Researchers: Cyber spies break into govt computers

A cyber spy network based mainly in China hacked into classified documents from government and private organizations in 103 countries, including the computers of the Dalai Lama and Tibetan exiles, Canadian researchers said Saturday.

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The work of the Information Warfare Monitor initially focused on allegations of Chinese cyber espionage against the Tibetan community in exile, and eventually led to a much wider network of compromised machines, the Internet-based research group said.

"We uncovered real-time evidence of malware that had penetrated Tibetan computer systems, extracting sensitive documents from the private office of the Dalai Lama," investigator Greg Walton said.

The research group said that while it's analysis points to China as the main source of the network, it has not conclusively been able to detect the identity or motivation of the hackers.

Calls to China's Foreign Ministry and Industry and Information Ministry rang unanswered Sunday. The Chinese Embassy in Toronto did not immediately return calls for comment Saturday.

Students For a Free Tibet activist Bhutila Karpoche said her organization's computers have been hacked into numerous times over the past four or five years, and particularly in the past year. She said she often gets e-mails that contain viruses that crash the group's computers.

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The IWM is composed of researchers from Ottawa-based think tank SecDev Group and the University of Toronto's Munk Centre for International Studies. The group's initial findings led to a 10-month investigation summarized in the report to be released online Sunday.

The researchers detected a cyber espionage network involving over 1,295 compromised computers from the ministries of foreign affairs of Iran, Bangladesh, Latvia, Indonesia, Philippines, Brunei, Barbados and Bhutan. They also discovered hacked systems in the embassies of India, South Korea, Indonesia, Romania, Cyprus, Malta, Thailand, Taiwan, Portugal, Germany and Pakistan.

Once the hackers infiltrated the systems, they gained control using malware — software they install on the compromised computers — and sent and received data from them, the researchers said.

Two researchers at Cambridge University in Britain who worked on the part of the investigation related to the Tibetans are also releasing their own report Sunday.

In an online abstract for "The Snooping Dragon: Social Malware Surveillance of the Tibetan Movement," Shishir Nagaraja and Ross Anderson write that while malware attacks are not new, these attacks should be noted for their ability to collect "actionable intelligence for use by the police and security services of a repressive state, with potentially fatal consequences for those exposed."

They say prevention against such attacks will be difficult since traditional defense against social malware in government agencies involves expensive and intrusive measures that range from mandatory access controls to tedious operational security procedures.

The Dalai Lama fled over the Himalaya mountains into exile 50 years ago when China quashed an uprising in Tibet, placing it under its direct rule for the first time. The spiritual leader and the Tibetan government in exile are based in Dharmsala, India.

Giant Internet worm set to change tactics April 1st

The fast-moving Conficker computer worm, a scourge of the Internet that has infected at least 3 million PCs, is set to spring to life in a new way on Wednesday — April Fools' Day.

That's when many of the poisoned machines will get more aggressive about "phoning home" to the worm's creators over the Internet. When that happens, the bad guys behind the worm will be able to trigger the program to send spam, spread more infections, clog networks with traffic, or try and bring down Web sites.




Technically, this could cause havoc, from massive network outages to the creation of a cyberweapon of mass destruction that attacks government computers. But researchers who have been tracking Conficker say the date will probably come and go quietly.

More likely, these researchers say, the programming change that goes into effect April 1 is partly symbolic — an April Fools' Day tweaking of Conficker's pursuers, who for now have been able to prevent the worm from doing significant damage.

"I don't think there will be a cataclysmic network event," said Richard Wang, manager of the U.S. research division of security firm Sophos PLC. "It doesn't make sense for the guys behind Conficker to cause a major network problem, because if they're breaking parts of the Internet they can't make any money."

Previous Internet threats were designed to cause haphazard destruction. In 2003 a worm known as Slammer saturated the Internet's data pipelines with so much traffic it crippled corporate and government systems, including ATM networks and 911 centers.

Far more often now, Internet threats are designed to ring up profits. Control of infected PCs is valuable on the black market, since the machines can be rented out, from one group of bad guys to another, and act as a kind of illicit supercomputer, sending spam, scanning Web sites for security holes, or participating in network attacks.

The army of Conficker-infected machines, known as a "botnet," could be one of the greatest cybercrime tools ever assembled. Conficker's authors just need to figure out a way to reliably communicate with it.




Infected PCs need commands to come alive. They get those commands by connecting to Web sites controlled by the bad guys. Even legitimate sites can be co-opted for this purpose, if hackers break in and use the sites' servers to send out malicious commands.

So far, Conficker-infected machines have been trying to connect each day to 250 Internet domains — the spots on the Internet where Web sites are parked. The bad guys need to get just one of those sites under their control to send their commands to the botnet. (The name Conficker comes from rearranging letters in the name of one of the original sites the worm was connecting to.)

Conficker has been a victim of its success, however, because its rapid spread across the Internet drew the notice of computer security companies. They have been able to work with domain name registrars, which administer Web site addresses, to block the botnet from dialing in.

Now those efforts will get much harder. On April 1, many Conficker-infected machines will generate a list of 50,000 new domains a day that they could try. Of that group, the botnet will randomly select 500 for the machines to actually query.

The bad guys still need to get only one of those up and running to connect to their botnet. And the bigger list of possibilities increases the odds they'll slip something by the security community.

Researchers already know which domains the infected machines will check, but pre-emptively registering them all, or persuading the registrars to neutralize all of them, is a bigger hurdle.

"We expect something will happen, but we don't quite know what it will look like," said Jose Nazario, manager of security research for Arbor Networks, a member of the "Conficker Cabal," an alliance trying to hunt down the worm's authors.




"With every move that they make, there's the potential to identify who they are, where they're located and what we can do about them," he added. "The real challenge right now is doing all that work around the world. That's not a technical challenge, but it is a logistical challenge."

Conficker's authors also have updated the worm so infected machines have new ways to talk to each other. They can share malicious commands rather than having to contact a hacked Web site for instructions.

That variation is important because it shows that even as security researchers have neutralized much of what the botnet might do, the worm's authors "didn't lose control of their botnet," said Michael La Pilla, manager of the malicious code operations team at VeriSign Inc.'s iDefense division.

The Conficker outbreak illustrates the importance of keeping current with Internet security updates. Conficker moves from PC to PC by exploiting a vulnerability in Windows that Microsoft Corp. fixed in October. But many people haven't applied the patch or are running pirated copies of Windows that don't get the updates.

Unlike other Internet threats that trick people into downloading a malicious program, Conficker is so good at spreading because it finds vulnerable PCs on its own and doesn't need human involvement to infect a machine.

Once inside, it does nasty things. The worm tries to crack administrators' passwords, disables security software, blocks access to antivirus vendors' Web sites to prevent updating, and opens the machines to further infections by Conficker's authors.

Someone whose machine is infected might have to reinstall the operating system.

Twitter to try money-making methods

Micro-blogging sensation Twitter plans to begin dabbling this year with ways to pump cash from the fast-growing free service.




"We have patient investors and time for experimenting with revenue generating ideas and products," Twitter co-founder Biz Stone said late Thursday in response to an AFP inquiry.

"That being said, we'll start experimenting this year. We don't have to hit a home run right away but we're looking forward to showing some progress in this area."

Stone said in a public radio interview a day earlier that one method could be charging fees for commercial accounts used by businesses to spread messages on Twitter.

Twitter in February reportedly raised an additional 35 million dollars in funding from venture capital firms.

Stone said in the radio interview that Twitter remains focused on growth. The California-based company claims to have more than six million users and a "phenomenal growth rate" of 900 percent in the past year.

Twitter, which allows users to pepper one another with messages of 140 characters or less, has seen a dizzying surge in popularity since it was launched in August 2006 but has been unable so far to generate revenue.

"We are now positioned extremely well to support the accelerating growth of our service, further enable the robust ecosystem sprouting up around Twitter, and yes, to begin building revenue-generating products," Stone said in a February blog posting.

Stone said in his online message that Twitter's "small team will grow much bigger to meet the challenges and opportunities ahead."

Qualcomm backs game console for `next billion'

A startup called Zeebo Inc. is betting that people in emerging markets want to play good video games just as much as people in the U.S., Western Europe and Japan do.

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Zeebo plans to launch its "video game console for the next billion" in Brazil next month for $199 and in other countries later this year for $179. It was developed using the cell phone technology of Qualcomm Inc., the San Diego company best known for its mobile phone chips.

The Zeebo unit is light, and a little larger than the Nintendo Wii. But instead of playing video games on disks, the Zeebo will use digitally downloaded games — distributed through cell phone networks that players don't even have to subscribe to.

The console is not meant to directly compete with the latest, powerful devices like Sony Corp.'s PlayStation 3, Microsoft's Xbox 360, or the Wii.

Rather, said Zeebo CEO John F. Rizzo, it is targeted at consumers in emerging markets like India, China, Brazil and Eastern Europe who generally can't afford the latest high-end consoles, or the games published for them. In many of these countries, cell phone service is more readily available and cheaper than wired broadband.

Zeebo, unveiled Monday at the Game Developers Conference in San Francisco, attaches to any TV and uses a fraction of the electricity that high-end gaming consoles need. Its batteries can be juiced with what looks like a typical cell phone charger.

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The Zeebo's technological capability is somewhere between that of the original PlayStation, which launched in 1994, and its 2000 follow-up, the PlayStation 2. By U.S. standards this won't elicit many oohs and aahs, but Rizzo said the vast majority of the Zeebo's target market has not played an ultra-realistic modern video game. In Brazil, for example, a two-decades old system called Mega Drive, called Sega Genesis in the U.S., still sells well, said Reinaldo Normand, Zeebo's vice president of business development and licensing.

Zeebo hopes that by improving on systems like Mega Drive and offering wireless downloads of games, it will attract the emerging middle classes of India, China and Brazil to modern video games. A game like "Quake" may be old news to an American gamer today, but in 1996 it blew people's minds — just what Zeebo hopes it will do in Brazil.

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Big game publishers like Electronic Arts Inc., THQ Inc. and Activision Blizzard Inc. have agreed to make their games available for Zeebo. The question now is whether its target market, which the company estimates to be as big as 800 million, will sign on as well.

So far, video game consoles have not been successful in emerging markets. In addition to the price barrier for many consumers, piracy is widespread, which scares game publishers away. But Zeebo believes its wireless delivery of games will ward off piracy because there won't be physical game disks to copy.

Zeebo also plans to sell games for a few dollars more than what pirated games cost on the black market (about $10 in Brazil, for example, compared with about $100 for a legally available game), hoping that the ability to buy games from the comfort of home will lure consumers. Next year, the company plans to drop the price of the console to $149.

Mike Yuen, senior director of games and services at Qualcomm, compared the Zeebo's content delivery system to the Amazon Kindle, the electronic book reader that requires no subscription fees — just the purchase of the device and the content. Zeebo also said it plans to let customers have access to the console's broadband wireless service by connecting the device to their PCs.

Zeebo did not say how much money went into developing the console, but Rizzo noted that the company has only five full-time employees. The system, he said, is "designed from the ground up to be economically viable."

"Launching a new console is not for the faint of heart," Rizzo said.

Zeebo's launch reminded some people in the industry of the Phantom gaming system, which earlier this decade tried to digitally distribute computer games — but didn't really get anywhere. However, Wedbush Morgan analyst Michael Pachter pointed out a key difference. While the Phantom was meant for U.S. markets, which already had easy access to high-end gaming consoles, the Zeebo taps an entirely new market.

Recession casts shadow over video game conference

The video game industry is holding up, but the gloom of the recession will be on the minds of thousands of people at this week's Game Developers Conference in San Francisco, a key event for video game insiders looking to learn new skills, showcase innovations and if they're lucky enough, find work.

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Bolstered by an ever-expanding audience that is turning to games for cheaper entertainment, video games are benefiting in some ways from the economic turmoil. Yet the industry is not completely immune, with layoffs and closings of studios that produce games. Electronic Arts Inc., the game publisher behind the "Madden" football series, is cutting 1,000 jobs, most by the end of this month.

Meggan Scavio, the Game Developers Conference's event director, expects attendance to be slightly down this year from last year's 18,000 people. When game studios cut back, she noted, travel and training budgets are among the first to go. She also expects fewer, more informal parties.

"It's kind of like let's celebrate, but do it quietly," she said.

Even amid the recession's pall, this is a fertile time for video games. Blockbuster games with intricate story lines and movie-quality graphics have become popular entertainment for millions. Technological advancements like digital distribution are making it easier for new developers to get their games into players' hands. People are playing games on more platforms than ever — on their mobile phones and handheld systems, on social networks like Facebook and on consoles not just in their living rooms but in bars and retirement homes.

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In 2008, Americans spent more than $21 billion on video game hardware, software and accessories, up from $18 billion in 2007, according to market researcher NPD Group. And sales continued to rise in January and February of this year.

However, while people are still buying a lot of games, the industry's explosive growth now means there's more competition. Consumers are looking more carefully at which games they want to spend money on. And mindful of the recession, stores are watching their inventories carefully, reluctant to offer too much shelf space to games that aren't going to be hits.

Game companies that can't recoup their development costs — which can be in the tens of millions of dollars — face steep budget cuts to stay afloat. If they are publicly held, the companies must also please their shareholders.

In addition to EA, THQ Inc., which last month reported a loss and lower sales, is cutting 600 jobs — nearly a quarter of its work force.

IDC video games analyst Billy Pidgeon suggests job cuts in this industry are a knee-jerk reaction to Wall Street. "What worries me about the economic climate is that you are losing research and development (talent)," he said.

Compared to people in other industries, laid-off video game developers might have a better chance of landing another job. There are still video game companies hiring — the game conference will have nearly 50 companies recruiting new talent in the career pavilion.

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Among the companies looking to fill jobs will be Activision Blizzard Inc. and Microsoft Corp., though it's not clear how many positions are open.

It also might be easier today for a talented developer laid off from a big publisher to make it as an independent game designer. With a broadening audience, the definition of what counts as a game is expanding, as is how we play.

The recently launched "Flower" for the PlayStation 3, for example, lets players be the breeze, softly guiding a petal across fields on the screen. It was created by Thatgamecompany, co-founded by students at the University of Southern California. Another independently produced game, "You Have to Burn the Rope," can take 30 seconds to complete because the player has just one objective: to burn a rope so the chandelier it's holding falls and kills an angry boss. The latter is a finalist for an innovation award at the Independent Games Festival, which takes place throughout the week in conjunction with the Game Developers Conference.

Another highlight of the show will be a keynote speech by Satoru Iwata, the president of Nintendo Co., who started out as a game developer. Nintendo is responsible for much of game industry's recent success, ever since its 2006 Wii console broadened the definition of what it means to be a gamer. Now Nintendo has high hopes for the DSi, the latest version of its handheld system, which can incorporate sound recordings and photos into game play.

Still, there's no escaping the recession. This year will mark the first time that the Game Developers Conference features panels putting the economy front and center, with sessions entitled "Surviving the Squeeze" and "Stability in the Stormy Weather."

"People are finding ways to make money with smaller budgets, and that takes creativity," Scavio said. "The thing about game developers is that they are a resilient bunch. What they do is find their way through this downturn."

Sony e-book reader gets 500,000 books from Google

Google Inc. is making half a million books, unprotected by copyright, available for free on Sony Corp.'s electronic book-reading device, the companies were set to announce Thursday.

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It's the first time Google has made its vast trove of scanned public-domain books available to an e-book device, and vaults the Sony Reader past Amazon.com Inc.'s Kindle as the device with the largest available library, at about 600,000 books.

The scanned books were all published before 1923, and include works like Charles Dickens' "A Tale of Two Cities" as well as nonfiction classics like Herodotus' "The Histories."

The books are already available as free downloads in the Portable Document Format (PDF), which works well on computer screens but not on e-book readers. Google will provide the books to the Sony Reader in the EPUB (electronic publication) format, which lets the lines flow differently to fit a smaller screen.

Google spokeswoman Jennie Johnson said the company wants to make the books available as widely as possible.

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"Really our vision is: any book, anywhere, any time and on any device," she said. "We want to partner with anybody who shares our vision of making them more accessible."

The publishing industry has more or less united on EPUB for e-book distribution, but Amazon uses its own format for the Kindle. However, unencrypted EPUB files can be converted to a format readable by the Kindle using PC software.

Unlike the Sony Reader, the $359 Kindle has a wireless connection directly to its e-book store, which boasts more than 245,000 titles. To get books onto the Reader, the user first downloads them from Sony's Web site using a computer, then connects the Reader to the computer.

Cisco announces its first servers

Cisco Systems Inc. wants a bigger chunk of the corporate computing market, and plans to start selling servers in competition with old partners like Hewlett-Packard Co. and IBM Corp.

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The servers are part of a package put together by Cisco and partners like BMC Software and VMware Inc. to harness the power of a recent technology called "virtualization" that lets one computer act like several.

San Jose, Calif.-based Cisco is the world's largest maker of computer networking gear, but Monday's announcement greatly expands its ambitions in the corporate "data center" market. It's moving from selling the switches that allow the computers to talk to each other to selling virtually entire data centers, in conjunction with its partners.

In a videoconference, Cisco Chief Executive John Chambers emphasized that its "Unified Computing System" is not an attempt to move into the commodity server market.

"We have very little interest in the product space," Chambers said. "We're after: `How does it tie together?'"

Chambers called the unified computing product the biggest step for Cisco since it added switches to its original router products through the acquisition of Crescendo Communications Inc. in 1993.

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Since then, the company has used the cash generated by its enormously successful computer networking gear — it had $29.5 billion on hand in its last quarterly report — to buy up numerous companies, adding consumer gadgets and cable-TV equipment to its portfolio. This time, however, it's not diversifying through an acquisition, but by building its own products.

IDC analyst Michelle Bailey said Cisco isn't trying to take on HP and IBM in the broader market for servers, but rather is focusing on a certain set of very large customers. Their data centers, for instance, keep track of customer accounts, run large Web sites or deliver movies to PCs or cell phones. That's a $20 billion business annually.

Through virtualization, servers can quickly be shifted between different tasks, reducing the number that are needed. Cisco said the new system can reduce the capital cost of a data center by 20 percent, and operating expenses by 30 percent.

"Every customer we're talking to around the world is looking to save money," said Rob Lloyd, Cisco's senior vice president for the U.S., Canada and Japan.

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It's because Cisco wanted to make the most of virtualization that it decided to produce its own servers, said Mario Mazzola, senior vice president of the server access and virtualization business unit.

Monday's announcement, though widely expected, was light on specifics, and Cisco didn't say when the new system would be available.

It is clear that the server will be "blades" — thin devices that will be powered by Intel Corp.'s latest chips. HP dominates that market now, followed by IBM.

Other companies support the launch included software providers Microsoft Corp., Red Hat Inc., consultant Accenture Ltd. and EMC Corp., a maker of data storage systems and the majority owner of VMware.

HP, which not only makes servers but competes with Cisco in networking gear, said it's already providing its own equivalent of Unified Computing, which it calls Adaptive Infrastructure.

"The vision they paint for tomorrow is one we're already delivering for today," said Jim Ganthier, vice president of marketing for enterprise servers and storage at HP.

He also said that making servers isn't as easy as it seems, requiring a long-term commitment to development and continuous investment.

"It may have looked like a really great idea on paper, but as they start to wade into the water they may find out that there are some things in the water that they don't like," Ganthier said.

How to tell, what to do if computer is infected

Computer-virus infections don't cause your machine to crash anymore.

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Nowadays, the criminals behind the infections usually want your computer operating in top form so you don't know something's wrong. That way, they can log your keystrokes and steal any passwords or credit-card numbers you enter at Web sites, or they can link your infected computer with others to send out spam.

Here are some signs your computer is infected, tapped to serve as part of "botnet" armies run by criminals:

• You experience new, prolonged slowdowns. This can be a sign that a malicious program is running in the background.

• You continually get pop-up ads that you can't make go away. This is a sure sign you have "adware," and possibly more, on your machine.

• You're being directed to sites you didn't intend to visit, or your search results are coming back funky. This is another sign that hackers have gotten to your machine.

So what do you do?

• Having anti-virus software here is hugely helpful. For one, it can identify known malicious programs and disable them. If the virus that has infected your machine isn't detected, many anti-virus vendors offer a service in which they can remotely take over your computer and delete the malware for a fee.

• Some anti-virus vendors also offer free, online virus-scanning services.




• You may have to reinstall your operating system if your computer is still experiencing problems. It's a good idea even if you believe you've cleaned up the mess because malware can still be hidden on your machine. You will need to back up your files before you do this.

How do I know what information has been taken?

• It's very hard to tell what's been taken. Not every infection steals your data. Some just serve unwanted ads. Others poison your search result or steer you to Web sites you don't want to see. Others log your every keystroke. The anti-virus vendors have extensive databases about what the known infections do and don't do. Comparing the results from your virus scans to those entries will give you a good idea about what criminals may have snatched up.

Second Life finding new life

Linden Lab chief executive Mark Kingdon shakes his head when he sees news stories heralding the demise of former Internet darling Second Life.

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Reporters that rushed into Second Life to cover cyber-events and portrayed the online fantasy realm as science fiction future come true have been pulling up stakes and tearing down the community they had embraced.

Well-known Silicon Valley gossip website Vallywag even started a death watch for Second Life.

"You read those stories; as CEO I have to shake my head," said Mark Kingdon, who last year ago took over for founder Philip Rosedale as chief executive of San Francisco-based Linden Lab, the company behind Second Life.

"The reality is that Second Life continues to grow; every second someone joins. Second Life is hopping."

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The number of "active users" at Second Life has grown 25 percent since September last year, while the amount of time and money spent in the virtual world has climbed by similar percentages, according to Kingdon.

Linden Lab thinks the drubbing of its image is a rebound from the incredible hype it got during infancy.

"We are not called the darling anymore like Facebook or Twitter, but we are continuing to motor on at incredible levels," Kingdon said.

"Time will tell the story. We are a profitable business and we are growing."

Technology-loving "early adopters" flocked to Second Life, where they socialized in the forms of animated characters called "avatars" controlled by computer keystrokes and mouse clicks.

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Second Life was accused of painting a misleading picture by touting the overall number of people that opened accounts without accounting for the fact that many people didn't stick around to homestead.

The number of people that have joined the virtual world since it was created in 1999 eclipsed 15 million last year.

The average number of people logged on to Second Life at any given time is about 70,000, according to Linden Lab.

Residents spent about 41.5 million hours total in Second Life in January, as opposed to the 28.3 million hours users spent in the virtual world the same month in 2008, according to Linden.

Voice capabilities were added last year so people can talk in-world instead of typing conversations.

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"The array of things people do in Second Life has blossomed," Kingdon said. "One thing that has popped out as a killer application is business meetings."

Technology firms with workers spread around the world are increasingly using Second Life as an economical forum for meetings.

"There is something about that feeling of presence," said Karen Keeter, marketing director for digital convergence at IBM, which uses Second Life for gatherings.

"Being able to see yourself as this avatar standing there next to other people is just a feeling of immersion you don't get with other alternatives."



IBM's campus in Second Life features a picnic area with hammocks; a sculpture garden, and cafe for avatars to slip off and chat over faux coffee.

"People love that," Keeter said. "We create these environments that are like the lunch room. We get people there a half-hour early and the whole point is to mingle."

IBM is working with Linden to build a private conference area protected by a software "fire wall" for meetings focused on sensitive information best not discussed on the "public grid."

Kingdon downplays what he refers to as "an empty storefront syndrome" at Second Life.

An array of businesses that rushed in to sell virtual or real-world goods have abandoned the virtual world, leaving behind vacant faux buildings.

"Merchants in Second Life are doing well," Kingdon said. "We just bought two commerce sites last month because we see selling and buying of virtual good in Second Life is booming."

More than 1.3 million US dollars worth of transactions reportedly take place daily in Second Life, where the currency is the Linden dollar.

There are more than 15,000 merchants in Second Life selling snippets of computer code that become clothing, hair, art work or other items for avatars.

People spent 360 million dollars (US) in Second Life last year, according to Linden.

Schools continue to use Second Life for online classrooms and bands perform on in-world stages, albeit to sometimes meager audiences.

Linden is making avatar tools easier and "reworking the user experience," according to Kingdon.

"We have hired a world-class-team to lead the changes," Kingdon said. "You ain't seen nothing yet. A lot of work is going to be done in the next 9 to 12 months."

IBM launches water-management services operation

IBM Corp. wants to get really deep into water.

The technology company is launching a new line of water services Friday, hoping to tap a new sales vein by taking the manual labor out of fighting pollution and managing water supplies. IBM says the overall water-management services market could be worth $20 billion in five years.

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The effort is part of a wider role IBM wants to play in infrastructure services, including automobile traffic and power grids. In each instance, IBM is trying to persuade utilities and government agencies to overhaul their computer networks and link digital sensors together for better insights.

For example, instead of a meter-reader from the power company traipsing through your backyard, IBM is banking that one day your meter and your neighbors' will feed data directly into the utility's computer network.

Same for water. IBM says its new services will help water providers become more efficient in overseeing ever-more-precious supplies and responding faster to contamination and other emergencies.

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The company has been working on a project called SmartBay with an Irish marine institute to develop sensors that are monitoring pollution, marine life and wave conditions around Galway Bay and transmitting data to researchers. Among the benefits, IBM contends, is that computers can track floating debris that pose a hazard to commercial fishermen.

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This "smarter planet" theme is part of IBM's strategy to keep making money in the recession. The company's chairman and CEO, Sam Palmisano, said in a letter to shareholders this week that IBM will be aggressive in drumming up business in areas like managing traffic, power grids, water, food, health care and finance. He vowed the efforts will help Armonk, N.Y.-based IBM grow by getting early starts in areas that will need help for years to come.

"We will not simply ride out the storm," Palmisano wrote. "Rather, we will take a long-term view, and go on offense."

Google to target ads based on Web surfing habits

Google Inc. will use its surveillance of Web surfing habits to figure out which ads are best suited to each individual's interests — a practice likely to illuminate just how much the Internet search leader has been learning about millions of people around the world.

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Under the program announced Wednesday, someone who frequents sites about dogs might see more ads for flea treatment products even when visiting another Web destination that has nothing to do with pets.

The tactic relies on technology that Google got last year in a $3.2 billion acquisition of the Internet ad service DoubleClick Inc. Some of the opposition to the deal revolved around potential privacy intrusions, but Google overcame those misgivings during an extensive review to win regulators' approval for the deal.

The ads, set to debut within the next few weeks, initially will appear on Google's YouTube and thousands of other sites that belong to Google's ad network.

Google is following major rivals like Yahoo Inc. and Microsoft Corp. that already have been customizing ads based on the past activities of specific Web browsers. Until now, Google had been tying its ads solely to search requests and the general content on Web pages.

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Although Yahoo and Microsoft already have been tying ads to people's presumed interests, Google's embrace of this "behavioral" targeting is more troubling to privacy watchdogs. That is because the Mountain View-based company already has used its dominant position in the Internet search market to build a huge database of potentially sensitive information about the kinds of things that people are looking for on the Web.

Now Google is taking it a step further by tracking people's favorite Web sites to divine individual tastes and then package ads falling under the same areas of interest. The company intensified its monitoring activity in December when it began putting a sliver of DoubleClick's computer code, called a "cookie," on its advertising partners' Web sites.

"This is a very serious development," said Marc Rotenberg, executive director of the Electronic Privacy Information Center. "I don't think the world's largest search engine should be in the business of profiling people."

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Rotenberg is hoping Google's embrace of behavioral targeting prompts the Federal Trade Commission to take another look at the DoubleClick acquisition and perhaps mandate privacy safeguards.

Hoping to avoid a backlash and appease regulators, Google has set up its system so individuals can specify their areas of interest or shun certain forms of advertising at http://www.google.com/ads/preferences.

"We are pleased that our launch of interest-based advertising includes innovative, consumer-friendly features to provide meaningful transparency and choice for our users," Nicole Wong, Google's deputy general counsel, wrote in a Wednesday blog posting.

The Progress & Freedom Foundation, a Washington-based think tank, applauded Google for creating a "gold standard" that puts the company's stamp on behavioral targeting ads and provides clear explanations on how to avoid them. The group brushed off the criticism of Google's expansion into behavioral targeting as "paroxysms of privacy hysteria."

Google is betting most people will enjoy seeing more ads catering to their interests. In the process, Google is hoping it can boost its revenue, which climbed 31 percent to nearly $22 billion last year despite a recession that hammered many of its customers and partners.

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Anyone can also opt out of the targeting program, a choice that Google probably realizes the overwhelming majority of people won't take the time to do, said Jeff Chester, executive director of the Center for Digital Democracy. Both Yahoo and Microsoft also offer opt-out features.

Echoing a familiar sentiment among consumer activists, Chester believes people should be subjected to behavioral targeting only if they give their explicit permission.

"It would have been nice if Google had taken a stand against behavioral targeting instead of endorsing the model," Chester said. "We are now in an arms race of digital data collection where companies are trying to outdo each other in pursuit of the 21st century's Holy Grail — advertising."

Google software bug shared private online documents

Google has confirmed that a software bug exposed documents thought to be privately stored in the Internet giant's online Docs application service.

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The problem was fixed by the weekend and is believed to have affected only .05 percent of the digital documents at a Google Docs service that provides text-handling programs as services on the Internet.

"We've identified and fixed a bug where a very small percentage of users shared some of their documents inadvertently," Google Docs Product Manager Jennifer Mazzon wrote in a message at the firm's website on Saturday.

"We're sorry for the trouble this has caused. We understand our users' concerns (in fact, we were affected by this bug ourselves) and we're treating this very seriously."

The problem occurred in cases where people had chosen to collaborate on multiple documents and adjusted settings to allow access to others, according to Google.

Collaborators were unintentionally given permission to access documents aside from the ones intended.

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"As part of the fix, we used an automated process to remove collaborators and viewers from the documents that we identified as having been affected," Mazzon said.

"We then emailed the document owners to point them to their affected documents in case they need to re-share them."

The slip comes as Google and other Internet firms entice people to rely on applications offered online as services "in the cloud" instead of buying software then installing and maintaining it on their own machines.

While the trend toward cloud services is growing, some still worry about the privacy of data kept online and whether it is shrewd to rely on the Internet for access to information and applications.

U.S. gears up for digital TV switch now on June 12

With about three months to go, U.S. regulators say some consumers are still unprepared for the television industry switch to digital broadcasting, which will affect Americans who do not receive their signals through cable or satellite.

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The federally mandated transition was originally set for February 17, but lawmakers postponed it to June 12 on the theory that people need more time to get ready.

The switch from analog to digital allows broadcasters to send more data efficiently, and also frees up the existing analog spectrum for such uses as cellphone and public-safety radio transmissions.

About a third of the nation's 1,800 full-power broadcasters switched from analog to digital TV signals on the original February 17 date, though only about 15 percent of the nation's households were affected.

"We must be mindful that this is just the beginning and that the large impacts lie ahead of us," Eloise Gore, associate chief in the media bureau at the Federal Communications Commission, told a public meeting on the switch on Thursday.

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President Barack Obama and most congressional Democrats won a delay of the full digital transition to June 12, after a government coupon program for converter boxes needed for older TVs could not provide coupons due to budget issues. That put millions of households on a coupon waiting list.

Backers of a delay feared vulnerable groups, like the elderly and needy, would lose access to emergency information if they lost television signals for days.

"For many, television is not simply a source of entertainment but a vital source of news that can be a lifeline in an emergency situation," acting FCC chairman Michael Copps said.

For the most part, the transition in February went smoothly. Significantly fewer calls came into call centers than estimated, for example. Still, the government expects up to 3 million telephone calls for help between now and June 12.

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Still, about 5 million U.S. households are still "totally unready" and 2.3 million households are waiting for the $40 government coupons, the government said.

"We are ... struggling with the procrastination of seniors who now see the June 12 date and see they have more time to act," said Sandy Markwood, chief of the National Association of Area Agencies on Aging.

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But that coupon waiting list should be cleared within three weeks now that the government has millions in new stimulus money assigned to re-fund the program and allow it to use first-class mail, among other changes.

The government is now sending out 2 million coupons a week with a turnaround time of 9 days, compared with 21 days, thanks to new funding, an official said.

Among the most common problems for consumers have been reception issues because of antennas that need to be repositioned or replaced. Viewers must also perform a scan to pick up channels once they receive a converter box, according to the FCC.

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The converter boxes typically cost between $60 and $80. Originally, the coupon program was intended to cover the full cost.




But a $40 box is "elusive," conceded Christopher McLean, executive director of the Consumer Electronics Retailers Coalition, which represents many of the companies selling the boxes like Wal-Mart Stores and Best Buy.

Consumers Union said it believes some retailers will not carry the cheaper boxes because they will make slimmer profit margins on them.

That retailers are making the boxes available is "largely a public service," McLean said. "Consumers need to shop around a little bit" to find cheaper boxes.

The postponement could benefit cable and satellite companies, which could attract more customers during the extension, according to Stanford Washington Research analyst Paul Gallant.

Beneficiaries are likely to include Comcast Corp, Time Warner Cable, DirecTV Group, EchoStar Corp, Mediacom Communications, and Charter Communications, he said.

Major U.S. television networks, including CBS Corp's CBS, General Electric Co's NBC and Walt Disney Co's ABC, vowed last week to continue to transmit TV signals in analog.

Microsoft to let PC users turn off IE Web browser

A single check box deep in the guts of the next version of Windows is giving Microsoft Corp. watchers a peek at how the software maker plans to keep European antitrust regulators from marring a crucial software launch.

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Windows 7, the successor to the much-maligned Vista, isn't expected to reach consumers until next year, but more than a million people are already testing early versions. A pair of bloggers tinkering with settings stumbled upon one they hadn't seen before: The ability to "turn off" Microsoft's own Internet Explorer browser.

Microsoft lost a long-running battle with EU antitrust regulators in 2007 over the way it bundled media player software into the Windows operating system. The dust had barely settled when a similar claim was filed, this time over Internet Explorer's place inside Windows. Opera Software ASA, a Norwegian competitor, claimed the practice gives Microsoft's browser an unfair advantage.

In a preliminary decision in January, the EU agreed. Since then, makers of the open-source browser Firefox and Google Inc., which entered the browser market six months ago, have offered to provide more evidence that Microsoft is stifling competition.

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In the media player dispute, the EU heavily fined Microsoft and forced it to sell a version of Windows without the offending program installed. This time, Microsoft appears to be offering the check-box solution as a way to head off a similar ending.

The company declined to comment Friday on the connection between the check boxes and the EU's preliminary decision. But in a recent quarterly filing, it said the European Commission may order PC makers to install multiple browsers on new PCs and force Microsoft to disable parts of its own Internet Explorer if people chose a competing browser.

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The check boxes, which were described on Microsoft enthusiast blogs http://www.aeroxp.org and http://www.chris123nt.com, also give Windows 7 users a way to disable the media player and hard-drive search programs, among other components, both of which have drawn scrutiny from regulators.

After Windows Vista landed with a thud, Microsoft needs a hit, said Michael Cherry, an analyst for the research group Directions on Microsoft. Beyond appeasing the EU, he said he didn't see much use for the Internet Explorer check box.

"Windows 7 is becoming more and more important for Microsoft," he said in an interview. "You don't want anything that gives anyone even a doubt as to whether or not they should upgrade."

Cook County sheriff sues Craigslist over sex ads

Cook County's sheriff filed a lawsuit Thursday against Craigslist, saying the popular online classifieds site not only allows the solicitation of prostitution but has actively created "the largest source of prostitution in America."

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"They've actually catered their site so it facilitates (prostitution), where you can actually and more specifically and quickly get to what you want," said Sheriff Tom Dart at a news conference announcing the federal lawsuit.

"How is that different than somebody who's aggressively and actively working with a pimp to try to get the word out about the women working for him?" he said.

Craigslist spokeswoman Susan Best said that although the company had not seen the lawsuit, it vehemently disputes the sheriff's contentions. The company cooperates with law enforcement, has taken several steps to prevent illegal use of the site and pulls inappropriate ads, she added.

"Misuse of Craigslist to facilitate criminal activity is unacceptable, and we continue to work diligently to prevent it," Best said in an e-mail to The Associated Press.

But Dart said Craigslist has refused over the last two years to prevent people from posting the ads that pop up by the thousands in its "Erotic Services" section.

He acknowledged the company does warn that solicitation of prostitution is prohibited, but said it ignores obviously illegal ads.

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"None of these ads require any imagination, there's no mystery," Dart said, pointing to ads with phrases such as "Teens for cash ... $100 quickie," and "Ask me about my 2 girl specials."

Dart brought to the press conference a 19-year-old woman who he said turned to prostitution — and was recently arrested for allegedly soliciting an undercover officer — after originally going to the site in search of modeling jobs.

Craigslist has created a public nuisance and is in violation of city, county, state and federal prohibitions, Dart says in the lawsuit. He asks that a federal judge shut the "Erotic Services" section down.

Like other sites, Craigslist, which allows users to post classified ads and other items, generally doesn't check the postings or remove them unless it receives complaints. Federal law offers broad immunity to service providers for content posted by users, as long as they respond to specific complaints.

The previous lawsuits failed because the defendants' only role was allowing ads, Dart said. In contrast, he argued, the purpose of the "Erotic Services" is to facilitate prostitution.

"They are not passive," Dart said. "They are actively involved with this."

Further, he said his own officers' experience — in which they posed as minors seeking sex — demonstrates that Craigslist does not look very hard for illegal activity.

"We put up ... one saying 14-year-old looking for sex," he said. "That ad wasn't taken down. It sat out there until we took it down."

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There have been several arrests around the nation that stemmed from "Erotic Services" ads posted on Craigslist.

In New York, federal prosecutors charged a New York man in November with being a violent pimp and alleged he advertised the services of girls and women between the ages of 15 and 20. And in January, two Wisconsin women were charged with misdemeanor prostitution after allegedly offering sex for money on Craigslist.

Craigslist reached an agreement in November with attorneys general in Connecticut, Illinois and several other states that called for the company to crack down on prostitution ads. The Connecticut attorney general's office had contacted the site after receiving several complaints about photographs depicting nudity.

Jim Buckmaster, Craigslist's CEO, said at the time that the agreement would allow legitimate escort services to continue advertising while discouraging illegal activity by requiring anyone posting "Erotic Services" ads to provide a working phone number and pay a fee with a valid credit card.

Craigslist also agreed to provide that information to law enforcement if subpoenaed.

At the time, Connecticut Attorney General Richard Blumenthal, who brokered the agreement, said Craigslist cooperated fully.

Also in November, Craigslist filed lawsuits against more than a dozen software and Internet companies that help people who post erotic service ads to circumvent the Web site's defenses against inappropriate content and illegal activity.

On Thursday, Best pointed to that agreement as evidence of Craigslist's diligence.

But the lawsuit has prompted Blumenthal to evaluate the agreement.

"If my office determines these measures have failed to stop prostitution and human trafficking, I will seek much stronger safeguards and consider other steps," he said in a statement, adding that Craigslist is cooperating.

Kindle e-book reader comes to the iPhone

Amazon.com Inc. has received a lot of attention and respectable sales for its Kindle e-book reader, but it's hardly made a dent in the hardcover armor of the old-fashioned paper book.

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On Wednesday, the Internet company revealed another prong of its strategy in making its gigantic e-book library available on a device already in millions of hands: the iPhone.

This is a big step for e-books, which have lingered outside the mainstream for nearly two decades even as digital media have conquered music and film distribution. Amazon's move combines a readily available device that's suitable for reading with a good distribution system and reasonably priced books.

That said, the first version of the iPhone application is crude, and Amazon would do well to release a software update soon to demonstrate its commitment to the iPhone.

But before we get into that, let's take a look at how the Kindle app works. It's free, available in Apple Inc.'s App Store for U.S. residents. Amazon says it's working on taking it international, though I wouldn't hold my breath because that would involve securing international publishing rights. Apart from the iPhone, it will also work on the iPod Touch.

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Once you've loaded the app, you can buy books on Amazon's Web store. You'll have to use either a computer or the iPhone's browser. Unlike some other e-book readers, including the Kindle, the app doesn't have a built-in store. Considering that most people are familiar with the Web site, this isn't a major shortcoming.

New books cost a few dollars less than the print versions, and some public-domain books are available for 99 cents.

Head back to the application, and it will load up the books you bought wirelessly. The Apple devices have gigabytes of storage memory, and unless you've filled it with music and movies, they can hold hundreds, even thousands of books.

Tap one, and its text fills the screen. Turn the page by swiping over it with your finger. If you do something else with your phone, then return to the reader app, it will show you the last page you were reading, so there's no need to fiddle with bookmarks or bend page corners.

That's great for reading short snatches here and there. Whip your iPhone out in the elevator, and your co-travellers won't know that you're ignoring them in the best way by catching up on Danielle Steel. You won't look like a snob in the supermarket checkout line, even if you're reading Stendhal's "The Charterhouse of Parma."

Since the screen is backlit, you don't need a light source.

If you've already bought a book for the Kindle device, it will load on your iPhone for free, and vice versa. If you're reading a book both on the Kindle and the iPhone, the two devices will communicate to keep track of how far you've read.

This sounds elegant, but the app has a mildly annoying habit of freezing when it's trying to communicate with Amazon when your wireless connection is weak.

Most of the other shortcomings have to do with reading comfort.

E-book readers haven't taken off in part because people don't like reading on a computer screen. The Kindle reading device, which costs $359, tackles that by using a novel screen technology known as electronic ink. It's not backlit, so it looks a lot more like paper, but it has numerous drawbacks, most notably that it can't show a bright white or a really dark black. Since it doesn't show any colors either, it looks like gray, unbleached paper printed with weak ink.

The iPhone and iPod Touch screens are nothing like that, of course. They have great contrast and color. But the Kindle app will show all books on a white background that many will find too bright, making it uncomfortable to read. You can turn down the screen brightness, but that will leave it too dark for other applications.

Other e-book readers available on the iPhone, like eReader and Stanza, let you pick a background and text color that won't hurt your eyes. These other reading applications also let you pick the font and set the margins on the screen. The only adjustment the Amazon app offers is the font size.

I also noticed that the app cut off the ends of some indented paragraphs in Max Brooks' "The Zombie Survival Guide," making them impossible to read. The Kindle 2, which went on sale last week, doesn't do this. Hopefully Amazon will fix the app before there's a major zombie uprising.

But the Kindle on the iPhone is still the best e-book reader I've seen so far.

Other applications are hampered by a weak selection of books and inelegant ordering systems. You can probably find something you won't mind reading on the eReader and Stanza, but if you have a particular book in mind from the outset, you're likely to be disappointed. Stanza has the bad habit of freezing for nearly a minute when launched.

A third, relatively new application called Shortcovers gave me frequent connection problems, and perplexingly it seems to emphasize providing samples rather than full books, even when the books are in the public domain.

The eReader does have the virtue of being available for other cell phones, so you're not completely left out if you don't have an iPhone. Another alternative, Mobipocket, is available for practically every "smart" phone except the iPhone. But there are few phones out there with screens large and sharp enough to make reading pleasurable.

The Kindle 2 is four times the size of the iPhone. You might prefer Kindle's screen, but I think most people will be fine with the phone once they get used to it. The dedicated reader has much longer battery life, but the iPhone will last for a domestic flight, and you need a charge the phone every other day or so anyway.

Perhaps the biggest advantage of the Kindle 2 is that it can subscribe to newspapers, which load wirelessly every day. The iPhone makes up for this to some extent through free news applications.

The iPhone costs less to buy than the Kindle, but the monthly wireless service fees quickly make up the difference, so don't get an iPhone just as an e-book reader. For that, get an iPod Touch for $229. It doesn't have any monthly fees.

Try the app. With an engrossing book and the brightness turned down, you'll forget after a little while that you're not reading on paper, and your surroundings will fade as your mind is sucked into that little screen.

Google CEO wishes Microsoft, Yahoo! luck on search

Google chief executive Eric Schmidt wished rivals Microsoft and Yahoo! luck on Tuesday in competing on Web search but took aim at the software giant for what he called a "history" of trying to "restrict consumer choice."

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"Microsoft is working very hard to build a competitive search engine," the CEO of Internet search king Google told a Morgan Stanley technology conference in San Francisco.

Asked about the prospects of a Yahoo!-Microsoft tie-up on search, Schmidt said: "I don't know if that scenario will occur.

"We did our best attempt at a deal with Yahoo!, and as you know we had to cancel it at the very last minute," he said in a reference to a Google-Yahoo! search advertising partnership that was rejected by US anti-trust regulators.

"So we wish them the best of luck," Schmidt said.

"The problem has to do with Microsoft's ability to use its Windows monopoly to restrict consumer choice," the Google CEO added. "That's not a new subject, it's been discussed at great length.

"So anything that Microsoft would do that would eliminate consumer choice with respect to search engines, Internet browsers, distribution, for which it was previously found guilty, are of concern and there's a history of that.

"So that's what we worry about," Schmidt said. "So long as technologies are competing on a fair to fair basis I think that's great."

Schmidt also said the search market was not "settled."

"There's obviously a lot of innovation ahead of us," he said. "It looks like people will move very quickly from one search engine to another. A majority of people say they use more than one search engine.

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"Search as it's defined, as historically it has been defined by Google, is not settled at all," he said.

Yahoo! chief executive Carol Bartz addressed the same conference and said Internet search data remained "extremely important" to the company.

She also said any talks with Microsoft would remain private.

"We've been investing in search this last tumultuous year," the new Yahoo! CEO said. "We've actually improved the search experience.

"Search data is extremely important and we would never debone the company of missing what our customers value by (knowing) what they're looking for."

Asked whether Yahoo! would enter into talks with Microsoft, Bartz said: "I'm not going to negotiate with my 50,000 favorite friends" -- a reference to the software giant's employees.

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"If we're going to negotiate it's as companies negotiate and that is privately," Bartz said. "And if something happens you'll know it then, and until then there's no comment on it."

Bartz, who replaced Yahoo! co-founder Jerry Yang as CEO in January, also identified products she considered "core" to the Sunnyvale, California, firm.

"Core is the front door, core is news, finance, core is mail," she said.

"All the other things, everything's up for examination," Bartz said, adding that she had created a "wall of shame" of "products we're not so happy with."

Bartz didn't identify such products but let slip she prefers a Google product to a Yahoo! one. "I don't use Yahoo! maps, I use Google maps," she said.

Bartz also said Yahoo! was interested in social networks but added: "I do not think we can invent the next Facebook."

The comments by Schmidt and Bartz came as Microsoft confirmed it is testing a new Internet search engine known as Kumo.com it hopes will make the software giant a player in a market dominated by Google.

Microsoft tried last year to buy Yahoo! for 47.5 billion dollars in a vain effort to merge online resources to better battle Google, which rules more than 60 percent of the US online search market.

Yahoo!'s share of the market is about 21 percent and Microsoft trails with 8.5 percent, according to recent figures from industry tracking firms.

Microsoft goes intercontinental via cloud and Surface

Microsoft announced on Monday that it is going intercontinental with touch-screen Surface computers and a suite of business software offered online as services "in the cloud."




Microsoft said it would expand availability of its surface computing platform to Europe, Africa and the Middle East. The product is already available in Canada and the United States.

Surface computers feature multi-touch and object-sensing screens in table-top designs, allowing people to work collaboratively.

They can also allow businesses to automatically track what comes and goes. For example, a bottle of wine could be placed on a surface computer table in a cafe, with the price instantly posted to a customer's tab.

"We've received an overwhelming response from companies worldwide that are looking for innovative ways to engage with their customers and developers who want to create applications that were not possible with other technologies," said Surface general manager Panos Panay.

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Microsoft says it has more than 120 partners in 11 countries developing ways to use surface computers in retail, health care, government, tourism, media, travel, banking, manufacturing and other sectors.

The US software giant is also stepping further into cloud computing, by letting businesses in 19 countries test its Business Productivity Online Suite.

The cloud computing trend has intensified as businesses struggling in dismal economic conditions reduce costs by using applications online as paid services instead of buying, installing and maintaining software on their own machines.

Microsoft is adding to its international menu Office Communications Online and Deskless Worker Suite software that handle tasks such as email, calendars, collaboration, and instant messaging.

"These services open up new possibilities for businesses to control costs while continuing to enhance the productivity of their employees," said Microsoft business division president Stephen Elop.

"Customers can save between 10 percent and 50 percent in IT-related expenditures as a result of deploying Microsoft Online Services."

Exchange Online and SharePoint Online are available for trial in several European countries, Japan, New Zealand, and the United States.

Organizations worldwide will be able to try the entire Business Productivity Online Suite in April, according to Microsoft.

Use of Business Productivity Online Suite software currently costs 12.78 euros per month per user. Deskless Worker Suite programs providing email and collaboration software costs 2.56 per month per user.