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InfoWorld names top 10 IT stories for 2000

InfoWorld

(IDG) -- It was a year of failed dot-coms, mega mergers, love bugs and privacy concerns. And it was a year that will not soon be forgotten by members of the public -- or the IT community.

Here, in no particular order, are the top 10 IT news events of 2000.

Dot-com deathwatch

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.

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.

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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 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 institution like Time Warner. Based on the $350 billion deal struck in January, America Online Inc. shareholders would own 55 percent of the new company, AOL Time Warner. Time Warner is the parent company of CNN.com. The European Union has subsequently approved the deal, and the U.S. Federal Trade Commission has now voted to unanimously approve it. The merger still faces scrutiny by the U.S. Federal Communications Commission, which experts suggest is a much lower hurdle for the companies to overcome. Executives of the two companies had undoubtedly hoped the merger would be finalized earlier since 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 subsidiary. 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, the U.S. Department of Justice beat 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? Some industry observers see its influence waning.

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.com 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.com 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.




RELATED STORIES:
FTC approves AOL, Time Warner merger
December 14, 2000
Dot-coms start to spread the wealth
November 25, 2000
Digital media battle heading to Congress
December 1, 2000
'Love Bug' takes on the world
May 5, 2000
Report: Serious concerns remain over FBI's 'Carnivore' system
December 5, 2000
Microsoft case in political limbo as votes counted
November 9, 2000

RELATED IDG.net STORIES:
The Nasdaq that stole Christmas
(The Industry Standard)
Whistling a happier tune
(The Industry Standard)
Quotes of the year -- who said what in IT
(InfoWorld.com)
Variant of 'I Love You' virus attacks
(IDG.net)
Researchers fault independent review of Carnivore
(Computerworld)
Poles, Swiss issue 3G mobile licenses
(IDG.net)
Finding a price for telecom stocks
(The Industry Standard)
FTC delays AOL-Time Warner decision by three weeks
(IDG.net)

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