Week in review: Googly eyes

'Twas the week before Christmas and as shoppers hit the stores, deals were brewing behind closed doors.

In a week otherwise dominated by holiday parties and retail buzz, Google and America Online made some big news Tuesday by announcing a long-rumored partnership.

Google will invest $1 billion for a 5 percent stake in Time Warner's America Online unit as part of a partnership that expands their existing search engine deal to include collaboration on advertising, instant messaging and video.

Google also is offering a $300 million credit that AOL can use to buy keyword-based ads from Google. Google will become the only shareholder in AOL other than Time Warner. Google also will have "certain customary minority shareholder rights, including those associated with any future sale or public offering of AOL," the companies said in a statement.

CNET News.com reader Nathan Boyle said the deal isn't so much about the future of AOL "because it doesn't have one."

"This is a war over who gets to feed on the carcass of AOL," he wrote. "I don't think we should look at this in terms of what AOL will become with help from Google. I think we should view it in terms of how does Google parlay this in the long term. This was a poker game against (Microsoft), and Google won."

The deal leaves Microsoft out in the cold after months of negotiations with Time Warner over AOL's search business. Microsoft was on the verge of striking a deal before the surprise turn in Google's favor late last week.

Speaking of Microsoft, Google settled with the software giant in the lawsuit filed over the hiring of Kai-Fu Lee, an expert in speech recognition technology and the man who founded Microsoft's China research lab in the late 1990s. The settlement was made public late Thursday.

Google announced in July its plans to hire Lee to head up its China research lab. Microsoft immediately filed suit in Washington against Lee and Google, arguing that Lee was violating a one-year noncompete agreement that was part of his Microsoft contract.

The tug-of-war over Lee was seen as Microsoft's latest attempt to thwart Google's growing influence. The two have increasingly crossed swords, and Mountain View, Calif.-based Google won an important round with the aforementioned deal with AOL.

But the game isn't over for jilted suitor Microsoft. Microsoft plans to leverage its desktop market dominance to compete with Google on search and advertising, analysts said Wednesday.

In other deal news, IBM made two acquisition announcements. First, Big Blue said Tuesday that it has acquired Bowstreet in its quest to tightly integrate the portal development tools of its longtime partner into its service-oriented architecture strategy.

Bowstreet, based in Tewksbury, Mass., is expected to have its Portlet Factory software integrated into IBM's software products in the second half of next year. Until then, IBM will continue to offer the Portlet Factory software with its WebSphere Portal tools.

Then, on Thursday, the company announced plans to acquire network-management software maker Micromuse in a $865 million cash deal.

The transaction is designed to enhance Big Blue's Tivoli software portfolio with Micromuse's network-management offerings. Micromuse's software supports IT systems handling voice, video and data traffic over the Internet.

Also this week, the European Commission officials gave their blessing to Oracle's $5.8 billion merger with Siebel Systems, removing the last major antitrust hurdle for the enterprise software companies.

Scammers and bah humbugs
For some, it's the season of giving gifts and spreading good will. To others, however, it's the time for taking consumers' personal information and spreading bugs and worms.

With the holidays just days away, Internet users can expect to see almost twice as many phishing attacks this December compared with last year, said Andrew Klein, manager of the threat center at MailFrontier, an e-mail security company in Palo Alto, Calif. Phishing scams combine spammed e-mail messages and fraudulent Web sites to trick people into giving up sensitive information.

In one example, scammers crafted an e-mail that looks like it came from eBay. The mail announces that "Christmas is coming!" and encourages recipients to click on a link to "www.ebaychristmas.net" for advice on "seasonal selling." Though they appear legitimate, the e-mail message and the Web site were fraudulent, Klein said.

Meanwhile, a Santa Claus worm is attempting to trick America Online, Microsoft MSN and Yahoo instant-messaging users into

clicking on a file that delivers unwanted software to a victim's computer. The IM.GiftCom.All worm attempts to dupe IM users into thinking an acquaintance has sent them a link to a harmless Santa Claus file, according to a security advisory issued Tuesday by IMlogic.

Also this week, it was learned that Symantec's antivirus software contains a vulnerability that could be exploited by a malicious hacker to take control of a system.

According to Symantec, the bug, which affects a range of the company's security products, is a "high" risk. Denmark security company Secunia has labeled it "highly critical."

Meanwhile, mobile security threats are expected to triple next year as smart phones and other mobile devices become more prevalent, according to a study released Monday by McAfee Avert Labs.

The number of malicious software programs created for mobile devices is expected to reach 726 by the end of 2006, up from an estimated 226 at the end of 2005, according to McAfee.

And a maker of popular role-playing games was forced to shut down its online store for four days after hackers pilfered e-mail addresses, user names and encrypted passwords.

White Wolf Publishing, creator of video and tabletop games such as "World of Darkness" and "Vampire: The Requiem," received a message from an "international group of hackers" on Dec. 11 saying they had penetrated the company's online security defense, said company spokeswoman Kelley Herman.

Fa, la, la, la, la
Music lovers also have to be wary of security issues. Tom Ferris, an independent security researcher, provided more details on a security flaw in Apple Computer's popular iTunes and QuickTime software that could put systems running Windows and Mac OS X at risk of attack.

An attacker could commandeer a vulnerable computer by tricking a user into opening a malicious ".mov" media file, the Mission Viejo, Calif.-based bug hunter said in an advisory posted on his Security-Protocols.com Web site late Tuesday.

Music fans flooding iTunes last month helped Apple outpace Google and Amazon as the fastest-growing Web site among the top 10 best-known online brands, according to a report released Tuesday.

Traffic-reporting service Nielsen/NetRatings said that traffic to Apple.com rose from 19.6 million unique visitors in November 2004 to 30.8 million last month--a 57 percent jump. The number of visitors to online search engine Google climbed by 29 percent, while traffic to retailer Amazon grew 16 percent.

In other music news, a five-person company called Pioneers of the Inevitable is taking aim at Apple's iTunes with music software called Songbird that's based on much of the same underlying open-source technology as the Firefox Web browser.

And Verizon Wireless is expected to introduce a music download service next month that will let subscribers purchase music wirelessly over their mobile phones and transfer songs between their phones and Windows PCs, CNET News.com has learned.

Also of note
A federal judge says California's law restricting violent video games violates the First Amendment...The European Commission issued Microsoft a warning that it could face a steep fine for failing to comply with its antitrust order...The Pentium name will go into partial retirement in January. John Parkinson is showing off a new keyboard design next month at the Consumer Electronics Show in Las Vegas...Broadband providers and e-commerce companies are finding themselves butting heads over federal legislation. The Senate voted to end over-the-air analog TV by Feb. 18, 2009...Two bills propose sweeping changes to how Americans are taxed for online and mail order purchases...President Bush on Monday forcefully defended his decision to authorize electronic spying on Americans without court authorization.