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Date: Friday, July 07, 2000, 2:35 PM -0400
From: Faulkner Information Services <mailserver@faulknerinfo.com>
To: ???
Subject: Faulkner's Cyberscape Digest 07/07/00


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CyberScape Digest

CyberScape Digest is a weekly roundup of top internet stories. This issue
covers events from Wednesday 07/05/00 through Friday 07/07/00. 


  

European Parliament Finds US Privacy Protection Inadequate
In a major setback for e-commerce between the US and Europe, the European
Parliament rejected the proposed "Safe Harbor" agreement that would have
permitted the export of digital data concerning European citizens to the
US. According to the Parliament, the electronic privacy safeguards in place
in the US do not provide data privacy that is commensurate with the EU's
laws--and therefore, by the EU's own principles, US companies cannot be
permitted to receive information from data bases maintained in the EU. The
Parliament voted for this position 279 to 259, with 22 abstentions. The
vote does not mean the death of the "Safe Harbor" agreement. The
Parliament's vote is not legally binding, but the European Commission's
vote is, and it would be politically difficult for the Commission to
disregard the Parliament's opinion. Apparently this is not the only privacy
concern the EU has about the US; the busy European Parliament appointed a
36 member committee to spend a year investigating Echelon. Echelon--if it
exists--is a global surveillance system supposedly capable of intercepting
e-mail, faxes, and phone conversations. According to a report prepared by
British analyst Duncan Campbell for the Parliament, the US, UK, Canada,
Australia, and New Zealand have been using the system to discover European
industrial secrets. One goal of the committee will be to separate truth
from fiction.

   

Buying Companies--and Virtual Newscasters
Orange, a British mobile phone operator owned by France Telecom, purchased
virtual newscaster Ananova, along with her Web site and the company behind
it, from the Press Association for 95 million pounds (US$144 million) in
cash. Ananova will play a big role in Orange's plans to create its own
portal. As part of the deal, PA will provide Orange with content. Ananova
may have achieved a first: the first newscaster to report news of her own
sale. Executive recruitment firm Korn/Ferry made a more modest deal; it
agreed to buy online college graduate recruitment company JobDirect.com for
$30 million in cash and stock. In a much bigger deal, Japanese phone
carrier NTT wants to buy US ISP Verio in a deal worth $5.5 billion--but the
FBI is holding up the deal due to national security concerns. A Treasury
Department panel is reviewing the agreement and will make a recommendation
to President Clinton. Finally, the Terra-Lycos merger took another small
step forward as Bertelsmann said it was still committed to the merger,
despite being permitted to scale back the amount of money it planned to
spend on advertising and e-commerce services with Terra Lycos.
Bertelsmann's five-year commitment shrank from $1 billion to $325 million,
but CEO Thomas Middelhoff said that it was very unlikely that the company
would spend less than $1 billion. 

  

This Week's Lawsuits: Setting Precedents?
A lawsuit directed against America Online was filed in a US District Court
in New York. The would-be class action accuses the media giant of illegally
tracking Web surfers, thus breaking the Electronic Communications Privacy
Act and the Computer Fraud and Abuse Act. The suit claims that AOL monitors
users through Netscape's SmartDownload package, which, according to the
suit, secretly sends information about downloads of .exe and .zip files
back to itself, along with an identifying "cookie." The suit seeks
unspecified damages. Meanwhile, Microsoft--who is or is not competing with
AOL, depending on whom one asks--added Carter Phillips and Phillips' law
firm Sidley &Austin to its legal team to fight Judge Thomas Penfield
Jackson's unfavorable antitrust ruling. Phillips possesses extensive
experience with the Supreme Court, which is where the Justice Department
wants to send the appeal on a fast-track basis. Speaking of the antitrust
trial and "fast tracks," remember David Boies, the lawyer who turned in a
sterling performance representing the government in that trial? He has a
new gig defending Napster from the copyright infringement charges leveled
against it by the Recording Industry Association of America. In his first
brief filed for the case, Boies cited the precedents set by the Audio Home
Recording Act to maintain that consumers have the right to create and
transfer digital music for personal (noncommercial) use. The act also set
the precedent that a technology capable of substantial non-infringing uses
cannot cause the technology's distributor to be held liable for copyright
infringement, even if the distributor encouraged infringing uses and where
the technology actually was used for copyright infringement. Boies did not
miss the free speech angle, either, objecting that an injunction by the
RIAA that Napster take down its directory violates the First Amendment.
From the sublime to the strange, sports shoe make Nike is being sued--for
allowing itself to be hacked. On June 21, hackers penetrated Scottish ISP
FirstNet's servers and used them to redirect Nike's Web and e-mail traffic.
Nike asked the ISP to redirect the traffic back to its servers while Nike
regained control of its own domain name. After the matter was taken care
of, FirstNet sent Nike a bill for its services, and Nike refused to pay. So
far, it's merely a question of contract law--but part of FirstNet's bill
covers compensation for the disruption caused by the humongous amount of
traffic Nike generates. FirstNet says that Nike's poor security caused the
problem, so the company is financially responsible for the disruption. The
issue could raise disturbing precedents, and a host of lawsuits. Finally,
online privacy watchdog TRUSTe is planning to file a brief in bankruptcy
court against former online toy seller ToySmart. The company is selling its
assets, including customer lists and data bases, but selling its customer
information violates ToySmart's agreement with TRUSTe, which awards seals
of approval based on a company's privacy practices. At issue is whether
bankruptcy allows ToySmart to break its contract--an issue likely to loom
larger in the face of large numbers of Internet companies going under. 

  

Doing the Deals Online
Do you dream of surfing the Internet by talking to it? Apparently someone
at America Online does; the company paid $5 million for one percent of
SpeechWorks International's stock, with an option to increase its holding
to four percent. AOL maintains more than just a financial interest in the
company; the media giant licensed SpeechWorks' technology to develop a
voice-activated interface to its online services. Licensing deals achieve
all sorts of excellent things; just look at the one between i-DNS
International and Melbourne IT. Thanks to i-DNS' technology, Melbourne's
domain name registrar subsidiary, Internet Names WorldWide, will be the
first ICANN-accredited registrar to offer domain names written in Chinese
characters. The service is expected to boost the popularity of the Internet
in China, where it is already wildly popular. Of course, some deals are
somewhat more run-of-the-mill. MSNBC.com teamed up with FairMarket to
launch an online auction site. Auctions@MSNBC is designed to fit the needs
of both businesses and consumers, and will become part of the FairMarket
Network. For the security-minded, Microsoft teamed up with 3GI to create
network and Internet security products featuring the Windows Powered Smart
Card. Nokia and Cable &Wireless agreed to work together to create wireless
data centers which will deliver wireless Web content and services to ISPs,
large companies, and network operators.  

  

B2B Marketplaces Become Big Outside the US
Fourteen companies located in Australia formed a joint venture, a
multiple-industry Australian online B2B marketplace. Dubbed corProcure, the
company will start with a joint investment of more than $8 billion (US $5
billion) from its founding members in commitments to use the system for
indirect goods and services over the next two years. The marketplace will
be open to all existing and new suppliers. Founding members include Amcor,
Australia Post, Coca-Cola Amatil, Foster's, Qantas, Telstra, and
Wesfarmers. Spanish companies are also getting into the procurement arena.
Telefonica, Repsol-YPF, Banco Bilbao Viscaya Argentina, and
Iberia--representing telecommunications, energy, banking, and airlines,
respectively--formed a joint venture which the companies say will have a
buying capacity of more than one trillion pesetas ($5.74 billion) per year.
The company will be the first online B2B marketplace in Spain.  

  

The Beginning and the End: Bankruptcies and IPOs
Not even being backed by a genuine prince can save some Web sites. Tim
Winter, president and COO of FasTV, a streaming media news site, received a
phone call from Prince Khaled Al-Nehayan of the United Arab Emirates
telling Winter that he was pulling his money out of the company, and to
fire all 79 employees except himself. That must really simplify the staff
meetings. Meanwhile, online crime news site APBnews.com is still twitching,
if not quite fully alive. The company filed for Chapter 11 bankruptcy
protection, and managed to rehire some two dozen of its original staff of
140. Some of the old staff are still working at the company on a volunteer
basis. Its search for funding continues. Online event planning company
TimeDance.com folded after it failed to secure a second round of funding or
a buyer. Proving that two companies' losses can be another company's gain,
Freewwweb and WorldSpy both filed for bankruptcy and are sending their
subscribers to Juno's service. Both companies offered free Internet access;
Freewwweb supported itself with advertising, while WorldSpy tried to make a
go of it with no advertising. Amid this chaos, two dot-coms moved to put up
IPOs. Independent News &Media, based in Ireland, is floating its iTouch
mobile phone information service on the London Stock Exchange later this
month. The offering values the unit at 325 million pounds (US$490.8
million). Taiwan-based Digital United Holdings is planning an IPO on the
NASDAQ consisting of 10 million shares at $9 to $11 per share. The company
is an ISP, known as Seednet, with the second largest number of subscribers
in China. 

  

Microsoft Battles Bugs; IE Slips Out
Microsoft's Internet Explorer displayed its vulnerable side as the software
giant issued a patch for a nasty bug that can be used to overwrite files
and crash computers. The specific problem concerns the program's Active
Setup Download feature, which malicious hackers can use to launch
denial-of-service attacks. The feature, used for updating software, is
supposed to check for digital signatures as a security measure, and warn
the user if the download lacks the signature, or the signature is not the
right one. The feature treated files signed by Microsoft as automatically
trusted--meaning such files would be downloaded without requesting user
approval. One hopes the problem is fixed in IE 5.5, which is already
available in Chinese, German, Japanese, and Korean--but not English.
Somehow, the international releases slipped out; a Microsoft spokesperson
said that "A few got posted to the Web, which is a little regrettable," but
that a US version was imminent. This version of IE will be included in the
consumer version of Microsoft's operating system, Windows Millennium. With
luck, it will avoid one of the strange problems with Windows 2000.
Actually, it's Symantec's problem: due to a software glitch, the company's
Norton Antivirus software caused some Windows 2000 computers to crash.
Norton Antivirus 2000 on a Windows 2000 system can cause programs to slow
to the point that they no longer respond to the keyboard or the mouse.
Symantec already released a patch for the problem--after all, Windows 2000
itself should not be affected by the software, since it is not a virus.
Right? 

  

Outage Ticker: Sprint
Sprint performed various maintenance tasks and gave advance warning of
several more. On Thursday, the company upgraded hardware on is sl-gw8
router in Atlanta between 12:01 AM and 7:00 AM. On July 10, Sprint plants
to upgrade hardware on the following Fort Worth routers: sl-bb1, sl-bb2,
sl-bb3, and sl-bb4. The work will take place between 12:00 AM and 7:00 AM.
That same day, the company will upgrade hardware on the sl-gw11 router in
Anaheim, in a one hour window between 12:01 AM and 7:00 AM. On July 11,
Sprint will upgrade hardware on two other Anaheim routers, sdn-pnc1 and
sdn-gw1, between 4:00 AM and 6:00 AM and between 12:00 AM and 6:00 AM,
respectively. All customers directly connected to the aforementioned
routers during the maintenance tasks 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: Boundaries Blur Between the Real and the Virtual
The latest twist on "reality" entertainment comes from Germany. Extramile
AG will offer "RealityRun" starting August 1. The rules are simple: the
contestant is dropped off somewhere in Berlin, and must hide from the
event's RealityHunter for 24 consecutive days. RealityRunners receive no
special equipment--except for a mobile microphone which can be heard
through the contest's Web site--and no permanent place to live; they must
bring everything they need to survive. The RealityHunter will be a former
elite combat soldier, and he will be able to receive tips from visitors to
the contest's Web site as to where the runner might be. Extramile envisions
this event as the first of a series to take place in big cities around the
world. Successful runners will receive $10,000 and the right to compete in
a Mega-RealityRun with a $100,000 prize, to be held in August 2001 in New
York. Meanwhile, for those who find the reality of this year's presidential
race to be a little, um, boring, there's always Jackie Strike. Launching
her campaign on July 4 in Germany, Jackie is a politically involved
housewife and has her own Web site with all the required features: a
candidate's bio, speeches, a diary, pages that explain where she stands on
the issues (a budding poet, Jackie explains her views in both prose and
poetry), and of course, a place for volunteers to sign up. There's just one
little problem: Jackie isn't real; she's virtual. The first clue is in her
July 4 address: "On this day in 1776, our forefathers called for a
revolution...Today, we are doing virtually the same thing." Jackie's
speeches are generated from snippets of political addresses by others.
Three German companies are supporting Jackie Strike: noDNA, Boettcher
Hinrichs, and Web Pilots. The site is meant as a demonstration of the
companies' software, to attract US customers and investors. There's an
opening in the campaign for a vice-president. Hmmm...wonder if Ananova is
available?

   


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


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

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