Fujiology Archive/fujiology_archive_v1_0.iso/!MAGS/A_ONE/AONE0414.ZIP/AONE0414.TXT

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Volume 4, Issue 14        Atari Online News, Etc.       April 5, 2002


                  Published and Copyright (c) 1999 - 2002
                            All Rights Reserved

                          Atari Online News, Etc.
                           A-ONE Online Magazine
                Dana P. Jacobson, Publisher/Managing Editor
                      Joseph Mirando, Managing Editor
                       Rob Mahlert, Associate Editor


                       Atari Online News, Etc. Staff

                        Dana P. Jacobson  --  Editor
                   Joe Mirando  --  "People Are Talking"
                Michael Burkley  --  "Unabashed Atariophile"
                   Albert Dayes  --  "CC: Classic Chips"
                         Rob Mahlert  --  Web site
                Thomas J. Andrews  --  "Keeper of the Flame"


                           With Contributions by:

                                Kevin Savetz
                                Rob Mahlert



      To subscribe to A-ONE, change e-mail addresses, or unsubscribe,
                log on to our website at: www.atarinews.org
                       and click on "Subscriptions".
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          and your address will be added to the distribution list.
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                              following sites:

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                        http://www.icwhen.com/aone/
                           http://a1mag.atari.org
                               Now available:
                          http://www.atarinews.org


                 Visit the Atari Advantage Forum on Delphi!
           http://forums.delphiforums.com/m/main.asp?sigdir=atari



                                  =~=~=~=



A-ONE #0414                                                 04/05/02

   ~ New HighWire Released! ~ People Are Talking!    ~ CIPA Law In Danger!
   ~ HP Board Dumps Hewlett ~ HP-Compaq Trial Is Set ~ GameCube Price Cut?!
   ~ MSN Price On The Rise? ~ Librarians Testify!    ~ MusicEdit Upgrade!
   ~ E-Mail Turns Fee-mail! ~ Kazaa And Stealth Ware ~ MyAtari Update!

                  -* Anti-Unix Site Runs On Unix! *-
               -* Atari Computer Database Is Upgraded *-
           -* Will Microsoft and Apple Renew Support Vow *-



                                  =~=~=~=



->From the Editor's Keyboard              "Saying it like it is!"
  """"""""""""""""""""""""""



Well, I'm finally beginning to feel better although I haven't completely
shaken this nagging cold yet.  You would think that something so common
could be cured in this day and age!  Even my mouth, after the surgery, is
rarely bothering me these days.  Now if we can only get that warm spring
weather, I'd be all set.

The U.S. government never ceases to amaze me.  Fortunately, there are people
out there who stand up for the rights that our government is supposed to
protect.  Yes, it's that CIPA law still.  The law that was enacted to
protect children from online pornography.  Many of our country's libraries
receive federal subsidies for support.  Part of this CIPA law requires that
libraries utilize filtering software or risk losing their subsidy.  Well,
these filters do not work perfectly and libraries are crying foul because
First Amendment rights are being violated.  Good for the libraries, as I
stated numerous times in the past.  The unmitigated gall of the government
attorneys to say that if libraries don't want the filtering software, feel
free to get rid of them.  The catch is no financial support.  Either
subsidize the libraries, or not - we shouldn't be in the business to dictate
conditions.  There have to be better ways to help protect children than a
mechanism that is proven to be faulty, and infringe on people's legitimate
rights to access this information.  Finally, reality strikes some people
with some common sense!  After a two-week hearing, a panel of judges is
leaning toward skepticism of this filtering decision.  In all likelihood,
this case is going to end up in front of the Supreme Court.  I'm betting on
the side of the library!

Until next time...



                                  =~=~=~=



                      Atari Computer Database Upgrade


The Atari Computer Database has been given a major upgrade! Although not
complete, the moment a regular visitor arrives or even a casual visitor,
one will notice a very large difference. The rest of the conversion from
the old format will go online bit by bit but as it is, any thing that is
still in old format will still stay online until its upgrade is complete.

http://acd.atari.org



                          HighWire 0.03 Released!


The HighWire Development Team has released the third demonstration package.
Progress has been made and there are many more exciting things coming in
the near future. Finding a point to release this time around has been very
hard. Almost daily, some new support has been added or some old bug found
and exterminated.

Improvements have been made throughout the code. Tables support is looking
brilliant, frameset support has been improved again. Some irritating font
issues have been fixed. Upper range character display improvements. Atari
character display in text files. More 'common' buggy html code is supported.
Yes many 'popular' sites have html that doesn't comply with the specs ;)
And that is only a portion of the improvements.

As always, we hope that this release will silence some of the detractors
who have been saying our task is impossible. Our goal is achievable, it
will just take time and your support. We can always use more programmers
and support on the documentation side of the project always is a critical
need. Translation support for more languages would be a great addition to
the project as well.

We do feel that we have something here that shows that our platforms need
for an open source browser can be obtained. Currently it should not really
be classified as a browser, but more of a demonstration of a parsing and
rendering engine. This technology is open source, so hopefully with your
support it can be the core to many projects on our platform. Not the least
of which will be in the future a fully modern web browser. To reach that
goal we will need time and the help of community.

HighWire Development Team
http://highwire.atari-users.net



                           MusicEdit 7.0 Released


As users wished, MusicEdit now has a fully graphical input.

Right mouse-button is supported too, for opening graphical elements.

http://www.musicedit.de/



                           Hang Loose Telnet BBS


As it takes me years to complete the Hang Loose Web page you can go
meanwhile to telnet://bbs.atari-warez.com to get yourself a account and
than either download your wanted files via telnet z-modem (yeah good
old times) or after creating an account via ftp://ftp.atari-warez.com
with your newly created username and password.

[e-mail]
telnet://bbs.atari-warez.com/



                      April Issue of MyAtari Released


The editor of MyAtari has announced:

The April issue of MyAtari magazine is now available to read on-line
www.myatari.net

The March issue is also available to download from our back issues page.
Finally, please note that voting for the MyAtari 2002 Awards ends at
midnight on the 7th April 2002! If you are yet to cast your vote, please
do so ASAP

http://www.myatari.net



                        Mekka/Symposium Atari Demos


Two new Falcon-demos were released at the Mekka/Symposium party in
Germany this weekend. One bigger demo from Ephidrena, previously only
active on the Amiga and another demo from the infamous Spiceboys.

Download them both at the URL below.
http://www.dhs.nu/



                                  =~=~=~=



                             PEOPLE ARE TALKING
                          compiled by Joe Mirando
                             [e-mail]



[Editor's note: Due to an electronic communications problem, this week's
People Are Talking column is unavailable.  It will return next issue.  Our
apologies.]



                                  =~=~=~=



->In This Week's Gaming Section  - Is GameCube Price Cut Coming?
  """""""""""""""""""""""""""""    Star Wars Jedi Starfighter!





                                  =~=~=~=



->A-ONE's Game Console Industry News   -  The Latest Gaming News!
  """"""""""""""""""""""""""""""""""



                  Nintendo May Consider GameCube Price Cut


Video game publisher and console maker Nintendo Co. Ltd. may cut the price
of its new GameCube console later this year, depending on a similar price
cut from Sony Corp. for its PlayStation 2, a company executive told Reuters
on Monday.

On the sidelines of a Nintendo event coinciding with the start of the
season for baseball's Seattle Mariners, in which the company is a lead
investor, Vice President of Marketing George Harrison said a GameCube cut
was contingent on whether any Sony price cut is to $199 or $249, from the
current price of $299.

"We haven't made a decision on (a price cut)," Harrison said. "Sony's
expected to make the first move and then we'll see where we stand." He
implied that the deeper price cut, to $199, would make a GameCube cut more
likely.

The GameCube currently retails nationally for $199.95.

Despite frequent denials that it has any plans on any price cut, Sony has
been widely expected to cut the PS2's price this year, presumably at the
industry's Electronic Entertainment Expo (E3) in May.

Harrison said Nintendo had expected Sony might cut the price at a retailer
conference it held last month, and that any GameCube price cut would have
to come by August in order to have full effect for the holiday season.

Harrison speculated that if Sony makes a deep enough cut, and if Nintendo
makes a cut, then Microsoft Corp. might also have to cut the price on its
$299 Xbox, which came out last November.

He also said the company expects to have shipped 2 million GameCubes in
North America as of Mar. 31, implying it has shipped 500,000 this year
after shipping 1.5 million between its Nov. 18 launch and the end of 2001.

As for software pricing, Harrison said Nintendo saw no need to cut its
$49.99 price for its top titles, though it may consider a discount program
for best-selling games down the road, as Sony recently announced.



                   Review of 'Star Wars Jedi Starfighter'


You'd better hope the Force is with you if you plan to come out victorious
in "Star Wars Jedi Starfighter."

An excellent new game from LucasArts for the PlayStation 2 adds to the vast
collection of titles available using the hugely popular Star Wars movie
series as a base.

It might seem as if a Star Wars game surfaces every week or so, but this
one has something the others don't - a link to Episode II Attack of the
Clones, the next, as-yet unreleased movie in the series.

The game focuses on Nym, a rebel leader, and Adi Gallia, a female Jedi
knight sent to make sure the resources-rich Karthakk system doesn't fall
into the hands of the Trade Federation.

To achieve that end, you'll be cruising through 15 missions in the sleek
and speedy Jedi Starfighter, or Nym's starship, the Havoc, which has four
devastating secondary weapons to choose from.

Even better, you'll also have access to the Force.

It's complicated to explain the use of the Force in the game, but a lot of
its value rests in your ability to time its power. Pressing the O button
summons the Force, but how long you hold the button is key to using it
effectively.

The Force can be used in several ways; as a shield, as a lightning field
that can damage or even destroy enemy craft, as a means of speeding up
your reflexes (actually, slowing down the rest of the game) and as a
powerful shock wave.

The Force isn't just a technical gimmick you can call up once in a while.
It's a vital part of the game, and the harder the missions get, the less
likely you'll be able to complete them without using it.

The game also displays nice teamwork between you and your AI wingmen.

If you have a real person to play with, the split-screen two-person mode
is excellent. The second player flies as one of three additional pilot
characters - Reti, Jinkins or Siri Tachi - or serves as turret gunner on
Havoc's bomber, which player one (that's you) is piloting.

The missions feature a wide selection of enemies, from hordes of aircraft
to submarines and destroyers to land facilities such as tractor beams and
weapons turrets. There are useful training missions available if you're
feeling inadequate, and unlockable bonus levels are lurking for the
talented fighter pilot.

Graphics get an A. They're beautifully shaded and detailed and look far
better than last year's original Starfighter title. Wildly colorful combat
effects add to the on-screen excellence.

Control gets a B+. Everything works smoothly, including the targeting. If
only the fighters would just turn a little faster; I constantly found
myself being passed by enemy warships and unable to swing around fast
enough to deal with them.

Sound gets an A. The roar of crackling weapons, huge, colorful explosions,
radio chatter and Star Wars tunes add greatly to the enjoyment of the
game.

"Star Wars Jedi Starfighter" gets an A. The game doesn't give away the
plot of this summer's latest Star Wars flick, but it will sure get you in
the mood. It's a solid upgrade of the original "Starfighter" game, and has
to be one of the best Star Wars titles yet.

May the Force be with you.

"Star Wars Jedi Starfighter" is rated T, for ages 13 and up.



                                  =~=~=~=



                           A-ONE's Headline News
                   The Latest in Computer Technology News
                       Compiled by: Dana P. Jacobson



                    Walter Hewlett Dumped From HP Board


Hewlett-Packard said Monday that it will not renominate Walter Hewlett to
its board of directors.

As first reported by CNET News.com, HP chose not to nominate Hewlett, who
late last year launched a proxy fight opposing the company's planned
acquisition of Compaq Computer.

In a statement, HP said that the decision of its board not to nominate
Hewlett is "based on his ongoing adversarial relationship with the
company, as evidenced by his recent litigation against HP, as well as
concerns about his lack of candor and issues of trust."

HP's board said that it had planned to renominate Hewlett but changed its
mind after he launched a lawsuit against the company that questioned the
last-minute decision of institutional shareholder Deutsche Asset
Management (a unit of Deutsche Bank) to support the deal.

HP called the suit "spurious," adding that "allegations that HP bought
votes from Deutsche Bank or improperly coerced it to change its votes are
false."

Hewlett said in a statement that he regretted the company's decision not
to renominate him.

"It is unfortunate that the HP board has seemingly missed what the
company's stockholders have clearly recognized: that dissent is not
disloyalty, that healthy boards need not agree on every issue and that
while management and board may run a company, the stockholders are the
true owners of a company."

Hewlett reiterated that if the merger with Compaq is eventually closed, he
will do everything he can to "support the successful implementation of the
merger."

According to Sam Ginn, chairman of the HP board's nominating and
governance committee, CEO Carly Fiorina encouraged Ginn to meet with
Hewlett after last month's shareholder meeting to "re-establish a
constructive working relationship."

The parties met again March 27, and it looked as though Hewlett would be
renominated, Ginn said. However, the board was "shocked" by Hewlett's
subsequent lawsuit, adding that he was "continuing his assault on the
integrity of the HP board and management team."

HP said the decision not to nominate Hewlett wouldn't deter the company
from selecting independent board members.

"The board recognizes the importance of shareowner voices. We will reach
out to shareowners, including our institutions and foundations, to
determine the best way to assure they continue to be heard," Fiorina said.

If the merger transaction with Compaq closes before HP's annual meeting
April 26, HP said shareholders will vote on the following nominees later
this month:

- Current HP board members Philip M. Condit, Patricia C. Dunn, Fiorina,
Ginn, Richard A. Hackborn, George A. Keyworth II and Robert E. Knowling
Jr.

- Current Compaq board members Lawrence T. Babbio Jr., Michael D.
Capellas, Sanford M. Litvack, Thomas J. Perkins and Lucille S. Salhany.

If the merger with Compaq doesn't close before the meeting, HP shareholders
will vote on the following nominees: Condit, Dunn, Fiorina, Ginn, Hackborn,
Keyworth, Knowling and Robert P. Wayman.

The annual meeting will start at 2 p.m. PST on April 26 at the Flint Center
in Cupertino, Calif.

Although Hewlett won't serve on HP's board anymore, he is still a board
member at Agilent Technologies, an HP spinoff.

The vote to exclude Hewlett is likely to spark sharp criticism from some
employees, investors and others who have a stake in HP's leadership.
Hewlett's decision to publicly fight against HP's $20 billion acquisition
of Compaq has been hailed by advocates for shareholder rights as well as
by large institutional investors.

In addition, many HP employees--who face being among the thousands who
will lose their jobs if the merger is completed--have rallied behind
Hewlett.

Not having Hewlett on the board could also present other problems. His
exclusion would mean that no Hewlett or Packard family member is included
on HP's board--no trivial matter, considering that the family group holds
about 18 percent of HP shares through various trusts, foundations and
personal holdings.

However, if the merger is completed, the power of their voting bloc would
be somewhat diluted.

The vote marks the latest chapter in a nasty five-month proxy battle over
HP's proposed Compaq acquisition that has pitted HP against one of its own
directors. Just four days ago, Hewlett filed a lawsuit charging HP with
improperly garnering votes for the merger and requesting that a judge
invalidate the shares cast in favor of the deal.

Hewlett announced last November that he would oppose the merger, even
though he initially voted for it as an HP director. Since then, both sides
have traded caustic personal attacks: HP has dismissed Hewlett as a
"musician and academic," and Hewlett has called for Fiorina's ouster.

Recriminations also flew back and forth between the outside directors and
Hewlett over such issues as Hewlett's release of board minutes on
executive compensation, a topic he felt should be shared with investors
before the merger vote.

The fighting continued right up to HP's March 19 shareholder vote on the
merger. HP claimed victory after that meeting, based on an informal count.
But Hewlett has maintained that the results are too close to call.

Hewlett still has at least two options to get his name before shareholders
at the upcoming annual meeting. He can ask the HP board to waive a Nov. 29
deadline for write-in candidates to declare their candidacy, or he can ask
a court to waive the deadline.

Hewlett knew of the deadline when he launched his proxy fight in early
November and could have entered his name as a write-in candidate early on.
However, he "knowingly let the time go by," said a source close to
Hewlett.

Without the deadline waiver, Hewlett would then be off the board for a
year with the possibility of submitting his name as a write-in candidate
when the one-year term for HP directors expires.

"I won't speculate about what I'll be doing in a year's time," Hewlett
said at a press conference last month when asked about serving as a
write-in candidate if the board should not renominate him.

Hewlett said he would be interested in serving another term. If not
renominated, he could develop his own slate of directors--a move that
would cast him in another contentious proxy battle.

"There's been several cases where a slate of directors was introduced and
replaced the incumbent board," said Charles Elon, professor of corporate
governance with the University of Delaware.

Last year, timber giant Weyerhaeuser successfully unseated three board
members of rival Willamette in favor of its own slate. The proxy battle
was part of Weyerhaeuser's effort to acquire Willamette.

Hewlett's expected departure would signal the end of family participation
on the HP board. Over the past several years, founding family members
David Woodley Packard, Susan Packard Orr and Hewlett's brother-in-law,
Jean-Paul Gimon, have left the board for a variety of reasons.

Hewlett's exclusion could also stir discontent among shareholder
advocates.

Institutional Shareholder Services, a proxy adviser to about 23 percent of
HP's institutional investors, had strongly urged the company to have a
director with a large stake on the board and one who is willing to be a
shareholder activist. ISS noted that Hewlett embodies both such traits.

"We believe that the board would benefit materially from the continued
presence of a significant shareholder on the board, however--a presence
that would be lost if Mr. Hewlett leaves and is not replaced by another
member of the Hewlett or Packard families," ISS stated in its HP merger
recommendation report to institutional investors.

One family member who asked not to be identified agrees with ISS's
assessment about significant shareholders but noted that representation
does not necessarily have to come from a blood relation.

"When you have two families with 18 percent of the shares, you should have
one person on the board who will represent the point of view of the
families," said a family member. "It doesn't necessarily have to be a
family member, but it should be someone who represents their views."

The family member added that if Hewlett wasn't renominated, it would be
hard to predict whether the Packard and Hewlett families would seek a
board seat via a write-in candidate or work together to jointly find a
board member to represent their views.

"We've never really worked together before (on HP business matters)...The
families are fairly independent from one another," the family member said.
"(HP's) board seems to value directors who have business experience. But
company boards are supposed to represent all shareholders, and not all
shareholders are in business. I think it is important to get balance on
the board, any board."

Elon said there are other reasons why Hewlett should be renominated,
particularly because of the support he receives from a large percentage of
shareholders.

"He has close to half of the shareholders who think he's doing the right
thing," Elon said. "Given these circumstances, he represents an important
constituency."

During the March shareholders' meeting, Hewlett received rousing applause
and a standing ovation when he gave a five-minute presentation. Hewlett's
reception was in sharp contrast to that of Fiorina, who at one point was
booed when she said a majority of employees favored the merger.

Ironically, Hewlett's presentation almost helped him dodge a bullet.

HP directors were on the verge of nixing his renomination and had even
scheduled a board meeting for later that day, after the HP shareholders
morning vote, said a source familiar with the company.

"Originally, that was the objective," said a source. "But Walter made a
number of conciliatory comments at the shareholders' meeting about
supporting the merger if it went through."

That March 19 board meeting was canceled and a new one scheduled for last
Wednesday. During last week's board meeting, Hewlett discussed his views
on corporate governance and how he would view his responsibilities if he
stayed on as a director.

"He said if the merger goes through, he's not one to fight lost battles,"
the source said. "He also said he now has international stature, which may
help him do things for the merger that others could not."

During that meeting, Hewlett later signed off the conference call to
enable the directors to go into executive session to further discuss his
status on the board. The board voted to renominate Hewlett, on the
contingency that nominating-committee members Ginn and Condit have one
last discussion with Hewlett to re-confirm the board's understanding of
how Hewlett viewed his director's role.

Ginn and Condit would be empowered to tell Walter he was renominated,
provided they were satisfied with his answers. But Hewlett was not
available to take Ginn's call later that day, and arrangements through
Hewlett's attorneys were made to call back after a specific time Thursday
morning.

That morning, however, Hewlett filed a lawsuit before Ginn called,
alleging that HP used questionable tactics to solicit votes for the
merger.

"The board was stunned. There was no warning a lawsuit was coming," said a
source. As a result, Ginn never made that Thursday-morning call, the
source said. "He made a series of allegations that question HP's corporate
governance."

HP's board once again held a conference call to resolve the nominating
issue, this time on Sunday night. Although Hewlett had been notified and
asked to attend, he elected not to.

In an 8-0 vote, the board voted to forgo re-nominating Hewlett to its
slate of directors.

"When he entered into the lawsuit, that places him in a position of an
adversary," a source said. "It would not be considered good corporate
governance to renominate him as a director."



                    Judge Sets Date for HP-Compaq Trial


Dissident Hewlett-Packard Co. director Walter Hewlett's lawsuit seeking to
halt the company's merger with Compaq Computer Corp. will go to trial
April 23, a Delaware judge said Wednesday.

The suit, filed March 28, claims HP improperly enticed a big investor to
back the deal and the company misled investors about the progress of plans
to integrate the two computer giants.

Chancery Court Judge William Chandler III allotted three days for the
trial. On Sunday morning, he is scheduled to hear arguments on HP's motion
to dismiss the lawsuit.

Votes continue to be counted after five months of debate between Hewlett
and merger supporters. HP chief executive Carly Fiorina claimed a small
but sufficient margin shortly after the end of a shareholder meeting on
the $19 billion merger.

Hewlett, the son of the late HP co-founder William Hewlett, has not
conceded, saying the vote is too close to call. On Monday, HP said he
would not be nominated for re-election to the board of directors.



            Microsoft Remedy Should Address .Net, AOL Exec Says


A proposed settlement of the antitrust case against Microsoft Corp. would
still allow the software giant to protect its Windows operating system
monopoly and boost its Internet presence, an executive from archrival
America Online testified on Wednesday.

AOL Vice President John Borthwick backed alternative remedies offered by
nine states still pursuing the case that aim to level the playing field
for non-Microsoft software.

Without such remedies, Borthwick painted a bleak picture for Microsoft's
competitors. He said the new Windows XP operating system, combined with
Microsoft's .NET strategy, allows the company to dominate the emerging area
of services that reside on a Web server rather than in software on a user's
computer.

"Microsoft's proposed remedy does nothing to ensure that Microsoft will
not use its Windows operating system to thwart platform competition in the
market for Web services," he said in written testimony to U.S. District
Judge Colleen Kollar-Kotelly.

Borthwick, in charge of AOL's Advanced Services division, was the 11th
witness called by the nine states that have rejected the settlement
reached in November by Microsoft and the U.S. Justice Department.

AOL, part of the giant media and entertainment empire of AOL Time Warner ,
is a fierce rival of Microsoft. The software giant charges that its
competitors have been behind the four-year-old case from the start.

Microsoft has said sanctions against it should not go beyond specific
wrongdoings upheld by a federal appeals court last year, mainly that
Microsoft tried to crush an Internet browser made by Netscape
Communications in an effort to preserve the Windows monopoly. Netscape was
later acquired by AOL.

Kollar-Kotelly is still considering whether the proposed settlement meets
a required public interest standard.

Borthwick said Windows XP repeatedly prompts users to sign up for Passport,
Microsoft's authorization software for .NET.

AOL recently joined other large companies in the Liberty Alliance, which
seeks to develop a competing authentication service, after failing to
agree with Microsoft on making .NET compatible with an AOL suite of
services dubbed Magic Carpet.

Microsoft spokesman Jim Desler said the companies could not work out the
compatibility issues because Magic Carpet was still in very early stages
of development.

Borthwick said the states' proposal for broader disclosure of the
inner-workings of Windows and protections against retaliation by Microsoft
would allow rivals to develop services to compete with .NET.

The AOL executive also praised proposals by the states to allow third
parties to license a stripped-down version of Windows that could be used
to design customized computer desktops that feature non-Microsoft software.

Borthwick provided the court with a prototype for a child's computer
featuring the Lego building toy that uses non-Microsoft middleware
applications like Yahoo Messenger and Kodak picture maker.

He also saw possibilities for a sports PC or a music PC aimed at
high-school and college students.

The proposed settlement aims to give computer makers greater freedom to
feature rival software, but Borthwick said Microsoft's middleware would
only be hidden.

Microsoft need only wait 14 days before prompting the consumer to
reconfigure the desktop or sweep competing icons away into a folder off
the opening screen, he said.

Under questioning by Microsoft attorney Richard Pepperman, Borthwick
conceded that AOL had walked away from one PC customization proposal made
last year by computer maker Compaq .

Under Compaq's proposal, the company would have designed a "Harry Potter
PC," based on the popular children's book character.

AOL, which owns the movie rights to Harry Potter, vetoed the idea because
Compaq was only allowed by Microsoft to make "superficial changes" to the
computer desktop and therefore it "was not a compelling proposition to
promote Harry Potter," Borthwick said.

Pepperman said allowing for such broad customization would allow other
companies to sell "crummy" variations of Windows that would hurt Windows'
reputation.

Borthwick retorted that if those versions were "crummy" people wouldn't
buy them.

The states argue that remedies in the case should be broad enough to
protect technologies that have arisen since the case began, handheld
computing devices and interactive television.

Earlier on Wednesday, Microsoft disputed the testimony of an interactive
television executive who charged Microsoft had muscled in on his company's
business.

Microsoft attorney Dan Webb challenged Mitchell Kertzman, chief executive
of Liberate Technologies , to cite any examples in which Microsoft had
used illegal tactics to cut into Liberate's business. Webb also questioned
Kertzman's claim that Liberate poses a competitive threat to Microsoft.

Kertzman had said Microsoft was making inroads into interactive television
by requiring the use of its software as a condition of major investments
in cable television firms.

Webb pointed out that most of those companies, including Telewest, AT&T
Corp. and Comcast Corp., still used Liberate software in their TV set-top
boxes.

"Apparently you've done well with AT&T in spite of Microsoft," Webb said
sarcastically.

Kertzman said Microsoft had so far not taken away any of Liberate's
business because it had failed to produce interactive TV software. "We are
doing well in this nascent stage of the market despite Microsoft's efforts
to control the channels of distribution," he said.



                   High-profile Anti-Unix Site Runs Unix


A Web site sponsored by Microsoft and Unisys as a way to steer big
companies away from the Unix operating system is itself powered by Unix
software.

The site, dubbed "We have the way out," runs on Web servers powered by
FreeBSD, an open-source version of Unix, along with the Unix-based Web
server Apache, according to Netcraft, which tracks Web site information.
Both pieces of software compete with Microsoft's Windows operating system.
The Microsoft/Unisys site solicits names and contact information in
exchange for research reports on data center trends.

Representatives at Unisys and Microsoft weren't immediately available for
comment.

The marketing site's use of Unix comes as Microsoft works to get a greater
foothold for its Windows operating system in the enterprise computing
market, where Unix is well entrenched. Unisys partnered with Microsoft to
co-market its large server hardware running Windows as a Unix alternative.

The Web site is just part of Microsoft's renewed marketing and advertising
campaign to undermine Unix, the operating system at the heart of powerful
server lines from rivals Sun Microsystems, IBM and Hewlett-Packard.

Unisys is spending $25 million on the campaign. Microsoft is adding
funding of its own but has declined to say how much.

The "We have the way out" campaign describes Unix as an expensive trap.
One ad reads: "No wonder Unix makes you feel boxed in. It ties you to an
inflexible system. It requires you to pay for expensive experts. It makes
you struggle daily with a server environment that's more complex than
ever."

The same ad depicts a scene in which a computer user has painted himself
into a corner with purple paint. Sun's servers are manufactured in a shade
of purple similar to that in the ad.

The 18-month project will include advertisements, technical sales efforts
and other marketing work plugging Unisys' high-end server and Microsoft's
top-end version of Windows--two products that so far have made only their
first steps into the data centers where high-end servers often reside.

The Unisys ES7000 server can accommodate as many as 32 Intel processors
and can be divided into independent "partitions," each with its own
operating system. The Datacenter version of Windows 2000 can run on
machines with as many as 32 processors. These top-end configurations are
rare, Unisys has said, with eight-, 12- or 16-processor partitions more
common.



                      Anti-Unix Web Site On the Fritz?


When it comes to Unix, Microsoft and Unisys are suddenly silent.

The two companies launched a Web site earlier this week seeking to
persuade customers to switch from the Unix operating system to Microsoft
software. But as of midday Tuesday, the "We have the way out" site
displayed either an all-white screen or an "Error 403" authorization
message.

Unisys declined to comment on the development. A Microsoft representative,
who also pulled up a blank screen when trying to access the site, said the
company would look into the matter.

Although it's been around for only a few days, the site has drawn the
wrath of Unix and Linux programmers.

On Monday, it was revealed that the site ran on Web servers powered by
FreeBSD, an open-source version of Unix, as well as on the Unix-based Web
server Apache. Both pieces of software compete with Microsoft's Windows
operating system.

Netcraft, which tracks the software running on various sites, reports that
the site switched over to using Microsoft Internet Information Server
software on Tuesday, the same day as the outage.

The Web site is just part of Microsoft's renewed marketing and advertising
campaign to undermine Unix, the operating system at the heart of powerful
server lines from rivals Sun Microsystems, IBM and Hewlett-Packard.

Unisys is spending $25 million on the campaign. Microsoft is adding
funding of its own but has declined to say how much. Before the
Microsoft/Unisys site came up blank, it solicited names and contact
information in exchange for research reports on data center trends.

The "We have the way out" campaign describes Unix as an expensive trap.
One ad reads: "No wonder Unix makes you feel boxed in. It ties you to an
inflexible system. It requires you to pay for expensive experts. It makes
you struggle daily with a server environment that's more complex than
ever."



               Will Microsoft, Apple Renew Their Office Vows?


After nearly five years of living in technological harmony, two of the
biggest names in personal computing are due to renew their vows.

In August, a contract forged in 1997 between Microsoft Corp. and Apple
Computer Inc. will expire, leaving both companies legally unchained. While
the companies declined to comment this week on whether they plan to renew
the contract, analysts and company officials said the technical
cooperation, such as the development of Microsoft's Office software for
Macintosh computers, would continue.

Microsoft has scheduled a presentation for April 10 at its Mountain View,
California, campus where Kevin Browne, general manager of Microsoft's
Macintosh Business Unit (MacBU), is expected to discuss the future of the
group and its products now that the contract is nearing its end.

Maintaining a relationship of some sort will be vital for both companies,
analysts said. For one, Microsoft's Office software has become a key
application for Mac users, according to Roger Kay, director of client
computing with IDC, in Framingham, Massachusetts. "Office for Mac is a
really integral part of what Apple is offering. It's very critical for
Apple to have the Office suite," he said.

Analysts said maintaining ties will also be important for the Redmond,
Washington, software maker as it pursues its wide initiative for delivering
software and services over the Internet, called .Net.

Some of Wednesday's presentation will touch on .Net's role in the Mac
community, Microsoft said. It comes in the midst of Microsoft's push to
get developers and users to adopt its .Net products. As for how Apple
might be included in its plans, that remains an open question.

"It's very critical to Apple that they get this .Net blessing, otherwise
they're going to get forced out of the corporate network," said Rob
Enderle, research fellow with Giga Information Group Inc. Enderle noted
that many Giga! customers have raised concerns recently about the cost
and dif! ficulty of supporting Mac computers within corporate networks.

While Microsoft confirmed Tuesday that it plans to bring Apple into its
.Net to some degree, Apple has been vague about how it will support the
technology. "Basically, we're not really sure what .Net is because it's
not very well defined," said an Apple spokesman. "But we always look at
new technologies and how they can benefit Mac users."

One piece of technology that would bridge Apple's Macintosh operating
system with .Net is already in the works, though not at Apple. Microsoft
and Corel Corp. have developed an alternative version of the .Net runtime
environment, known as the .Net Framework, for the FreeBSD operating system.
FreeBSD is a variant of Unix and is also at the core of Mac OS X, offering
what should be an easy path to replicate the technology for the Mac.

A separate effort to develop a Linux implementation of the .Net Framework,
known as Mono, has also committed to porting its work to Mac OS X,
according to Miguel de Icaza, chief technology officer of Ximian Inc., who
is leading the Mono effort.

In addition to broadening the base of users that would be able to use
software and services designed to run in the .Net runtime environment,
bringing Apple into Microsoft's .Net plans could also improve networking
compatibilities between Mac and Windows systems, Enderle noted.

Apple has promoted its operating system beginning with Mac OS 9 as
Windows-friendly. Support for Office applications, the Windows media
player and some networking capabilities have been addressed. For instance,
sharing files between Windows and Mac machines is seamless, said Al Gillen,
research director of software systems at IDC.

Still, Macintosh clients are still sore thumbs in corporate networks that
use Microsoft server and database software, Enderle said.

"Right now we are getting the highest number of requests from people who
are t! rying to migrate off of Apple," he said. "People are incredibly!
concerned that these Apple machines are going to be isolated" in Windows
networks.

One issue is the Unix roots in Mac OS X, which is based on the BSD
operating system. "This Unix component is working against them," Enderle
said. "It's basically Unix with an Apple front end, but from the
administrators' point of view, all they see is Unix."

While Unix is used widely by businesses it typically takes the form of
server software. "Most organizations have Unix servers installed, and
they're prepared to manage Unix systems. The question is whether they're
prepared to manage large blocks of Unix clients," Gillen said.

Similar to computers running the open source operating system Linux, the
Unix features in Mac OS X add a new element to network management that
was not previously an issue with Windows PCs residing in a network.

"Most of the system management tools are very much geared for Windows
clients. As soon as you start turning that arou! nd to Unix clients, that
presents a different paradigm," Gillen continued. "Not to say the tools
can't handle Unix clients but it's something they haven't done previously."

Additional work on behalf of Microsoft and Apple could iron out any issues
that keep Windows and Mac users apart, Enderle said. One way to do that
would be for Apple to come up with a strategy that allowed its users to use
Microsoft's .Net services.



                    Librarians Testify in Internet Case


Inside the stately courtroom of U.S. District Judge Harvey Bartle III,
there's language coming from the bench and the witness stand that renders
George Carlin's "seven words you can't say on television" tame by
comparison. And then there's the nudity.

In the first week of a trial debating the constitutionality of a
requirement that public libraries install porn-blocking software on their
computers, gray-haired librarians uttered words that could make a
longshoreman blush, soft-spoken computer analysts described bizarre sexual
proclivities and federal judges mulled the definition of "fetish."

One of the three veteran jurists hearing the case, U.S. District Judge
John P. Fullam, summed it up as he flipped through a huge binder of color
printouts from pornographic Web sites: "Dirty pictures."

And though the judges seem to be taking a certain enjoyment in the
proceeding's unusual nature, they're focused on the importance of the
issue: How or if a law can shield children from hardcore pornography
without trampling on the First Amendment's guarantee of free speech.

Week two of the trial over the Children's Internet Protection Act, or CIPA,
begins Monday.

The law, signed by President Clinton in 2000, requires that public
libraries receiving certain types of federal funding install filtering
software to prevent access to online smut. The rule was challenged by the
American Library Association and a group of public libraries and library
patrons. The American Civil Liberties Union is now arguing their case.

Librarian Candace Morgan, the first plaintiffs' witness, didn't flinch
when government attorney Timothy Zick placed an open binder of Web porn
photos in front of her.

"Is it your testimony that I have the right to look at these Web sites?"
Zick asked.

"Yes, it is," replied Morgan, the associate director of the Fort Vancouver,
Wash., regional library.

Shown a particular page with an extremely raunchy title, she read it aloud
to the uncomfortable snickers of some audience members and matter-of-factly
stated, "We have sex manuals with similar pictures to this one."

Government witness Chris Lemmon, of computer testing firm eTesting Labs
Inc., was clearly less comfortable when asked to describe some of the more
disturbing Web sites he had encountered. He haltingly described
pornographic sites involving, among other subjects, elderly women.

"It was disturbing," he testified.

Unlike two previous laws addressing Internet porn that were struck down by
federal judges in Philadelphia, CIPA deals only with funding and not with
direct restrictions on Internet access.

The 1996 Communications Decency Act, which made it a crime to put
adult-oriented material online where children can find it, was thrown out
by the Supreme Court as unconstitutional.

The 1998 Child Online Protection Act, which required sites to collect a
credit card number or other proof of age before allowing Internet users
to view material deemed "harmful to minors," was sidelined by the 3rd U.S.
Circuit Court of Appeals. The Supreme Court is expected to rule this year.

The plaintiffs in the latest case say CIPA relies on inexact technology
that censors protected speech and lets porn through; amounts to "economic
censorship" for libraries serving poor areas; and improperly takes content
decisions away from the libraries and their patrons and gives them to the
federal government.

The government maintains that librarians can unblock sites improperly
censored by the software and they say safeguards need to be placed between
children and World Wide Web porn purveyors lying in wait for them.

Libraries that don't want filters can simply turn down the subsidies, the
government lawyers say.

The judges are expected to rule on the case by early May to give libraries
time to comply if the law is upheld and goes into effect as scheduled
July 31. Any appeal of the panel's decision would go directly to the
Supreme Court.



            Judges End U.S. Library Porn Trial on Skeptical Note


A two-week federal trial to determine how far the government can go to
protect children from pornography on library computers ended on Thursday
with judges openly concerned about whether the latest online smut law from
Congress infringes on free-speech rights.

The Children's Internet Protection Act, or CIPA, which supporters view as
the government's best shot yet at reining in online smut, requires public
libraries to install filtering software on all computers or lose federal
technology funding.

Attorneys for a plaintiffs' coalition of libraries, library patrons and Web
site operators, who want CIPA overturned, said in closing arguments that
libraries cannot implement the law without denying patrons their First
Amendment right to free speech under the U.S. Constitution.

"We're stuck right in the heart of the First Amendment when we're talking
about libraries," observed 3rd U.S. Circuit Court of Appeals Chief Judge
Edward Becker.

Becker heads a three-judge panel that will rule by early May on a
plaintiffs' request for a permanent injunction against CIPA. Whichever way
the ruling goes, the case will be appealed directly to the U.S. Supreme
Court.

A key plank in the case against CIPA is the limitations of filtering
software products such as Cyber Patrol, Smart Filter, Web Sense and N2H2,
which are designed to block access to Web sites deemed harmful to children
under 17, including more than 100,000 sites with sexually explicit content.

But even the government's attorneys concede that no product on the $250
million filtering software market can screen out objectionable Web sites
without also blocking constitutionally protected sites including those
of Sports Illustrated, Planned Parenthood and Salon.com.

The law's "terms, if you will, are a sham. Everybody knows you can't comply
with its terms," American Civil Liberties Union attorney Chris Hansen told
the court.

U.S. District Judge Harvey Bartle appeared to agree. "Every witness has
testified that the statute can't be applied according to its own terms,"
he said.

Judges also seemed concerned that the decision about which of the 11
million World Wide Web sites deserve to be blocked is made by anonymous
corporate officials who consider their choices to be vital trade secrets.

"The nameless and faceless," intoned U.S. District Judge John Fullam.
"What right does the government have to require this kind of filtering
system?"

CIPA, the third attempt by Congress to control online pornography, was
theoretically designed to weather free speech challenges by seeking only
to cut off federal library funds rather than impose direct censorship
restrictions.

At stake for the nation's 40,000 public libraries are hundreds of millions
of dollars in subsidies, such as grants provided under the Library Service
and Technology Act, which are used to automate services and pay for
Internet access.

But the case also goes to the heart of the role libraries play as an open
source of information in their communities.

The judges expressed empathy for communities that want to protect children
from an aggressive commercial pornography industry intent on luring young
customers. However, they also recognized the constitutional dangers of
leaving censorship decisions to the local majority opinion.

Among the legal issues before the panel is whether judges can overturn CIPA
without also branding unconstitutional the filtering systems already in
place at libraries in Greenville, South Carolina, and Tacoma, Washington,
which both provided evidence and testimony for the government's defense.

"There is no constitutional right to immediate, anonymous access to speech,
for free, in a public library," Justice Department attorney Rupa
Bhattacharyya said in a spirited defense of CIPA that equated filtering
software usage to the choices libraries make selecting books for their
collections.

"Even if you assume that libraries have a right to provide unfettered
access to the Internet, they don't have a right to do so with a federal
subsidy," she added. "The crux of this matter is whether or not Congress
has the power to decide how to use its money."

The first attempt by Congress to control online smut, the 1996
Communications Decency Act, was thrown out by the Supreme Court as an
infringement of free speech. The second, the 1998 Child Online
Protection Act, remains sidelined by an injunction with the U.S. high court
due to issue a final opinion by mid-year. Both would impose criminal
penalties on violators.



                      E-mail Is Evolving Into Fee-mail


Christopher Larson has been suspended from MSN Hotmail six times recently.

His crime: exceeding the new 2-megabyte storage limit that Microsoft's
Web-based, ad-supported free e-mail service gives users.

"Some goofball put me on a bulk mailer on a Sunday, and I got 1,000
pieces of mail in one day," says Larson, 43, a Los Angeles paralegal.
"By Monday, I couldn't get to my e-mail until I cleared out my inbox. No
matter what you do to screen out junk mail, with Hotmail it just doesn't
work."

Larson lost mail; his friends had their e-mails bounced back as
undeliverable. Hotmail's solution: Buy more storage space for $19.95 a
year, which Larson refuses to do.

Fees for e-mail are the latest addition to the "formerly free, now comes
with a fee" trend that has been transforming the Internet from a free
information superhighway to a toll road over the past 12 months.

Though free Web-based e-mail hasn't gone away yet, the service offerings
are getting fewer, and charges are creeping in.

Yahoo just announced pricing plans for automatic forwarding of Yahoo mail
to other accounts: $19.99 a year if you sign up now; $29.99 after April
24. Mail.com charges $39.95 for the same service; extra storage starts at
$29.95 yearly.

"It's clear which way this is headed -- to get people to pay for their
e-mail," says David Ferris of Ferris Research, which specializes in
communication technologies. "The service providers will give less
options, and the noose will be drawn even tighter."

Unlike many Web innovations that were met with indifference by the public,
free e-mail has become a victim of its own success. Microsoft bought the
then-8.5-million-member Hotmail in 1998 for $400 million, seeing it as a
vehicle to market its products. Today, it claims more than 110 million
total members (and has 34.5 million users a month) -- and the costs
associated with processing all that mail are enormous.

"I don't know if this is the beginning of the end of free e-mail. We're
not thinking in that direction at this point," says MSN's Parul Shah, who
oversees Hotmail. "But who knows what can happen down the line? E-mail
has become so popular, and at the end of the day we're a business and have
to figure out how to make ends meet."

She won't give specific numbers but says the response to MSN's offer to
purchase extra storage has "exceeded our expectations."

Yahoo's Lisa Pollock also was "pleasantly surprised" at sign-ups for
paid mail-forwarding, which is aimed at students and others whose e-mail
addresses may be temporary. "If they align their e-mail to a certain
stage in their life, the Yahoo mail transports when they move to the next
stage."

In the past several months, such formerly free offerings as Web-based file
and photo storage and video news feeds started charging, which makes users
wonder whether Yahoo is planning to rethink free e-mail, too.

"Right now, we're committed to offering a free e-mail product and
enhanced services for people who find value in incremental offerings,"
Pollock says.

E-mail is included in America Online's monthly $23.90 membership fee, says
AOL spokesman Nicholas Graham. "We do not offer a premium e-mail plan
because we believe e-mail already is a premium service." AOL members also
see a small banner ad.

Evan Williams, who tracks new fees on a Web site called The End of Free
(theendoffree.com), isn't up in arms over the shift in e-mail fees. "My
take is that this is a necessary thing to happen," he says. "Everything
being free has held back innovation."

The concept behind free e-mail was that millions would sign up, and
sponsors would want to reach them with ads, says Joyce Graff, an analyst
with market research firm Gartner. Millions did sign up, but "when people
go into their e-mail, the last thing they want to see is an ad," she
says. "It's like, get this out of my face. They get more annoyed than
enticed by it."

And even though top mail providers Hotmail and Yahoo attract millions to
view the banner ads at the top of the page, not enough advertisers have
signed up.

Most users of free e-mail accounts consider them a backup, Graff says;
most also have a paid account with AOL or another Internet service
provider. "They're a convenience, good for additional people in your
household, or a place to sign up to participate in lists. E-mail is
everything to people, but if it's your third account, you might choose to
give it up. The only reason you have it is because it's free, so you think
hard before paying."

Betsy Platnick, 48, of Mill Valley, Calif., says "the whole point of
Hotmail is it's free. I'm already paying a fortune for DSL (a high-speed
connection) and AOL. If (Hotmail) switches to all-pay, I'll just drop
it."

Larson says he would never pay for Hotmail because of the heavy spam the
account attracts. He says he receives 200 junk e-mails a day with offers
of legalized gambling and sex aids (news - web sites). "If you want me to
pay, I should be guaranteed that the mail I get is the mail I want."

Microsoft's Shah responds that "Hotmail is one of the largest e-mail
services, so we're a target for spammers. We're doing everything we can to
get rid of it."

Larson also has a Yahoo account, which doesn't have the same spam problem,
he says. If push came to shove and he had to pay for that one, "I'd
probably say yes."

But at Yahoo, a policy shift as of Thursday could invite more spam into
user mailboxes. The change caused much consternation in chat rooms over
the weekend.

Yahoo sent out e-mails to its registered users announcing a change in its
"privacy policy" requiring members to reset their "marketing
preferences."

Despite what Yahoo members have indicated in the past, accounts have been
reset to automatically accept blurbs for everything from products to job
offers and matchmaking services. The only out is for members to go back in
and check "no" in each category within the next 60 days.

This was done to "make it easier for you to manage the marketing
communications you receive from Yahoo," wrote the company.



                        Is Your E-mail Watching You?


Watch out--the spam choking your e-mail in-box may be loaded with software
that lets marketers track your moves online, and you may not even be aware
that you've been bugged.

Web sites have long planted bits of code called "cookies" on consumers'
hard drives to tailor Internet pages for returning visitors and better
target ads. Now, enhanced messages that share the look and feel of Web
pages are being used to deliver the same bits of code through e-mail, in
many cases without regard for safeguards that have been developed to
protect consumer privacy on the Web.

"All of the security and privacy issues on the Web now relate to e-mail,"
said Adam Shostack, director of technology at Zero-Knowledge Systems, a
Montreal-based privacy and security company. "The shame about this
behavior is that it's going on surreptitiously and people are not given an
obvious way to opt out."

Consumer notice and choice have been at the heart of the Internet privacy
debate for years, driving popular Web companies including eBay, Yahoo and
DoubleClick to write tough-sounding Web privacy policies. Playing offense,
civil libertarians and privacy groups for years have stalked Web sites for
violations of their stated policies and have kept an eye on secretive
tracking tactics. Although many of the same troubles are cutting into
e-mail, disclosure of such data-gathering practices has not received
anywhere close to the level of scrutiny it has had on the Web.

With e-mail, however, the stakes for consumer privacy may be higher.

After battling consumer advocates for years over the issue, Web sites now
typically cloak visitors' identities and collect data anonymously. By
contrast, junk e-mailers and even some legitimate marketers have begun to
use cookies and other techniques to link specific addresses to surfing
behavior, security experts said.

In some cases, spammers may be able to link formerly anonymous consumers
with their e-mail addresses. For example, a Web site specializing in
horoscopes may know a consumer only by birth date. But if that Web site
rents a list of e-mail addresses with that consumer's address on it, the
company may be able to link the address to the individual's birth date and
visits to the site.

"In many ways, e-mail tracking is more powerful because they can correlate
the e-mail address with online history," said Lance Cottrell, president of
Anonymizer, an Internet privacy services company.

"There isn't an opportunity to be fully informed when you receive a spam
with remotely loaded graphics used to track your computer," he added.
"It's a bit of a loophole in the whole process."

The rise of e-mail tracking runs parallel to the adoption of "rich e-mail,"
or messages that incorporate the programming language most commonly used to
display Web pages, known as HTML (Hypertext Markup Language). Such messages
may include Web pages, audio and video in addition to ordinary text.

According to a recent report from the industry trade group the Direct
Marketing Association (DMA), 65 percent of online marketers regularly send
HTML e-mail to consumers or prospective customers. By incorporating HTML,
the e-mail acts like a Web page, requesting graphics and content from a
Web server and counting as a "hit" to the company's Web site.

Taking advantage of the technology, marketers can track how and when
people respond to e-mail, note where they click, and trace follow-up
actions on their Web pages. They do this by embedding cookies or clear GIF
images known as Web beacons, an action that isn't possible in a simple
text message.

On the simplest level, marketers may embed a numeric tracking code in the
"from" line. This code is sent back to the Web site's service when the
recipient visits the site from the e-mail. More sophisticated tracking can
involve cookies so that the Web site can detect whether the consumer
visits the site days later. Cookies can also help determine how much
revenue was booked on a Web site as a result of an e-mail campaign by
following the recipient throughout a visit.

The monitoring technology can be planted on consumer hard drives at
various stages in the process of delivering and reading an e-mail. In many
cases, cookies or Web beacons are set the moment the recipient opens the
message or views it in the preview window of the e-mail program. In other
cases, cookies are set only when the person clicks on an embedded link
that leads to a Web site--an action some argue is part of the Web
experience and is the purview of Web privacy policies.

Digital Impact, an e-mail marketing services company, uses a range of
tactics to measure the effectiveness of campaigns for its customers, which
include Citigroup, Bank of America, Wal-Mart, Target and the Gap.

Since its launch in 1998, Digital Impact has sent about 3 billion
commercial e-mails. Gerardo Capiel, chief technology officer and co-founder
of Digital Impact, said that while about 70 percent of the e-mail the
company sends for customers is HTML, less than 30 percent of HTML e-mail
includes tracking technology. Capiel said the company asks that its
customers address e-mail communications in their privacy policies.

"We don't set a cookie when you open the e-mail, but you might get one when
you click through," he said. "It's really a question of how aggressive the
marketer wants to get to track revenue."

Capiel said the company only sends messages to consumers who have opted to
receive communications from the client. Still, he acknowledges that people
can be sensitive to cookies. "You may end up irking some customers," he
said.

Experian, another e-mail marketing services company, started using cookies
this year to better track digital communications for its customers.
According to its privacy policy, it uses cookies and Web beacons to monitor
when an e-mail was opened, how many times an e-mail recipient forwarded the
message, and which Web addresses were clicked on, among other actions.

Christine Frye, chief privacy officer of Experian's e-marketing services
unit, said the company has started working with customers to educate them
on updating their privacy policies to include e-mail tracking. So far,
"they've been very receptive to that," she said. She would not name any
Experian customers.

Such techniques have become pervasive enough to attract the attention of
browser and e-mail software makers.

Some e-mail programs already include settings allowing consumers to block
cookies. Microsoft's Internet Explorer 6.0, for example, offers controls
for cookies on the Web and via the company's Outlook and Outlook Express
e-mail programs. Turning on the "prompt for cookies" setting can reveal
the stunning extent of the problem, unmasking unsolicited HTML e-mail
messages that try to lay down cookies on a hard drive.

According to Microsoft, IE 6, Outlook and Outlook Express block cookies by
default in HTML mail and place such mail automatically in a secure
"restricted" zone. The settings have not always proven effective,
however--well-known security expert Richard Smith has reported at least
one bug that allows cookies to be planted through Outlook despite the
default settings.

Rajeev Dujari, development manager on IE 6 for Microsoft, countered that
Outlook is designed to let consumers read e-mail in different security
zones and control cookies through privacy settings. But he admitted that
consumers need to better educate themselves to set a defense against
increasingly invasive marketing tactics.

"Our default is around cookies being part of a Web experience rather than
an e-mail experience," Dujari said. "When consumers get e-mail, people
don't usually expect a cookie."

There's a fine line between spam and commercial pitches from an online
retailer that ask for permission to send a message. In both cases, the
message may plant a cookie on the receiver's hard drive, but the spammer,
by definition, has done so without any pre-established relationship.
Still, consumers at the receiving end of both kinds of messages are often
not notified of monitoring--either in the mail or in Web privacy
policies--nor given the option to block cookies in the future, privacy
experts said.

Direct marketers are just starting to pay attention to this area. Pat
Faley, vice president of ethics and consumer affairs for the DMA, a
5,000-member organization of retailers, said the group urges members to
include in all e-mail a link to their privacy policies. She added that
members should "definitely disclose e-mail tracking practices in their Web
site privacy policy."

E-mail marketing also raises sticky questions for marketing services
companies, which deliver ads into rich e-mail. Although these companies
typically guarantee anonymous data-collection, it theoretically would be
easy to tie that data back to an e-mail address in an e-mail-based
marketing campaign, according to privacy experts.

DoubleClick, a heavyweight in Web ad delivery and e-mail marketing, offers
a service called DartMail that lets companies manage, deliver and track
e-mail marketing campaigns. The technology allows customers to add software
such as cookies or Web beacons to a campaign and track the effectiveness of
a promotion.

DoubleClick said that data it collects online is kept separate from data
collected through e-mail.

J.Crew is a customer of DoubleClick's DartMail, but the retailer does not
specifically address e-mail monitoring practices in the privacy policy
published in its Web site. The policy says only that "in some instances,
we may use third-party companies to help us serve you better. These
companies may be given access to some or all of the information you provide
to us and may use cookies on our behalf."

J.Crew did not immediately respond to requests for comment.

To be sure, some retailers are starting to refer to e-mail monitoring in
privacy policies. Amazon.com, for example, mentions that it may use
tracking methods via e-mail to determine preferences for future
communications. Still, privacy advocates said e-mail privacy practices are
largely under-disclosed compared with other media such as the Web.

"E-mail privacy hasn't been on the radar until recently," said Larry
Ponemon, CEO of the Dallas-based Privacy Council, a knowledge management
and technology company. He added that most companies still don't fully
understand how e-mail plays a role in privacy and security.

One problem with the disclosure of e-mail privacy stems from the large
percentage of e-mail marketing campaigns that are conducted at arm's
length through third-party providers. As a result, companies that retain
e-mail marketing services may not always be fully aware of the practices
employed on their behalf.

Although many major companies outsource their e-mail marketing to companies
that openly admit to using cookies and other tracking techniques, the
privacy policies published online by these companies do not always address
the issue of e-mail monitoring.

"There's a lot less transparency around what's happening in e-mail
marketing than with Web content," said Alex Fowler, senior director of
policy and advocacy at Zero-Knowledge Systems.

Walmart.com, for example, delivers opt-in e-mail marketing through
third-party providers. It does not mention e-mail monitoring in its privacy
policy, however, which was last updated Dec. 8, 2000, according to its Web
site.

In an interview, Walmart.com spokeswoman Cynthia Lin confirmed that the
company tracks customers through e-mail using "software technology."
Still, she said, the company's privacy policy is adequate.

For one thing, the company does not use cookies, she said. In addition, she
said that any data gathering that occurs after consumers leave the e-mail
client is not technically part of the e-mail experience, even if the
original Web link is embedded in an e-mail. Once consumers are whisked to
the Web, all of the company's practices are covered by its Web policy,
which clearly states that the company never sells or rents customer
information.

"When customers do get those e-mails and click on links within them, we
are aleb to track that information," she said. "We have made every effort
to
 make our security and privacy policy as clear as possible to our
customers."



                  Microsoft Considers Raising MSN's Price


Microsoft on Monday said it is evaluating new features and a possible
price increase for a pending version of its MSN Internet Access service,
due out later this year.

"As we add value to the service, we're going to evaluate the price. But
nothing has been decided," a Microsoft representative said.

A price increase for MSN 8.0 would bring the service price closer to that
of its biggest competitor. Microsoft currently charges $21.95 a month for
standard dial-up service. Last year, America Online increased the price of
its standard dial-up service to $23.90 a month, and Earthlink raised its
subscription rate by $2 to $21.95 a month.

"If your major competitor raises prices, you're going to think about
whether you will too," said Rob Lancaster, senior analyst at the
Boston-based research firm The Yankee Group.

Microsoft has waged an intensive campaign aimed at wooing customers to its
lower-priced service, offering substantial incentives such as free months
of service for AOL members who switch. Through such tactics, it has
attracted some 7 million subscribers compared to AOL's 34 million.

Although Microsoft has appeared willing to absorb heavy expenses
associated with acquiring new members and running its MSN service, it has
also demonstrated signs of cost consciousness. Last year, it discontinued
a $400 rebate program after acknowledging that the program had eaten into
its bottom line.

Earlier this month, MSN began to enforce limits on storage for its free
Hotmail Web-based e-mail service while heavily promoting a premium version
for $19.95 a year.

The Yankee Group's Lancaster noted that the price gap between MSN and AOL
leaves ample room for the company to preserve a small discount even if it
decides to charge more.

"Perception is everything here. MSN wants to be perceived as an AOL
competitor and viewed on the same plane," he said. "But MSN wants to stay
slightly cheaper than AOL. If they see a little space to raise their
prices and stay under AOL, I don't think it will damage them."



                   Stealth P2P Network Hides Inside Kazaa


A California company has quietly attached its software to millions of
downloads of the popular Kazaa file-trading program and plans to remotely
"turn on" people's PCs, welding them into a new network of its own.

Brilliant Digital Entertainment, a California-based digital advertising
technology company, has been distributing its 3D ad technology along with
the Kazaa software since late last fall. But in a federal securities
filing Monday, the company revealed it also has been installing more
ambitious technology that could turn every computer running Kazaa into a
node in a new network controlled by Brilliant Digital.

The company plans to wake up the millions of computers that have installed
its software in as soon as four weeks. It plans to use the machines--with
their owners' permission--to host and distribute other companies' content,
such as advertising or music. Alternatively, it might borrow people's
unused processing power to help with other companies' complicated
computing tasks.

Brilliant Digital CEO Kevin Bermeister says computers or Internet
connections won't be used without their owners' permission. But the
company will nevertheless have access to millions of computers at once,
almost as easily as turning on a light switch.

"Everybody will get turned on in more or less a simultaneous fashion,"
Bermeister said. "This will be an opt-in program...We're trying to create
a secure network based on end-user relationships."

The Brilliant Digital plan is the most ambitious yet from a string of
companies that have tried to make money off the millions of people who are
downloading and using free file-swapping programs such as Kazaa,
MusicCity's Morpheus or LimeWire.

Nearly all of the file-swapping programs now routinely come bundled with
so-called adware or spyware--programs that automatically pop up
advertisements while people surf the Web or that keep track of where
someone surfs, information that can then be sold to marketing companies.
Despite growing concerns about this bundled software, usage and downloads
of the file-swapping programs are at an all-time high.

But Brilliant's plan, by tapping into the computer resources of the
file-swappers themselves, has fallen into a new realm where start-ups such
as Kontiki and Red Swoosh are just starting to gain traction. Those
companies are trying to use peer-to-peer technology to distribute content
more quickly online, but they face a battle convincing people to install
their software and become distribution points.

Brilliant, by contrast, already has potentially tens of millions of
computers in its network, simply by piggybacking on top of Kazaa.

According to CNET Download.com, a popular software aggregation site owned
by News.com publisher CNET Networks, the Kazaa software--and by extension
the Brilliant software--was downloaded more than 2.6 million times last
week alone. Brilliant has been distributing the core technology for its
peer-to-peer service along with Kazaa since February, Bermeister said.

The Brilliant network is based on a piece of software called "Altnet
Secureinstall," which is bundled with the Kazaa software. That technology
can connect to other peer-to-peer networks, ad servers or file servers
independently of the Kazaa software and can be automatically updated to
add new features, according to Brilliant's filing.

When the software is "turned on," computers running the Brilliant software
will form a new peer-to-peer network separate from but connected to Kazaa,
the filing said. A few computers with fast connections will form the early
core of the network and be asked to join first. Other ordinary computers
and Net connections will be invited later, Bermeister said.

Brilliant's software will be able to understand and respond to searches
inside Kazaa, since it is based on the same technology. But if it is
successful, Brilliant will be able to host content and run "distributed
computing" applications over the new network that is entirely separate
from Kazaa or other file-swapping networks based on the same technology.

Brilliant and Bermeister have played a central role in many of the events
shaping the file-swapping world in the past few months.

Bermeister began distributing his company's 3D advertising software along
with the Kazaa software last year. That's how he got to know the founders
of Kazaa BV, the Dutch company that created the file-swapping technology
originally used by Kazaa, Morpheus and Grokster.

When the Kazaa BV founders decided they didn't want to be in the network
business, Bermeister introduced them to a former associate in Australia,
Nicola Hemming. Her new company, Sharman Networks, bought the Kazaa
software and continues to distribute it.

Bermeister is now drawing on his association with the Dutch programmers
for his new venture. Brilliant has created a new company for the
peer-to-peer service, called Altnet. It has licensed the Dutch programmers'
technology from their new venture, called Blastoise. According to
Brilliant's annual report, filed Monday, the Dutch programmers have taken a
49 percent stake in Altnet.

Brilliant has been subpoenaed in the record labels and big movie studios'
copyright infringement lawsuit against Kazaa BV. No suit has been filed
against Brilliant or Sharman Networks, however.

The immediate plans for Altnet, Brilliant and the new peer-to-peer network
remain unclear.

Bermeister said the company had been testing the technology along with ad
giants DoubleClick as a way to serve ordinary Web ads more quickly. Under
this plan, an ad that a person sees on a Web site might be hosted by a
nearby computer running Brilliant's Altnet instead of on a central ad
server, as now typically happens with DoubleClick.

Brilliant's CEO was quick to note that people would be asked before their
computers were used for this or other purposes. He said the software would
show a pop-up box explaining the network's function and giving people a
chance to turn it off. People who allow their computers to be used will be
compensated somehow, possibly with gift certificates or free videos, the
company's filing said.

However, people who accept "terms of service" already distributed with
Brilliant's and Kazaa's software are already agreeing to let their
computers be used without any payment at all.

"You hereby grant (Brilliant) the right to access and use the unused
computing power and storage space on your computer/s and/or Internet
access or bandwidth for the aggregation of content and use in distributed
computing," the terms of service read. "The user acknowledges and
authorizes this use without the right of compensation."

Anybody who declines this provision is not able to install the Kazaa
file-swapping software. Brilliant's software can be disabled or removed
after installation without affecting Kazaa's performance, however.

A representative for Sharman, which distributes the Kazaa software, could
not be reached for comment.

Privacy-rights advocates contacted for comment expressed some concern
about the way the Altnet software has been distributed and about whether
the millions of people who already have it installed on their computers
will be tech-savvy enough to know what they're agreeing to when and if
Brilliant does ask to use their computers.

"A lot of the people most likely to use this software are teenagers or
college students. There's a lack of sensitivity about privacy in that age
group," said Larry Poneman, CEO of Privacy Council, which helps companies
manage privacy issues. "Do they really want to be commandeered and have
their machines do things that aren't necessarily in their best interest?"



                    Kazaa Exec Defends Sleeper Software


Two days after disclosures that file-swappers using Kazaa were unwittingly
downloading software that could turn their computers into part of a new
network, Kazaa's owner spoke up to defend the company's actions.

As previously reported, Kazaa quietly has been bundled for two months with
software that contains the core of a new peer-to-peer network. This
software, from a California company called Brilliant Digital Entertainment,
has been installed on potentially tens of millions of computers. Brilliant
Digital plans to "turn on" this software in four to six weeks, tapping the
resources of potentially tens of millions of ordinary PCs to distribute
content or advertising or to run complicated computer tasks.

Kazaa is owned by Australian company Sharman Networks, whose chief
executive, Nicola Hemming, on Wednesday defended the company's arrangement
with Brilliant Digital as having "no downside" for Kazaa users.

"Nothing from (Brilliant Digital) has been downloaded which breaches
Sharman's or industry standards of users' privacy protection," Hemming
wrote in a statement. Brilliant Digital has simply acted in "much the same
way that major software publishers such as AOL, Microsoft and RealNetworks
(do to) deploy components for future functions," she added.

Brilliant Digital's plans, first outlined in a document filed Monday with
U.S. securities regulators, are the most reaching yet of a long list of
companies trying to make money off the millions of people who download and
use file-swapping software.

The company, run by Australian entrepreneur Kevin Bermeister, originally
focused on 3D advertising and media software. Its advertising software was
distributed last year along with Kazaa, while the file-swapping software
was still owned by the group of Dutch programmers who had created its
original peer-to-peer technology.

But in February, Brilliant Digital created a new subsidiary, called Altnet,
with the ambitious goal of creating a new peer-to-peer network that
piggybacked on Kazaa's wide distribution. The original Dutch programmers
took 49 percent of Bermeister's new company and licensed their peer-to-peer
technology to Brilliant Digital.

The Kazaa program itself was sold to Sharman early this year. But Sharman's
Hemming, a former business associate of Bermeister, agreed to continue
distributing Brilliant Digital's software along with Kazaa.

That new software, the core of Brilliant Digital's Altnet business plan,
has the ability to "wake up" and weld the millions of computers on which
it has been installed into a new peer-to-peer network, in which each
computer can talk to the other. That network, which would be controlled by
Brilliant Digital, would be used to distribute content or perform
complicated distributed computing tasks for Brilliant Digital's clients.

Bermeister said in an interview Monday that Altnet would get people's
permission before using their computers. When the network is activated, a
pop-up box will appear and ask if the computer user wants to participate.
Those who do participate will be compensated, possibly with gift
certificates or free videos, he said.

The disclosure of the sleeper network set off a firestorm of criticism
among Kazaa users, however. Kazaa has been downloaded well over 20 million
times since early February, creating a huge base of people who might be
affected.

"That is the most frightening thing I have read, since I am a Kazaa user
myself," Eric Santiago wrote in one typical e-mail. "I guess I should
uninstall and start reading user agreements in the future."

The news has also thrown the program's owner into the defensive. Hemming
defended Brilliant Digital's plan as a way for all Kazaa users to have a
"richer P2P experience," including faster downloads, new kinds of content,
and the ability to be compensated for use of their extra computing power.

But Hemming also spotlighted her own companies' privacy policy for the
first time, describing exactly what information Kazaa keeps.

The policy reads much like other Web sites'. The company collects a
considerable amount of data in its log files, including Internet service
provider, Internet address, date and time of visit, and number of clicks.
It does not collect personal information from log files, the company says.

The company also does not collect information on what files people are
searching for or storing as part of the file-swapping program, a
representative said.



             Judge Says U.S. Has Jurisdiction in Internet Case


A federal judge has denied a motion to dismiss a lawsuit filed against a
Russian company accused of violating a controversial U.S. copyright law,
saying that even though the activity transpired over the Internet the
United States still has jurisdiction.

Attorney Joseph Burton of law firm Duane Morris in San Francisco
acknowledged on Tuesday the novelty of the argument he made on behalf of
his client, Moscow-based ElcomSoft Co. Ltd., in one of the most closely
watched cases challenging the 1998 Digital Millennium Copyright Act (DMCA).

ElcomSoft is accused of violating the DMCA by selling online a program
that allowed people to circumvent copyright protections in electronic
books. Burton had argued that because the conduct occurred over the
Internet, the U.S. court didn't have jurisdiction.

"I'm disappointed but not surprised," he told Reuters. "It's a motion
that's a little bit ahead of its time. I think it will take a while for
courts to understand the real nature of the Internet and how it works and
how we interact with it before a motion like this has a better reception."

Burton argued that regardless of where the company's Web site was located,
the activity itself was transacted over multiple borders in the digital
realm, and therefore not within the jurisdiction of U.S. courts.

But in a ruling dated last Wednesday and received by defense and
prosecuting attorneys this week, U.S. District Court Judge Ronald Whyte in
San Jose, California, said there was sufficient conduct occurring within
the United States for his court to rule.

"The conduct which underlies the indictment includes ElcomSoft's offering
its AEBPR program for sale over the Internet, from a computer server
physically located in the United States," the judge wrote. "Purchasers
obtained copies of the program in the United States... Payments were
directed to, and received by, an entity in the United States."

The judge previously denied a defense motion to dismiss conspiracy charges
against ElcomSoft, but Burton said the judge said he could refile that
motion after getting more information.

A hearing is set for April 15 at which a trial date may be set, lawyers
said. They said they did not know when the judge would rule on the two
remaining motions to dismiss.

On Monday, lawyers for both sides presented their arguments before the
judge on two other, more significant motions to dismiss filed by the
defense. Defense lawyers contend that the DMCA is overly vague and
violates ElcomSoft's constitutional rights to free speech.

Prosecutors counter that the law clearly targets digital pirates and tools
that allow people to make unauthorized copies of digital copyrighted
material.

ElcomSoft's program, sold briefly on the Internet last year, allowed
people using Adobe Systems Inc.'s eBook Reader to copy and print digital
books, as well as transfer them to other computers and have the computer
read them aloud.

The ElcomSoft case is widely viewed as a crucial test of the DMCA, which
civil rights advocates and software programmers contend gives copyright
owners broader protection than they have over non-digital material, at the
expense of individuals' rights to legitimate use.

Movie studios and record labels argue that the law is necessary to keep
people from indiscriminate and unauthorized copying of films and music
over the Internet, where digital material is so easily digested and
transferred.

ElcomSoft faces $2.25 million in fines. The employee who wrote the program
at the heart of the case was released with the promise that charges would
be dropped against him in exchange for his testimony.

Dmitry Sklyarov, 27, returned home in December and said he will return to
testify in support of his employer. He was arrested in July after
presenting his program at the DefCon hacker conference in Las Vegas.




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