Services & Software

The week's news: Yahoo buys GeoCities

The tidal wave of Net mergers refuses to subside: The latest entry belongs to Yahoo, which paid $3.56 billion for the Web's hottest community site. Who's next?

Yes, we led this column with another acquisition last week (@Home buying Excite), but that's just the way it has been with the Net and merger mania. Yahoo paid $3.56 billion for the Web's hottest community site, a whopping sum when you consider that GeoCities is bleeding money by the millions. But drawing surfers--GeoCities is reportedly the fifth most popular site--is one way for Yahoo to validate its business and $35 billion market cap to Wall Street.

Who's next in line?
The GeoCities buyout opens the landscape to a new list of possible acquisition targets. Many are speculating that the attraction to online communities as takeover targets will extend to Xoom and TheGlobe, both of which use home page building and chat forums to gather and retain members. Other potential candidates include e-commerce or auction sites such as eBay, uBid, Onsale, or CDnow. Analysts speculated that one example of a possible fit would be Amazon and download site AudioHighway.

Too much of a good thing
AT&T's WorldNet Internet service provider is suffering network slowdowns that have some angry users comparing the situation to America Online's early troubles. It appears that AT&T's promotion of its ISP is getting great response to its recent advertising blitz. That's the good news. The bad news is that the additional traffic is putting a major strain on its backbone.

AT&T isn't alone
Although stock in @Home continues to soar after its blockbuster purchase of Excite, nagging complaints linger that, for some, the high-speed Internet service is not all it's cracked up to be. @Home sits at the enviable confluence of content and high-speed access to the Net--a combination that conjures dollar signs for many potential investors. But a handful of service problems and proposed limits on data traffic have some users feeling short-changed.

And on the AOL front
Marc Andreessen, Internet visionary and cofounder of Netscape Communications, has reportedly agreed to become chief technology officer at America Online once the online giant completes its acquisition of Netscape. What his title will mean, however, remains in question. According to one report, Andreessen will not oversee any of AOL's technical operations or Netscape's continuing software efforts.

Speaking of ISPs
The Federal Communications Commission will pull two key Internet-related items from its agenda in the wake of a Supreme Court decision that reaffirmed its power to regulate local telephone issues. The commission had planned to finalize its long-delayed decision on how calls to Internet service providers should be treated, a controversial issue with hundreds of millions of dollars in payments between Baby Bells and their smaller competitors at stake. Another contentious item, governing Baby Bells' ability to offer high-speed Internet lines though subsidiaries, also will be withdrawn from the next meeting's agenda. Both items will have to be redrafted because of yesterday's Supreme Court ruling, FCC sources told CNET

Is Linux a threat in Redmond?
Although the Unix-like operating system was created by the free-wheeling efforts of hundreds of programmers across the Internet, Linux is acquiring the trappings that make it more appealing to corporate customers--for example, interest from major computer makers and features such as 24-hour support hotlines. But more important, Linux can be obtained for free or for a relatively low cost. And with sub-$2,000 servers coming to market from all the major manufacturers, saving $600 on the operating system could prove to be an attractive selling point.

Meanwhile, computing heavyweights are jumping on the Linux bandwagon Linux is taking another step toward corporate credibility as big names like Hewlett-Packard, Compaq, IBM, and Silicon Graphics scramble to respond to swelling customer demand for Linux support. Among reports that emerged this week: HP said that a model of its NetServer line, traditionally Windows NT machines, will come with a version of Linux and announced a support deal with Linux distributor Red Hat that will make it easier for corporate customers to adopt Linux on Intel-based servers. Compaq has qualified Linux on the new DS20 Alpha-based servers coming next week and plans to qualify Intel-based systems in the future. IBM is in discussions with Red Hat and said it's "aggressively" evaluating Linux servers. And details emerged about Silicon Graphics' efforts to get Linux to work on its workstations.

Is Child Online Protection Act enforceable?
Civil liberties groups and advocates of protecting children from harmful material online face off, as the First Amendment's boundaries in cyberspace are hammered out in a federal courtroom where the future of the Child Online Protection Act is being debated.

Other notable stories
FTC faces tough trial against Intel because of drastic market changes led by the sub-$1,000 PC...Pentium III is now on sale even though Intel isn't officially releasing its latest processor until February 28...On the Microsoft front, the U.S. Court of Appeals unanimously rejected an effort by the company to keep testimony by chairman Bill Gates secret.