Yahoo Gets Back With the In Crowd Through Twitter Deal

Computer World

In battle to regain lost momentum, Yahoo opens its sites to Twitter users

Yahoo Inc.'s deal with microblogging phenom Twitter Inc., announced yesterday, could prove timely for an Internet pioneer looking to regain lost momentum and join the social networking glitterati.

"This is a company struggling for relevance," said Rob Enderle, principal analyst at Enderle Group. "Social networking, rather than search, was closer to Yahoo's initial strength, and they lost their way by going after Google. This takes them back to their roots, and typically that is a good thing. This does give Yahoo some much needed visibility."

Yahoo and Twitter said the deal calls for enabling Yahoo's search engine to access real-time Twitter tweets in its search results. The agreement will also let Twitter feeds be accessed on various Yahoo properties, including its home page and its Yahoo Mail and Yahoo Sports pages. And Twitter users will be able to update their status from Yahoo sites, the companies said.

Last October, Twitter signed similar deals to integrate tweets into Google and Microsoft Bing search results.

Analysts note that the Yahoo-Twitter deal goes a step or two further by enabling users to access their Twitter feeds and to make status changes from Yahoo sites.

"The Yahoo deal is more extensive than the deals Google and [Microsoft] made with Twitter, and I think it demonstrates a new assertiveness on the part of Yahoo," said Augie Ray, an analyst at Forrester Research Inc. "The new Twitter-Yahoo deal has the potential to position Yahoo in the intersection of the search, content and social worlds. Whether this allows Yahoo to grab more buzz and build some momentum will depend upon the speed and effectiveness in rolling out the new Twitter features."

Ezra Gottheil, an analyst at Technology Business Research, said the move should help struggling Yahoo to slowly move in a more positive direction.

"I think [Yahoo] has to get comfortable with being a slow-growth company," said Gottheil. "It needs to communicate to the world and to the market that it's a long-term growth concern. It's not likely to show explosive growth going forward.

"Companies can't grow like high-tech start-ups forever," Gottheil added. "Most healthy companies mature and go into a phase of slower growth and reasonable profitability. It's harder to do that in the tech world, where every year some new company passes you in some metric, but if you take care of your customers, you can go on for a very long time."

Analysts also noted that this week's deal is the latest sign that Twitter has reached a new level of relevance.

For a long time the microblogging site was thought of as a silly service that enabled people to yammer on about their favorite sandwich or the great parking spot they snagged in front of their favorite restaurant. But last year, the company turned a corner when Twitterers began using the site to get information out about important events, like turmoil in Iran and rescue efforts after the devastating earthquake in Haiti.

"For Twitter, this [week's deal] continues to cement its place in the social media world," Ray said. "Twitter's traffic continues to grow, but there are some nagging reports that some portion of new users post a couple of times and then drift away. These search engine deals help to raise Twitter's profile and drive traffic to Twitter. And Yahoo's approach will help to make Twitter a vital part of Yahoo users' communication and sharing tools."

Threat to Web Freedom Seen in Italy's Google Case

NY Times

ROME — Three Google executives were convicted of violating Italian privacy laws on Wednesday, the first case to hold the company’s executives responsible for the content posted on its system.

The case, though subject to appeal, could have sweeping implications worldwide for Internet freedom: It suggests that Google was not simply a tool for its users, as it contends, but effectively no different from any other media company, like newspapers or television, that provides content and could be regulated.

The ruling further complicates the business environment for Google in Europe, where it faces a wave of antitrust complaints. And it comes shortly after Google threatened to withdraw from China, citing sophisticated attacks by hackers there and Chinese demands that it restrict information available to local users.

Google’s enormous search and advertising business depends heavily on its reach into every corner of the global Internet and on providing users access to as much digital content as possible, regardless of its origins or ownership.

The Italian move to hold the company or its executives responsible for text, photographs or videos made available by third parties through Google and its online services, like YouTube, poses a significant challenge to the company’s business model, along with those of other Internet companies.

In Italy, where Prime Minister Silvio Berlusconi owns most private media and indirectly controls public media, there is a strong push to regulate the Internet more assertively than it is controlled elsewhere in Europe. Several measures are pending in Parliament here that seek to impose various controls on the Internet. Critics of Mr. Berlusconi say the measures go beyond routine copyright questions and are a way to stave off competition from the Web to public television stations and his own private channels — and to keep a tighter grip on public debate.

“It’s a deliberate effort to control the means of communication,” said Juan Carlos de Martin, the founder of the Nexa Center at Turin’s Polytechnic University, which studies Internet use in Italy.

Italy has one of the lowest rates of Internet use and e-commerce in Europe, and experts warned that the ruling on Wednesday could erode the nation’s position further and limit information to young people, who watch television less than their parents.

In Milan, Judge Oscar Magi sentenced the Google executives in absentia to six-month suspended sentences for violating the privacy of an autistic boy. He said Google did not act fast enough to remove from the site a widely viewed video posted in 2006 showing a group of teenage boys harassing the boy.

But Judge Magi cleared the Google executives of defamation charges. The three were Peter Fleischer, Google’s chief privacy counsel, David Drummond, senior vice president and chief legal officer, and George Reyes, a former chief financial officer. A fourth defendant, Arvind Desikan, charged only with defamation, was acquitted.

Internet activists, as well as the American ambassador to Italy, cried foul about the ruling, which some likened to punishing the mailman for delivering a nasty letter.

A spokesman for Google, Bill Echikson, called the ruling “astonishing” and said the company would appeal. In its blog, Google added that the ruling “attacks the very principles of freedom on which the Internet is built.”

Prosecutors said Google waited to remove the video until after complaints to the police by Vivi Down, an Italian group representing people with Down syndrome, whose name was mentioned by the boys in the video.

Google said it removed the video within two hours of receiving a formal complaint from the Italian police, two months after the video was first posted.

The boys, all minors, were not charged by prosecutors, but were sentenced by a different judge to community service. Prosecutors named the Google executives because Italian law holds corporate executives responsible for a company’s actions.

Google maintains that the ruling contradicted a European Union directive on electronic commerce that gives service providers safe harbor from liability for the content they host.

But prosecutors argued that because Google handles user data — and uses content to generate advertising revenue — it is a content provider, not a service provider, and therefore broke Italian privacy law. The law prohibits the use of someone’s personal data with the intent of harming him or of making a profit.

“To say this is about censorship has a big media effect, but is false,” said Alfredo Robledo, one of the prosecutors. “This is about finding a balance between free enterprise and the protection of human dignity.”

Still, the upshot of the ruling, if it prevails on appeal, is that Google will be expected in Italy to monitor the content it hosts. Mr. Echikson, the Google spokesman, said that would be impossible considering that 20 hours of video are uploaded to its site every hour.

The American ambassador to Italy, David Thorne, said he was “disappointed” by the ruling.

“We disagree that Internet service providers are responsible prior to posting for the content uploaded by users,” he said in a statement, adding that Secretary of State Hillary Rodham Clinton had said that “free Internet is an integral human right that must be protected in free societies.”

Mr. Robledo said that a company like Google could easily find ways to monitor its content, and that it should not profit from advertising revenue generated from content that violated privacy laws. He said if Google had found a way to create filters in China, it could do the same in Italy, not to monitor political content “but to protect human dignity.”

Google disagreed.

“If company employees like me can be held criminally liable for any video on a hosting platform, when they had absolutely nothing to do with the video in question, then our liability is unlimited,” said one of the three executives, Mr. Fleischer.

The Google ruling comes amid other proposed legislation that would seek to bureaucratize the Internet in Italy, including the highly contested Italian version of a European directive that would compel online broadcasters to seek the same licensing agreements as broadcast television. Google lobbied for changes to the proposal.

Paolo Romani, a deputy communications minister who sponsored the measure, said the issue was copyright protection. “It has nothing to do with the fact that our prime minister also owns television stations,” Mr. Romani said. “It’s in Berlusconi’s interest not to be accused of conflict of interest.”

Another proposal pending in Italy, tucked into a bill on wiretapping, would require blogs to publish corrections within 48 hours, as newspapers are required to do, while a third would make sites responsible for anonymous comments posted on them.

Paolo Gentiloni, a leading opposition member and a former communications minister, said Internet regulation was inevitably political. Today in Italy, “political power is in the hands of people who do TV, not the Internet.”

“The slower broadband is, the better it is for a broadcasting-oriented government,” he added.

Others warned that Italy’s red tape — including the Google ruling — could stifle free expression. Mr. de Martin, of the Nexa Center, said that universities and companies might not want to run the risk of opening Web forums if they would be criminally liable for their contents.

“If you bureaucratize it even a little, you eliminate thousands or millions of people who don’t feel like making the effort,” he said.

People's Republic of Hacking

The Wall Street Journal

'Panda' Exploit Offers Rare Inside Look at China's Cybercrime Networks

WUHAN, China—Some of today's biggest cybersecurity worries trace their roots to this central Chinese city, where a hacker with a junior high school education slapped cartoon pandas onto millions of computers to hide a destructive spy program.

The Panda Burns Incense computer worm, created by 27-year-old Li Jun, wreaked havoc for months in China in 2006 and 2007, eventually landing Mr. Li in jail. Jumping one computer to another by tricking users into opening what appeared to be a friendly email message, the Panda funneled passwords, financial information and online cash balances from game Web sites to Mr. Li's cohorts—leaving a panda as its calling card.

When Google Inc. last month alleged that it and more than 20 other companies were breached in a cyberattack it traced to China, the attack, dubbed Aurora, appeared orders of magnitude more complex than the Panda attack. Unlike the Panda attack, which left a calling card and spread quickly and randomly, the perpetrators of Aurora targeted specific employees within the companies they attacked and went to great lengths to cover their tracks.

There is no evidence thus far that the Google hack has any connection to the Panda's pandemonium. What is clear is that Mr. Li learned his craft and launched his attack within a hacker network in China that remains an active and growing threat to global computer users.

The identity, motivation and methods of Chinese hackers are rarely traceable. But based on interviews with security experts, forensic reports from independent tech firms, and the hackers themselves, the Panda case offers a rare window into how the underground world of Chinese hacking operates.

Mr. Li's Panda attack became known as "the first case of organized cybercrime in China, using a computer virus," according to U.S. technology security firm Symantec Corp. Once a computer was infected, the desktop icon of every executable file, such as Microsoft Corp.'s Word, would change into a picture of a panda. Clicking the panda would prompt the computer to immediately download software from the Internet that in turn allowed Mr. Li's computers to siphon off financial information stored deep inside it.

Cyber experts say hacker forums are very likely fertile recruiting grounds for the Chinese government, which is increasingly anxious about its own cybersecurity. In fact, one person formerly involved in spreading the Panda virus says he was later hired to work with Chinese police to break into accounts of Internet users. That couldn't be independently verified.

China rejects as nonsense that it is a hacker haven. "The government has never supported or been involved in cyber attacks, and it will never do so," Peng Bo, an official with the State Council Information Office's Internet Bureau, told state media in mid-February. "In fact, China is the country worst hit by worldwide hackers."

Investigators probing the Google matter still don't know where it began but have been examining whether computers at China's Shanghai Jiaotong University and Lanxiang Vocational School in Shandong Province were involved in the attacks, according to a person briefed on the matter. The New York Times reported Thursday that the attacks have been traced to computers at the two schools.

Mr. Li was released from prison in December after serving three years of a four-year term for destruction of property related to hacking. He declined a formal interview, but in a series of brief phone calls, online chats and email messages, he said he is looking for a "fresh start," perhaps as a cybersecurity specialist, a so-called "white hat." After his release from jail, Mr. Li spent a few days at his parent's red tiled three-floor house outside Wuhan. Instead, he has crisscrossed the country with his Acer laptop to visit others involved in the Panda attack. Mr. Li says he's interested in working with former co-conspirators on legitimate businesses.

Mr. Li's hacking career began in May 1999, a month before his 17th birthday, when U.S. warplanes bombed China's embassy in Belgrade. Angered by the strike, Mr. Li, who was hanging out at cybercafes in Wuhan, stopped playing computer games to become a hacker.

Mr. Li took lessons from a childhood acquaintance named Lei Lei. He learned how to control thousands of computers as zombie-slaves, or "chickens" in Chinese slang, to attack Websites, Mr. Lei said in an interview. While students in Beijing pelted the U.S. Embassy with rocks, the two skinny teenagers, from the second floor of a dimly lit Wuhan cybercafe called the "Network Club," waged their own "U.S. hacker war," disrupting 20 or 30 U.S. Websites, according to Mr. Lei. "We were too young at the time, doing wild things," Mr. Li said by email.

Over the next few years, the two hacked as teammates, stealing money from Internet users, Mr. Lei recalls. They downloaded simple attack programs found on the Internet to break into gaming accounts to steal and then sell virtual-money credits used by players. To advance in their games, players buy special weapons and other items, which are tradeable for cash.

Mr. Lei, 27, spent a year in the same jail as Mr. Li in Hubei province on similar charges for the Panda attack and was released in 2008. Today he works for his father's manufacturing firm in Wuhan and plans to open an Internet security business. A fan of American hip-hop music, he still flouts authority, steering his luxury Toyota the wrong way down Wuhan streets during an interview to avoid traffic.

The two hackers say they sharpened their skills as part of an online hacker alliance that took its name from a Qing Dynasty insurgency group, the Small Swords Society. Mr. Li adopted the online moniker WHboy, for Wuhan.

In general, Chinese hackers don't fit the Hollywood stereotype of geeky loner-geniuses in American basements or steely smooth Russian mobsters who design and execute hits, reaping all the benefits, cybersecurity experts say. On the contrary, China's hacker community is a widely dispersed, fragmented chain of digital craftsmen. In Chinese, hackers are known as "heike," or black guests.

"As for Chinese hackers, their overall technological skill isn't as good as American or Russian hackers," Mr. Li said in an email, answering questions from the Wall Street Journal. "However, China has the biggest population of hackers in the world." Noting his own communication with foreign hackers, he added, "I often downloaded hacker software from their sites to compare them with programs I wrote or other Chinese hackers wrote."

In China's hacking community, each person does a specific job and, rather than working for a big score, gets paid piecemeal by selling his work, cybersecurity experts say. The programmer of malicious programs usually assembles his program, as Mr. Li did, with lines of computer code he bought elsewhere. The operation works like an assembly line: The programmer then makes customers of others who pay to undertake the broader attack, spreading the malicious software, triggering it and sharing the payoff.

"The chain business is uniquely Chinese," says a Chinese security expert for a major U.S. technology company in Shanghai. Hacker conspiracies in China are structured like multi-level sales networks and even pyramid schemes, he said, not tight-knit criminal gangs that write "technically clean" code designed from the ground up.

Like most Chinese hackers, Mr. Li says he was nurtured inside the informal but active network of online chat rooms where technology break-ins are plotted. According to hackers and Internet security people, such forums are little more than criminal training schools and hardware stores, a cyber underworld where the locks on technological secrets that power online games, bank Websites and Apple Inc.'s iPhone undergo brutal stress tests from the world's largest Internet population.

To sidestep laws against selling malicious software, programmers euphemistically advertise their hacks as "training" and "tutoring," hackers say. Would-be distributors tout themselves as "mail senders," while "script kiddies," keen to build an underworld reputation, will buy hacker tools and pull the trigger.

Anyone along the chain can tweak a virus, for instance, so it attacks another target or trolls for different data. The bounty, benignly called "envelopes," is for sale too: source codes to mimic existing Websites sell priced at 50 yuan, about $7, and data from their users go for 500 yuan. Forum owners and participants mask their identities. The chief barrier to participation is the Chinese language.

Hacker "crowd sourcing"—when large numbers of people contribute to writing code and executing it—reduces the risks individuals face and leaves the network intact if someone does get caught or a forum is shut, Internet security experts say.

By October 2006, looking to filch from several types of online accounts at once, Mr. Li turned to these forums, hoping to steal enough money to buy a Land Rover, he recalled in an email sent to the Wall Street Journal.

Using a Dell computer in a rented apartment in central Wuhan, Mr. Li designed his panda worm, now formally known as W32.Fujacks, to deliver a package of software to Internet users that would steal virtual-money credits and other items from 10 different sources like online game sites. The software exploited poorly protected firewalls to infect virtually any computer connected to the Internet.

Mr. Li fished these hacker forums for usable lines of code, settling on script for a worm called Nimaya. For feedback, in the hacker equivalent of a professional peer review, he dropped samples of his own work into bulletin boards like delphibbs.com, according to Mr. Lei. Hacking "can't have made such fast progress and be here today without innovation, sharing and exchanging of technologies," Mr. Li said by email.

Weeks later, Mr. Li branded his tens of thousands of lines of code with an icon stolen from a chatting website called QQ: a black-and-white panda gripping three incense sticks. He offered the tool that siphoned money out of sites for sale, initially tapping 10 distributors who he charged about $120 each.

With "astonishing frequency," according to Symantec, the panda replicated itself by the millions. For some recipients, it was a reminder of a bug dubbed "ILOVEYOU" that had spread from the Philippines six years earlier. But the panda added a malicious feature: hackers could deploy its "backdoor" to grab virtual money from popular online games, including those run by Tencent Inc. A spokeswoman for Tencent said many companies were affected and declined to comment on the Panda case.

Mr. Lei recalls the two spent every waking moment trying to resell their virtual trove. They fenced it at 10% discounts to face value to online buyers, "like on Ebay," Mr. Lei said. How much the scam brought in isn't known, but Mr. Lei says they could earn $1,200 some days. They partied and Mr. Li bought a $2,000 computer but otherwise Mr. Lei says they didn't spend their winnings much.

Soon Chinese Internet users, including government agencies, were decrying the "poisonous panda." Modified or copycat versions of the panda started doing other kinds of damage: turning screens blue, slowing computer speeds, crashing systems and erasing programs.

By early 2007, the two realized the Panda was "out of control" and set plans to flee to western China. By then, police had tracked the Panda to the $72-per-month apartment in Wuhan rented by Messrs. Li and Lei. Only Mr. Li was home when they swooped in on Feb. 3.

Mr. Li appeared in court handcuffed with a newly shaved head and was convicted of destroying property and stealing $18,000.

Mr. Lei was caught later. Police arrested others in Zhejiang, Yunnan and Shandong provinces for their involvement in the Panda attack, some of whom were jailed as well. Many others were never identified, including people who spurred the Panda's spread and profited from it.

As Mr. Li began his four-year sentence, state media pictured him behind bars in a yellow jumper using a prison computer to exterminate his panda virus. (It didn't work. Last November, McAfee Inc., the Internet security firm, warned fresh strains of the panda bug were spreading.)

In December, Mr. Li was released early for good behavior. His first call was to Mr. Lei.

To his fast-expanding 17,000 following on a Twitter-like service, Mr. Li issued a cryptic message about what he planned for the future: "Bread will come. Milk will come. Everything can be restarted all over again."

Hack Attacks and Technical Snafus at Facebook and Twitter

NEW YORK (AP) - Facebook users have been complaining about problems at the social media site.

Users in the U.S. and other countries reported problems beginning Saturday morning. Some could not log in, and the site was unusually slow and glitchy for others. Users in London, Bangkok and Mexico City reported problems. Many used Twitter to complain.

Facebook spokesman Matt Hicks said it was a "small percentage of users" who had problems accessing Facebook, their friends' profiles or specific site features because of an isolated server problem.

At 6 p.m. Saturday, Facebook said it had restored access to the users who were having access problems.

Facebook, which has more than 100 million users, has occasionally experienced such hiccups. Twitter has had bigger problems. Last August, hackers shut down the short messaging service for several hours. Facebook also experienced problems, though it was never shut down completely.

College Kids in China Responsible For First Successful Google Hack

Hackers attacked Google from China schools

 

SAN FRANCISCO (AP) - The Internet attacks that may end up driving Google Inc. out of China originated from two prominent schools in the country, according to a story published late Thursday.

The New York Times reported security investigators have traced the hacking to computers at Shanghai Jiaotong University and Lanxiang Vocational School in China. The newspaper attributed the information to unnamed people involved in the investigation.

Google didn't immediately respond to requests for comment.

The company revealed on Jan. 12 that digital thieves had stolen some of its computer code and tried to break into the accounts of human rights activists opposed to China's policies. The sophisticated theft also targeted the computers of more than 30 other companies, according to security experts. A security weakness in Microsoft Corp.'s Internet Explorer Web browser is believed to have created an opening for the hackers.

The digital assault was serious enough to prompt Google to confront China's government about censorship rules that weed out politically and culturally sensitive topics from search results in the country. Google says it's prepared to shut down its China-based search engine and possibly shut down all of its offices in the country unless the ruling party loosens its restrictions on free speech.

Google and the government are still discussing a possible compromise.

The threat to leave China triggered speculation that Google suspected the country's government might have been involved in the computer attacks. Google has only said it believes the attack originated from within China.

China's government has denied any involvement while continuing to insist publicly that Google must obey its restrictions against showing links deemed to be subversive or pornographic.

The National Security Agency and other specialists in digital forensics have been trying to identify the source of the attacks against Google and the other companies for weeks. The inquiry led to computers at the two schools, with some evidence suggesting the attacks may have started 10 months ago, the Times reported.

Jiaotong University boasts one of China's top computer science programs, according to the Times' story. Lanxiang is a large vocational school that trains some computer scientists for the Chinese military, the Times said.

Spokesmen for the two schools told the Times that they hadn't heard U.S. investigators had implicated them in the attacks.

NYC Judge Expresses Doubts About Google Deal

Google digital library faces outcry at NYC hearing

NEW YORK (AP) - A judge Thursday questioned whether Google and lawyers for authors and publishers went too far when they struck a deal that would let the gigantic search engine make money presiding over the world's largest digital library.

U.S. District Judge Denny Chin put lawyers who reached the $125 million settlement on the defensive as he presided over a fairness hearing in a packed Manhattan courtroom where opponents of the agreement spent several hours urging him to reject it or demand changes. He did not immediately rule.

When the lawyers who completed revisions on the deal in the fall took their turn to speak, Chin questioned why the settlement gave Google publishing rights well into the future rather than merely rectifying any harm that led authors and publishers to sue it five years ago.

"Usually it's a release of claims based on what's happened in the past. Usually you don't have a release of claims based on future conduct. Why is this case different?" Chin asked Michael J. Boni, a lawyer for authors.

Boni agreed that the case was unusual but insisted the deal was fair despite objections by Google rivals, consumer watchdogs, academic experts, literary agents and even foreign governments.

The judge said it seemed akin to a settlement in a discrimination action containing wording that says: "I'm releasing you now from discriminating against me in the future."

He also seemed to take the side of some of Google's stiffest critics, including the U.S. Department of Justice, when he noted that many of those protesting the deal would disappear if the company was required to get agreements from authors before letting their works be used.

As the deal stands, Google would be able to use so-called "orphan works" - out-of-print books whose writers' could not be located - and the works of other authors who declined to opt-out of the agreement after learning about it.

"I would surmise that Google wants the orphan books and that's what this is about," Chin said.

Boni said attempts by the litigants to notify authors had already caused 620,000 out-of-print books that some would call orphan books to be claimed by 40,000 authors. So far, Google has scanned about 10 million books.

"When there is money waiting for them, they come forward at a very high rate," he said.

Boni's remarks came after a stream of people opposing the deal each spoke for about 5 minutes, leading Boni to begin by saying: "I feel a little bit like Rocky getting beaten around the head and face for 15 rounds."

Minutes earlier, U.S. Deputy Assistant Attorney General William F. Cavanaugh took his swings, saying the Justice Department was continuing an investigation and believed the agreement might violate antitrust laws.

He said Google had used the settlement to give it rights it never negotiated for, "essentially rewriting people's contracts."

"It produces benefits to Google that Google could not achieve in the marketplace because of the existence of orphan works," Cavanaugh said.

Still, Cavanaugh said the Justice Department "recognizes and applauds the objectives of mass digitization. Our concern is that this is not the appropriate vehicle to achieve those objectives."

Attorney Daralyn J. Durie, speaking for Google Inc., which is based in Mountain View, Calif., said provisions of the deal requiring authors to opt-out if they don't want their books scanned rather than requiring Google to first get each rightholder's approval was not an issue the company could be flexible on.

"There would be no settlement. There is no other way to create a market for these out-of-print works so they can become available and so the rightholders can be located," she said.

"Microsoft abandoned their scanning project. They couldn't figure out a way to make it commercially viable," she said.

Chin at one point cited critics who say the deal gives Google too many rights and he added that it did seem to go beyond where prior law had in the past allowed cases to go.

Before the lawyers took their turn, Chin heard from about two dozen speakers, the majority asking that the settlement be changed or rejected.

"It's not going to be a great library, it's going to be a great store," said Sarah Canzoneri, a member of the Children's Book Guild and plaintiff in a lawsuit by authors and publishers.

Marc Mauer, president of the National Federation of the Blind, said the audio capabilities of Google's system "will give us access to 10 million books."

Andrew DeVore, a lawyer for folk singer Arlo Guthrie and "Pay it Forward" writer Catherine Ryan Hyde, said the library would exploit his clients with "woefully inadequate compensation" for "unknown and undisclosed uses."

The hearing put technology giants at odds: A lawyer for Sony Corp., which makes electronic book readers, said the company supports Google's effort because it would promote competition. But an attorney for Microsoft Corp. complained that it would give Google an unfair advantage.

The proposed settlement "was structured to solidify Google's dominance," said Tom Rubin, the Microsoft lawyer.

Other opponents said they were worried about Google's unchecked ability to track users' reading habits and collect data on them.

The deal "raises very serious privacy concerns," said John Morris, an attorney for the Center for Democracy & Technology.

France and Germany, which oppose the settlement, noted they support a European book-scanning project, Europeana, because it is in compliance with their laws and requires permission from copyright holders before books are scanned.

Irene Pakuscher, speaking for the government of Germany, said Germany "strenuously supports the creation of digital libraries" but said the settlement should be limited to U.S. authors and publishers.

Cynthia Arato, a lawyer for the New Zealand Society of Authors, said opposition to the settlement was so strong in European countries that its approval would place severe diplomatic stress on the United States and lead to calls for trade sanctions.

She said its approval would be "virtually certain to become the most controversial class action settlement ever to emanate from the United States."

David Nimmer, a lawyer for Amazon.com Inc., told Chin the agreement allowed "full scale commercial exploitation with essentially no restraint whatsoever."

He added: "It turns copyright law on its head."

Durie said Google disputed the notion.

"This does not turn copyright law on its head," she said. "We firmly believe that it constitutes fair use and is permissible under copyright law."

She said there was no "present danger that Google will monopolize the market for e-books" because the company currently had no market. She said competitors were trying to keep the company out of the market.

Durie said fewer than 10 million books of 174 million books in the world would be affected by the settlement, about 5 million of which were out-of-print works.

She said the settlement provides a mechanism to access out-of-print books.

"One way to get something is certainly better than no way to get them at all. One distribution channel is a lot better than none," she said.

Corporations, Agencies Infiltrated by Botnet

AP

SAN FRANCISCO (AP) - Security experts have found a network of 74,000 virus-infected computers that stole information from inside corporations and government agencies. The unusual thing about the incident is not that it happened but that it was discovered, and it is a reminder of the dangers of having computers with sensitive data connected to the open Internet.

More than 2,400 organizations, including financial institutions and energy companies and federal agencies, were infiltrated by the "botnet," according to the NetWitness Corp. security firm, which discovered it.

NetWitness didn't name the companies or agencies whose computers were compromised. The Wall Street Journal said the affected companies included Merck & Co., Cardinal Health Inc., Paramount Pictures and Juniper Networks Inc. Merck and Cardinal Health said in statements Thursday that one computer in each company was among those in the botnet but no sensitive information was taken. The other two companies didn't return messages from The Associated Press seeking comment Thursday.

The victims don't appear to have been specifically targeted, unlike the recent computer attacks on Google Inc. that prompted the Internet search leader to threaten to pull its business out of China. That's an important distinction, because it shows how online secrets can fall into the wrong hands even when criminals aren't necessarily looking for them.

"This kind of stuff is out there and it's pervasive," said Amit Yoran, CEO of NetWitness and former cybersecurity chief at the U.S. Department of Homeland Security. Parts of the botnet discovered by his firm likely are still active. He said the network appears to be run from computers in Eastern Europe and China, but it's not certain the perpetrators are there.

Botnets are networks of poisoned PCs that are remotely controlled by hackers and behave like their criminal robots. The PCs are often infected when their owners visit bad Web sites or open malicious e-mail attachments.

Botnets are a major tool for cybercrime. They help criminals amass troves of stolen data that they can sell on the black market or use for their own schemes, such as yanking money from victims' bank accounts.

The biggest on record is the one created by the Conficker worm. That infected anywhere from 3 million to 12 million PCs running Microsoft Corp.'s Windows operating system and is still active.

The botnet NetWitness discovered used malicious software called "ZeuS" that steals passwords and other online credentials. It's primarily focused on poaching Internet banking credentials and is well known in the security community.

The fact that so many companies and government agencies were hit generally appears to have been incidental. Yoran said the attackers were targeting specific information rather than specific organizations.

Still, they were very successful, snatching more than 68,000 credentials over four weeks. Most of those credentials were login details for Facebook and Yahoo and other personal e-mail services. On the face of it those aren't the most sensitive pieces of information, but they can hold the keys to unlocking other types of online accounts and private data.

Security experts who weren't part of the NetWitness report said the findings illustrate the growing risk from the ZeuS software, whose authors are constantly updating it to evade detection by antivirus software and other security measures.

Don Jackson, researcher with the Counter Threat Unit of SecureWorks, said millions of computers are infected with ZeuS. Perhaps half a million of those are being milked by professional operators running the latest versions of the software.

He said the botnet NetWitness found was a "major threat" but added that the criminals behind it appeared to be using an older version of the software that is easier to detect.

"There are dozens of these types of operations ongoing every day that just aren't named," he said.

A bigger concern, Jackson said, is a new version of ZeuS that has appeared in the last few months and is more powerful and even harder to detect.

One of its features is that it gives a hacker the ability to conduct financial transactions directly from a compromised computer. Otherwise the criminal would have to steal the login credentials and use them on another computer. Some banks have put up extra security measures to detect and stop that.

Microsoft Risks Margins as Office Unit Fights Google 

Bloomberg News

Microsoft Corp. President Stephen Elop is preparing for the biggest shakeup to the $19 billion Office business in a decade as the company races Google Inc. to sell Internet-based programs.

Two years into his career as head of Microsoft’s business software unit, Elop says cloud computing and social-networking sites have created a “constructive disruption” that could be more of an opportunity than a threat. Office 2010, due by June, will include a free Web-based version for the first time, matching similar software from Google. Future updates may add Twitter-like functions that allow users to post short messages.

The dilemma for Elop, 46, is how to embrace Web-based software while protecting his unit’s 64 percent profit margin. Under the cloud-computing model, Microsoft would store Office programs on its own servers and deliver them to customers online, which costs the company more than supplying software installed on computers. Elop says the shift will mean businesses actually end up spending more money with Microsoft.

“In that cloud environment, we are not only selling them software but we are also saying, ‘We’ll take care of your networking, your hardware your operations, your customer support,’” Elop said in an interview. “We’re doing much more work for the customer. What that does is increases revenue and allows us to participate in more profit.”

Elop’s Office unit is Microsoft’s biggest business, accounting for a third of the company’s $58.4 billion in sales last fiscal year. The shift to Internet-based versions of Office may cut margins by 5 to 10 percentage points, said Matt Rosoff, an analyst at Directions on Microsoft in Kirkland, Washington.

‘Have to Do Something’

“Elop’s challenge is to move carefully and not undercut the traditional software business,” Rosoff said. “You don’t want to give everybody free Office over the Web because that jeopardizes a highly profitable business, but you have to do something.”

Microsoft rose 24 cents to $28.59 at 4 p.m. New York time on the Nasdaq Stock Market. After gaining 57 percent last year, the shares have lost 6.2 percent in 2010.

Microsoft’s Office division, which dominates the word- processing, spreadsheet and presentation management software market, reported a 2.8 percent drop in revenue last quarter, with sales to businesses falling 6 percent. Consumer revenue rose 12 percent -- a slower pace than personal-computer sales, the Redmond, Washington-based company said.

Free Version

Microsoft is projecting that consumer and small-business sales will pick up with the release of Office 2010. The program will offer Web features, such as the ability to collaborate and share documents over the Internet. There also will be a free version included on some PCs and a student offer that’s two- thirds the price of the current product, which starts at $149.

That will attract consumers who might otherwise be reluctant to upgrade, Elop said. A record 4.5 million people have downloaded a test version of Office 2010, said Chris Capossela, a senior vice president who works for Elop.

The U.S. Olympic Committee used Office 2010’s SharePoint program to set up a Web site for reporters covering the Winter Games in Vancouver, allowing them to access the latest information on hometown athletes and follow their Twitter feeds.

Dell Inc. plans to install the new Office on at least 25,000 of its employees’ computers by year-end. It will rely on the software to help engineers and sales teams share notes and collaborate on projects over the Web, said Tom Piegat, a manager in Round Rock, Texas-based Dell’s information-technology department. Microsoft is taking the right steps to let employees work, save and share on the Internet, he said.

‘Jury Is Still Out’

“Whether that promise gets completely fulfilled with Office 2010, I’m not sure about that -- the jury is still out,” Piegat said. “But the building blocks are there.”

Office’s Web-based features are unlikely to generate significant additional revenue for the next few years and investors may not like the narrowing profit margins that result, said Heather Bellini, an analyst at ISI Group in New York.

“It’s a market they need to be involved in -- if that’s the way the industry is going, you don’t want customers to rip out Microsoft and go to a Google solution,” Bellini said. “But I question whether we’ll be able to have a company where the stock will go up even though margins are going down.”

Margins Shrink

Microsoft is selling more of its software as a service, which may hurt profit margins, said Bellini, who hasn’t yet calculated by how much. Besides the Web-based Office project, the company started charging this year for its Azure cloud- computing services, which store and run programs on behalf of customers.

Gross margin, the percentage of sales remaining after the cost of making the product, was 79 percent in the fiscal year that ended June 30. Ten years earlier, it was 86 percent, according to data compiled by Bloomberg.

Elop is playing catch-up in cloud software. Companies like Google and Salesforce.com Inc. have more experience with Web- based programs. Even so, Microsoft has an edge over Google in selling to large companies, Rosoff said.

Google, based in Mountain View, California, offers Internet-based word-processing and spreadsheet programs for free to consumers. It charges $50 a year per user for businesses.

“We welcome Microsoft’s movement to the cloud,” Google said in a statement. “Choice is good for users, and their direction further validates that the future of computing is in the cloud.”

In October, the Los Angeles City Council voted to have Google manage e-mail for city workers. Rexel SA, the world’s largest distributor of electrical equipment, also considered using Google -- until Microsoft cut the price of its e-mail software by 30 percent.

‘Pushing the Envelope’

“That’s going to be the challenge for Elop,” said David Smith, an analyst at Gartner Inc. in Stamford, Connecticut. “He is going to be competing more and more with things that are free or lower cost.”

Sales of cloud-computing services worldwide rose an estimated 21 percent to $56.3 billion last year, according to Gartner. By 2013, that number will hit $150.1 billion. The shift is of the same magnitude as the move to graphical computer software and the advent of the Internet, Elop said.

Elop, who was chief executive officer at Web-video pioneer Macromedia Inc., has experience building successful businesses out of Internet programs. At Macromedia, he helped make Dreamweaver the top Web-page authoring program, edging out Microsoft’s FrontPage. Macromedia also developed Flash, the Internet’s most popular video and animation software.

Elop said Microsoft CEO Steve Ballmer hired him in part because he had competed with the company for most of his life. Now that he’s at Microsoft, he’s championing the idea of making software that’s more compatible with rival products.

Rival Browsers

Elop wants to make sure that Office’s Web applications work on Mozilla Corp.’s Firefox and Apple Inc.’s Safari browsers, as well as Microsoft’s own Internet Explorer, Capossela said.

Elop’s interest in competing products impressed Capossela, who interviewed him for his current job without realizing he was screening his own boss. Elop walked into the Sunday morning interview at the Woodmark Hotel in Kirkland, Washington, with an iPhone, BlackBerry and Windows Mobile phone holstered to his belt, Capossela said. He pulled out each one to talk about them. Elop discussed his experience installing Microsoft’s Windows Vista on an Apple Macintosh computer.

He arrived as an outsider at the company, at a time when all the other product units were led by executives who had been at Microsoft more than a decade. Elop spent his initial few months listening to a team he inherited from 27-year Microsoft veteran Jeff Raikes, Capossela said. After about a year, Elop started talking about changing Microsoft’s approach to the market.

“He did a good job of articulating that we needed to be leaders in this disruption even though that can be scary,” Capossela said. “We can either worry about a disruption happening to us or we can do it in a way that’s constructive.”

Hackers Find New Paths Through Facebook And Social Media
Reuters

A new type of computer virus is known to have breached almost 75,000 computers in 2,500 organizations around the world, including user accounts of popular social network websites, according Internet security firm NetWitness.

The latest virus -- known as "Kneber botnet" -- gathers login credentials to online financial systems, social networking sites and email systems from infested computers and reports the information back to hackers, NetWitness said in a statement.

A botnet is an army of infected computers that hackers can control from a central machine."

The company said the attack was first discovered in January during a routine deployment of NetWitness software.

Further investigation by the Herndon, Virginia-based software security firm revealed that many commercial and government systems were compromised, including 68,000 corporate login credentials and access to email systems, online banking sites, Yahoo, Hotmail and social networks such as Facebook.

"Conventional malware protection and signature-based intrusion detection systems are, by definition, inadequate for addressing Kneber or most other advanced threats," Chief Executive Amit Yoran said in a statement.

Facebook and Social Media Hype Spinning Out Of Control

Don’t Believe The Hype on Social Media

A new article in the San Francisco Chronicle claims that Facebook is directing more web traffic than Google. 

We think this is sheer brazen hogwash. 

Social Media PR Machine

Hordes of PR pieces are being scattershot all over the web in an effort to convince us that if we have a website, then we MUST get involved in social media or we're missing the big boat. Don't bet on it! 

Headlines Like:  Facebook Driving More Web Traffic Than Google Are False
On its own merits, this claim is outrageous. And if you stop to consider the entire Google package: Google Search, Google News, Google Maps, YouTube, Blogger, and the brand new Google Buzz (Google's own social networking site), it should be mathematically evident that Facebook is not in the same league when it comes to driving traffic to websites.

Social Media Has Its Place in Promoting and Extending Brand Awareness 

By all means, if you have a website and a product or service to offer, you should make yourself a Facebook page, create a Twitter presence, maybe even try the new Buzz. But do not be fooled into emptying your wallet and investing a lot of your time on these sites. They're fun and addictive but, so far, the numbers do not necessarily add up to a good ROI.

Social Media Is Still Not the Primary Driver of Website Traffic
As of March 2009, Google was averaging nearly 300 Million direct searches per day. Currently, Facebook has only 100 Million total users!
 

Clearly, organic search is still the number one way users get connected to websites, and the way to get them to your site is through content development and content support through such mediums as video and blogging.

Here is the SF Chronicle article we mentioned at the top. Take it with a grain of salt:
 

Facebook directs more online users than Google
San Francisco Chronicle 

A big part of the Facebook experience is how friends and family share Web links to interesting news stories, photos, videos and Internet sites.

This "friend-casting" of information has helped propel Facebook into a major force in directing traffic around the Web.

According to Web measurement firm Compete Inc., Facebook has passed search-engine giant Google to become the top source for traffic to major portals like Yahoo and MSN, and is among the leaders for other types of sites.

This trend is shifting the way Web site operators approach online marketing, even as Google takes steps to move into the social-media world.

Some experts say social media could become the Internet's next search engine.

"People are spending less time navigating the Internet on their own and are now navigating the Internet based on their friends' recommendations or their friends' activities," said Dave Yovanno, chief executive of Gigya Inc., a Palo Alto firm that offers social-media services. "That's one of the big trends we started picking up on probably four or five months ago."

For years, Web content creators had to worry whether they had the proper level of search-engine optimization to make sure search engines listed them among the top results. Now, they have to consider what companies like Gigya offer - social-media optimization.

"Marketers must focus on social marketing in addition to traditional search, as customers have a multi-pronged way of finding information," said Jeremiah Owyang, a Web strategist for the Altimeter Group, a San Mateo consulting firm with clients like Gigya. "The clear-cut channels of yesteryear are now an intricate set of connections."

Using a snapshot of Web traffic from December, Compete's director of online media and search, Jessica Ong, found that 15 percent of traffic to major Web portals like Yahoo, MSN and AOL came from Facebook and MySpace. The lion's share of that traffic, 13 percent came from Facebook.

Google, which has profited handsomely from directing Web surfers to their destinations during the past decade, was third with 7 percent, just behind e-commerce site eBay, which had 7.61 percent. MySpace was fourth with just under 2 percent.
 

Surprise gain

The numbers proved eye-opening because Google used to dominate most Web-referral categories. "I was surprised to see Facebook has become No. 1," Ong said.

In other categories, Compete's data showed Mountain View's Google still on top, but Palo Alto's Facebook was not far behind. For example, Google accounted for 21.3 percent of referrals to sites catering to movie fans, but Facebook was second with 12.4 percent. And in a video category, Google - which owns YouTube - was first with 22.9 percent, but Facebook was next at 12.7 percent.

Facebook's meteoric growth as a Web destination was a factor. Facebook says it has 400 million active members, including about 225 million added in just the past 12 months. Its size now rivals that of major Web portals and its demographics mirror those of the Internet in general, Ong said.

"Putting all this information together, we can say that Facebook has become an integral part of the consumer Web experience, similar to how portals like Yahoo and MSN are part of most consumers' online sessions," Ong said. "So the message for the advertising industry is that more serious attention needs to be paid to social-networking sites like Facebook, and advertisers need to figure out how to leverage this traffic."
 

TurboTax gamble

One of Gigya's clients is financial software maker Intuit Inc. Seth Greenberg, Intuit's director of national media and digital marketing, said the company is betting on social media to draw customers to its TurboTax Web site this year. The tax preparation program generates about $1 billion in revenue in the 10 t0 15 weeks leading to April 15.

Half of TurboTax's 20 million users are on Facebook and each has an average of 150 friends. Intuit is using social media to generate more buzz about the program through the sharing of product reviews and answers to tax preparation questions.

Greenberg coined the phrase "friend-casting" to describe how Intuit is using social media.

"We actually want our customers to be our best sales force, not us," Greenberg said. "Enabling our 20 million-customer base to be a word-of-mouth army for us is much more interesting."
Strong influence

Although methods such as paid search, Web display ads and TV commercials still reach a larger audience, the "influence" tapped in social media "is a heck of a lot stronger than it is with traditional advertising," he said.

David Berkowitz, director of emerging media and client strategy for the digital marketing firm 360i of New York, said the importance of search engines isn't going away.

"But there's always been one downside to search," he said. "Consumers only spend about 5 percent of their time online searching and the other 95 percent of the time at the destination. Social media is quickly accounting for a large percentage of that 95 percent. Google's biggest acquisitions, DoubleClick and YouTube, have been all about playing a big role in the rest of consumers' Web usage."

He noted that last week Google purchased San Francisco's Aardvark, a social-media search engine for questions and answers, and then unveiled Google Buzz, which allows Gmail users to post updates, videos, photos and links, Facebook-style.

"Mobile will be another new source for search, and some of that will be incremental rather than cannibalistic," he said.

"But social media's just finding its feet and the business models are just starting to emerge. And they're evolving quickly."

Google Admits Buzz Testing Sucked and They are 'Very Very Sorry'

Gizmodo

Are Larry and Sergey Buzzed?

Google has admitted that their Buzz testing process was equivalent to mine: Click enable, then disable it ninety seconds later. They said to the BBC that their testing sucked donkey balls, which is why many people hate it. The excuse:

    We're very early in this space. This was one of our first big attempts. We've been testing Buzz internally at Google for a while. Of course, getting feedback from 20,000 Googlers isn't quite the same as letting Gmail users play with Buzz in the wild. If it becomes clear that people don't think we've done enough, we'll make more changes.

That's what Todd Jackson, Buzz product manager, told BBC News. Google only tested this thing internally, and didn't put the service through the Google Trusted Tester program, like they have done with other services in the past. He also admitted that tens of millions of Buzz users were "rightfully upset" and that Google was "very, very sorry." Todd's right, but I don't think all those "tens of millions of Buzz" ex-users would care about the too late apologies. They do care about the privacy problems and the inbox spamming.

Would these users give Google another chance? I doubt it would be soon. And, personally, I doubt there's enough interest for yet another Facebookish Tumblred Twitting clusterfuckassered online service.

Microsoft to pull Facebook, MySpace into Outlook

Office Productivity Meet Outlook "Time Suck"

SEATTLE (AP) - Microsoft Corp. is taking another step toward turning Outlook, its desktop e-mail program, into a hub for information from popular social networking sites such as Facebook and MySpace.

On Wednesday, Microsoft is releasing a "beta" test version of the Outlook Social Connector. The add-on software, which was first discussed last November, adds a new pane to the main e-mail reading screen on Outlook. When a user clicks to read an e-mail message, the new pane fills up with the sender's most recent social-networking activities. Those could include the addition of a professional contact on LinkedIn or a "what I'm doing now" status update from Facebook.

Microsoft has a mixed record when it comes to Web trends. The company's free Hotmail and Windows Live Messenger programs are widely used, but its Windows Live blog/social network didn't pick up much steam in the face of competition from Facebook. In this case, a small startup called Xobni has already built an Outlook add-on that combines inbox search with content from Facebook, LinkedIn and others.

Microsoft's new software also treats Outlook itself as a social network. If the e-mail sender and recipient are jointly working on a document stored on a company's Sharepoint server, both will see updates if one logs on to make edits.

For now, the new software doesn't let people use Outlook to push information back up to LinkedIn, Facebook or other sites.

People using Office 2003, 2007 and beta versions of Office 2010 can download the updated Outlook Social Connector beta Wednesday. LinkedIn, which is primarily used for business networking online, is the first company to make its add-in software available. It can be downloaded from LinkedIn.com.

Microsoft said the Facebook and MySpace plug-ins will be ready for download by the time Office 2010 goes on sale in June.

Will Kennedy, a corporate vice president for the Office group, said some of Microsoft's business customers have expressed concern that employees will become less productive if they have all this extra information at their fingertips.

But Kennedy sees business-friendly uses for the Social Connector. He thinks it could speed up processes that require a string of people to sign off, because each person in that chain could see when it's time for him or her to weigh in.

"We don't want this to sort of be the next great time waster in the workplace," he said.

Privacy Group Files FTC Complaint Against Google Buzz
AP

A privacy watchdog group complained to federal regulators on Tuesday about Google's new Buzz social networking service, saying it violates federal consumer protection law.

The Electronic Privacy Information Center filed its complaint with the Federal Trade Commission just days after Google Inc. altered the service to address mounting privacy concerns.

Since launching Google Buzz as part of Gmail a week ago, the search company has come under fire for automatically creating public circles of friends for users based on their most frequent Gmail contacts. Over the weekend, Google altered the service to merely suggest contacts for its users' social networks.

Despite the changes, EPIC argues that privacy violations remain because Google automatically signs up Gmail users for Buzz, rather than waiting for them to do so themselves, or "opt in" for the service. EPIC wants the FTC to require Google to make Buzz a "fully opt-in" service. It also wants the company barred from using Gmail address book contacts to compile social networking lists.

"This is a significant breach of consumers' expectations of privacy," EPIC Executive Director Marc Rotenberg said in a statement. "Google should not be allowed to push users' personal information into a social network they never requested."

But Google insists that it gives users control because, even though it adds a "Buzz" link to all Gmail accounts, users must click on the link and agree to activate the service. Google also gives users the option to disable Buzz.

In response to the EPIC complaint, Google said it has already made some changes to Buzz based on user feedback and has "more improvements in the works."

"We look forward to hearing more suggestions and will continue to improve the Buzz experience with user transparency and control top of mind," the company said.

Aiming for a Comeback: Microsoft Plays Show and Tell With Phone Software

USA Today

NEW YORK — Microsoft is expected to announce a major revamp of its phone software Monday, in an attempt to regain momentum in a crucial market where it has been overshadowed.

CEO Steve Ballmer will be speaking at Mobile World Congress in Barcelona, Spain, the world's largest cellphone trade show, and analysts expect him to reveal Windows Mobile 7. The software could be in phones by late this year.

The new software comes as Microsoft, dominant when smart phones were young, has taken a back seat to Research in Motion's BlackBerrys among corporate users and Apple.'s iPhone among consumers.

"They seem to have lost the world's attention in smart phones," said Dan Hays, who specializes in telecommunications at management consulting firm PRTM.

The new software is expected to be more consumer-focused than previous versions, with a simplified user interface, which could be borrowed in part from Microsoft's well-reviewed — but low-selling — Zune HD media player.

"If that thing had a phone in it ... that would be a pretty darn good device," said Charles Golvin, analyst with Forrester Research.

"But my own judgment is that this is kind of their last chance," Golvin said. "If Windows Mobile doesn't get it right this time around, they're probably toast."

Microsoft is famous, Golvin said, for sticking to its projects, version after version. But developments in smart phones are coming so fast that tenacity alone won't help. RIM and Apple are already squeezing Microsoft out, and in the last year, Google Inc. has emerged as a major player with its Android software.

Microsoft has said it would not comment in advance of Monday's event.

Windows phones accounted for 9% of smart phones sold worldwide last year, according to research firm In-Stat. That was down from 13.2% in 2008.

Much is at stake in the battle for smart phone dominance. Phones steer their users to potentially lucrative Web services and ads. Software developers write their applications first for the largest base of phones, making those phones even more attractive.

As it's trying to regain its footing, Microsoft also finds itself in the odd position of charging for something that others give away. Both Android and Symbian, used on Nokia's smart phones, are free for any manufacturer to use and modify as they see fit. Both Google and Nokia hope this will spur adoption and steer phone users to their services.

Having to compete against a free product hasn't hurt Microsoft on PCs, where free Linux software has made few inroads against Windows. But phones are a different game, because they're less dependent on being compatible with other Microsoft products such as Office software, or with peripherals like printers that may connect only with Windows.

However, the cost of the software makes up a relatively small part of the cost of a phone, said In-Stat analyst Allen Nogee, and manufacturers are likely willing to swallow the cost if the benefits are worth it.

Ballmer went to Barcelona a year ago to show off the previous software update, Windows Mobile 6.5. The first phones landed in October, to little acclaim.

"Microsoft always tries to make a big splash at Mobile World Congress," Hays said, "and they never do."

Yet Again, Google Revises Buzz Privacy Settings

USA Today

Google on Saturday again revised privacy settings of Buzz, the new social network it has piggy- backed onto tens of millions of existing Gmail accounts.

It was the second major revision in 72 hours. The search giant has been scrambling all week to quell backlash from Gmail users upset about how Google has introduced the new service and how Buzz taps into their Gmail contacts list.

Buzz lets Gmail subscribers create profiles, like Facebook, and send Internet-wide blog postings, like Twitter. One issue of concern is a feature called "auto follow" that automatically sets up people you e-mail and chat with the most as followers of your Buzz postings.

Google launched Buzz on Tuesday with auto follow enabled by default. Disabling it required several steps. On Thursday, Google announced it would revise that feature by displaying a pre-checked box, followed by two lines of text describing the auto follow function and allowing first time users to disable it by unchecking the box.

On Saturday afternoon, Google announced another revision. It said first time users will be presented with a series of pre-checked boxes, each showing a photo and name of a specific person Google suggests the user follows, chosen from those they e-mail and chat with "the most," says company spokeswoman Victoria Katsarou.

Users will not be able to use Buzz unless they make some choices at that point: affirm the full list, disable the entire list, or select specific individuals from the list to follow. "We're prompting you to make the decision to say 'Yes, we want to follow these people,'" says Katsarou.

She said the new revision, dubbed "auto-suggest," will go live "in the next couple of days."

Some critics have been calling for Google to go a step further and assume Gmail users do not want Buzz's auto follow feature enabled unless they specifically request it. Nicholas Carlson, senior editor at Silicon Alley Insider, says this could easily be done by leaving the boxes unchecked. Users would retain the privilege to "opt in" by checking boxes.

Beyond the auto follow feature, Buzz's tight integration with Gmail and other free Google online services has raised a storm of complaints on blogs and social networks. Some users have complained about their lists of contacts being spread too widely without their permission, introducing the potential to disrupt business and personal confidences.

In its blog post Saturday, Google acknowledged the problems.

"We quickly realized that we didn't get everything quite right," wrote Todd Jackson, Google's product manager for Gmail and Buzz. "We're very sorry for the concern we've caused and have been working hard ever since to improve things based on your feedback. We'll continue to do so."

Computer Hacker to Repay $27.5M, Sentenced to Prison for Credit ScamUSA Today

PITTSBURGH — A San Francisco man who had more than 1.8 million stolen bank and credit card numbers on his home computers was sentenced Friday to 13 years in federal prison and ordered to repay $27.5 million to the banks and credit card companies he victimized.

Max Ray Vision, who legally changed his last name from Butler, had pleaded guilty in June to his role in an online clearinghouse where identity thieves shared stolen information.

A self-taught computer whiz who fell in love with the devices as an 8-year-old boy in his father's computer store, Vision told Senior U.S. District Judge Maurice B. Cohill Jr. that he was mesmerized by "the thrill of hacking, being addicted to it."

Bespectacled, soft-spoken and articulate, the 37-year-old Vision told the judge he had changed and realizes what he did was wrong.

"You probably hear that a lot, but it's absolutely true," he said.

Cohill's sentence was based on a joint recommendation by federal prosecutors and Vision's public defender, Michael Novara. Federal sentencing guidelines suggested a sentence of 30 years to life, which Novara called "ludicrous."

Still, Assistant U.S. Attorney Luke Dembosky said serious punishment was merited because of the scale of Vision's crimes. Dembosky agreed to the lesser sentence because Vision has continued to work with the government under terms that remain sealed.

All Dembosky would say is, "It could relate to a whole range of things."

Before his arrest in 2007, Vision had developed software to prevent hacking and had even worked as a volunteer who helped the FBI understand and prevent cyber crimes.

Dembosky agreed that Vision wasn't mean-spirited, but was more "wide-eyed" and "curious" about what he could accomplish behind a keyboard.

"Unfortunately, that curiosity took a dark turn and that's why we're here today," Dembosky said. "The amount of damage a person can cause with a keyboard in this day and age is astronomical."

Visa, MasterCard, American Express and Discover tracked more than $86 million in fraudulent purchases to the account numbers found on Vision's computers. In all, 10,000 financial institutions were victimized, Dembosky said.

Vision was charged in Pittsburgh because he sold more than 100 credit card numbers and related information to a western Pennsylvania resident who cooperated with the investigation of a website called cardersmarket.com. About 4,500 people worldwide could trade or access stolen credit information on the website from 2005 until it was shut down in 2007.

Vision has been in custody since authorities raided his apartment in September 2007.

Although authorities found 1.8 million stolen credit card numbers on his computers, they said they were confident that Vision had obtained 1.1 million directly, Dembosky said. The others might have come from other sources.

Vision's $27.5 million restitution was calculated by multiplying the 1.1 million by the roughly $25 it costs banks and credit card companies to replace each stolen credit card number, Dembosky said.

"No one should think that's the amount of money Max gained as a result of this misadventure," said Novara, who claims Vision likely netted less than $1 million from selling the numbers.

"I think we're all trying to figure out, how did we get here?" Novara said.

Summary: Google Continues Book Battle with DOJ

AP

WHO'S SMARTER?: Google Inc. believes it can convince a federal judge that it has a better grasp on antitrust and copyright law than the U.S. Department of Justice.

WHAT'S AT STAKE: The Internet search leader is seeking the digital rights to millions of hard-to-find books to make them more accessible. It has reached a settlement with publishers, but the Justice Department and others object.

THE DECISION MAKER: U.S. District Judge Denny Chin in New York.

WHAT'S NEXT: Chin is scheduled to hear arguments Feb. 18.

Yahoo Talks Tough About the Search Business

BBC News

Web giant Yahoo said it is still in the search game despite falling market share in a business it helped create.

The company held a press event to address what it called misconceptions that exist about its search efforts.

Yahoo said a deal to let Microsoft's Bing power searches on its sites might have led many to think Yahoo had abandoned one of its core businesses.

"Yahoo has been in search, is in search and will continue to be in search," said Yahoo's search boss Shashi Seth.

"That is the stake we have put in the ground. We will continue to show innovation and drive lots of great features and products into the marketplace and wow our users," said Mr Seth who took up his post just three weeks ago.

The partnership with Microsoft is still going through the regulatory process but is expected to be finalised in the next few months.

Many bloggers said at the time that the deal signalled Yahoo's departure from search.

Mr Seth admitted to the BBC the view of Yahoo changed as a result.

"I wouldn't say it killed us but it did make a dent. It is going to be a really tough job going forward but I think we are well equipped to do well in that space."

'Web of things'

During the SearchSpeak presentation at its California headquarters, a series of Yahoo executives defended the company's commitment to search, and unveiled a number of products it said will solidify its position in the market.

The features under development were all aimed at producing what Yahoo described as "the next generation of search".

These included a way to look for restaurants on a smartphone using a finger to draw a circle on a map.

Another example included shortcuts to organise related content and a variety of information without having to type in the search bar. Images of albums, audio clips and videos were shown alongside results for the rock band U2.

For nearly a year the company has been categorising information and pulling it together so that queries for things get more than just a list of blue links as the return.

Yahoo called it the "web of things".

"It includes everything in your everyday life," said Larry Cornett, Yahoo's vice-president of search consumer products.

"We are talking about people like celebrities and athletes, but also your friends and the people you are connected to. We are talking about restaurants, stores, places you go, things you are thinking about buying and connecting them in a way you don't have to think about when using search."

'A fighting chance'

Can Yahoo succeed in a market where it is losing ground to both Microsoft's Bing and industry leader Google?

Research group comScore revealed this week that Yahoo's share of US search queries has dropped more than three percentage points to 17% in the past year.

Google has solidified its hold on first place with around 65% of all queries made while Microsoft's Bing has gained share at Yahoo's expense rising to 11% in January.

"I think the market wants a competitive Yahoo," Greg Sterling, of blog SearchEngineLand, told BBC News.

"It doesn't want to see just two players dominate this space. It wants more diversity and innovation and that comes from competition. I give them a fighting chance."