17th > February > 2000 Archive
Microsoft's lobbying efforts have gone into overdrive, with an email sent to US Congress representatives last week describing breakup as "a regulatory death sentence" for the company. Talks about a possible settlement of the Microsoft case are currently being conducted by Judge Richard Posner, who has required absolute secrecy. The latest email therefore sails somewhat close to the wind. It says Microsoft is willing to accept a "common sense" settlement involving some restrictions on its conduct, but rejects breakup. Could you call this a leak? That kind of depends on what they've been discussing behind closed doors. In an interview with AP yesterday Microsoft president and CEO Steve Ballmer certainly didn't call it a leak; in his book Microsoft is just keeping lawmakers informed of its position, and keeping them educated on its point of view. The email certainly seems to have been more of a manifesto for Microsoft than a nudge that the company would indeed be willing to settle. It uses the briefs filed by Microsoft's friends of court, and includes some of the opinion poll data that 'proves' that ordinary Americans don't want Microsoft broken up or beaten up too badly. So it's clearly not in exactly the same territory as the previous leak, which seemed to emanate from the government side (we still think it was the States), and which was at least based on information that was to be discussed via mediator Posner. Nevertheless, the good judge might still get a bit tetchy. ®
FBI Director Louis Freeh recommends invoking Racketeer Influenced and Corrupt Organization (RICO) statutes in prosecuting some cyber crimes. "This is an initiative [the FBI is] exploring," Freeh explained during a Senate Appropriations Subcommittee hearing Wednesday. "Some activity which goes beyond a single incident of fraud or hacking...gets into the realm of enterprise criminal activity," he noted. Repeated network intrusions could potentially expose American hackers to racketeering statutes which carry far more severe penalties than those allowed under the current Computer Fraud and Abuse Act, which often obstructs prosecution of malicious hacks resulting in less than US $5000 in damage to remote systems. If a malicious hacker were to carry out repeated attacks -- and "repeated" might posibly include the DDoS attacks which captured headlines last week -- RICO could potentially be invoked even if the hacks failed to achieve the minimum damage standards of the Computer Fraud and Abuse Act. RICO convictions enable the Feds to appropriate property believed to derive from criminal activity. Virtually anything may be included, as the burden of proof that a given article was purchased with money obtained by legitimate means rests with the convict. The statutes also enable the Feds to seize property pursuant to a conviction, leaving an exonerated suspect with the burden of recovering his or her property from various federal agencies notorious for their slow response. Federal prosecutors have used RICO to attack drugs traffickers -- and with limited results, we might add, owing to the spectacular hauls such criminals typically enjoy. Many consider the risk worth taking. "We are working on putting together a package, and I think you can anticipate that," US Attorney General Janet Reno added. The Register is unsure what to make of this development. The proposed provision would not discourage cyber-criminals capable of scoring hauls comparable to those enjoyed by heavy-duty drugs traffickers; and as for hackers, we note that all of those known to The Register are so strapped financially that seizing their property would be tantamount to squeezing blood from a stone. ®
The FBI is working hard to establish itself as the world's premier computer forensics expert. The Bureau has deployed 193 Special Agents devoted specifically to cyber crime, along with more than 100 related support personnel at FBI Headquarters in Washington, and 142 "parts examiners" busily recovering data from seized computers in the field, FBI Director Louis Freeh told the Senate Appropriations Subcommittee Wednesday. "These are people who can take evidence off a hard drive that even fairly sophisticated users would think had been erased," Freeh explained. Most computers sold in 1998 featured hard drives of six to eight GB capacity. But by the end of this year, sixty to eighty GB hard drives will be common, he noted -- and with considerable exaggeration, we observe. To tell the truth, twenty to forty GB hard drives will be "common" towards the end of this year. Sixty to eighty... well, that will remain in the realm of "dream boxes" for some time to come. In any event, the continuing development of big HDDs "vastly increases the area that needs to be searched", he complained. Yet there is hope on the horizon. The FBI has developed a program it calls the Automated Computer Examination System (ACES), which allows investigators to examine huge areas of magnetic media quickly, Freeh revealed. This, combined with the FBI's Computer Wizards' ambition to "de-centralise computer examination," should eventually yield an efficient mechanism for lifting data from confiscated boxes, he reckons. One putatively successful effort along these lines is a collaboration between the FBI and the San Diego Regional Computer Forensics Laboratory. This de-centralised approach is supposed to increase the Bureau's efficiency in forensic investigation. New centres are planned for New England and Texas, and ought to be running soon, Freeh said. ®
Looks like TheStreet.com is up for sale. At very best, the online financial new service is looking for what Salon neatly calls a sugar daddy to help it through its expansion plans.
Microsoft will unveil its would-be PlayStation 2 killer, X-Box, next month during the Game Developers Conference in San Jose, California. At least that's what UK trade title CTW is predicting. It reckons Bill Gates will play second fiddle to Lionhead co-founder Peter Molyneux who will be on stage to demo his upcoming online multiplayer Black and White running on the X-Box.
FBI Director Louis Freeh remains determined to require cryptography users to register their keys so that the Bureau can crack their secret files whenever a judge can be persuaded that information contained therein might facilitate a prosecution. There were fifty-three cases last year which slipped through the FBI's hands because their (apparently overrated) technicians were unable to crack the cryptography with which the incriminating files were encoded, Freeh explained in testimony to the Senate Appropriations Subcommittee on Wednesday. "We are operating with primitive tools," Freeh allowed. "If this area remains unanswered, we will be unable to investigate some of the major cases" of cyber crime, he added. "We don't need a major change in the Constitution or our authority. We can get this plain-text access, which comes only with a court order, without changing any statute which protects not only privacy, but the expectation of privacy," Freeh claimed. "If this remains unanswered, we will be unable to work many of these cases," he warned. Freeh and his boss, US Attorney General Janet Reno, have repeatedly called for strict crypto regulations along the lines preferred by the British and Communist Chinese governments. It remains to be seen whether the US Congress, which has the last word in this debate, will come around to their way of thinking. In America, many Members are reluctant to give such power to Big Brother for fear of a Nanny State gone out of control. Reno and Freeh may well be condemned, like Cassandra, to repeating their gloomy message to deaf ears ad nauseum. We note that just as the British government is announcing appallingly Draconian ambitions to require crypto keys to be registered, the Irish government is renouncing any such development in the name of lubricating e-commerce. We note further, and with delicious irony, that US Trade Representative Charlene Barchefsky is currently involved in a heated dispute with the Chinese, decrying their Blair-esque ambitions to require the registration of crypto keys, which the USTR fears might interrupt the flow of sex, money and greed upon which all developing economies, and those who would exploit them, necessarily depend. Meanwhile, far across the Pond, Congressional gridlock all but guarantees that the United States will have time enough to learn for itself which approach works best. ®
Microsoft's UK chief is quitting because he feels he is too wrinkly for the job. At 51, David Svendsen is stepping down from the post of UK chairman for the software giant just as it launches its flagship operating system. He will be replaced on 1 March by current Microsoft MD Neil Holloway, 39, who was described by one company insider as "the hero of Microsoft's marketing department" in today's Times. Svendsen, who will not be taking up another full-time position, said: "Sixteen years at Microsoft is a long time. I could go on, but this is a young person's game." Svendsen, chairman for 20 months and before that UK MD for ten years, will continue his role as chairman of corporate development on the board of childrens' charity the NSPCC. Holloway -- with ten years at Microsoft already under his belt -- is today launching the company's two-day event in London for the release of Windows 2000. ® Related Story Linux troops expected to rally for W2K launch
UK cable operator Telewest Communications has executed a bizarre volte face, apparently hopping straight from the arms of Microsoft into those of Liberate Technologies. Telewest will now be using Liberate's TV Platform for the deployment of interactive TV services to its customers. Liberate is of course the company formerly known as NCI, Oracle's NCI, while Microsoft bought a large slice of Telewest last year. Bizarre, isn't it? Aside from the $3 billion investment in October, Microsoft and Telewest announced "a strategic alliance to deliver broadband and Internet services." Microsoft was particularly busy buying bits of the British cable business last year, and this was widely seen as an attempt to buy its way into the market. The MS-Telewest alliance was intended to commence with the development of a Telewest-MSN co-branded portal, evolving into a broadband service early this year. The latest Liberate deal on the other hand, although not absolutely excluding Microsoft from the picture, does seem to restrict its available opportunities. Telewest will be using Liberate TV Navigator client software and Liberate Connect at the server end. The system will give customers access to email, banking and e-commerce. Among Liberate's shareholders, you'll recall, are Acer, AOL, Lucent, Nintendo, Oracle, Sega, Sony and Sun - bit of a rogue's gallery from Microsoft's point of view, no? Meanwhile in the department of strange Telewest-related coincidences, we forgot to point out an odd connection last month, when Telewest announced a deal with Worldwide Fiber to build a link between London and Liverpool. The CEO of Worldwide Fiber is Greg Maffei, while the then Microsoft CFO who put $3 billion into Telewest last year was - Greg Maffei. ®
DDI, Japan's third-largest telco, threatened yesterday to shut down Iridium's Japanese operation, Nippon Iridium. The telco is Nippon Iridium's largest shareholder, owning 35.7 per cent of the company. Iridium itself own just 11.2 per cent of the Japanese business. Kyocera, which, with Motorola, makes Iridium handsets, owns ten per cent of the company. According to Reuters, Kyocera remains keen to continue supporting Nippon Iridium and has no plans to pull out of the business. Earlier this year, Motorola said it wouldn't bankroll Iridium any further, and since DDI is to Nippon Iridium what Motorola is to the troubled satellite comms venture as a whole, it's not surprising that it shares Motorola's concerns. Last September, DDI revealed its exposure to Nippon Iridium ran to the tune of Y25 billion ($230 million) through equity investments, loans, loan guarantees and business support guarantees. Nippon Iridium contributes around 4000 subscribers to the overall operation. A DDI spokesman said that if the company did pull the rug from under Nippon Iridium's feet, it would service those 4000 subscribers. It's not clear whether that would be through reselling Iridium's offerings itself, or simply by hooking them up through cellphone network IDO, with which DDI plans to merge next October. Presumably IDO has some decent roaming agreements with overseas networks -- the very facility that has rendered Iridium's service largely redundant. Presumably, Iridium would wish to retain those customers for itself but it's unlikely to be able to put together enough cash to buy DDI's stake in Nippon Iridium, even with Teledesic boss Craig McCaw's planned investment in the company. That could well persuade McCaw to dig deeper into his pockets. His plan is to build Teledesic, ICO Global Communications (which he now owns) and Iridium (which he's working on taking over) into a full-service satellite communications and broadband Internet networking operation, and with the Japanese leading the way in services that require high-speed satellite-based Net connections, such as Sony's 'PlayStation 2 as video on demand client' programme, maintaining a Japanese presence is essential. ® Related Stories Iridium to receive $75m from Teledesic's McCaw Mobile phone sales triple Motorola Q4 profit Kyocera buys Qualcomm Terrestrial
Microsoft is facing more trouble in selling Windows 2000 in mainland China, because Chinese restrictions imposed last October forbid the use of foreign encryption products. Microsoft is due to roll out Win2k in China on 20 March, and in January announced that, er, "the Windows 2000 operating system will be the first platform with 128-bit encryption to be shipped internationally." Microsoft China is in talks with the government over the problem, and is still optimistic that it will be allowed to ship Win2k there. But Microsoft is by no means the only company that's going to fall foul of the rules, because they effectively block virtually any imported product containing encryption, and US trade negotiators aren't happy. Trade rep Charlene "Ballistic" Barshefsky was yesterday demanding that China abandon the rules, describing China's attempts to control the use of the Internet as futile. One can't help recalling how sensitive the US has historically been over encryption export, and the many efforts the Feds have made to introduce systems that will allow them to, er, control the use of the Internet and snoop on traffic. It's only been legal for US companies to export 128-bit encryption since 14 January, yet now the trade reps are demanding that overseas customers buy it. And then of course one also recalls how keen they were to get China into the World Trade Organisation. China's restrictions, which are the sort of stuff the US trade rottweilers regularly complain to the WTO about, were introduced just after China was let in. ® More sneering at Charlene: Crypto must be controlled - FBI director
More than £2 billion was wiped off the value of BT shares yesterday after it was reported Chancellor Gordon Brown was to announce plans that would cut the cost of Net access in Britain. In the event, he didn't. He merely voiced his desire to see costs come down and to speed up the unbundling of the local loop. But a combination of political spin and media hype led to near panic on the stock market, causing BT's share value to crash. In an attempt to turn the tide, BT chairman Sir Peter Bonfield issued a statement attacking the Chancellor. He said: "Opening up our local access network to our competitors is an entirely separate issue. BT shareholders own the network and BT not only needs to be consulted but to agree any timetable with Oftel. "We have already agreed with Oftel a deadline of July 1, 2001 and there will be no change to this date without our agreement. That would anyway be a matter for Oftel and BT -- not for the Treasury. So Brown has to live with the sorry fact that his political intervention has made him deeply unpopular among thousands of small investors who saw the value of their personal savings plummet. Understandably, relations between BT and the Treasury chilled considerably in the wake of Brown's blunder. Treasury spinsters attempted to salvage what they could from the fiasco but by then, the damage had been done. It remains to be seen whether his intervention will result in any long-term damage. ® Related Stories Brown Net cuts story is false Brown to slash Net charges
The wheels of justice grind exceedingly slow, but not, for once, in Britain. Here, the High Court of Justice's Patents Court (Chancery Division) is set to be the first jurisdiction to hear Intel's suit alleging that Via's chipsets infringe its patents. On Monday (Feb 14), Via filed a countersuit in the UK, requesting dismissal of the case. It asked the court to rule that its technology does not "infringe on Intel patent number EP (UK) 0 804 763 regarding snoop timing", Electronics News reports. In any case, the Intel patent is invalid, Via argues. Electronics New story here ®
The UK government wants British IT professionals working in the US to pack their bags and come home to Blighty to help fuel the Internet revolution. Speaking at the UK Software Partner & Investment Forum today, e-commerce minister Patricia Hewitt said she would use a visit to the US next month to try and woo back British ex-pats. "Britain is becoming the most exciting place for emerging technologies," she said. Though some might consider it to be somewhat less than exciting when it comes to salaries, decent Silicon Valley weather and as much Kool Aid as you could possible want. Asked whether simply appealing to people to come home was enough, especially when many left Britain in the first place because of high taxes in this country, Hewitt said: "You'll have to watch the budget and see what the Chancellor says." Nod, nod, wink, wink... ®
Fire has destroyed part of NTL's cable network in Nottingham leaving thousands of customers unable to use their phones, TVs or the Net. The blaze broke out last night after an electric cable caught fire in underground ducting. The flames damaged NTL's fibre optic links. Engineers have been working round the clock to repair the damage, said Mick Casey, a spokesman for NTL. He said he hoped al those affected would be reconnected by this evening. Casey also said the outage only affected people in the Nottingham area. He denied early reports that NTL's switch had gone up in smoke causing disruption to the whole of the North of England. ® Related Story Demon weathers storm as offices flooded
The E-Commerce Bill could be the first Act of Parliament to receive Royal Assent in the 21st Century, e-commerce minister Patricia Hewitt said today. The Bill is currently going through its final stages before being set before the Queen for her Royal Assent. The Bill's PR value of -- especially in light of the Government's keenness to support all things wired -- should not be underestimated. Not only would this new Act be the first of the new millennium, it would serve as a platform for the Government's future e-commerce policy. And in what would be an even bigger PR coup, it's hoped the Queen would sign the Act digitally. A spokeswoman for Buckingham Palace confirmed that discussions to break hundreds of years of tradition were underway. "No decision has been reached yet," she said. Last month the Queen ploughed £100,000 into Millennium Mapping Company, a British Webco. ® Related Story Queen invests in Web firm
Just what has Intel agreed to on work with Sony? Has it agreed to work with the Japanese giant at all? There certainly seems to be some confusion here. On Tuesday, speaking at the Intel Developer Forum (IDF), Pat 'Kicking' Gelsinger, general manager of Intel's desktop group, told attendees the company is working with Sony on a number of technologies, including home networking kit and a wireless version of the despised IEEE 1394 - or, iLink, as Sony calls it.
Intel Developer ForumNo-one was more shocked than Intel at how the shares of Rambus Ink soared the day it introduced its Willamette chip, we can reveal. In fact, a source very close to Intel's plans, said yesterday that "Rambus was the surprise celebrity at this IDF". So what exactly happened? Apparently, Ted and Jane's CNN ran an interview with someone very early on Tuesday morning where the pundit was asked what the significance of the 1.5GHz announcement was. Said pundit repeated the Intel party line that this microprocessor would not work with any other memory technology than Rambus RIMMs. Result, people all over this country piled their savings into Rambus Ink, sendings its shares to a stratospheric level. During the mad fever, the shares soared to over $168 each, almost the price of a RIMM itself. The shares stand at $140 right now. As every dog and its man know, you don't need to stuff motherboards with RIMMs to run Willamette. There's got to be something wrong here... We can report that at the memory briefing a couple of evenings back, there were fifty people present, and about half of them were financial analysts. And, during the Willamette demo itself, here in the press office, we were sat next to a couple of busy bees from New York who were actually trading from the press office itself. Who let these people in? Intel? ®
Web marketing outfit DoubleClick's shares plummeted on Thursday, largely on news of several impending investigations of its privacy policies, vouchsafing it the un-enviable distinction of leading the NASDAQ's losers for the day. The nose-dive followed a press conference earlier this week during which the company scrambled to lacquer up its image, and where it announced numerous initiatives to satisfy the public's privacy fears. It was too little too late, and investor retribution was swift. Company shares plummeted 12-1/8 to 94-3/8 on Thursday, in response to news of pending investigations by the States of Michigan and New York, and the Federal Trade Commission (FTC) in Washington. There seems to be a wide gap between the company's perception of its privacy safeguards and the perceptions of nearly everyone else. "DoubleClick has never and will never use sensitive online data in our profiles," company President Kevin Ryan said in a statement. Fair enough, but Ryan's definition of "sensitive" pertains to such items as medical records and financial statements, meaning that the company might well use data which the average person would be appalled to find floating around in a marketer's database. The company's spin campaign is going nowhere. "It is DoubleClick's policy to only merge personally identifiable information with non-personally identifiable information for profiling, after providing clear notice and choice," Ryan said. Not good enough, according to our sources. The kernel here is DoubleClick's previous policy of using no personally-identifiable data for consumer profiling, which it abandoned when it bought catalogue marketer Abacus Direct last November, and proceeded to merge the two companies' databases. Those who previously opted in, or declined to opt out, of DoubleClick's services now find themselves in an arrangement quite different from that to which they originally given their consent. Though the company has made much noise explaining how easy it is for consumers to opt out of their service, federal regulators will be looking closely at the difference between what DoubleClick promised Web surfers before it acquired Abacus, and what it delivers to them now. The FTC would not comment on an ongoing case, but Last May the Commission reached a consent agreement with Boston asset-management outfit Liberty Financial Companies, the operator of Web site called Young Investor. The site targets children and teens, and focuses on issues relating to money and investing. The FTC alleged that the site made false claims that any personal information collected from children in their on-line survey would be maintained anonymously, and that participants would be sent an e-mail newsletter as well as prizes. In fact, the personal information about the children and their family's finances was maintained in an identifiable manner, the Commission found. The site's "Measure Up" survey invited children to disclose financial information including the child's weekly allowance; types of financial gifts received such as stocks, bonds and mutual funds; spending habits; part-time work history; plans for college; and family finances. In addition to this anonymous data, the site asked for identifying information such as name, address, age and e-mail address in connection with providing the children with an e-mail newsletter and eligibility to receive prizes. At the beginning of the survey, Liberty Financial expressly stated that, "All of your answers will be totally anonymous," the FTC said. In that case, the company was admonished to tighten up its privacy disclosure statement, and to refrain from collecting data from young children without some sort of verifiable parental-consent mechanism. It would be reasonable, then, to imagine DoubleClick receiving similar treatment, probably requiring the company to improve its privacy notification setup, and possibly requiring it to dispose of data it collected on the basis of a disclosure mechanism the Commission might deem inadequate. With this in mind, one might see Wall Street's reaction as overplayed, and more revealing of a pent-up desire to swat one of the dot-coms which have been making it so twitchy all this year than of any sober, measured analysis of DoubleClick's financial future. But no one at The Register is rushing out to by DoubleClick shares just yet. The FTC investigation is likely to represent the least of the company's worries. It's the suits looming in Michigan and New York that should have the board shaking in their boots. We say this not because we have any inside information on either case. We simply note that in the past, ambitious state attorneys general have often scored copious political points for themselves by going after consumer-protection cases as enthusiastically and ruthlessly as possible. And if Michigan and New York show restraint in their actions, as we might expect them to do, DoubleClick is still one juicy hunk of bait for any AG who might welcome a righteous consumer crusade to smarten up their image. Thus death by a thousand cuts at the state level may yet prove to be the company's undoing. ®