against unreasonable search and
seizure. Some of the government's concerns may find their way into
legislation. The House Judiciary Committee approved the Electronic
Communications Privacy Act of 2000 this week. If enacted, the bill would
require law enforcement agents to get a search warrant, rather than an
administrative subpoena, before reading e-mail stored on a server. A search
warrant, unlike an administrative subpoena, requires a judge's signature.
Meanwhile, just outside the halls of justice, defunct online furniture
store Living.com settled with the state of Texas, which had sought an
injunction to prevent the company from  selling its customer information.
Living.com will destroy all of its customers' financial records; it will
sell names and e-mail addresses, but only after notifying its customers and
giving them the opportunity to "opt out" of the sale. Taking advantage of
consumer concerns about online privacy, OneName began offering a service
for sending information securely over the Internet. The company created a
"Web agent" to store personal data in a password-protected account which
users set up for free. The agent then processes the user's Web
transactions, according to the user's preferences. Consumers using the Web
agent with Web sites only reveal as much or as little as they want, rather
than agreeing to the Web site's privacy policy. OneName will make its money
by charging online businesses $5 per year for links to each user granting
permission to exchange information with that site. Seemingly on the other
side of the coin, NetZero created a new division, dubbed CyberTarget, to
sell the information collected by the company's zCast software. The
software observes the Web surfing habits of NetZero's registered users, but
keeps their personal information private. Such data, to be made available
by subscription, would be useful to marketers, advertising agencies, and
research firms. Meanwhile the 72 companies which make up the Global
Business Dialogue on E-Commerce proposed that global standards are needed
to protect personal information on the Internet. The GBDE, which counts
major concerns such as Time Warner among its members, suggested its own
privacy guidelines. They include obligating e-tailers to clearly explain
the ways they use personal data, give customers the opportunity to keep
their information private, and provide a contact for privacy complaints.
The GBDE recommended special guidelines to cover the handling of personal
data obtained from minors. A group of Web advertising companies, dubbed the
Responsible Electronic Communications Alliance and made up of 16 online
marketers, including DoubleClick, released its own set of proposed privacy
protection standards. Hoping to regulate itself rather than have rules
forced down its throat by outside regulators, RECA's standards included
notification of all personal information collected from consumers, how the
data will be used, and who will receive it. They would also obligate
e-tailers to alert Web surfers to cookies and other hidden
information-gathering tools. The standards also endorse providing consumers
with a single "opt-in" choice for receiving marketing material. Companies
which follow RECA's standards would be eligible to receive a "seal of
approval;" those companies which have received the seal and violate the
standards could face a variety of penalties. 

ATF Enlists Internet in War Against Illegal Guns
In an effort to crack down on those who create false licenses for firearms
in order to illegally obtain guns, the US Treasury Department's Bureau of
Alcohol, Tobacco, and Firearms created a firearm-license verification
system which users can access from the bureau's Web site. Dubbed "eZ
Check," it will allow gun dealers to submit a federal firearms license
identification number from a prospective purchaser's license and discover
the status of the license. 

  Outage Ticker: Sprint
Sprint reported that an outage occurred at approximately 12:48 pm EDT on
Wednesday at its Pennsauken, NJ switch site, which may have resulted in
loss of connectivity or degradation of service for customers directly
connected to its sl-gw28 router. After Sprint performed emergency
maintenance involving power cycling and re-seating cards, the router came
back up at 3:09 pm EDT. Additionally, on October 1, Sprint plans a
scheduled one-hour outage to move OC48 WAN circuits onto new GRS+ for its
sl-gw18 and sl-gw9 New York City routers. The outage is slated to occur
sometime between midnight and 6:00 am EDT. Sprint also reported that
network enhancement work of approximately one hour's duration is scheduled
to occur sometime between midnight and 6:00 am EDT on October 2 at the
Pennsauken site. For all gateway routers, the packet over soenet (Pos) link
and FDDI ring connections to the backbone will be moved to SRP. Affected
Sprintlink routers will include sl-gw11, sl-gw12, sl-gw30, sl-gw31, sl-gw8,
sl-gw7, sl-gw28, sl-gw9, sl-gw17, sl-gw14, sl-gw15, sl-gw35, sl-gw33,
sl-gw36. Also on October 2, Sprint will perform a sl 2000 build of one
hour's duration on its sl-gw2, sl-gw3, sl-gw4, sl-gw5, sl-gw6, sl-gw7,
sl-gw10, sl-gw11, sl-gw12, sl-gw15, sl-gw16, sl-gw17, and sl-gw18 Anaheim
routers (between 3:00 am an4:00 am EDT), and on its sl-gw11, sl-gw12,
sl-gw13, sl-gw14, sl-gw 15, sl-gw16, sl-gw17, sl-gw 18, sl-gw5 New York
City routers (sometime between midnight and 6:00am EDT). Finally, Sprint
has scheduled a one-hour outage to occur between 12:01 am and 6:00 am EDT
on October 2 for conversion of GW uplinks to SRP rehome fb1 and OC12 cards
for its sl-gw12, sl-gw14, sl-gw16, sl-gw17, sl-gw18, sl-gw20, and sl-gw21
Chicago routers. In all of the aforementioned outage situations, customers
directly connected to the affected routers may experience a temporary loss
of connectivity or a slight degradation of service, including possible
latency through the network for the duration of the maintenance.       

  Cyberscape Delight: First Comes Love, Then Comes 
Lucky Web surfer Rosemary Burgio of Franklin Square, NY, logged on to the
iWon.com Internet portal on Saturday and encountered a homepage banner that
read, "Rosemary, will you marry me? - Mario". Actually, the virtual
proposal from her long-time boyfriend Mario Scirica, was accompanied in
real-time by one of the old-fashioned bended-knee variety, as Mario knelt
and presented Rosemary with a diamond ring. (She accepted). iWon claims the
distinction of its having been the first time a marriage proposal has taken
place on a top five portal for all its users to see. Rosemary should now
pick out a lovely china pattern and have iWon direct all visitors to the
bridal registry of a Web site devoted to tasteful, elegant, and
outrageously-priced gifts for the happy cybercouple. Speaking of couples,
Liz Kalodner's worried mother would like to see her daughter become half of
one, preferably with a wedding and grandchildren to plan for in the near
future. Liz is CEO of SocialNet.com, an online dating and networking
service. Ironically, Liz is so busy juggling the myriad duties required of
a dot-com entrepreneur that her love life is a tad on the pathetic side. To
rectify this P.R. nightmare, the company resolved to take swift and
decisive action. Hence, the "Win a Date with Our CEO and Make Her Mother
Happy" contest at the SocialNet site. Would-be suitors interested in
squiring about a successful Silicon Valley dot-com executive are invited to
present their profiles. Contest entrants are required to join SocialNet's
Dating channel. This, however, appears to be the most stringent
requirement. Liz's mom, in a dish-the-dirt interview at the site,
characterizes the ideal mate for her daughter as "Alive...tall and alive.
Breathing. Good health...as long as he can perform because I want
grandchildren!"    

*** Terri Wells and Adrienne Edwards, 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: mailto:flash@faulkner.com 

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