The week in review: Stopped cold
Relatively simple computer attacks paralyze several leading Web sites, striking at the heart of the digital economy.
So-called denial of service assaults temporarily felled e-commerce giants eBay, Amazon.com and Buy.com, Internet bellwether Yahoo, news site CNN.com and online trading sites E*Trade and Datek, among others, causing untold losses. The federal government pledged to track down the responsible parties, but security experts predicted they will have a tough time.
Out cold
Yahoo was hit first, on Monday afternoon, followed the next day by Buy.com, eBay, CNN and Amazon. The strikes were relatively brief, presumably to help keep the perpetrators from being easily caught.
The succession demonstrated the unique vulnerability of e-commerce: Online businesses can be virtually shut down for several hours by faceless hackers, unlike a chain of Wal-Mart stores.
Victims refused to estimate their losses. Based on Amazon's average hourly revenues last year, however, the e-tail company would have lost about $561,643 during its three-hour outage. Businesses that rely primarily on advertising likely would be affected differently from e-commerce companies.
But Internet doomsaying not heard since the peak of millennium-bug mania last year may ring false. Those within the high-tech industry predicted the Web as a whole will suffer no lasting damage. Two key reasons for that assessment are the relatively brief duration of these assaults and the fact that they do not destroy data.
Meanwhile, security experts thought it unlikely the masterminds will be caught. "There's a very good chance that they'll never know who did some of these attacks," said Avi Rubin, an Internet security expert at AT&T Labs and author of the "Web Security Sourcebook."
A conference presentation on denial of service attacks may have triggered the outburst. The basic technique has existed for decades, but several improved tools that help automate the launch of such attacks have been released only recently. A denial of service outage occurs when attackers bombard a Web site's servers with fake requests for information. When the server responds, the attackers' systems step up the barrage by sending more requests, slowing performance for users or even crashing the target system.
A computer expert in Germany who goes only by "Mixter" is believed by some to be the author of the program used this week. In an interview with News.com, Mixter denied any responsibility but confirmed that he has written programs that appear similar to those used in the attacks.
In response, the Federal Bureau of Investigation posted a tool that examines software programs for "signatures" that indicate the presence of the attack software, much like the way antivirus software looks for telltale signs.
More downtime?
One in four corporations making the move to Microsoft's Windows 2000 will run into problems getting the operating system to work with existing software and systems, according to a noted industry research firm. The warning came less than a week before the operating software's official debut, and could make it much harder to sell to big companies.
Linux surpassed more-established rivals to become the second-most-popular operating system for server computers, claiming a quarter of the market, but it's not making much money for those selling it. Nearly twice as many copies shipped last year as in 1998, and the open-source software grew at roughly four times the market rate. But sales brought in only $32 million, less than 1 percent of the $5.7 billion total. Front-running Windows NT, with 38 percent share, earned $1.7 billion.
3Com, Cisco Systems, Sun Microsystems and a handful of other firms plan to boost the capacity of Ethernet, the dominant technology for connecting PCs and server computers together on a network. A 10-gigabits-per-second (Gbps) Ethernet standard could allow network managers to run Ethernet-based systems across long-distance links as well as their local layouts. A similar effort was undertaken to develop a market for 1 gigabit-speed Ethernet, which is just now taking hold.
Second place
Positive investor reaction to Cisco's quarterly earnings report catapulted the networking firm past General Electric, making it the second-most-valuable company in the country. Cisco, which announced a 49 percent increase in earnings and a 53 percent increase in sales, recently supplanted Intel as high tech's second-leading company. Microsoft remains top dog, but while Cisco's stock has surged about 125 percent in the past year, the software maker's has grown only about 30 percent during the same period amid its ongoing legal woes.
Inprise and Corel merged to jointly tackle the burgeoning Linux and better compete against Microsoft, in a stock transaction valued at $2.44 billion. Inprise, a maker of tools that help developers create e-commerce Web sites and business software, has seen its revenue and market share decline due to Microsoft price cuts; Corel has to compete against Microsoft Office. Both companies' shares have perked up since latching onto to Linux, but industry analysts are skeptical of their combined prospects.
Craig McCaw is reportedly close to making a $600 million offer for the world's first satellite phone service, Iridium, which filed for bankruptcy protections last year. The cell phone industry pioneer already is set to invest about $1.2 billion in ICO Global Communications, which is in much the same boat. The capital and McCaw's record could be just the boost these companies need to get back on track.
Andersen Consulting will provide services and rental space to start-ups in exchange for equity. The plan calls for establishing 17 so-called launch centers, situated around the world, for companies that have already won funding but have not yet made a public offering. The privately held "Big Five" accounting firms increasingly have been accepting equity in lieu of payment from cash-strapped clients, positioning the consultancies to reap the rewards of successful IPOs and become the services firm of choice for promising dot-coms.
Rapid growth in the number of Europeans who have Web access is spurring a race among U.S. and domestic e-commerce companies. Feeling the heat from Americans expanding overseas, many in Germany, England, Sweden and France are moving quickly to protect their turf. London-based Virgin Group, which recently announced a $248 million project that will connect the company's many businesses--including music, airlines, autos and financial services--intends to introduce its first online venture next month, offering European Union cars for sale online in the United Kingdom.
Crying out
Sen. Robert Torricelli, D-N.J., offered a plan that would make it unlawful for companies to collect personal information online without first getting permission from the consumer. Earlier, House and Senate lawmakers formed task forces to grapple with Net privacy. Propelled by a spate of high-profile flaps, consumer advocates are hopeful that this year their cries for online protections will finally capture Congress' attention.
Striking back against allegations that it violated the copyrights on thousands of CDs, MP3.com is charging that the powerful Recording Industry Association of America engaged in unfair business practices to undermine the Net music firm. The suit alleges the RIAA gathered technical information from MP3.com and spoke to analysts about its stock price just days before suing it for copyright infringement.
The European Union's executive commission sent Microsoft a formal request for information following allegations its new Windows 2000 software breaks EU antitrust rules.
Also of note
Reuters Group will reorganize and promote its services to a wider audience through the Internet ... British Sky Broadcasting too joined the Internet rush with plans to pour 250 million pounds into new media ventures, agreed to a joint venture with Kingston Communications, and is negotiating with BT Cellnet ... CMGI acquired online auction site uBid.com for about $407 million in stock, hoping to steer the consumer-oriented site toward business-to-business auctions ... Microsoft's next consumer operating system, dubbed Windows Me, could debut as early as May 26 ... In a move to expand sales beyond the Web, Handspring later this month plans to start selling its handheld device in retail stores ... Advanced Micro Devices passed rival Intel in the microprocessor speed race when it announced an 850-MHz version of its flagship chip ... Worldwide sales of semiconductors jumped 18.9 percent to a record $149 billion in 1999.