Alleged 'scareware' vendors to pay $8.2 million to FTC

The operator of an alleged "scareware" scheme, using deceptive advertising to trick Internet users into buying software to fix their supposedly infected computers, will pay the U.S. Federal Trade Commission $8.2 million to settle a complaint brought by the agency, the FTC said.

Marc D'Souza and his father, Maurice D'Souza, will give up the money in the settlement, announced Thursday by the FTC. Marc D'Souza was one of the key participants in a group of businesses that delivered online advertisements falsely claiming that the viewers' computers were infected with malicious software, the FTC said in a press release.

The FTC will use money from the settlement to reimburse customers who purchased software from the defendants, the agency said.

The defendants in the case, doing business under several company names including Innovative Marketing and ByteHosting Internet Services, falsely claimed that scans had detected viruses, spyware and illegal pornography on consumers' computers, the FTC said. The defendants sold more than 1 million software products, with names such as Winfixer, Drive Cleaner and Antivirus XP, to remove the malware the bogus scans had supposedly detected, the agency added.

The defendants charged $39.95 or more for the software packages, the FTC said.

Marc D'Souza operated one business connected to the scheme and served as an officer in a second business,  in U.S. District Court for the District of Maryland. Maurice D'Souza did not participate in the scam, but allegedly profited from it, the FTC said.

A lawyer for the D'Souzas didn't immediately return a phone call seeking comment on the settlement.

The court had ordered a halt to the "massive scheme" in December 2008, when the FTC filed a complaint about the advertising practices.

The defendants used what the FTC called an "elaborate ruse" that duped Internet advertising networks and popular websites into carrying their advertisements. The defendants falsely claimed they were placing Internet advertisements on behalf of legitimate companies, the agency said.

But the defendants inserted hidden programming code into the advertisements that delivered, instead, the ads for the bogus security software, the agency said.

The settlement order bars Marc D'Souza from any involvement with software that interferes with consumers' computers. It also prohibits him from making deceptive claims connected to computer security software and using domain names registered with false information.

Two other defendants in the case, one individual and one company, have previously settled the charges against them. The FTC obtained default judgments against three other defendants. Litigation will continue against the remaining defendant in the case, Kristy Ross.

New sales figures show Windows Phone 7 sales go from bad to worse

Microsoft is out with new sales figures for Windows Phone 7 devices, and there's only bad news for Microsoft. The company now says that it has shipped a total of 2 million devices to retailers, with only 500,000 coming during December. Given that Google says it activates 300,000 devices per day, this is bad news. And a closer look at the Microsoft figures make it even worse.

Microsoft senior product manager Greg Sullivan told a Bloomberg reporter that Microsoft shipped a total of 2 million phones during the last quarter. 

A month ago, Microsoft said 1.5 million Windows Phones had shipped in the first six weeks --from the Oct. 21 Europe-Asia launch until around Dec. 2. That means from then until the end of December, just about 500,000 more Windows Phones were shipped.

That 500,000 number is even worse than it sounds. Those sales are to retailers, not to users, so no numbers are available for the actual number of people who are buying Windows Phone 7 devices. Not every phone sold to a retailer was sold to a consumer, so clearly, the number is under 500,000.

Even worse, December is the holiday season, and should have been a peak month for sales. So Windows Phone 7 sales actually slowed down during what should have been the busiest time of the year.

Google says it actives 300,000 Android phones a day. So in a two-day period, significantly more Android phones are sold than Windows Phone 7 devices during the entire month of December.

Also problematic is that Microsoft still doesn't have a solid timeline for when Windows Phone 7 will be updated. Windows Phone 7 still doesn't have copy and paste capabilities, and won't until the upgrade.

The upshot? Despite the Windows Phone 7 launch, Microsoft appears to be falling further behind in mobile.

Loss of iPhone exclusivity will cause 'rocky' time for ATT, CEO says

AT&T's loss of its exclusive hold on Apple's iPhone will make early 2011 "rocky, volatile and hard to predict" for the carrier, CEO Randall Stephenson said in a conference call with analysts on Thursday.

Verizon Wireless will start selling the iPhone on Feb. 10.

However, Stephenson said AT&T is "fairly confident we will grow through the disruption." He pointed to AT&T's activations of 4.1 million iPhones in the fourth quarter of 2010 as a sign of the company's strength.

The iPhone "is still strong, and we had one of the best quarters ever," he noted, even though it became evident during that quarter that AT&T had only a short time left as the sole U.S. carrier offering the iPhone. "We sold [more than] 4 million." 

Stephenson twice articulated uncertainty about AT&T's prospects in the coming months. "It may be rocky, volatile and hard to predict, but as the market stabilizes, we will work through it," he said the second time.

Despite the uncertain outlook, AT&T experienced its biggest increase ever in wireless subscribers in the fourth quarter and for all of 2010, Stephenson noted. The carrier now has 95.million wireless customers,compared with 94.1 million for Verizon Wireless.

Some analysts have predicted that AT&T could lose 10% or more of its iphone subscribers to verizon. However, Stephenson indicated that AT&T's iPhone sales could still grow. "We feel with a little volatility, we can grow... contract subscribers this year," he added.

As 2011 moves along, Stephenson said AT&T expects to increase sales of its Windows Phone 7, BlackBerry and Android devices. "We have not been very aggressive with the Android portion [of the wireless device market]," he said. "We will be a heavy participant in the Android market this year."

Moreover, AT&T is planning a midyear activation of an LTE network on top of HSPA+ network capabilities, with speeds of 6Mbit/sec., Stephenson noted. "We feel good about the network situation," he added.

AT&T Chief Financial Officer Rick Lindner tempered Stephenson's remarks over the loss of the carrier's exclusive iPhone deal. "There is probably a little more volatility this year and certainly in the first half," he said. "We are seeing continued strong iPhone sales, despite the anticipation [of Verizon selling it]."

The 4.1 million iPhone sales in the fourth quarter brought AT&T's total iPhone sales for the second half of 2010 to 9 million, Lindner pointed out. "That's a pretty phenomenal number if you think about it," he said.

Lindner said AT&T assumes that sales of all smartphones will be strong in 2011. "We'll have a tremendous device portfolio for customers," he said. AT&T even expects to have success with sales of iPhone 3G devices, which will go for $49, he added.

Lindner pointed out that AT&T saw its second-highest level of smartphone contract upgrades in the fourth quarter, with more than 9% of customers upgrading. Combined with sales of other smartphones, he said that the upgrade performance "bodes well for the business where iPhone is not exclusive."

Rep. Flake re-introduces bill to 'staple' green cards to Ph.D diplomas

WASHINGTON - U.S. Rep. Jeff Flake, R-Arizona, has re-introduced legislation that would offer permanent residency to any U.S. university student who graduates with a Ph.D in science, technology, engineering and mathematics.

Flake introduced his bill the same week that President Barack Obama said, in his State of the Union speech, that the U.S. should make it easier for top foreign university graduates to remain here. Too often, Obama said, "we send them back to [to other countres] to compete against us. It makes no sense," Obama said.

Flake's bill would exempt qualifying foreign university graduates from H-1B cap limitations, as well as make them eligible for permanent residency. First introduced in 2009, the legislation is called the Staple Act, after the argument that Ph.D graduates should have a Green Card "stapled" onto their diploma.

"Unless we want to see the next Google or Intel created overseas, we've got to enact legal immigration reforms that allow foreign-born, U.S.-educated students who have earned advanced degrees to remain and work in the country after they've graduated," Flake said in a statement.

 

Obama opened the door to H-1B reform and Green Card reform in his State of Union speech, and his administration continued the call for reform this week by posting on the White House Web sitestatements from industry and academic groups that have long advocated raising the H-1B cap.

The U.S. sets aside 20,000 H-1B visas for foreigner students holding advanced degrees from U.S. universities. That cap was reached last week. There are 2,200 H-1B openings left under the overall cap of 65,000.

Graduates do not need an H-1B visa to begin working. They can work in the U.S. for up to 29 months without a work visa under a rule approved in the last year of the George W. Bush administration.

Ron Hira, an associate professor of public policy at the Rochester Institute of Technology, said Obama's speech "was parroting the false talking point, promulgated by industry and university lobbyists, that US policy is kicking foreign graduates with advanced degrees out of the country immediately after they graduate."

Hira said the real problem for some of them is staying permanently in the US.

Hira that as the recent GAO report found, the H-1B cap poses little problem for American companies and few of those companies say that they will move operations overseas because of the cap. There are plenty of work-arounds, he said.

"The real constraint is the Green Card bottleneck and that guest workers cannot self-sponsor - they are dependent on employer sponsorship for permanent residence," said Hira.

Verizon Wireless still ahead of AT&T in apples-to-apples customer comparison

What is a wireless subscriber? And what is a wireless customer? The difference is important when it comes to the two largest U.S. wireless carriers.

On Thursday, AT&T reported for its fourth quarter that it had added 2.8 million "total wireless subscribers" to reach 95.5 million subscribers by the end of 2010.

Computerworld reported incorrectly on AT&T's statement that the 95.5 million was enough to put AT&T ahead of Verizon Wireless in subscribers. That was based on Verizon reporting on Tuesday that it had 94.1 million "total customers" at the end of the fourth quarter.

In fact, Verizon also had in its fourth quarter report 102.2 million "total connections," which compares correctly to AT&T's 95.5 million "wireless subscribers... in service," according to representatives for the two carriers.

By that count, Verizon is ahead.

Without the "connections," also referred to as connected devices like Kindle e-readers, Verizon has 94.1 "total customers" while AT&T without the connected devices has 86 million, according to the two carriers.

"Verizon Wireless is still the largest carrier in terms of customers," Verizon spokeswoman Nancy Stark said in an e-mail to Computerworld.

AT&T spokesman Mark Siegel said in a telephone interview that AT&T's 95.5 million includes connected devices. "We're very transparent about that," he said.

Siegel argued that owners of connected devices including tablets who are not on long-term contracts are "subscribers" to the AT&T service and can be termed as such.

Despite Siegel's contention that AT&T is "transparent" about including connected devices in its subscriber number, AT&T's main press release on its fourth quarter report does not explain that distinction.

Apple, News Corp. to launch all-digital newspaper next week

Apple and News Corp. will launch the latter's The Daily iPad-only newspaper next week in New York, according to invitations sent to members of the press.

The invitations stated that News Corp. CEO Rupert Murdoch will share the stage at the Guggenheim Museum on Feb. 2 with Eddy Cue, the head of Apple's Internet services group, and the executive in charge of iTunes, the App Store and MobileMe.

The Daily will be an all-digital publication available only on Apple's iPad, and initially only in the U.S. Last year, the New York Times reported that Murdoch had pumped $30 million into the venture, which would feature photographs and other media specifically designed for the tablet. Murdoch has said that the newspaper will cost 99c per week.

Rumors have circulated on Apple enthusiast and technology blogs that The Daily will be the first digital publication to use a new subscription pay scheme, under which the App Store will automatically dip into a customer's iTunes account on a weekly or monthly basis.

 

Currently, the App Store does not generally permit subscriptions, and instead requires publications to charge for each issue individually.

The Daily will also reportedly be the first publication to be delivered to subscribers' iPads automatically each day, much like Amazon.com's Kindle does with digital versions of papers such as the New York Times.

Originally, the newspaper's launch was slated for Jan. 19, and was to include Apple CEO Steve Jobs. Days later, Jobs announced that he was taking an indefinite medical leave for an undisclosed problem, which may have been the reason for pushing back the event.

Magazine and newspaper publishers were bullish about the iPad last year, with some analysts saying that the tablet would relieve the pressure on media, which has witnessed declining circulations and lower advertising revenues.

But while initial sales were strong, consumers apparently balked at paying single-issue prices, resulting in declining download numbers. The expectation is that a subscription option mayreinvigorate sales.

It's unknown whether Apple will relax its policies and allow publishers access to iPad subscribers' data, a bone of contention between some media giants and the Cupertino, Calif. company.

Intel offers free software stack for Fibre Channel Over Ethernet

Intel has eased the migration to a single network infrastructure throughout data centers by introducing Open FCOE, a free software stack for Fibre Channel Over Ethernet.

The software stack had been in testing and development for some time, but on Thursday it was formally introduced after being qualified for Microsoft Windows, Red Hat and SUSE Linux, and EMC and NetApp storage platforms. It has also been qualified for use with Cisco Systems and Brocade Communications switches. Open FCOE is being offered as a free upgrade to the Intel 10 Gigabit Ethernet Server Adapter X520 family, the company announced at a press event in San Francisco.

FCOE is an advanced form of Ethernet that is designed to bring the reliability of traditional Fibre Channel to the nearly ubiquitous infrastructure of Ethernet. Fibre Channel remains the connection to many enterprise storage platforms even as Ethernet forms the foundation of both LANs and other storage technologies, such as NAS (network-attached storage) and iSCSI (Internet SCSI). With Ethernet providing both computing and storage connections, IT departments can have more flexibility to provision and modify their data centers, according to backers of the so-called unified fabric.

One of those backers is Cisco, which has been shipping FCOE products since June 2008. Last year, Cisco, NetApp, and VMware announced their first certified end-to-end Fibre Channel over Ethernet (FCoE) storage network for VMware server environments. Open FCOE will be available to all its 10-Gigabit Ethernet customers, said Soni Jiandani, vice president of marketing for Cisco's Server Access Virtualization Business Unit.

"Customers will no longer have to differentiate between, 'Can I mount storage on my servers that supports NAS, ISCSI, or Fibre Channel?' It brings forth the notion of, 'Wire once, and mount any type of storage on your computing infrastructure,'" Jiandani said. This type of flexibility is key to making the most of computing and storage virtualization, she said.

By providing its Open FCOE stack to operating system vendors, Intel is making it possible to place most of the processing for FCOE connections on servers CPUs instead of specialized processors on the adapters. This keeps the door open to performance improvements in the future as Intel's server processors get faster, said Tom Swinford, vice president and general manager of the data center group in Intel's LAN Access Division. In tests, the CPU load from Open FCOE processing never exceeded 5%, Swinford said.

EMC has qualified the Open FCOE software for use with its EMC Symmetrix VMAX and EMC VNX storage platforms. EMC has been working for years with Intel, OS providers and switch vendors to harden the FCOE software and make sure it works with many Intel-based servers and with other network components, said Paul Brown, vice president and general manager of EMC's storage networking business.

Microsoft claims employee stole $460,000 from the company

Microsoft has sued a former director of business development in state court, accusing him of stealing nearly $460,000 from the company and trying to make off with another $1.5 million before his scheme was uncovered.

In a complaint filed with a Washington State Superior Court, Microsoft alleged that Robert D. Curry created a fake company, Blu Games, then submitted bogus invoices for non-existent services.

As a director of business development, Curry dealt with companies that promoted the downloading of Bing Bar, an Internet Explorer (IE) toolbar add-on designed to boost the use of Microsoft's search engine.

Curry started working for Microsoft five years ago. He was fired Jan. 13.

"On at least 3 occasions between April 19, 2010 and November 22, 2010, defendant Robert D. Curry ... fraudulently induced Microsoft to pay through a vendor approximately $459,341.63 for defendant Curry's benefit, while falsely representing that the payments were for legitimate Microsoft business expenses," the complained stated.

Curry siphoned money and goods from his employer by duping a legitimate Microsoft vendor, Pentad Solutions, into paying Blu Games for supposedly distributing the Bing Bar, then asking Microsoft for reimbursement.

To back up the scheme, Curry created fake invoices, distribution agreements and reports, and also forged his manager's signature, Microsoft claimed.

Although he successfully stole almost half a million dollars from Microsoft, Curry's activity was only discovered two weeks ago, when he tried to get Pentad to pay Blu Games $1.5 million for distributing the Bing Bar.

Earlier, he had convinced Microsoft's finance department to increase the total amount of the purchase order pool for payments to Pentad to $3.7 million.

Microsoft has demanded that Curry repay the $459,000, and that it be awarded triple damages under the state's Criminal Profiteering Act.