In brief: Microsoft to appeal European anti-trust ruling

Plus: Witty Worm not so funny; HP sues Gateway over patents; Government stops phishing plot; carriers could benefit from offshoring.

After being slapped with a record $611 million fine last week by the European Commission for violating European Union anti-trust laws, Microsoft said it would appeal the ruling, a process that could take five years.

 The EU ordered Microsoft to unbundle Windows Media Player within 90 days and make certain server protocols available to competitors.

“We believe every company should have the ability to improve its products to meet the needs of consumers,” said Microsoft CEO Steve Ballmer. He expressed disappointment that the EU decided to pursue the “riskier course of litigation” instead of agreeing to a settlement, which he said is still a possibility.

EU competition commissioner Mario Monti used similar language in defending the ruling, saying, “Our decision is about protecting consumer choice and innovation.” With the fine representing just more than 1% of Microsoft’s $53 billion in cash reserves, Goldman Sachs said it appears the decision will not have a significant effect on Microsoft’s business but potentially could constrain the company from adding major features to Windows in the future.

The Witty Worm, originally discovered by eEye Digital Security, recently began spreading to attack and compromise the intrusion-protection products BlackIce and RealSecure from Internet Security Systems just two days after ISS disclosed the vulnerability associated with these products.

This fast turnaround time in transforming a publicly disclosed vulnerability into an actual worm-based exploit caught the attention of security experts, especially because the Witty Worm seeks to destroy the hard drive by writing nonsense code to it. William Boni, Motorola’s vice president and chief information security officer, even had cause to allude to the Witty Worm in his keynote address last week at the InfoSec World conference. Motorola uses ISS products and had to rapidly upgrade with a patch to prevent worm infections.

HP has filed a lawsuit against Gateway that accuses HP’s rival of violating six technology patents relating to desktop, notebook and server computer systems. The suit, which was filed last week in federal district court in San Diego, alleges that Gateway violated HP’s patents in areas including graphics, power management and notebook design, says Joe Beyers, vice president of intellectual property licensing at HP. Gateway previously had licensed some of the patents in question, Beyers says. “Many of these were licensed to Gateway from 1994 to 1999,” he says. “They then refused to renew that license going forward after 1999.” Gateway vowed to fight the suit.

Last year, HP formed an intellectual property licensing division to expand and oversee licensing of the company’s patent portfolio. Wednesday’s lawsuit is the first to emerge from the division, which helped increase HP’s revenue from royalties by 50% in 2003, according to Beyers.

The Federal Trade Commission and the Department of Justice has acted to halt a fake-Web and e-mail “phishing” scam that had conned hundreds of users into giving credit card and bank account numbers to Web sites that looked like those of AOL and PayPal. The FTC charged Zachary Keith Hill of Houston with deceptive and unfair practices, and the Justice Department named Hill as a defendant in a criminal case it filed in Virginia.

Telecom operators will be the next to benefit from the cost savings and enhanced services made possible by moving operations overseas, according to a new Deloitte Research survey. However, the researcher warned that operation complexity, loss of control, language, cultural barriers and objections from home country groups that do not want to see local jobs go overseas present obstacles.

Global operators are expected to “offshore” 5% of the industry’s 5.5 million-strong labor force, or 275,000 jobs, by 2008, the professional services and advice organization said last week. What’s more, the industry is expected to reap cost savings of $14 billion per year by 2008 from improved call center capabilities and enhanced broadband and mobile data services, the research group says.

Call centers, IT services, application service development, and accounting and finance will be among some of the top offshore processes, the research group said, adding that India, Argentina and Estonia will be destinations of choice. (See Mark Gibbs’ thoughts on offshoring)