The week after Microsoft announced a massive network security breach that apparently resulted in the theft of Windows source code [see Oct. 30], the company has completely revised its story. Now, according to Microsoft, the alleged security violators were only in the network for 12 days, were being monitored the entire time, and never accessed significant amounts of code for projects in development. Microsoft claims that its earlier announcement, which made headline news in computer publications around the world, was simply precautionary to warn its investors of the "possibility" of a severe theft. The company has declined further comment because the investigation is ongoing, but we tend to doubt their tale, especially since it starkly contrasts the one they told only one week prior.
We aren't the only ones that have a problem with Microsoft's new story. Several media outlets have reported that Microsoft has now blocked all dial-up access for its thousands of telecommuting employees, a sign that the company is still unsure how badly it was breached. That action could have destroyed evidence that would have helped the FBI investigators Microsoft brought in. Even cracker extraordinaire Kevin Mitnick, who was recently released from a prison sentence stemming from his own infamous cracking activity, expressed some doubts about Microsoft's new story during a developer conference. Mitnick also showed surprise that Microsoft would be using static passwords, as that makes the company's networks easy targets for any cracker. Mitnick's statement was proven true later that week when at least one cracker (that we know of anyway) breached network security and left text files all over Microsoft's Web site as proof.
ALSO SEE: WinInfo, ZDNet, The Register, The Register, TechWeb, The Register

COURT NOTES: Before the appeals court on October 30, Microsoft objected to America Online's request to file an amicus brief (or friend-of-the-court statement) supporting the government case. An amicus brief generally accompanies filings from one side or another, adding supportive facts and additional viewpoints. ProComp, the Software & Information Industry Association (SIIA), and the Computer & Communications Industry Association (CCIA) filed amicus briefs in the original antitrust trial, and are expected to join with AOL in the current round of filings. Microsoft objected to the separate filings, saying that AOL can only offer a biased rehash of evidence presented in the trial by its own employees. Microsoft suggested instead that AOL, ProComp, SIIA and the CCIA all file one joint amicus brief, just like Microsoft's own supporters did. (But Microsoft failed to mention that the groups filing amicus briefs in its favor, the Association for Competitive Technology and the Computing Technology Industry Association, are both sponsored by Microsoft and as a result hold the exact same views.) The government, for its part, filed a brief giving no objections to any amicus briefs from either side.
On November 3, the court ruled in favor of Microsoft and granted AOL's request to file an amicus brief, but ordered that the brief be filed jointly with the other groups, and be limited to 25 pages. Microsoft's supporters were ordered to limit their joint brief to 25 pages as well. A second set of government supporters, The Association for Objective Law and Center for the Moral Defense of Capitalism were also ordered to file their own 25-page joint brief, while three individuals were allowed to file their documents separately.
ALSO SEE: C|Net, InfoWorld, The Register, InfoWorld, C|Net, Court Site

The first beta of 'Whistler', Microsoft's next iteration of Windows, was released to testers and software developers on October 31. The beta was made available in 32 and 64 bit versions to beta testers, close corporate partners, and subscribers of the MSDN program for developers. Microsoft has yet to set a firm release date for Whistler, but a spokesman said the consumer version should be available in 'mid-2001', with the server versions following shortly thereafter. (Translating the Microspeak into English, Whistler will be called Windows 2001 and won't ship until this time next year at the earliest.)
ALSO SEE: WinInfo, The Register, ZDNet

After several months of public outrage and political pressure, Microsoft's German subsidiary has agreed to make Windows compliant with one of the country's most controversial laws. The law in question prevents agencies of the German government from purchasing products made by associates of the Church of Scientology. Windows violates that law because it comes with an integrated disk defragmentation tool made by Executive Software, a company whose CEO is a Scientologist. To settle the issue, instructions for rewriting the Windows registry to remove the tool have been posted on Microsoft's German Web site. A spokesman for Microsoft Deutschland stated that the company still recommends using the tool, but wanted to give its customers the freedom to remove it anyway. Now, if only someone had a religious objection to Internet Explorer...
ALSO SEE: The Register, WinInfo

Paul Allen, Microsoft's co-founder who recently stepped down from his seat on the company board of directors [see Oct. 09], has filed to sell 15 million shares of Microsoft stock, worth an estimated $950 million (depending on how the market closes). This latest sale will bring the total number of shares sold by Mr. Allen this year to nearly 31 million.
Cyber-café giant EasyEverything, which operates Internet access coffee bars throughout Europe, has made a deal to provide its customers with Microsoft software on a pay-per-use basis. The first café offering the products will open November 28th in New York city, and will charge its customers $2 per hour to access Word, Excel, and Powerpoint.
Increasing Microsoft's contact with the music industry, Warner Music announced on November 1 that it will make a large number of recordings available for purchase online in Microsoft's Windows Media format. Warners, the last large music pimp to announce an Internet strategy, was previously trying to set up a distribution platform with Real Networks and Liquid Audio, Microsoft's main competition in that arena.

CORRECTION: Last issue we mistakenly reported that Paul Allen originally retired from Microsoft because he was diagnosed with Parkinsons disease. Mr Allen was, in fact, diagnosed with Hodgkin's disease - a treatable cancer of the lymph nodes.

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