Faulkner Cyberscape Digest 12/01/00 (fwd)

[Melissa Harvey]

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Date: Friday, December 01, 2000, 3:50 PM -0500
From: Faulkner Information Services <mails...@faulknerinfo.com>
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Subject: Faulkner Cyberscape Digest 12/01/00

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CyberScape Digest

CyberScape Digest is a weekly roundup of top internet stories. This issue
covers events from Monday 11/27/00 through Friday 12/01/00.

AOL Time Warner Merger Stalls--But Other Business Moves Full Speed Ahead
Negotiation setbacks and delays dogged Time Warner and America Online as
they attempted to gain approval for their merger from the Federal Trade
Commission. The FTC delayed for a second time a meeting at which it would
vote on whether to sue the companies in order to block the merger. It then
laid down yet another condition on the merger: Time Warner must make its
news and entertainment content available to AOL's competitors. The old
media giant dug in its heels at this demand, saying that it has the right
to at least some content exclusive to AOL if it chooses. The FTC itself is
said to be divided on whether the firms' present concessions will preserve
competition. While failing to reach any kind of conclusive agreement with
the FTC, America Online and Time Warner did achieve other agreements this
week. Adventure travel package seller Away.com agreed to provide travel
information to visitors to AOL's Digital City. Users of the co-branded area
will be able to plan hiking, rafting, diving, and biking trips, and access
more than 100,000 pages of Away.com editorial content. Speaking of content
deals, AOL struck deals with QVC, National Geographic Channel, BBC America,
and the NBA to create interactive content for its AOLTV service. Meanwhile.
AOL, Time Warner, and Juno worked together to hammer out the details of
Juno's open access contract with the merger partners. Finally, AOL took the
next step in its "AOL Anywhere" initiative, releasing a two way pager which
AOL members can use to send and receive instant messages and email. The AOL
Mobile Communicator costs $330, plus $20 per month for unlimited use. This
is on top of paying for a wireless service.

Microsoft Back in Court, but Still Moving Forward
Software giant Microsoft argued that it did not violate antitrust law and
should not be split in two in a brief it filed Monday with the US Court of
Appeals. Two trade associations also filed briefs with the Court of Appeals
supporting Microsoft's position: the Association for Competitive Technology
and the Computing Technology Industry Association. Two other groups filed a
joint brief supporting Microsoft's stance: the Association for Objective
Law and the Center for the Moral Defense of Capitalism. Meanwhile,
Microsoft had to deal with the results of a civil antitrust suit brought
against it by Bristol Technologies. US District Judge Janet Hall ruled that
Microsoft must pay Bristol's legal fees for the case, which run to $3.7
million--and bring the total amount Microsoft owes Bristol to more than
$4.7 million. The software giant was more busy out of the courtroom than in
it, though. It released the second beta of its upcoming version of
FrontPage to some 10,000 testers; a full release is expected sometime next
spring. The company also worked hard on its .Net initiative, trying to
convince users to go along with its vision of hosted Office Online
applications. So far, 20 application service providers (ASPs) have licensed
the software, but most of them have found that their customers simply
aren't interested. Using Office Online entails storing sensitive files
remotely, which raises privacy concerns among potential users. Perhaps
Microsoft will have better luck with its new new initiative--dotSmart. This
"initiative" basically involved a restructuring of the company's e-commerce
site, which included adding and revising 100 pages to make the information
easier to find and use. Users can also submit their situations and needs in
a profiling process, and the company will reply with recommendations.
Somewhere in the midst of these initiatives, Microsoft found the time to
make some deals. It chose Exodus to provide Web hosting services for a
number of its Web sites; it teamed up with Dell to offer buyers of Dell
consumer PCs one free year of Internet access through its MSN service; and
its Microsoft Networks teamed with New Edge Networks to offer Internet
services on a broadband platform. That last deal created MSN HighSpeed,
which will be available next year at MSN retail channels nationwide. Whew!

Legal Discordance Reigns on the Internet
Bertelsmann's attempt at a partnership with online music-swapping company
Napster brought Matthew Katz out of the woodwork. The 70-year-old
self-proclaimed "professional litigant" recorded tracks by groups such as
Jefferson Airplane and Moby Grape under his San Francisco Sound label. He
now charges that the alliance of both companies will run him out of
business--or so he says in his lawsuit against them. More specifically, he
accuses the companies of copyright infringement, unfair competition, , and
interference with economic relations, and is seeking $10 million in
damages. Maybe Napster should just paint a big red target on its Web site;
EMusic.com isn't happy with the company, either. The MP3 site found that
more than 35,000 of its tunes are being illegally traded through Napster by
about 20,000 users, and wants Napster to block those users' access. EMusic
sent Napster a list of 600 of its users as the first installment of those
it wants Napster to block. Meanwhile, PSINet's financial woes predictably
inspired about 15 class action suits charging the company and some of its
executives with violating securities laws. The suits claim that PSINet and
the executives made false and misleading statements about the company's
1999 financial results, the effects of the Metamor acquisition, and other
matters. Accordingly, PSINet's stock price was artificially high. PSINet is
moving to dismiss the suits. Priceline founder Jay Walker may end up in
even worse financial and legal straits. The Connecticut attorney general's
office is investigating Walker Digital for violating state and federal
employment laws. According to Connecticut state law, companies employing 50
or more people that lay off more than 30 percent of their staff must give
60 days notice. Walker Digital, based in Stamford, laid off 100 of its 115
workers, allegedly without notice. If the attorney general finds that
Walker Digital broke the law, it could be forced to hand out severance and
termination pay to the workers it laid off. Finally, fresh from being told
by a court in France that it must find a way to block French Web surfers
from auctions of Nazi-related goods on its main Web site, Yahoo now faces a
probe from Germany. The search service's German Web site is alleged to have
permitted the online auction of copies of Hitler's autobiography, Mein
Kampf, which is banned in Germany.

Making the Purchases (or not)...
While not as popular an activity as it once was, companies continued to
purchase each other this week. HP spin-off Agilent Technologies agreed to
buy Objective Systems Integrators for $665 million, paying $17.75 per share
for the software maker. In the birds of a feather department, Aptimus
acquired XMarkstheSpot. Both companies handle permission marketing
networks. US-based streaming media company Streamedia agreed to purchase a
strategic interest in Nomad Media, a streaming media company headquartered
in Europe. Some of the most interesting deals, however, didn't involve the
complete purchase of a company. Japanese mobile phone company NTT DoCoMo
paid $9.8 billion to buy a 16 percent stake of AT&T Wireless Group, giving
it an entry to the mobile Internet market in the US. This fits in well with
NTT's European and Asian investments. VeriSign, owner of Network Solutions,
invested in dotTV, a small company that controls Internet addresses ending
in .tv. As a result, VeriSign will begin letting domain name purchasers
register .tv domain names through its Network Solutions Web site. Working
the seller end of the street, Walt Disney Internet Group sold its Infoseek
Japan Web portal to Rakuten, a Japanese e-commerce site, for about $81
million. In exchange, Rakuten will give WDIG preferred status on Infoseek
Japan sites. Finally, one sale that did NOT go through: Verizon and
NorthPoint Communications. Verizon said it will walk away from the merger,
despite already paying $150 million out of an $800 million ownership
investment to NorthPoint shareholders. With the money it saves, Verizon
says it will continue with its own DSL expansion, rather than use
NorthPoint's DSL footprint to help it expand. NorthPoint, needless to say,
is less than thrilled about this turn of events. In fact, NorthPoint is
reportedly planning to sue Verizon over the failed deal.

..and Doing the Deals
Agreements of various sorts proved to be as popular as ever. Not long after
being granted access to Time Warner's cable system, Juno reported that
Comcast agreed to offer Juno Express over its cable system. Trials of the
high-speed Internet access service will start in 2001 in Philadelphia. The
agreement will make Juno the first company not affiliated with Comcast to
offer broadband service over Comcast's network. Speaking of interesting
network deals, the Web really hit the mainstream this week when Web-based
entertainment company Icebox struck a deal with Fox Broadcasting to license
its Zombie College series to the TV network. Streamwaves.com and EMI Group
showed up with a different licensing deal, one that would let consumers
listen to unlimited songs from Streamwaves' Web site for a monthly fee.
Users of the site will not be able to make permanent copies of the songs;
they will simply be able to listen to them through an Internet-connected
computer. But unlike other arrangements, they won't have to own copies of
the songs before being allowed to listen. Streamwaves will draw from about
7000 to 10,000 CDs, arranged by style of music. Many folks like their music
on the go, though--and sometimes it's nice to have Web access on the go,
too. Enter Ericsson and Juniper. The two companies formed a joint venture
to deliver mobile Internet routing products. The technology is targeted to
ISPs and mobile operators, and is designed to help bridge the gap between
voice and data transmissions. Compaq and the Walt Disney Internet Group
also reported a technology deal. The three-year, $100 million pact includes
marketing and distribution as well. Compaq committed to advertise on Disney
Web sites, and in return, Disney Internet will purchase Compaq hardware and
technology services. Additionally, Compaq will help power some Disney
sites. Lycos Europe and Inktomi made a deal which combines their
technologies, at least to a limited extent. Inktomi agreed to create a
search engine system for Lycos' HotBot Europe portal, while Lycos
incorporated Inktomi's Search/Media service into its HotBot Europe service.
Users will now be able to search a large data base of multimedia files.
Finally, Dell and webMethods linked up for a business-to-business offering
(there has to be at least one of those). The two companies will bundle
Dell's PowerEdge servers with webMethod's B2B application integration
software. Dubbed the Rapid Trading Partner Enablement bundle, it will let
users link their existing ERP or procurement systems directly with other
trading partners.

A Look at Tech Issues Outside the US
The European Union passed the Brussels I regulation. Scheduled to go into
effect in March, the law states that online consumers can sue in a court in
their own EU country when they have a dispute with an online retailer. The
effect of the law is to force e-tailers to abide by the laws of all 15 EU
members. The European Commission believes that such laws will help promote
e-commerce in Europe. Meanwhile, EU finance ministers are grappling with
the issue of introducing a value-added tax on online transactions, and hope
to reach a decision by the end of June 2001. The biggest stumbling block to
the introduction of the VAT is how to charge it on transactions between
buyers inside the EU and sellers outside the EU. Japan's Parliament passed
a bill designed to boost Internet usage in the country, in an effort to
expand e-commerce. The legislation takes effect at the beginning of next
year, and includes provisions to make Internet access more affordable.
Finally, Germany fingered Hewlett-Packard for the dubious honor of being
the first company ordered to pay fees for building CD burners used to
illegally download copyrighted content from the Web. The order stems from a
law predating most high-tech devices, and may encourage other European
countries to adopt similar regulations.

Amazon Offers Modern Service, Faces Old-Fashioned Threat
E-tailer Amazon got into the wireless market this week, selling mobile
telephones and service from its Web site just in time for holiday shoppers.
Consumers can choose between offerings from AT&T Wireless Group, Sprint,
and VoiceStream Wireless. The company is in talks to get Verizon, Nextel,
and SBC on board. Wall Street was unimpressed; the announcement did not
halt the slide of the company's stock. Apparently, Amazon's employees
weren't very impressed, either. The e-tailer found itself having to fight a
unionization drive. The Communications Workers of America is trying to
unionize 400 Amazon customer service representatives in Seattle, while the
United Food and Commercial Workers Union and the Prewitt Organizing Fund
are trying to unionize 5000 workers at Amazon's eight distribution centers.
In response, Amazon set up an internal Web site for its managers and
supervisors listing the warning signs that a union is trying to organize,
why a union is "not desirable" (including the fact that unions limit worker
incentives because "Merit increases are contrary to union philosophy"), and
how to legally combat attempts to unionize.

It's Not Just Privacy Groups Who Want Carnivore Information...
The FBI's controversial e-mail surveillance machine held the attention of
Senate Judiciary Committee leaders, as they tried to extract more
information from the reticent bureau about the device. In particular,
Chairman Orrin Hatch (R-UT) and Patrick Leahy (D-VT) want FBI Director
Louis Freeh to account for why his description of Carnivore's capabilities
contradicts the bureau's own studies of the machine. Freeh testified
earlier this year that the system only gathers information that has passed
through a filter that limits the scope of data collection. In documents
obtained through the Freedom of Information Act, however, it was stated
that Carnivore "could reliably capture and archive all unfiltered traffic"
going through an ISP's network. Oops. Looks like the FBI has some
explaining to do.

Careful, it's Virus Season for PCs
A PC is susceptible to catching a virus any time, of course, but the cooler
weather gives hackers more incentive to stay indoors and work their
mischief. At least three viruses hit the radar of antivirus companies this
week. Computer Associates warned of Afeto, also known as WM97/Afeto. It
spreads via e-mail; once it infects a PC, it searches for JPEG format files
and sends the first one it finds to other PCs. It is named for the text of
the document that accompanies the image: "Para voces com afeto," a
Portuguese phrase which translates as "For you, with affection." Sophos
warned of MTX, also known as the Apology virus. This virus features unusual
attachment names which encourage users to click on them, such as "Is Linux
better than Unix." Its nastiest quality, however, is that once it is
executed, it blocks users from accessing most of the Web sites of
well-known antivirus companies. Finally, Trend Micro warned about
TROJ_SHOCKWAVE.A, reported in both the US and the Far East. This Trojan
horse arrives via e-mail, disguised as a Shockwave Flash movie. It copies
into the Windows Startup folder, so it executes every time Windows is
started on the infected machine. When it executes, it renames all JPG and
ZIP files and moves them to the user's "C:\" root directory.

Dot-coms Give Out Pain and Pink Slips for the Holidays
Getting laid off around the holidays adds insult to injury, but hundreds of
Internet employees face that fate this season, whether from cost-cutting
measures or companies going out of business. Online translation service
elingo shut down its service on Monday, putting its assets, technology, and
intellectual property up for sale. The company plans an orderly shut down,
and made no mention of the number of employees it will lay off. Speech
recognition company Lernout &Hauspie filed for Chapter 11 in order to
continue its operations while straightening out its financial problems. It
appears that the company's Korean subsidiary managed to mislay about $100
million. While L&H did not mention layoffs, either, the company's debts are
said to amount to hundreds of millions of dollars. DSL provider Covad,
meanwhile, laid off 400 workers and cut back its expansion plans; it
estimates such moves will slice 20 to 30 percent off its expenses in 2001.
Communications software maker CUseeMe said "see you later" to 36 employees,
or 22 percent of its work force, in an effort to save $2.5 million
annually. Online postage company Estamp began phasing out its postage
business and laid off about 30 percent of its workforce. It will shift its
focus to providing shipping and logistics products and services. HomeCom
Communications revealed plans to get rid of 18 jobs, about 28 percent of
its workforce, and is even considering selling part of itself. HomeCom
targets the financial services industry with Internet services and
software. Internet consulting company iXL Enterprises will not be having a
very merry Christmas; the company plans to unload its digital media,
marketing, and wireless units, take a fourth-quarter charge--and lay off
850 workers, or about 35 percent of its workforce. Quokka Sports laid off
90 employees, about 20 percent of its staff, as a result of redundancies
created from several acquisitions it made this year. High speed ISP DSL.net
laid off 141 workers, or 28 percent of its workforce, to reduce its
spending. Even gambling Web sites weren't immune. Youbet.com cut its
workforce by 34 employees, or almost 30 percent, and lost its president and
CEO A.L. Frank. Maybe the company should switch from taking bets on which
horse will win the race to which dot-com will make it through the year.

Outage Ticker: Sprint, Verizon, NASDAQ, Amazon, AOL, Excite, Underwater
Cable On November 25 (the Saturday of the US Thanksgiving weekend),
Sprint's sl-bb21 router in Pennsauken, NJ experienced an outage. Beginning
at 9:05 PM EDT, the outage continued until just after 11 PM EDT. It was
caused by a dead slot 9 card, which Sprint replaced. On Wednesday, Verizon
Online customers suffered a four-hour e-mail service outage. The company
blamed the outage on hardware problems. It was the third time in two weeks
that its subscribers experienced problems accessing their e-mail; the first
two times were the result of spam attacks. Also on Wednesday, the NASDAQ's
price quote engine fell victim to a software glitch, forcing the stock
exchange to halt trading for 11 minutes. It was the third time this year
the exchange's trading was adversely affected because of problems with this
system. Amazon's Web site crashed for about 15 minutes on Thursday due to
an internal glitch--not a big deal, perhaps, but the outage was the second
one for the online retailer in a week. The earlier one, attributed to an
internal bug, lasted twice as long and fell on Black Friday. Ouch. Also on
Thursday, about 12,000 AOL subscribers found that they couldn't log on.
Another group of subscribers couldn't read their e-mail. The company blamed
both problems on separate hardware glitches. A server problem cut off
e-mail and Internet connectivity for thousands of Excite@Home subscribers.
The company's domain name server data base accidentally became corrupted
during a backup, making it necessary for engineers to rebuild the files.
Full access was restored late Thursday afternoon. Finally, the undersea
fiber optic cable linking Australia, Asia, and Europe which was severed
last week remained unfixed as of Wednesday night. A ship with a repair crew
is on the scene, but storms and the discovery of more extensive damage
delayed the work.

Cyberscape Delight: Celebrating the Spirit of the Season
Before the holiday shopping rush overwhelms us all, there's just enough
time to reflect on one of the better-known holiday wishes: not "Merry
Christmas," but "Peace on Earth, Goodwill Toward Men" (and never mind the
political incorrectness). One of the strongest agents of peace, even in the
center of conflict, was Mohandas Karamchand Gandhi, better known as Mahatma
Gandhi, whose non-violent movement led to India's independence from the UK.
Thanks to money raised by a group of India-born IT professionals, the late
leader now has a Web site, set up by Mahatma's great grandson. The site is
designed to act as information source and to bring Gandhi's philosophy to
"a new generation driven to cynicism and despair." For the "goodwill toward
men," there are Web sites that offer painless ways for users to make
charitable contributions. The Hunger Site remains quite popular. Visitors
simply press a button on the site to give rice to the hungry. The donations
are paid for by the Hunger Site's sponsors and distributed to those in need
in more than 74 countries by Mercy Corps and America's Second Harvest. The
site is also selling wreaths and hats; each purchase donates another 25
cups of food. The site also contains links to other worthy causes which
operate in a similar manner; for instance, at the Breast Cancer site, a
click of the big pink button donates free mammograms. Finally, for those
who like to have a shot at receiving as well as giving, StarGiving.com
allows users to send money from corporate sponsors to charity, and also
lets them enter a sweepstakes to spend time with a celebrity.

*** 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
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