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Week in review: The trials of Microsoft

The failure of EU settlement talks paves the way for an antitrust ruling next week. Also, e-mail shows Microsoft wooing Warren Buffett, and open source gains momentum in Asia.

Settlement talks broke down this week between the European Union and Microsoft, paving the way for a landmark antitrust legal ruling next week.

EU Competition Commissioner Mario Monti said in a statement that the two sides had failed to agree on commitments for Microsoft's future business practices. "A settlement to the Microsoft case has not been possible," Monti said. "In the end, I had to decide what was best for competition and consumers in Europe. I believe they will be better served with a decision that creates a strong precedent. It is essential to have a precedent which will establish clear principles for the future conduct of a company with such a strong dominant position in the market."

EU antitrust regulators have concluded that the software giant violated competition rules by "tying" its media player to Windows. Now, they're weighing remedies that could go as far as forcing Microsoft to offer computer makers two different versions of its operating system--one with audio and video playback features, and another without them.

Microsoft CEO Steve Ballmer flew to Europe for the last-ditch negotiations. As a result, he missed a planned speech at a company conference in Las Vegas. At that event, Microsoft announced new software and additional details of its plan to make Windows systems easier to manage. Microsoft said a new release of its Software Update Services, renamed Windows Update Services, is entering testing this week. The software, which is scheduled to ship later this year, is designed to let system administrators keep PCs and servers up-to-date with the latest patches and bug fixes.

The software was originally set to ship as SUS 2.0 in the first half of this year but will now ship in the latter part of 2004.

Microsoft also said Microsoft Operations Manager (MOM) 2005 is entering the final testing cycle and that System Center 2005 will go into beta testing this week. The products enable big companies to manage collections of servers running Windows.

Also this week, an e-mail message that may become part of a Minnesota antitrust case provided a rare glimpse into the way a top Microsoft executive tried to persuade iconic investor Warren Buffett to buy into the company's software business.

Documents in the case, a class-action lawsuit accusing Microsoft of overcharging customers for some software products, began trickling onto Hennepin County District Court's Web site.

Reading, writing, arithmetic and firewalls
Two government industry groups released reports this week, recommending that the U.S. public and private sectors work together to teach children online ethics, help small businesses secure themselves, and create incident and advisory networks.

The Awareness and Outreach Task Force and the Cyber Security Early Warning Task Force are two of five groups formed by the National Cyber Security Partnership, an industry and government alliance aimed at finding ways to improve cybersecurity without resorting to legislation. The task forces' reports are the first proposals the group released; three more reports are due in coming weeks.

"We consider these recommendations to be a good starting point," said Guy Copeland, vice president at technology contractor Computer Sciences. "This is a dedicated group of volunteers presenting some hard thoughts on how to secure our information infrastructure."

More examples of malicious computer code came to the fore this week. In fact, the Bagle computer virus has almost finished off the alphabet.

Virus writers' penchant for modifying the source code for the program has resulted in four new variants--Bagle.Q, Bagle.R, Bagle.S and Bagle.T--in just two days, antivirus firms said on Thursday.

The viruses attempt to use an ActiveX vulnerability, discovered in August, to automatically upload and run a program on the victim's computer, without needing the user to run a file. The viruses pose a threat to Windows users who have not updated their operating system since the patch came out in August.

Cable guys and G-men
At least one cable operator is starting to comply with a federal law that has long required telecommunications carriers to help police conduct electronic surveillance, according to a source familiar with the company's plans.

Time Warner Cable is the first cable company to begin trying to adhere to the Communications Assistance for Law Enforcement Act, the source said. Cable companies are not yet required to comply with the 1994 wiretap law, but they see the writing on the wall.

Vernon Irvin, an executive vice president at security vendor VeriSign, said during a recent interview that his company had signed a deal with a "major cable operator" in the United States to help it follow CALEA. He did not identify the provider, but the source tagged Time Warner as the company. A Time Warner representative did not comment.

Irvin, however, did assert that other cable companies are sure to follow. That's because the FBI has made public a far-reaching proposal to require all broadband Internet providers--including cable modem and digital subscriber line (DSL) companies--to restructure their networks to support easy wiretapping by police.

Linux and the like living large
The open-source movement gained additional momentum this week. For starters, word hit that Hewlett-Packard has begun selling Linux PCs in 12 Asian countries. The systems, which are geared toward business buyers, will run a version of Turbolinux's operating system, called Turbolinux 10 Desktop (10D), HP said in a statement.

What's more, Oracle and Dell kicked off a Linux-based alliance in China that may spell trouble for Microsoft in the world's No. 2 computer market and may also curry favor with Beijing.

Dell and Oracle executives said the tie-up, which tacks Linux-based Oracle software onto Dell servers, would edge out competing platforms, but they declined to say how it would help them expand market share.

Nonetheless, the alliance could threaten Microsoft and its Windows dominance, because the Chinese government has been pushing for a national standard on open-source software to counter the reign of Windows in recent years.

And Novell, which became the No. 2 Linux seller by acquiring SuSE Linux, said it will begin selling a new version of its open-source operating system in May, revamped with a new core.

SuSE Linux 9.1 Professional will use the 2.6 kernel, a major overhaul of the Linux core that is designed to make the operating system more responsive. SuSE's new version, which will cost $59.95, supports the 64-bit extensions to x86 chips from Intel and Advanced Micro Devices, a feature that permits easier access to more than 4GB of memory.

Not all the open-source news pointed to a world full of freely published source code. Sun Microsystems' top software executive said his company is reluctant to make Java source code available through an open-source model, because it would encourage incompatible versions of the software.

Also of note
In an interview with CNET, ICANN Chairman Vint Cerf defended the organization against the charge that it is standing in the way of innovation and also discussed the lawsuit VeriSign filed...CNET also talked with IBM's director of WebSphere infrastructure software about service-oriented architecture...EDS revealed that a major client, thought likely to be Dow Chemical by an industry source, has indicated that it believes that the technology services company is in default of its obligations.