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Week in review: Judging tech

Some key tech decisions this week were made not in the boardroom but by nine men and women wearing black robes.

Some of the most important technology decisions this week were made not in the boardroom but by nine men and women wearing black robes.

The Supreme Court handed movie studios and record labels a sweeping victory against file swapping, ruling that peer-to-peer companies such as Grokster could be held responsible for the copyright piracy on their networks. In a unanimous decision, the nine justices said companies that build businesses with the active intent of encouraging copyright infringement should be held liable for their customers' illegal actions.

The decision comes as a surprisingly strong victory for copyright companies and stands to reshape an Internet landscape in which file swapping has become commonplace.

The ruling will give the recording industry and Hollywood immediate ammunition to file lawsuits against file-trading companies. It could also be a boon for legal music services such as Apple Computer's iTunes, which could see their strongest competitors--freely downloadable songs--driven further underground.


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The decision, however, is unlikely to put a damper on illegal sharing anytime soon, industry experts say. The ruling casts uncertainty on the fate of Grokster and other file-swapping companies, but not on the viability of swapping itself, an activity that has only flourished under legal attacks, observers say. That's because the software that underlies peer-to-peer networks is designed to function and evolve without the aid of any particular commercial venture.

At the same time, recent surveys indicate that growth of unauthorized file swapping has slowed somewhat as online music stores, such as iTunes and RealNetworks' Rhapsody, have taken off. The slowdown may also be tied to the fact that the Recording Industry Association of America has sued hundreds of file swappers during the past year or so.

Many musicians, songwriters and music publishers reacted positively to the court's ruling. Although peer-to-peer networks have allowed smaller bands and musicians to reach wider audiences, illegal downloads have hurt their bottom lines by depressing sales.

"It became so rampant that it was hurting everyone," said Matt Whittington, label manager for Eighteenth Street Lounge Music, or ESL. "Everyone wants to get paid for what they do."

In another key decision, the Supreme Court ruled that cable companies will not have to share their infrastructure with competing Internet service providers. In a 6-3 decision, the court overturned a federal court decision that would have forced cable companies to open up their networks to Internet service providers such as Brand X and EarthLink.

The decision likely will not affect consumers immediately, since cable companies have long been exempt from having to share their networks. But Brand X and its supporters believe that over the long term, the decision will hamper competition and ultimately lead to higher broadband prices.

The political spat likely to play out over the next few years will center on whether DSL (digital subscriber line) technology should enjoy the same immunity as telephone companies. The Federal Communications Commission is mulling whether DSL should be regulated as a "telecommunications service" and thus subject to the weighty stack of regulations designed for the analog telephone system of the early 1900s--or as an "information service," which would be relatively free from government control.

Certain types of DSL should be treated with a light touch, the agency has tentatively concluded. But any definitive ruling will have to wait until a successor to FCC Commissioner Michael Powell is confirmed by the Senate. Kevin Martin, a commissioner since 2001, has been selected to fill Powell's role as chairman. But Powell's departure still leaves a vacant seat on the five-member panel.

Chip clash
As the high court was making its rulings, Advanced Micro Devices was firing off a federal antitrust lawsuit against Intel, claiming that its rival has a monopolistic grip on the PC industry. The suit details alleged scare tactics and coercion that AMD claims Intel imposed on 38 companies, including large-scale computer makers, small system builders, wholesale distributors and retailers.

In its 48-page complaint, AMD alleges that former Compaq Computer CEO Michael Capellas complained that Intel withheld delivery of server chips in 2000. The complaint states that Capellas told AMD he had to stop buying its processors and said "he had a gun to his head." The complaint also states that Gateway executives said their company paid a high price for even its limited AMD dealings. The claim at the time was that Intel had "beaten them into 'guacamole'" in retaliation, the complaint states.

Later in the week, AMD Japan filed suits against Intel's Japanese subsidiary, Intel K.K.. It also launched a marketing campaign against Intel, running full-page ads in newspapers to outline the reasons for its lawsuit and to issue a call to action. The ad, which ran in newspapers from The New York Times to Capitol Hill's Roll Call, broadens AMD's legal fight into a battle for public opinion.

AMD's ad alleges Intel has harmed and curtailed competition in the chip industry, saying that Intel has strong-armed major customers into accepting exclusive deals and threatening retaliation should they do business with AMD. "For most competitive situations, this is just business. But from a monopolist, this is illegal," AMD claims in its ad.


Paul Otellini
CEO, Intel

Intel CEO Paul Otellini defended his company against AMD's new legal attacks. Otellini said his company has been involved in other antitrust suits, has faced similar issues before and expects to come out on top of this one as well.

"Intel has always respected the laws of the countries in which we operate," Otellini said in a statement. "We compete aggressively and fairly to deliver the best value to consumers. This will not change."

Roll video search
Google has launched a Web-based video search service. The service allows people to view content from the company's indexed database of video from Unicef, Greenpeace, CNET Networks and others that have uploaded material since April. The search engine complements Google's existing site, which lets people search the closed-caption text of, but not yet play back, television shows from PBS, CNN and others that Google has hosted.

The new content is marked by a triangle icon. To use the service, people must download Google Video Viewer. Once they have, they can watch an entire video piece or start viewing at the section that includes their search keywords.

Google's new video search tool is turning out to be a little more expansive than the company had planned, with users uploading copyrighted content ranging from the last "Matrix" movie to the "Family Guy" cartoons. Consumers browsing the service have uncovered links to full versions of feature-length movies, TV shows and other content.

A day after Google released its Video Viewer, a Norwegian programmer tweaked the application to make it play clips that are not on Google's servers. The search giant had restricted the Video Viewer, which is based on the open-source VLC player, to play back only those files stored on its servers. Jon Johansen, also known as DVD Jon, posted code on his Web site that he said removes that restriction.

A few days later, America Online quietly launched a new video-on-demand search service, opening the doors for millions of Internet users to view music videos, news segments and other content from parent company Time Warner, whose mountain of media holdings give AOL an advantage over rivals Google and Yahoo.

The beta service, called AOL Video, offers free access to search and play more than 15,000 licensed and originally produced video assets from Time Warner, including movies trailers from Warner Brothers, television programs, music videos and news clips from CNN, MSNBC and others.

News.com special focus
India is experiencing a tech renaissance, becoming a tech powerhouse that may challenge China for dominance in Asia. In a three-part special report, CNET News.com examines the manner in which Indian companies are raising their profile, India's experiences with Western-style growing pains in employee recruitment and retention, and how India has become the epicenter for projects on the cutting edge of computing hardware.

Also of note
Sun Microsystems plans to bolster its software lineup with the acquisition of integration specialist SeeBeyond for $387 million in cash...Microsoft Chairman Bill Gates is dropping hints that he may be ready to license the brains of the Xbox game console to other companies...E-mails suggesting there was a conspiracy around Pope John Paul II's death or that Michael Jackson has passed away could be carrying a worm...Apple has switched to color screens for all its standard iPods and has updated its iTunes software to let people more easily download podcasts.