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The News

• E-Cash Making Headway
• Justice Department Investigates Microsoft's On-Line Efforts
• Public Access Network Bows
• USENET Story Charges Dismissed

E-Cash Making Headway

So-called electronic cash is exchanging hands, or keystrokes and mouse clicks, to be more precise, on the Internet, as a number of small companies have created ways for personal computer users to buy goods and pay for them using electronic money or credit cards.

One start-up company, Reston, Va.-based CyberCash Inc., offers a service that establishes a link to a person's bank account through which they can pay for services by credit card or direct debit. CyberCash acts as a go-between, taking the credit card information and forwarding it to merchants.

Another company, Net1 Inc., is developing a service that provides consumers with a "checkbook" on their computer. When they want to buy something or pay a bill, they write a check and Net1 facilitates the payment. The system is in a test phase now.

But even on the information superhighway, watch out for pickpockets. It's not clear whether it's safe to deal in money or put your credit card or bank data on computer networks.

Companies offering the services say special software and coding methods protect the transactions from "crackers" -- criminally-minded computer experts who break into personal, corporate or government files and steal sensitive data.

Some Internet enthusiasts say doing electronic payments over the network is safer than giving your credit card number to a catalog company over the telephone.

"Wiretap equipment is not very expensive and doesn't require a lot of sophistication," said Brian Watts, president of the New York Internet Center.

It's much harder to tap into the Internet and intercept a payment transaction that's enveloped in special encryption codes, said Watts.

But others say consumers may be more vulnerable to rip-offs on the Internet because anyone can advertise a service or set up a "store" and there is no police or consumer protection on the network, a series of computer connections that started out as a global link between government and university scientists.

"There is no one in charge of the Internet," said Susan H. Nycum, an attorney with San Francisco-based Baker & McKenzie and former president of the Computer Law Association. "There's no police, and that's one of the issues that consumers have to cope with."Computer users should exercise the same caution on the Internet that they would if they received a solicitation from a bank or company in the mail or over the telephone. Know who you're dealing with before giving out your bank account or credit card number. If something sounds too good to be true, it probably is.

"The Internet will be a reflection of society as a whole, so there will be a criminal element," said David Saxton, executive vice president of Net1.

Justice Department Investigates Microsoft's On-Line Efforts

America Online Inc. in Vienna, CompuServe Inc. and Prodigy Services Co., the country's three leading commercial on-line services, received requests for information from the Justice Department earlier this week, company representatives said. The Justice Department asked the companies to respond on an unusually tight deadline: one week.

This is the third time the Justice Department has looked at the business practices of Microsoft, the world's largest personal computer software company.

Last summer, after an almost five-year government investigation, Microsoft agreed to change how it licenses its DOS and Windows operating system software. That settlement was finally approved last week, overturning an injunction made February 14 by Judge Stanley Sporkin. The stock market responded to the decision and boosted the price of Microsoft stock.

In April, the department filed suit against Microsoft's plans to acquire Intuit Inc., the country's biggest provider of personal finance software, causing Microsoft to drop the deal.

The department would not confirm the precise nature of its inquiry into the network. "We're looking at the possibility of anti-competitive practices in the computer software industry," said Gina Talamona, a spokeswoman for the department.

In a statement, Microsoft said the government had requested information about its new on-line service and that the company was "cooperating fully with the Justice Department and remains confident that its plans are legal and in the best interest of consumers."

At issue for Microsoft's on-line competitors is whether the company's dominance of the market for operating system software would give it an unfair advantage as it moves into the new realm of on-line services.

Late last year, the company said it planned to weave the software consumers will need for reaching the network into the next version of its operating system software, Windows 95. Microsoft has said it intends to officially release Windows 95 Ñ and so, the Microsoft Network Ñ on Aug. 24.

Integrating the software for reaching the Microsoft Network into the operating system means that by simply clicking, or activating, a symbol that will pop up on their screens, Windows 95 users will be able to reach the Microsoft Network.

That tight marriage has irritated other on-line companies, which say they work hard to get the software needed to reach their networks into the hands of consumers. Many on-line companies give away this software for free. They include the software with magazines or send computer users copies through the mail. The on-line companies also make deals with computer hardware makers so that they will load the software for their networks onto new machines before customers take them home.

Microsoft executives have argued that putting its software into the operating system is no different than sending a disk through the mail or cutting a deal with a hardware maker.

Still, analysts estimate that Microsoft may sell as many as 20 million copies of Windows 95 within the first three months of its release. If just a fraction of purchasers sign up to use the Microsoft Network, Microsoft would vault ahead of 10-year-old America Online in a matter of months. America Online has 2.5 million subscribers.

The Justice Department has heard the concerns about the on-line companies before. When the government began looking at Microsoft's proposed takeover of Intuit, the on-line companies submitted papers outlining their concerns about the Microsoft Network.

Shaw said that Microsoft believes its network will increase competition in the on-line services market.

The on-line companies say they are willing to compete against the Microsoft Network, provided the software for reaching it is not wrapped in Windows 95. "I think there are some pretty compelling reasons" to address the issue, CompuServe's Stuckey contended.

Public Access Network Bows

Smart Valley Inc., which is dedicated to securing Internet access for all and runs the PAN program, said the sites -- three in San Jose and one in Palo Alto -- will be the first of a dozen it plans to open in the South Bay.

"We want to make sure that people who don't have access to this technology can still get benefits from it," said Harry Saul, the group's president and chief executive officer. Free public access, Saul said, can help bridge the gap between the "haves" and the "have-nots" of Silicon Valley.

In Palo Alto, where residents already can cruise the Internet free at City Hall, Smart Valley will open a site at Fry's Electronics. In San Jose, free Internet access will be available at the Tech Museum of Innovation, at the main library and at the library's Hillview branch. At the Tech Museum, which normally charges admission, users may enter free between 4 p.m. and 5 p.m.

"Being computer literate will probably be as important in the next decade or so as learning how to read. People who don't understand how to use the technology won't be able to compete for jobs in the 21st century," said Larry Irving, assistant secretary of commerce and the Clinton administration's Internet guru.

As part of the administration's interest in promoting free Internet access, Irving was in San Jose to help kick off Smart Valley's Internet project. The Commerce Department has spent $24 million to help create similar projects in Charlotte, N.C., Alaska and elsewhere.

USENET Story Charges Dismissed

Judge Avern Cohn said Jake Baker's publication of the rape-slaying story would have been better handled as a disciplinary matter by the university.

Baker, 21, of Boardman, Ohio, also exchanged electronic mail with an unidentified man in Canada in which the two discussed carrying out an attack such as the one in his story.

The charge, transmitting a threat over state lines by electronic mail, carries up to five years in prison on conviction.

Prosecutors contended Baker's fantasies about the woman and the discussion of carrying them out against someone constituted transmitted threats. Defense lawyers said Baker's writings were protected free speech.

"The government's enthusiastic beginning petered out to a salvage effort once it recognized that the communication which so much alarmed the University of Michigan officials was only a rather savage and tasteless piece of fiction," Cohn wrote in his dismissal order.

"Why the government became involved in the matter is not really explained in the record."

The university had no immediate comment.

Baker underwent psychological testing while jailed on the charges, as attorneys fought over whether he should be freed on bond. Prosecutors said he was dangerous. His attorney, Douglas Mullkoff, called the writings harmless fantasy.

Baker was arrested after a university alumnus read the story on the Internet and alerted Michigan officials.

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