BOSTON -- LOOKING back, 2000 was the year when common sense made a comeback.
Most of us were sensible enough not to start the year holed up in a bomb shelter with our loved ones and a ton of canned food awaiting the end of the world as we knew it thanks to the Y2K bug. Most of us wondered how long you could keep a stock price high when you ran an Internet business that just lost money. Most of us figured that it was pretty dumb for a software company to think that faking demos would work in a federal antitrust case just because it fooled the marks on a trade show floor. But there are limits to common sense: most of us thought, "What's this e-mail -- he/she loves me? He/she is sending me a love letter attached? This I've got to read!"
Here, in no particular order, are the top 10 IT news events of 2000
It turned out that old-economy values like sustainable business models -- offering products and services for which a reasonable number of people are willing to pay money -- still hold true in the new economy. One after another, companies that had burned through venture capital and IPO (initial public offering) funds found that they couldn't go back to the well for more, and without the cash they couldn't stay in business long enough to get money the old-fashioned way, by earning it. So, farewell eve.com, boo.com, furniture.com, pets.com, mothernature.com, and.on.and.on.com.
Music on the 'Net meets copyright law
Music available in digital form on the Internet emerged as a serious threat, not just a theoretical worry, for the big record labels this year. Thanks in large part to Napster's wildly popular service, free music-sharing on the 'Net exploded from campus cult into courtrooms where industry lawyers tried to stuff the genie back into the bottle. The lawsuit against Napster filed by the Recording Industry Association of America (RIAA) in December 1999, made headlines before even coming to trial as the plaintiffs sought an injunction to shut down the popular peer-to-peer song-swapping service. While that case won't come to trial until next year, MP3.com lost its court battle with the RIAA in May. Regardless of the outcome of the Napster lawsuit, the music industry is now painfully aware that the Internet has changed its business model forever.
Love Bug virus
May 4 was a bad day for systems administrators. Years of being told by the IS department to be careful about opening e-mail attachments didn't prevent many people from clicking on apparent "love letters," in many cases from senders known to them. The virus-worm hybrid, which deleted victims' image files and hid audio files, started its damage early in the day in Asia (turns out it originated in the Philippines) and worked by using a Visual Basic script that sent itself to all recipients in a victim's Microsoft Outlook address book, thus spreading rapidly through businesses from East to West before IS staff were aware of the threat. Security experts estimated that the Love Bug infected more than half of U.S. large businesses and "tens of millions" of computers worldwide. Prosecutors in the Philippines ultimately dropped charges against Onel de Guzman, who was suspected of creating and disseminating the virus in May, because the Department of Justice lacked a law under which it could charge him.
FBI's Carnivore eats away at online privacy
A U.S. Federal Bureau of Investigation (FBI) technology, nicknamed "Carnivore," that the law-enforcement agency is using to uncover evidence in e-mail, raised hackles among civil libertarians and privacy advocates when its existence came to light this year. Carnivore, critics charge, doesn't meet guidelines governing the use of wiretaps. Of particular concern are allegations that the software, which the FBI has demanded be installed by some ISPs (Internet service providers), is capable of capturing all unfiltered e-mail traffic, rather than only e-mail going to people for whom the FBI has a wiretapping warrant. Last month, an outside review of the technology showing that it does not overstep its bounds was quickly criticized as inadequate by privacy advocates.
UMTS auction gold rush in Europe
Like any good scheme, the first guys to hit on it got rich quick. But the folks who came later to this money-making opportunity didn't have quite the same luck. Who would have thought that offering licenses to telecommunication companies to operate 3G (third-generation) mobile networks based on the UMTS (Universal Mobile Telecommunications System) standard could be this lucrative for national governments? First the U.K. extracted about $32 billion from four companies in exchange for the privilege. Then the Germans cleaned up, getting $44.8 billion in license fees. But things got messy in the Netherlands, where the state took just $2.4 billion, and ugly in Italy. Analysts started to wonder how much of this greed was good, and whether telecom companies would recoup these huge investments. The Swedish government won praise for its bank-on-the-future rather than take-the-money-and-run approach -- a modest administrative fee of about $10,000 per applicant, but an annual tax on UMTS revenue of 0.15 percent.
Time for telecoms to shuffle the deck
For some, all that money spent in European UMTS auctions didn't help -- it didn't make investors or bond-rating agencies happy. British Telecommunications PLC's second-quarter profits reported last month were less than half the previous year, thanks in part to the costs of acquiring licenses. The same day, it announced a reorganization, following the example of both AT&T and Worldcom, which both recently announced large scale organizational changes after seeing their stock prices hammered. Worldcom President and Chief Executive Officer Bernard Ebbers has had a rough year -- in June he had to drop his planned acquisition of Sprint as both the European Union and the U.S. Department of Justice apparently decided that some mega-mergers are just mega-anticompetitive.
AOL-Time Warner marries new media to old
Much earlier in the year, back in January, mega mergers were still in vogue, and new Internet money could still buy an august institution like Time Warner. Based on the $350 billion deal struck in January, America Online. shareholders would own 55 percent of the new company, AOL Time Warner. The European Union has approved the deal; as of late last week, the two companies were promising final concessions to please the U.S. Federal Trade Commission, which votes this week on whether to approve the merger. Executives of the two companies had certainly hoped the merger would be finalized earlier. Much has changed in the new -- and old -- media landscapes since they got engaged in January.
L&H goes from poster child for European IT to poster child for bad behavior
For most of this year, Lernout & Hauspie Speech Products NV was the high-flying voice technology company that Europeans could point to with pride as an example of a home-grown yet industry-leading innovator in global IT. In March, L&H solidified its leadership by agreeing to pay $592 million to buy out its U.S. rival, Dragon Systems Inc. Then the bad news started to trickle out. In August, a Wall Street Journal article raised allegations of accounting irregularities at the company's Korean subsidiaary. By September, the U.S. Securities and Exchange Commission had begun an investigation of accounting practices. In November, co-founders Jo Lernout and Pol Hauspie stepped down from their positions as co-chairmen and managing directors. By the end of the month the company's new chairman and chief executive officer had filed for bankruptcy, saying that they had uncovered evidence of financial misreporting and other questionable financial transactions, and that the filing was their only hope for protection from creditors and legal claimants and for cleaning up the mess they inherited. As of this writing, the company's assets have been frozen by a Belgian court.
Microsoft loses big in antitrust case
While no one expects the Microsoft antitrust case to be resolved anytime soon (will it be resolved in our lifetimes?) the U.S. Department of Justice whipped the software giant in round one, the trial in U.S. District Court. In April, Judge Thomas Penfield Jackson dropped the first shoe: a conclusions of law finding that Microsoft maintained its monopoly power by anticompetitive means and attempted to monopolize the Web browser market in violation of the Sherman Antitrust Law. In June, he kicked off the other loafer, ruling that Microsoft should be broken into two companies and heavily regulated to stop its anticompetitive behavior. Microsoft is appealing the decision, and the briefs are already flying in round two. Will Microsoft even be relevant by the time the last court rules definitively? Industry observers see its influence waning and the old "Wintel" duopoly just isn't what it used to be.
Denial of service attacks hit the big time
In February, hackers drew attention to a form of Web site attack that's not particularly elegant but effectively crippled some of the Web's biggest names, including EBay, Amazon, CNN and Yahoo, among others. These attacks worked not by breaking into a target Web site but by overloading the router connecting it to the rest of the Internet with so much fake traffic that it overloaded and bonafide users were unable to connect to it. However, lots of systems did get hacked to make this happen: thousands of unwitting users' systems had Trojans or zombie software placed in them, which then launched the DoS attacks from those machines. Computers most vulnerable to being used in DoS attacks are those that are on and connected to the Internet all the time via high bandwidth access. A Canadian teenager arrested in April for the DoS attack on CNN was considered to be just a copy-cat, and the real masterminds of the February attacks may never be caught. But the DoS threat is still real: anyone can get hit -- and it can bring your online business grinding to a halt.
Elizabeth Heichler is editor in chief for the IDG News Service.