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The week's news: All Microsoft, all the time

Sometimes, the high tech industry simply can't avoid the software giant.

No stranger to the limelight, this past week Microsoft found itself at the center of controversy over "open source" software. A leaked internal memo identifies Linux as a threat to its revenues and mulls modifying open Internet protocols to become proprietary technologies tying consumers and developers to Microsoft products.

But there's more
The so-called Halloween memo, written by engineer Vinod Valloppillil as a research exercise for upper management, suggests that Microsoft would benefit from modeling the open source movement. A second memo, also written by Valloppillil and Web-posted by an open source advocate, states that Microsoft engineers see Linux as a "best-of-breed" Unix that outperforms the company's own Windows NT.

Separately, Microsoft released a beta version of its Internet Explorer 5. The new version enables content sites to build extensions to the browser interface, to serve content continuously regardless of where the user surfs. Users reported frequent crashes.

On the business side, the Redmond giant paid $250 million for LinkExchange, an ad-banner network that allows users to advertise for free throughout its 250,000 sites, and prepared to announce the formation of a joint venture with Qualcomm that will focus on wireless data communications, a move heralding the software giant's entry into yet another "convergence" market.

Microsoft is eyeing the embedded market too. Windows NT Embedded 4.0 will go into beta in the first quarter of 1999, targeting point-of-sale devices and office and industrial automation. But the market may be tough to crack because the software is anonymous and the Windows logo won't mean much.

Meanwhile ...
In the third week of its landmark antitrust case in Washington, Apple senior vice president for software engineering Avadis Tevanian elaborated on his written testimony, which includes charges that Microsoft proposed "knifing" Apple's QuickTime--or dividing the multimedia software market--in a meeting between the two companies.

Tevanian admitted in previous questioning, however, that he was unable to prove Microsoft deliberately introduced incompatibilities between its products and QuickTime. Tevananian's testimony asserts Microsoft caused misleading error messages to appear when QuickTime ran on Windows-based machines

As part of cross-examination, Microsoft introduced two letters in which Apple allegedly demanded windfall sums of cash and other concessions in order to settle patent disputes centering on Apple's claims against Windows technology.

E-commerce setbacks
Several companies with business models based on the Internet appeared to suffer setbacks. Individuals who sell items over online auction sites like eBay and AuctionUniverse suspect that their bidding sessions are being artificially manipulated by phantom buyers known as "shielders" and "shills"--and that the auction sites are not doing all they can to discourage the fraud.

Electronic cash pioneer DigiCash filed for Chapter 11 bankruptcy protection after shrinking its payroll to about six people from nearly 50 in February, the latest in a series of reverses for supporters of digital money.

The largest U.S. pilot for smart cards, in Manhattan's Upper West Side, came to a halt after 14 months. Involving Visa, Mastercard, Chase Manhattan Bank, and Citibank, the trial wasn't successful with consumer or merchants.

A new set of federal regulations requires Internet service providers to register immediately with the U.S. government, or be held liable for pirated material that flows through their servers. The new rules stem from the Digital Millennium Copyright Act, signed by President Clinton last week.

USWeb named Robert Shaw as its CEO, while current CEO and cofounder Joe Firmage stepped aside to become the company's chief strategist.

Mitchell Kertzman joined Network Computer Incorporated as president and CEO, leaving software maker Sybase, where he was chairman of the board. Kertzman, the Oracle affiliate's third chief executive since its founding less than three years ago, takes over a company that has struggled in a market which has failed to take off.

Also of note
To offset diminishing sales, Apple launched a $29.95 a month loan program for its new iMac computer ... a scientist linked together 140 off-the-shelf computers to create a supercomputer that ranks within the world's 100 fastest systems ... in Los Angeles, the Webnoize trade show struggled with piracy and how to capitalize on the Net's advantages for the $40 billion music industry ... a federal court ruled the Internet Entertainment Group has valid rights to post nude photos of radio personality Dr. Laura Schlessinger that were taken when she was in her 20s.