February 10, 2006 10:00 AM PST

Week in review: The spying game

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manufacture, allowing them to be inserted into wine bottles. An integrated nose--which would include a sensor array and a silicon chip--could cost a few dimes apiece to manufacture now and drop to less than 5 cents over time. A nose based on all printed semiconductors would be even cheaper and could be feasible over time.

A little privacy
A bill announced in Congress would require every Web site operator to delete information about visitors, including e-mail addresses, if the data is no longer required for a "legitimate" business purpose. The proposal, introduced by Rep. Ed Markey, seeks to import European-style privacy regulations by imposing a broad data-deletion requirement. It would apply to every U.S. Web site, even ones run by individuals, bloggers or nonprofit groups and charities.

Markey said the measure would help stop identity theft. "This warehoused personal information about consumers' Internet use should not be needlessly stored to await compromise by data thieves or fraudsters, or disclosure through judicial fishing expeditions," the Massachusetts Democrat said in a statement. Also, Markey said, the bill would help address the issue of search engines storing data about their customers' search terms, a subject that received attention when the Department of Justice subpoenaed Google, Yahoo and other sites for such information.

Another bill in Congress proposes fines of up to $500,000 and prison sentences of up to 20 years for anyone who "fraudulently" acquires and resells records of calls made by a telephone subscriber. But it's not entirely clear that the measure is necessary. The Federal Trade Commission has for decades enjoyed the power to stop "deceptive" business practices, a term that also encompasses fraudulent behavior. In addition, state attorneys general have the ability to file civil and criminal suits to halt illicit business practices.

Congress took particular interest in the topic of phone record privacy after reports that online brokers may be "pretexting"--that is, posing as legitimate customers--to obtain such records and then sell them cheaply on the Web.

Meanwhile, a new law targeting "annoying" e-mail messages and Web posts is being challenged in federal court. The plaintiff, a Web site that lets people send anonymous e-mail for a fee, said the suit was necessary because the law is so broad it makes providing the service a crime.

As reported earlier by CNET News.com, President Bush last month signed into law a massive bill for the Justice Department that includes the new criminal sanctions aimed at Internet communications that "annoy." The law prohibits anyone from posting annoying Web messages or sending annoying e-mail messages without disclosing his or her true identity.

Executive exodus
Wayne Inouye, CEO of Gateway since its merger with eMachines two years ago, resigned as the company focuses on building up its direct sales to consumers and to professional markets. The sudden resignation of Inouye comes amid a rebound for the company.

In 2005, Gateway saw its market share in the U.S. rise to 6.1 percent, making the company the third-biggest PC maker in the country. The problem is that the gains have mostly come through selling low-price retail machines, and Gateway wants to expand its government and business sales.

The Web search landscape shifted a little after Google snatched the leader of Amazon.com's A9 subsidiary, Chief Executive Udi Manber, causing some experts to question the future of the e-commerce company's search efforts. Manber will become Google's vice president of engineering after he leaves A9 at the end of the week.

A9 is a general Web search site, like the more popular Google or Yahoo, and it powers the Web search and site search on Amazon.com. With Manber's departure, some Amazon watchers now question whether the A9 search effort is just an experiment for the Seattle company or a defensive move to protect e-commerce turf against Google and Yahoo.

Sometimes new leadership is unavoidable, which is the case with Internet phone provider Vonage. Vonage filed to go public, but it can't do so with its current CEO.

The company filed documents with the Securities and Exchange Commission, registering to become a public company and disclosing that it has hired a new CEO. Vonage founder Jeffrey Citron had been the company's chief executive since its inception.

But in 2003, Citron settled an SEC complaint that focused on a scheme involving improper use of the Nasdaq Stock Market's Small Order Execution System, or SOES. Without admitting or denying the allegations in the complaint, he paid a $22.5 million fine and agreed to accept an SEC order that bars him from associating with any securities broker or dealer.

Patent problems
Microsoft's recent warning that customers must use an updated version of Office in new installations is likely to affect a significant number of businesses...Computer code that could be used in cyberattacks on Firefox users has been released, increasing the urgency for people to upgrade to the latest version of the Web browser...Microsoft plans to ship a new security product in June, charging $49.95 a year to shield up to three PCs against viruses, spyware and other cyberthreats...Apple Computer introduced a lower-end, less expensive iPod Nano, with 1GB capacity, and lowered the price of its iPod Shuffle.

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