4th > April > 2000 Archive

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Judge finds against MS on virtually all fronts

Analysis The Conclusions of Law Judge Jackson has issued in the Microsoft trial are generally as expected: Microsoft has been found guilty of breaching both section one and section two of the Sherman Antitrust Act. "The Court concludes that Microsoft maintained its monopoly power by anticompetitive means and attempted to monopolise the Web browser market", the judge wrote, "by unlawfully tying its Web browser to its operating system". The nineteen states and the District of Columbia - the plaintiff states - also won their case, with the judge finding  Microsoft liable under state antitrust law as well. Because the hearing schedule severely limited the number of witnesses, the judge found that the evidence presented did not support the conclusion that "Microsoft's marketing arrangements with other companies constituted unlawful exclusive dealing". This does not mean that Microsoft did not indulge in such practices - merely that it wasn't proved to the necessary standard. The 43-page document issued last night links the findings of fact to legal precedents on which the legal conclusions are based. The judge put considerable weight on the fact that Microsoft protected its market share with "a substantial barrier to entry". He also concluded that there were no constraints that deprived Microsoft of "the ability to price substantially above the competitive level" (quoting the antitrust  treatise by Areeda), but in the effective absence of any directly competitive products it was hard to understand how a competitive level could be established. Contractual and technological shackles The Conclusions of Law summarise the findings of fact to devastating effect, for example when considering the OEM channel: "First, Microsoft bound Internet Explorer to Windows with contractual and, later, technological shackles in order to ensure the prominent (and ultimately permanent) presence of Internet Explorer on every Windows user's PC system, and to increase the costs attendant to installing and using Navigator on any PCs running Windows. Second, Microsoft imposed stringent limits on the freedom of OEMs to reconfigure or modify Windows 95 and Windows 98 in ways that might enable OEMs to generate usage for Navigator in spite of the contractual and technological devices that Microsoft had employed to bind Internet Explorer to Windows. Finally, Microsoft used incentives and threats to induce especially important OEMs to design their distributional, promotional and technical efforts to favor Internet Explorer to the exclusion of Navigator." Microsoft's only substantive attempt at a defence by using copyright is dismissed, since it "neither explains nor operates to immunise Microsoft's conduct under the Sherman Act", with the judge observing that "the validity of Microsoft's copyrights has never been in doubt; the issue is what, precisely, they protect". The judge was evidently impressed with arguments advanced by Sun, since he wrote: "Microsoft's tactics induced many Java developers to write their applications using Microsoft's developer tools and to refrain from distributing Sun-compliant JVMs to Windows users. This stratagem has effectively resulted in fewer applications that are easily portable. What is more, Microsoft's actions interfered with the development of new cross-platform Java interfaces... "The evidence thus compels the conclusion that Microsoft's actions with respect to Java have restricted significantly the ability of other firms to compete on the merits in the market for Intel-compatible PC operating systems. Microsoft's actions to counter the Java threat went far beyond the development of an attractive alternative to Sun's implementation of the technology. Specifically, Microsoft successfully pressured Intel, which was dependent in many ways on Microsoft's good graces, to abstain from aiding in Sun's and Netscape's Java development work. Microsoft also deliberately designed its Java development tools so that developers who were opting for portability over performance would nevertheless unwittingly write Java applications that would run only on Windows. Moreover, Microsoft's means of luring developers to its Java implementation included maximising Internet Explorer's share of browser usage at Navigator's expense in ways the Court has already held to be anticompetitive. Finally, Microsoft impelled ISVs, which are dependent upon Microsoft for technical information and certifications relating to Windows, to use and distribute Microsoft's version of the Windows JVM rather than any Sun-compliant version. Willing to slow Windows to hurt Java "These actions cannot be described as competition on the merits, and they did not benefit consumers. In fact, Microsoft's actions did not even benefit Microsoft in the short run, for the firm's efforts to create incompatibility between its JVM for Windows and others' JVMs for Windows resulted in fewer total applications being able to run on Windows than otherwise would have been written. Microsoft was willing nevertheless to obstruct the development of Windows-compatible applications if they would be easy to port to other platforms and would thus diminish the applications barrier to entry." The law requires the judge to consider Microsoft's conduct taken as a whole: his finding was that the company is "predacious" because "Microsoft paid vast sums of money, and renounced many millions more in lost revenue every year, in order to induce firms to take actions that would help enhance Internet Explorer's share of browser usage at Navigator's expense." As for attempting to obtain monopoly power in a second market by anticompetitive means (better known in European competition law as the abuse of a dominant position through monopoly leverage), the Court found that "the predatory course of conduct Microsoft has pursued since June of 1995 has revived the dangerous probability that Microsoft will attain monopoly power in a second market. Internet Explorer's share of browser usage has already risen above fifty percent, will exceed sixty percent by January 2001, and the trend continues unabated." Guilty of tying The anti-tying provisions of the Sherman Act were also found to have been breached by Microsoft. Judge Jackson confronted the appellate court finding in Microsoft's favour over whether Windows and IE were separate products, and noted: "Given the virtually infinite malleability of software code, software upgrades and new application features, such as Web browsers, could virtually always be configured so as to be capable of separate and subsequent installation by an immediate licensee or end user. A court mechanically applying a strict 'separate demand' test could improvidently wind up condemning .integrations' that represent genuine improvements to software that are benign from the standpoint of consumer welfare and a competitive market. Clearly, this is not a desirable outcome. Similar concerns have motivated other courts, as well as the D.C. Circuit, to resist a strict application of the 'separate products' tests to similar questions of 'technological tying'." The judge rubbed in his dependence on higher opinion: "To the extent that the Supreme Court has spoken authoritatively on these issues, however, this Court is bound to follow its guidance and is not at liberty to extrapolate a new rule governing the tying of software products. Nevertheless, the Court is confident that its conclusion, limited by the unique circumstances of this case, is consistent with the Supreme Court's teaching to date", making it seem that he was being very cautious and respectful of Supreme Court decisions, and so less likely to be overturned in the appellate court. Part of Judge Jackson's reasoning for letting Microsoft off for exclusive dealing was that "courts... have declined to find liability where alternative channels of distribution are available to the competitor, even if those channels are not as efficient or reliable as the channels foreclosed by the defendant." He decided not to set a precedent in the case, and gave Microsoft its only little victory. The states' claims Microsoft contended that a plaintiff cannot succeed in an antitrust claim under the laws of California, Louisiana, Maryland, New York, Ohio, or Wisconsin without proving an element that is not required under the Sherman Act, namely, intrastate impact. However, the judge found that "in each of the plaintiff states, Microsoft's anticompetitive conduct has significantly hampered competition". Microsoft's counterclaim against the attorneys general of the plaintiff states was rejected on the fundamental grounds that "it is inconceivable that their resort to this Court could represent an effort on the part of the attorneys general to deprive Microsoft of rights guaranteed it under federal law, because this Court does not possess the power to act in contravention of federal law. Therefore, since the conduct it complains of is the pursuit of relief in federal court, Microsoft fails to state a claim... Consequently, Microsoft's request for a declaratory judgment against the states... is denied, and the counterclaim is dismissed." The Order accompanying the Conclusions contained one considerable surprise: Microsoft will have to pay "costs and fees", which is unusual in US cases. There will be a further Order, almost certainly after a scheduling conference, about "following proceedings to be established by further Order of the Court" - which translates to a hearing on remedies. ® Complete Register Trial coverage
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MS guilty – can Prez Bush save it?

MS on Trial Microsoft is making it clear that it wishes to appeal. Whether it will do so immediately against the Conclusions of Law is not yet certain, but there can be little doubt that Microsoft would want to get the case back into the appellate court as soon as possible. Microsoft's hope would be that the Court of Appeals would stay any District Court proceedings pending the hearing of its appeal. One of Microsoft's stratagems must be to delay the case as much as possible, in the hope that George W Bush III becomes President (he is known to oppose the breakup of Microsoft), and appoints an attorney general who will not push for the breakup of Microsoft. Judge Jackson's plan is almost certainly to set a schedule for further briefs and a hearing on remedies, and if he moves at the same speed as for the fact and legal findings, it would be reasonable to suppose that he would make his Order about what should be done around the end of June or in early July. It remains to be seen whether Microsoft will persuade the appellate court to put such a procedure on hold. Although Microsoft has made noises about an expedited appeal, the appellate court is not very swift about holding hearings and deciding the matter. It would be reasonable to expect a lapse of up to six months between the launch of an appeal, the preparation of briefs, a hearing, and the decision. If the District Court action were stayed pending the appeal, then Microsoft would make it into the next presidency, with the possibility of a pro-Microsoft  attorney general and a new antitrust chief in place by next January. There is an interesting alternative possibility: the Antitrust Expediting Act makes it possible for the DoJ to seek to have the case appealed directly to the Supreme Court, so by-passing the DC Circuit Court of Appeals. Whether this could happen at the present stage is unclear, but it would seem more likely that the District Court would have to finish its work first. When Ronald Reagan became president, he effectively halted the IBM antitrust case that was active. It is of concern to those living under somewhat older and more mature judicial systems that there is in the USA a very real possibility of executive interference with the job of the judiciary, casting doubt on the effectiveness of the separation of powers. It is disturbing that the issue may result being of Microsoft's breakup might well depend on who becomes President. ® Complete Register Trial coverage
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Via admits it's in talks to buy S3 chip unit

Taiwan's Via Technologies has confirmed it is talking to S3 with a view to buying the graphics-to-gadgets company's 3D processor operation, according to Taiwanese business paper the Commercial Times (CT). Via emerged as the front-runner in the race to buy S3's chip business, nosing ahead of the favourite, Nvidia. Hints that Via was talking to S3 began to appear earlier this year, but little more was heard until S3 last week confessed it was talking to one or more third-parties. S3 insiders last week claimed the company had been talking to Via, but neither company would confirm this - until now. Curiously, Via admitted that there were indeed other companies talking to S3, so it's not possible to rule out an acquisition by Nvidia, Intel, ATI or another company. Via owns 14.9 per cent of S3, so it's possible that Via is acting now to prevent the loss of the 3D business to a rival. Certainly the early rumours of Via-S3 talks focused on an acquisition of the company in its entirety, rather than its 3D chip business. Via is clearly confident that it will win through. CT reported that the deal should be settled any day now, and that Via will spin off the chip business as an independent operation, presumably with Via retaining control through a majority shareholding. ® Related Stories S3 Sweepstake: Via edges into the lead S3 chip team sale: the potential buyers lined up S3 readies graphics chips hive-off
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Bluetooth won't fry your brain

While World+dog are in agreement that Bluetooth is a jolly clever technology, it finds itself in a very similar position to that of USB a couple of years ago: nice idea, no products. But now French phone behemoth Alcatel is to embed a Cambridge Silicon Radio (CSR) Bluetooth chip in the battery packs of its OneTouch 500 and 700 GSM phones, enabling cordless hands-free operation and thus avoiding the much-publicised risk of conventional headsets acting as an antenna and cooking the user's brain. CSRs Bluecore 01 single chip Bluetooth product will also allow the phones to communicate with handhelds and PCs, says Alcatel. CSR's BlueCore 01 is a single-chip radio and baseband IC for 2.4GHz Bluetooth radios, with an external Flash ROM containing the CSR Bluetooth software stack. The design is optimised to require very few external RF components to speed design of the motherboard, especially critical in the mobile phone arena, where products typically have a lifespan of three months. ®
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Sega US preps free Dreamcast lure for its ISP

Sega' US operation is following the lead set last month by Japanese company J-Data Co. and offering free Dreamcast consoles in exchange for Internet access contracts. Sega of America's scheme centres on the launch of an online gaming company, to be called Sega.com, and an ISP service, SegaNet, to connect online players together. SegaNet is due to go live in the autumn. Sega will offer a $200 rebate to anyone who signs up for a two-year subscription to SegaNet. The ISP is expected to charge $21.95 per month for access, which amounts to $526.80 over the two-year period. That's rather more than the average ISP fee of around $10 per month, so while the $200 rebate will nicely cover the cost of the console, users will be paying over the odds for Net access. But maybe they'll be happy with the free keyboard they'll also receive as part of the deal. Essentially the deal is about building marketshare before Sony launches the PlayStation 2 in the US next autumn. Anticipation of the Sony machine is already hitting Dreamcast sales in Japan - they were never quit as high as Sega would have liked as it is - and the same effect is likely to be seen in the US and Europe. Arguably it's already happening. Giving away hardware to entice users to sign up for long-term ISP contracts isn't a new approach, but it's not one that's been quite as successful as some industry watchers have hoped. The idea of companies offer free kit as a loss-leader really hasn't emerged beyond a small number of 'free PC' deals that have since faded into obscurity. Sega's plan may have more success since it's focused on a very specific audience - online gamers - and not on users who kind of feel they ought to get online, but it's still a gamble. That said, as the Japanese market is showing, maybe it's got nothing to lose at this point. Well, apart from the support of retailers that is, which is presumably why it's giving the consoles away via a rebate rather than simply mailing SegaNet subscribers a free box. Sega said it wants to distribute four million Dreamcasts in the US between April 2000 and the end of the year for a total installed base of six million units. Sega's plan mirrors a scheme put in place last month by Japan's J-Data Co., which will offer 50,000 free Dreamcasts in exchange for a year's susbcription to Japanese ISP Momotaro Internet. The membership fee plus the monthly subscription comes to around $306.21 for the first year. Sega.com expects to break even in its first two years of operation, which shows you just how high an ISP's margins are. ®
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1GHz StrongARM picks up .18 micron features

Further details have emerged about the next generation of Intel's StrongARM technology after the firm fleshed out future details of its IXA (Internet Exchange Architecture) this morning. Jeff McKeown, marketing manager of the CEG Logic Unit at Intel UK, confirmed that the firm is migrating the StrongARM microprocessor core to .18 micron technology in the second half of this year, and will proliferate the power characteristics of the device to other, appliance specific devices which integrate a number of functions, in the late end and the first quarter of next year. Intel engineers have designated the process 859, in recognition of the .18 technology which has the internal code number 858. According to McKeown, the next generation of StrongARM technology will use superpipelined RISC technology, and have dynamic voltage characteristics which will allow it to change clock speeds more or less on the fly. That, he claimed, will make the core attractive to third parties looking at improving battery life in a number of devices including PDAs, WAP phones and other vertical applications. Dynamic clock speeds were likely to reach 600MHz and above in the next StrongARM microprocessor core, but it is in the area of power requirements and delivery of MIPs that future StrongARMs would appear to excel. The technology allowed Intel to switch clock speeds as required. Products are well en route to achieve voltages as low as 1 and .75 volts, McKeown said. But Intel seems to have temporarily dropped plans to implement StrongARM devices in set top boxes, he admitted, although the technology it developed will be used internally as a "technology vehicle" for future designs. McKeown even held out the allure of StrongARM 2 clocking at 1GHz, but acknowledged that this does not have such a strong marketing message as for so-called classic Intel architecture. Essentially, he claimed, StrongARM 2 will deliver three to four times the performance of existing StrongARM chips, and are likely to be used in voice recognition systems, video applications, and hand held devices. The Intel i960 RISC chip will eventually be phased out in favour of StrongARM devices, he said. Will we see StrongARM implementing x86 instructions? No, said McKeown. But we will see a concerted attempt by Intel to integrate the fast bus StrongARM 2 will use with x86 chips as part of its IXA (Internet Exchange Architecture) push. Further, future iterations of the so-called network chip - the IXP 1200 - will likely use elements of the design work undertaken by Intel architects since it took over StrongARM from Digital (now Compaq). ®
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B2B goes hell for leather

Dubbing itself as "one of Europe's first operating vortals", the leatherXchange.com, based in Barcelona, is to link the world's slaughterhouses (size doesn't matter the press release assures), with tanneries, leather goods manufacturers, traders, agents, and chemical and machinery suppliers in a new trading platform. But what the hell is a vortal? This buzzword means vertical business portal, as in a study issued by Delphi Group, a market research firm, which claims that "B2B vortals are today's most under-valued Internet players, but will account for $5 trillion in purchases by 2002". LeatherXchange is not to be mistaken for the other leather markets on the Internet, of which there appear to be many. Enter the search term, "leather market" into any of the major search engines, and you will find hundreds of sites dedicated to selling leather articles and accessories, such as collars, cuffs, lace-up bras or trousers, thongs, and pants, many available in assorted colours and finishes, such as patent, buff or nubuck leather. ®
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Lastminute refunds people who never bought shares

Lastminute.com has cocked-up again, this time refunding cash to individuals who never bought shares. As part of the ongoing fiasco, some investors who cancelled their share applications at the last minute have nevertheless received share certificates and refund cheques from the company. Many individuals pulled out after only being issued with 35 shares, worth £133. But another "administrative error" at IRG, the online retailer's registrar, meant cheques were sent out before anyone realised. These lucky punters, laughing all the way to the bank, have been unable to stop spouting off about the debacle on the Web, today's Times reports. One, using the name Lorraine Turner, told members of the Interactive Investor International bulletin board that she had stopped her £2,000 cheque, only to get a refund for £1,868. Surjit Randhawa claimed a similar windfall: "I applied for the share offer along with some other members of my family. When I was told of my share allocation, I immediately stopped my cheque," he said. "I was surprised to see that I was sent a cheque back for the unused amount". A representative for lastminute today admitted that a total of 5,000 cheques sent to the company by would-be investors had either been cancelled or had bounced. She was unable to say how many people had been sent money that shouldn't have received it. "We don't have that figure. But we think it's fairly minimal," she said. IRG, the registrar company that processed the flotation, has been blamed for the farce. The company, which decided to give all applicants just 35 shares after the lastminute float was wildly oversubscribed, also yesterday admitted sending cheques out to genuine investors which bounced. These mistakes were due to "administrative errors" at IRG. What with cash gifts and bouncing cheques, it comes as little surprise that some investors are still waiting for the cheques and share certificates they are entitled to. "IRG regrets that owing to administrative errors on its part there have been delays in some investors receiving their shares and cheque refunds," it said. IRG apologised for the many administrative errors, and said it was "taking immediate steps to rectify the situation." Lastminute share price was today down 20 pence at 202.5 pence.® Related stories Lastminute in bounced shares debacle Now lastminute is worth £526 million 250,000 flock to register for Lastminute shares
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OnDigital – TV's secret service

The British government plans to switch off analog TV transmitters by 2010, by which time 100 per cent of the population should be able to receive digital terrestrial broadcasts. In order to achieve this goal, OnDigital - the company that is digital terrestrial in the UK - has to attract viewers to make the switch from analog to digital. One of the ways by which people are attracted to new technology has traditionally been to supply them with all the information needed to make a sensible purchasing decision. OnDigital takes a somewhat different approach and makes it almost impossible for users to find out what the Hell's going on. OnDigital is the trading name of British Digital Broadcasting PLC - which is owned by Carlton and Granada. Satellite broadcaster BSkyB used to own part of BDB, until it was forced to sell by the Monopolies and Mergers Commission. Sign up for the OnDigital service and they'll send you a free set top box (STB) that you simply plug in to your aerial and TV. For around £10 a month that gives you all the free-to-air channels from the BBC and ITV. To receive all the channels currently being broadcast (40+), it'll cost just over £40. There is also the capability to send and receive email via the TV, but this needs a phone connection. The first problem you may encounter is which set-top box you are sent, because some are more equal than others. The first STBs came from Philips, followed by Pace, Nokia, Toshiba and Sony. For reasons which aren't immediately obvious, all these manufacturers have taken a different design approach meaning the firmware needed to make them work is different in each case. The firmware can be automatically updated by downloading it via the airwaves. Philips STBs got a firmware update last Autumn enabling them to display digital text. Pace owners got text a few weeks ago, but Nokia boxes still cannot display either the BBC's or ITV's dedicated digital text channels or the text broadcast alongside BBC Knowledge. What this means in effect is that if you have a Nokia box, you receive two fewer channels than a Philips owner, yet pay the same for the service. There is no information on the OnDigital Web site to tell you what the differences between the STBs is; there is no information about when firmware updates will be available; there is no email request for information; there isn't even a phone number. With the deepest respect The only source of information comes in the shape of internet forums like Diginews which are filled with posts from bemused users asking if anyone can tell them what's happening in terms of when new channels are coming online, when new games will be available (a long running saga, that one) and why digital text still doesn't work. Some enterprising users have even tried to get OnDigital to swap their Nokia STBs for Philips ones in a bid to get access to all the channels they were paying for. Calls to the OnDigital call centre are seldom a rewarding experience unless you enjoy listening to music on hold. When you finally get through, the chances of receiving any useful information are slim. I spent over 30 minutes trying to elicit a date for the arrival of text on Nokia STBs and the eventual reply was "By the end of this month, or maybe the end of May." Technical support was little better, prefacing each reply with "With the deepest respect..." - a phrase I have always understood to mean 'Why don't you shut up and stop bothering me?' Incidentally, I will not be holding my breath for the arrival of the text update - this is the third "definite" date I've seen in the last six months. On the plus side, digital terrestrial does give excellent sound and picture quality, eight times as many channels as analog and you don't need a tacky satellite dish bolted to your house. But OnDigital seems to be doing its best to put people off moving from analog by a complete lack of communication. OnDigital has an elegant way of upgrading software at its disposal - and being via broadcast - it's completely free to users. Some STBs even automatically search for updated firmware and download it without any user intervention (Not the Nokia ones, obviously). What does OnDigital do? It sends a letter by snailmail telling users to do an update. What IT company would send a letter to its users telling them a new version of its software was available for download from the Web? The company's argument is that it doesn't want to release software before it's been tested, but if the posts on Diginews are anything to go by, the software on Philips and Pace STBs falls over quite frequently. In the meantime, this Nokia owner at least would prefer to receive a full service for their money even if it only worked 90 per cent of the time. ®
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Lorry alarm nobbles immigrants

Illegal immigrants' days may be numbered thanks to a new 'trailer alarm' that tells HGV drivers if someone has sneaked into their cab. The device, under development by Pulse Design, consists of a thin-strip detector running all the way around the inside of a lorry's tarpaulin and an alarm unit in the driver's cab, connected by radio waves. If the detector is bent by more than six inches, it will send a signal to the alarm unit, alerting the driver when he returns. Of course, following the recent soul-searching/witch-hunting over UK immigrants, Pulse's timing looks extremely suspect. But talking to the alarm's inventor, Andrew Goodwill, The Register found itself in the unusual position in falling for a product manager's sales pitch. A high percentage of illegal immigrants enter the UK by stowing away in lorries. If caught, the lorry driver/firm faces a fine of between £1000 and £2000. Despite current precautions, between 20 and 30 stowaways are being found each week, according to Goodwill. With 100-plus lorries arriving every day, there is clearly a large market. Most firms have fitted padlocked cables on the inside of their lorries but stowaways are cutting them with bolt-cutters and then holding the ends together with insulation tape, Goodwill said. The alarm, expected to come in at £150, will send a signal to the main unit if it is cut. The device is activated only when the engine is switched off - cutting out the risk that wind will trigger the alarm. Since the detector is at the bottom of the tarpaulin, it is also unlikely to be affected by wind when the lorry is stationary. Most movement occurs in the middle of the tarpaulin, Goodwill explained. The device is soon to go into testing and should be available in two months. If successful, the Daily Mail and Daily Telegraph are expected to hurriedly find another scapegoat for society's ills. ®
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AltaVista beta-tests UK ISP service

AltaVista will begin beta testing its new British toll-free ISP service next week before launching the service for real after Easter. Marcus Bicknell, president of AltaVista majority shareholder CMGI's European operation, said a million people had registered for the service since it was announced last month. Bicknell also denied press speculation that AltaVista's decision to pre-announce the flat-fee unmetered service was little more than a publicity stunt. He added that AltaVista was looking to offer broadband services sometime in the future, although ADSL wasn't on the agenda. Yet. Instead, AltaVista was toying with the idea of cable or satellite services, he said. This, it seems, is how AltaVista will make its money in the future. The strategy appears to be hoover up as many customers as possible now—even if it's going to cost megabucks to do it—and then flog 'em broadband when it comes around. ® Related Story It's first come, first served: AltaVista
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Freedom phone fighters tussle over domain

A row has broken out between two rival UK phone companies claiming the rights to a domain name. freedomphones.com was registered in December by Upload UK – a Web design company – for its client, mobile phone seller Freedom Communications. Meanwhile, Scott Allison went to register the URL for his company, Freedom Phones, but found it gone. According to Allison, a battle of words ensued, with his solicitors last month issuing proceedings from the High Court. Allison, a sole trader, is now desperate to get his hands on the URL. "It's what I trade as. I've been trading as Freedom Phones for around four years," he said. He is worried that if freedomphones.com, currently not in use, started selling phones it would damage his business. "I'm willing to go to court to fight for the URL," he said. Freedom Communications, however, feels that it got there first and the domain name is rightfully its property. It has never traded as Freedom Phones, but said it was not aware of Allison's Freedom Phones company at the time of registering the URL and does not see itself as a cybersquatter. "I can understand this man (Allison) not being happy. I've been in business for 30 years, and we're all in unchartered waters where the legalities of the Internet are concerned," said David Greeson, Freedom Communications MD. "We have registered this and other URLs to protect Freedom Communications and its future business," he added. With the benefit of hindsight, Allison realises he should have registered the dotcom at the same time he registered freedomphones.co.uk last June. He will now have to prove to a court that he has more right to the freedomphones.com name than any other phone company. Chris Brodie, MD of Web design agency Upload UK, said companies only have themselves to blame if they find their domain names snapped up. "When clients contact me... I specifically say to them that they need to get the full set of URLs. It can cost up to £500 to get the set, including hyphens etc," said Brodie, who owns around 150 URLs, including blobby.com and policecameraction.com. ® Related Stories Government plays cybersquatter Watford Electronics turns cybersquatter on rivals for 'a joke' BAA attempts to shaft sheep site
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Judge uses verdict to torpedo MS appeal chances

Analysis Immediately after the judge's verdict yesterday Microsoft said it would appeal. Said Bill Gates: "While we did everything we could to settle this case, and will continue to look for new opportunities to resolve it, we believe that we have a strong case on appeal." But how strong is it? In his Conclusions of Law Judge Jackson spends some considerable time on Microsoft's case, and does his best to torpedo it. Microsoft's most recent pitches have been based on its interpretation of the copyright protection it has for Windows. This case is however comprehensively blown out of the water in the judge's Conclusions, and yesterday Gates was instead stressing that "the Appeals Court has already affirmed Microsoft's right to build Internet capabilities into the Windows operating system to benefit consumers." This is of course the Appeals Court ruling which overturned Jackson's earlier injunction regarding the bundling of Internet Explorer with Windows 95, so Jackson is in a tricky position here. He can't exactly say the Appeals Court was wrong in overruling him, but he needs to anticipate Microsoft attempting to expand this small potential crack into a hole big enough to escape through. In the politest possible way, Jackson endeavours to show that the territory covered by the Appeals Court was narrow, and that the verdict he's producing now is entirely in accordance with precedents set by the Supreme Court. With respect, you're wrong... In the case of the Appeals Court, "the issue... was the construction to be placed upon a single provision of a consent decree that, although animated by antitrust considerations, was nevertheless still promarily a matter of detemring contractual intent." He notes that this ought to be enough to allow him to move on, but adds: "Nevertheless, both prudence and the deference this Court owes to pronouncements of its own Circuit oblige that it follow in the direction it is pointed until the trail falters." The "deference" doesn't go very far. He comments that the Appeals Court displayed a "lack of confidence in the ability of the courts to distinguish between improvements in fact and improvements in name only, made for anticompetitive purposes. Read literally, the DC Circuit's opinion appears to immunise any product design... from antitrust scrutiny, irrespective of its effect on competition." In the nicest possible way, Jackson is saying the court was dumb. Microsoft has already built a substantial edifice on top of this, and will build lots more as its appeal goes ahead, but Jackson points out that taking this tack means that any "plausible claim" of advantage associated with the integration of products gives the integrator immunity from antitrust action. Now we get to the meat: "This undemanding test appears to this Court to be inconsistent with the pertinent Supreme Court precedents in at least three respects." It views the market "as the defendant would like to have the market viewed," it ignores reality, as the advantage "need only be plausible," and it needn't be proved. Judge takes his case to Supreme Court first He notes one Supreme Court precedent establishing that if the evidence at trial established there was customer demand for an integrated service or product as separate products, then this meant the defendant was guilty of tying, despite the defendant's contention that the products were one single product. This clearly applies to IE and Windows; demand for them as separate products was established at the trial, and Jackson notes that customers still perceive them as separate products. Following up on this he notes that the Appeals Court view is "at minimum... at odds with the Supreme Court's own approach." He reinforces this by following Supreme Court precedents closely in asserting that Microsoft possessed "appreciable economic power in the tying market," and that "a 'not insubstantial' amount of commerce was foreclosed to competitors." He points out the Supreme Court has stated the 'essential characteristic' of illegal tying is a seller taking action "to force the buyer into the purchase of a tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms." He then gives a nod to the Appeals Court's warning regarding "the perils associated with a rigid application of the traditional 'separate products' test to computer software design," but signs off this section with: "To the extent that the Supreme Court has spoken authoritatively on these issues... this Court is bound to follow its guidance and is not at liberty to extrapolate a new rule governing the tying of software products. Nevertheless, the Court is confident that its conclusion, limited by the unique circumstances of this case, is consistent with the Supreme Court's teaching to date." As the case will almost certainly end up in the Supreme Court, aside from trying to undermine Microsoft's preferred appeals strategy, Jackson is putting up big signposts for the Supreme Court itself. It will surely have trouble disagreeing with itself, right? ® Related stories: Judge finds against MS on virtually all fronts MS guilty - can Prez Bush save it? MS guilty - a monopoly, and anti-competitive Complete Register Trial coverage
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Intel's cunning network plan

Analysis You've got to hand to it Intel, it understands jigsaws, especially those related to computers. Possibly, just like certain other readers of this online newspaper, you found yourself in the glad or unhappy receipt of said puzzles from a man masquerading as Santa Claus when you were a kid and had to sit on his knee. Just by shaking the present, wrapped as it was in fancy Christmas paper covered in robins, snow and tinselly bits, you could tell it was a jigsaw and wondered, when you got home, whether when you wrenched off the covering it was sure to be some kind of puzzle you could never solve. Unfortunately, Intel's IXA strategy, which it has already spent $6 billion on in the last 18 months and which aims to cover the building blocks, bricks and mortar, and wallpaper on the fabric of the Internet, seems to be that kind of a jigsaw. The companies Intel has bought, the most notable of which was Level One, and the last, which it is still negotiating to buy for half a billion dollars, Basis, do not form a complete building blocks strategy for the company. And, because Intel is so liquid, it is still acting coy about whether other acquisitions are in order, faced, as it is, with competition from other building block firms such as Cisco and IBM. Jeff McKeown, marketing manager of Intel's building block unit in Europe, told The Register this morning: "Intel's like wallpaper and you tend not to see the wallpaper." He explained that Intel was so well known throughout the industry that it talked to just about every other hi-tech firm, including those who were seen as competitors. He put it in another way: "We're the mortar between some of the bricks which we also supply." That is one of the quotes of all time. Given that it is competing with some of the IT industry's bravest, that is indeed an interesting statement. Firstly, its IXA technology, which we dubbed mycelium, or the underlying nature of fungi, is an edge technology, said McKeown. Intel wishes to make the whole of this architectural division highly scaleable, from the smallest, most humblest end user, to the largest, most arrogant, corporation. What about the other big boys playing this game? Said McKeown: "The big boys recognise that Intel will find an entry point [in the market]. They're looking at more rapidly developing designs in the future without going through the large development cycle involved." IXP 2000 has been taken up by many of Intel partners, and, we must say, the firm seems to have found itself a huge niche which must make board directors at Nortel, Lucent and even Cisco shake a little. Further, said McKeown, IXA will support both the Internet and the "fellow travellers" which also support Intel's strategy. At this point, we got quite a bit interested in these so called fellow travellers and investigated a little as to whose these might be. The term was invented in a McArthyite witch hunt of reds in the early fifties but we never thought we'd hear Intel's PC customers described as such. But yes. Fellow Travellers are, in Intelspeak, third party companies which willingly engage in following the firm's server and IXA strategies. McKeown does admit that the market is becoming ever increasingly commodotised and that Intel will attack its competitors on the price performance front. Most of us at the breakfast meeting could not help but conclude that meant the so-called "big boys" too. After all, if Intel managed to undercut 3Com on the price of network interface cards (NICs), why not the rest of the networking world? All in all, a most revealing breakfast meeting. More of which will follow later. ®
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Herpes contracted over the Net

It may be the world's number one sexually transmitted disease but for two Brummies it's a dose of who wants to be a millionaire. Entrepreneur Andrew Knight and specialist doctor Ian Pardoe plan to set up a dedicated herpes Web site covering all aspects of the disease and are working on a £10 million flotation. Herpes is far more widespread than thought, with an estimated one in six North Americans (that's about 40 million) carrying the disease. About ten per cent to 20 per cent of sufferers have frequent outbreaks, but they are often wrongly self-diagnosed as cold sores or heat blisters. The charged-for site hopes to tap into this huge market of embarrassed or confused punters by offering information, advice and treatments online. Whether Knight is right to believe that "desperate" people will pay to access the site - especially since a wealth of knowledge and advice is already available for free - has yet to be seen. The Register would like to know what will the site's URL be? Herpes, pustule and coldsore.com are all gone. May we suggest bitchofanitch, matchthatscratch or genitalgrief.com? ® Register Factoid No.99 The word "herpes" derives from the Greek for "to creep". ®
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Nortel lobbies to broadband for the world

A new industry forum has been created to oversee the global development of broadband services. Nortel Networks led a pack of some 30 companies in announcing the formation of the Broadband Content Delivery Forum (BCDF) which will focus on "recommending open architectures... over the emerging broadband networks and improve end user experience through enhanced performance and personalisation". AltaVista, BBC and BT are among the pack of companies that have already signed up to the forum. The organisers believe it is simply a matter of time before other content providers, service providers, wholesale access providers, networking outfits et al come to their senses and sign up as well. If you want to know more check out the BCDF Web -- who knows, you might even want to join -- you can find it here. ®
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Settlement not dead as DoJ mulls MS appeals

US District Judge Thomas Penfield Jackson's strongly-worded, even colourful, findings of law against Microsoft announced Monday were music to the ears of Department of Justice (DoJ) lawyers and states' attorneys general. Amid an atmosphere of restrained triumphalism down at DoJ headquarters Monday evening we learned that the judgment "will set the ground rules for enforcement in the Information Age," as US Assistant Attorney General Joel Klein put it. But will it? The findings of law may stand as little more than a historical document if a settlement should be reached between Microsoft and the DoJ during the remedy considerations of the coming months, or if the rulings should be overturned on appeal in the coming years. Microsoft was swift and eager to assert its intention to appeal the ruling, and many observers have taken the company at its word that it really wants its decade in court. But the announcement could be meant to leverage DoJ in the direction of a settlement. Asked about this during a Washington press conference Monday evening, Klein was less than forthcoming. "The Department is always willing to settle," he said simply, and changed the subject. The risk that the government faces here is "severe", according to Microsoft booster Boyden Gray of law firm Wilmer, Cutler & Pickering. "They may get absolutely nothing if the courts disagree with the judge here," he observed. The judge's finding, Gray says, is not that Microsoft misused its monopoly over Windows, but that it invested too much in the browser market in order to kill Netscape. "I don't think that will stand on appeal," he said. We're not quite sure we agree with Gray's reading entirely, but a settlement could still be a worthwhile avenue for the company. Microsoft wins if a settlement is reached, since that takes the biggest feather out of DoJ's cap after three years of struggle and a brief whiff of victory from Jackson's ruling. Failing a settlement, Microsoft also wins for as long as the appeals process goes on and the company gets to pursue business as usual. This could easily be a matter of years, considering the legal resources Redmond can afford to throw at the courts. For DoJ, not getting overturned on appeal is, well, not winning, exactly, but not losing as badly as it might. A settlement would be the lesser of two evils if Jackson were to be reversed. And DoJ can claim that Jackson's affirmation of their views brought the company to the table: an OK outcome for the Department, if not a slam dunk. No doubt the Department legal team will be burning the midnight oil as they pore over the Jackson decision looking for reversible error that could trip them up on appeal. Thus, if there is a settlement, we can bet that they found something. ®
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MS ruling knocks stuffing out of Wall Street

The Microsoft antitrust ruling initiated a badly-needed correction in the tech-heavy NASDAQ composite on Monday. By the end of trading, the composite closed down 349, or 7.5 percent, for its single-largest point loss in history as investors sold billions of dollars worth of New Economy stocks, primarily in order to buy familiar Old Economy stocks in the Dow, which rose over 300 to close at 11,222. Microsoft shares fell 15 percent Monday on jittery anticipation of the antitrust ruling, and in the process costing Chairman Bill Gates US $11 billion personally. About forty other dot-coms, caught helplessly in the vortex, sank to their lowest values for the year. The NASDAQ collapsed again Tuesday, and by over 570 points, or twenty-seven percent off from its historical high point in afternoon trading. Action on the Dow had been more restrained Tuesday, with a gain of 1.86 to 11,223.79 showing at midday. But panic on the NASDAQ spread throughout the Street, leaving the Dow down by over 500 at one point. Then programmed trading and bargain hunters colluded to save the day, which ultimately left both indices to close only slightly off from Tuesday's market opening. Ominously, Treasury notes were on the rise Tuesday as investors took refuge from dot-com uncertainty. By midday, 10-year notes were up 9/32; thirty-year bonds were up 16/32; two-year notes were up 3/32; and five-year notes were up 8/32, all a sure sign of bearish retreats to traditional comfort zones. We warned readers that a correction was iminent on the NASDAQ some weeks ago, when we perceived the imbalance between the Old and New Economy shares as artificial and impossible to sustain. The shadow of a correction appeared briefly Tuesday afternoon but could not materialise. It appears that the tech sector won't take its medicine voluntarily, so we expect to see a tremendous reciprocal momentum in both market sectors during the weeks to come. A firm correction does, of course, have to come at some point. How dramatic it will be depends on how wide the swings become. If they remain in the range of 500 points, then it will be a spectacular shock indeed. ®
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DeCSS injunction challenged

The Electronic Frontier Foundation (EFF) submitted an appeal this week to reconsider a preliminary injunction granted against more than seventy Webmasters accused of trade secrets infringement for circulating a utility programme called DeCSS which cracks the security coding of DVDs and enables users to watch them on unauthorised viewers. The free-speech advocacy group argues that the act of posting the utility is constitutionally protected expression, not trade secret infringement. A key claim is that reverse engineering and decryption are permitted under the fair use exceptions to US copyright and trade secrets laws. We see a very slim chance of persuading a judge to come around to that point of view, but of course hope does spring eternal. A movie-industry front group called the DVD Copy Control Association filed two suits late last year after a sixteen-year-old Norwegian lad posted the utility programme on line, ostensibly to make it possible to view DVDs on a Linux box. The author, Jon Johansen, was arrested and questioned in Norway by local authorities. In the US, two cases, one in California and one in New York, have led to injunctions against US Webmasters who had been distributing the programme on line. The EFF is appealing the California case. ®
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New virus wipes your HDD, then rings 911

A recent FBI case has revealed the creation and distribution of a self-replicating script that can erase hard drives and automatically dial 911 emergency services, the Bureau's National Infrastructure Protection Centre (NIPC) says. The script can actively search the Internet for computers foolishly set up for file and print sharing and copy itself to those systems. It can overwrite victims' hard drives. It can cause victims' systems to dial 911. Thus far the FBI believes there has been "a relatively limited" distribution of the script, confined so far to the Houston, Texas area. 'Source computers' have scanned several thousand boxes through four ISPs: AOL, AT&T, MCI and NetZero. The script is likely to be hidden in a directory named chode, dickhair or foreskin, the FBI says. The FBI requests that anyone with personal knowledge of chode and dickhair and their smarmy contents contact them via the NIPC Web site. ®