Uncle Sam's watching - how much privacy do you have?

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F.B.I. Received Unauthorized E-Mail Access
By ERIC LICHTBLAU
Published: February 17, 2008
WASHINGTON - A technical glitch gave the F.B.I. access to the e-mail
messages from an entire computer network - perhaps hundreds of
accounts or more - instead of simply the lone e-mail address that was
approved by a secret intelligence court as part of a national security
investigation, according to an internal report of the 2006 episode.
F.B.I. officials blamed an "apparent miscommunication" with the
unnamed Internet provider, which mistakenly turned over all the e-mail
from a small e-mail domain for which it served as host. The records
were ultimately destroyed, officials said.
Bureau officials noticed a "surge" in the e-mail activity they were
monitoring and realized that the provider had mistakenly set its
filtering equipment to trap far more data than a judge had actually
authorized.
The episode is an unusual example of what has become a regular if
little-noticed occurrence, as American officials have expanded their
technological tools: government officials, or the private companies
they rely on for surveillance operations, sometimes foul up their
instructions about what they can and cannot collect.
The problem has received no discussion as part of the fierce debate in
Congress about whether to expand the government's wiretapping
authorities and give legal immunity to private telecommunications
companies that have helped in those operations.
But an intelligence official, who spoke on condition of anonymity
because surveillance operations are classified, said: "It's inevitable
that these things will happen. It's not weekly, but it's common."
A report in 2006 by the Justice Department inspector general found
more than 100 violations of federal wiretap law in the two prior years
by the Federal Bureau of Investigation, many of them considered
technical and inadvertent.
Bureau officials said they did not have updated public figures but
were preparing them as part of a wider-ranging review by the inspector
general into misuses of the bureau's authority to use so-called
national security letters in gathering phone records and financial
documents in intelligence investigations.
In the warrantless wiretapping program approved by President Bush
after the Sept. 11 terrorist attacks, technical errors led officials
at the National Security Agency on some occasions to monitor
communications entirely within the United States - in apparent
violation of the program's protocols - because communications problems
made it difficult to tell initially whether the targets were in the
country or not.
Past violations by the government have also included continuing a
wiretap for days or weeks beyond what was authorized by a court, or
seeking records beyond what were authorized. The 2006 case appears to
be a particularly egregious example of what intelligence officials
refer to as "overproduction" - in which a telecommunications provider
gives the government more data than it was ordered to provide.
The episode was disclosed as part of a new batch of internal documents
that the F.B.I. turned over to the Electronic Frontier Foundation, a
nonprofit group in San Francisco that advocates for greater digital
privacy protections, as part of a Freedom of Information Act lawsuit
the group has brought. The group provided the documents on the 2006
episode to The New York Times.
Marcia Hofmann, a lawyer for the privacy foundation, said the episode
raised troubling questions about the technical and policy controls
that the F.B.I. had in place to guard against civil liberties abuses.
"How do we know what the F.B.I. does with all these documents when
problem like this comes up?" Ms. Hofmann asked.
In the cyber era, the incident is the equivalent of law enforcement
officials getting a subpoena to search a single apartment, but instead
having the landlord give them the keys to every apartment in the
building. In February 2006, an F.B.I. technical unit noticed "a surge
in data being collected" as part of a national security investigation,
according to an internal bureau report. An Internet provider was
supposed to be providing access to the e-mail of a single target of
that investigation, but the F.B.I. soon realized that the filtering
controls used by the company "were improperly set and appeared to be
collecting data on the entire e-mail domain" used by the individual,
according to the report.
The bureau had first gotten authorization from the Foreign
Intelligence Surveillance Court to monitor the e-mail of the
individual target 10 months earlier, in April 2005, according to the
internal F.B.I. document. But Michael Kortan, an F.B.I. spokesman,
said in an interview that the problem with the unfiltered e-mail went
on for just a few days before it was discovered and fixed. "It was
unintentional on their part," he said.
Mr. Kortan would not disclose the name of the Internet provider or the
network domain because the national security investigation, which is
classified, is continuing. The improperly collected e-mail was first
segregated from the court-authorized data and later was destroyed
through unspecified means. The individuals whose e-mail was collected
apparently were never informed of the problem. Mr. Kortan said he
could not say how much e-mail was mistakenly collected as a result of
the error, but he said the volume "was enough to get our attention."
Peter Eckersley, a staff technologist for the Electronic Frontier
Foundation who reviewed the documents, said it would most likely have
taken hundreds or perhaps thousands of extra messages to produce the
type of "surge" described in the F.B.I.'s internal reports.
Mr. Kortan said that once the problem was detected the foreign
intelligence court was notified, along with the Intelligence Oversight
Board, which receives reports of possible wiretapping violations.
"This was a technical glitch in an area of evolving tools and
technology and fast-paced investigations," Mr. Kortan said. "We moved
quickly to resolve it and stop it. The system worked exactly the way
it's designed."

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interesting perspective

Yahoo Deal Is Big, but Is It the Next Big Thing?

SAN FRANCISCO - In moving to buy Yahoo, Microsoft may be firing the
final shot of yesterday's war.
That one was over Internet search advertising, a booming category in
which both Microsoft and Yahoo were humble and distant 'also-rans'
behind Google.
Microsoft may see Yahoo as its last best chance to catch up. But for
all its size and ambition, the bid has not been greeted with only
enthusiasm. That may be because Silicon Valley favors bottom-up
innovation instead of growth by acquisition. The region's investment
money and brain power are tuned to start-ups that can anticipate the
next big thing rather than chase the last one.
And what will touch off the next battle? Maybe it will be a low-power
microprocessor, code-named Silverthorne, that Intel plans to announce
Monday. It is designed for a new wave of hand-held wireless devices
that Silicon Valley hopes will touch off the next wave of software
innovation.
Or maybe it will be something else entirely.
No one really knows, of course, but gambling on the future is the
essence of Silicon Valley. Everyone chases the next big thing, knowing
it could very well be the wrong thing. And those who guess wrong risk
their survival.
That is why, in this silicon-centric economy, front-runners do not
stay front-runners for long.
Many big names of the 1980s - Commodore, Tandem, Digital Equipment and
MicroPro - are in a graveyard shared by the highfliers of the 1990s -
the At Home Network, Netscape and Infoseek, to name a few.
Now Yahoo, founded by Stanford graduate students who became media
darlings and instant billionaires after an exhilarating initial public
offering of stock, may be the next to disappear.
And Yahoo, which is based in Sunnyvale, Calif., is only 13 years old.
Microsoft wants to buy the company for $44.6 billion as its way to
compete with Google, the hot company of this decade, which was also
founded by Stanford graduate students who became media darlings and
instant billionaires after an exhilarating initial public offering.
"This is the very nature of the Valley," said Jim Breyerof the venture
capital firm Accel Partners. "After very strong growth, businesses by
definition start to slow as competition increases and young creative
start-ups begin to attack the incumbents."
The economist Joseph Alois Schumpeter had a name for this principle of
capitalism: creative destruction. Perhaps nowhere does it play out
more dramatically - and more rapidly - than in Silicon Valley, where
innovation unleashes a force that creates and destroys, over and over.
Microsoft, at the still-young age of 32, is making its largest
acquisition because it, too, is affected by this force. Founded in
1975, Microsoft has had a longer run than most tech companies largely
because it became very good at chasing the next big thing: an
operating system, point-and-click computing, software for servers, Web
services, video games, and, most recently, Internet search and online
advertising.
Technological innovation may not have always been what gave Microsoft
the edge. It has been frequently criticized for me-tooism and for
getting it almost right the third time. Sometimes, marketing skill and
bullying were it's keys to its success.
Microsoft won huge business battles, starting with its domination of
personal-computer software against Apple during the 1980s. A decade
later, it made quick work of Netscape Communications, which
popularized Web browsing in the mid-1990s.
While Microsoft remains very profitable because of its lock on desktop
software, its efforts to dislodge the Valley's leading
third-generation Internet company, Google, have so far failed.
Google's central innovation, Internet search, has confounded
Microsoft, despite investing billions in both technology development
and numerous smaller acquisitions. Internet technology has overtaken
the PC desktop as the center of the action, as people increasingly
view the computer as merely a doorway to their virtual world. Google
calls this phenomenon "cloud computing."
Google, based in Mountain View, Calif., has been setting up giant data
centers around the globe. It benefited from the software innovations
of hundreds of nimble garage start-ups to develop programs that reach
millions of users over the Web.
It has unleashed the power of 'free' to endear itself to a new
generation of computer users with services they find they cannot live
without, like e-mail, digital video and social networking.
Now Microsoft is trying to make up ground by buying what it has not
been able to build. To many technologists and entrepreneurs here, the
deal does not indicate any imminent threat to the Valley's start-up
culture or suggest that the region might go the way of Detroit; it
underscores the health of the heartland that has produced waves of
ever-more powerful technologies for more than half a century.
There is a sense here among investors that Microsoft, as a more
effective counterweight to Google, might actually serve to spur
innovation in the Valley.
"When Microsoft was in the ascendancy, there were whole areas of
investment that were of less interest to investors," said William R.
Hearst III, an affiliated partner with the venture capital firm
Kleiner Perkins Caufield & Byers. "Now you could enter a new area and
people will think that maybe one of the two colossuses will be
interested in acquiring your start-up."
Innovation has been the driving force of Silicon Valley, and the
results over the last quarter-century have been stunning. More than a
billion personal computers are in use around the world. Cellphones are
in the hands of three billion people. The next generation of mobile
computers appears destined to reach another two billion people in just
six more years.
The productivity gains from these devices have driven the world's
economy to faster economic growth and a higher standard of living for
an ever-widening swath of the world's population.
If Microsoft acquires Yahoo, some executives said, the question is
whether it will shake its obsession with catching Google (unlikely!)
and instead look to the next generation of the Internet, even if it
threatens Microsoft's dominant position in PC software.
The bid for Yahoo "underscores how Microsoft's hold on the personal
computer desktop is meaning less," said Nicholas Carr, author of "The
Big Switch," which describes the consequences of Internet computing.
In that sense, Microsoft may in a situation identical to the one faced
by I.B.M. in the early 1980s. Dominant in the mainframe business and
threatened by PCs, I.B.M. responded by quickly becoming the largest PC
vendor.
However, despite all of its manufacturing proficiency, the PC business
was far less profitable and I.B.M. was unable to make that business
work. It took a wrenching cultural change and the shedding of its
management and tens of thousands of employees to regain its footing.
Ultimately, Microsoft's challenge in making its new acquisition work
will be a cultural one. Can the giant software maker - which,
incidentally, is based in Redmond, Wash., about 850 miles from Silicon
Valley - use a huge acquisition to tap into what makes the Valley
tick? Will it force Microsoft to look forward instead of backward?
To many, these questions frame the challenge that Microsoft confronts.
"To a large degree, it's the willingness to move on and abandon
something," said David Liddle, a venture capitalist at U.S. Venture
Partners. "It's that ability to let something go and move on to the
next big thing."

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mobile phones with Google based OS soon available!

Microsoft put a price Friday on its inability to keep pace with Google
in the race for dominance on the Web: $44.6 billion.

That's how much Microsoft offered for Yahoo in an attempt to compete
with Google, the Internet search king.

Tired of talking with Yahoo about a partnership, as it has over the
past 18 months, Microsoft instead initiated a surprise takeover bid
for the Web portal.

The size of the proposed cash-and-stock transaction puts Yahoo under
intense pressure to consider the offer, valued at $31 a share -- a
rich 62 percent premium over Yahoo's $19.18 closing price on Thursday.
Microsoft's offer was made public Friday before the markets opened.

A deal would usher in a new era of competition between Microsoft and
Google, the two biggest players of the digital age. They have been
battling each other across businesses and gobbling up other companies
as they try to one-up each other in an era of explosive growth in all
sectors of the Internet economy.

The fact that Microsoft is chasing Yahoo is an acknowledgment that it
couldn't catch up to Google, the online portal of choice for tens of
millions of computer users, who go online to do everything from watch
videos on Google's YouTube to look for a restaurant.

To attract the huge number of advertisers flocking online, Microsoft
recognized it needed a partner and wants Yahoo, the third titan of the
Internet age.

In a letter to Yahoo's board of directors Friday, Microsoft CEO Steve
Ballmer made it clear why the Redmond, Wash., software giant wants
Yahoo: online advertising is expected to double in the next three
years, from $40 billion to $80 billion.

"Today, the market is increasingly dominated by one player," Ballmer wrote.

Indeed, Google continues to separate itself from the pack.

Google's share of the U.S. Internet search market increased from
nearly 52 percent at the end of 2006 to more than 58 percent at the
end of 2007, according to ComScore figures. Meanwhile, Yahoo's search
share slipped from 28 percent to 23 percent, and Microsoft's fell to
under 10 percent during the same period.

So even though a combined Microsoft and Yahoo would still
significantly trail Google in search share, "a stronger No. 2 can gain
share," said Brian Bolan, an analyst who covers the tech giants for
Chicago's Jackson Securities.

That No. 2 also would have a single ad platform to help publishers
place ads across the Internet.

"The online advertising industry is an industry where scale matters,"
said Kevin Johnson, Microsoft's president for platform services,
during a conference call.

There is more to online advertising than search-based ads. Yahoo, for
instance, is the top Internet property based on display ad
impressions. These are the ads that are displayed on a Web site when a
page is opened. According to ComScore, it has a 19 percent share of
that market. The No. 2 competitor, with a 16 percent share, is Fox
Interactive Media, the owner of MySpace.com.

Ads across the Web

Yahoo, like Google and Microsoft, operates a network to place ads
across Web sites. Google's is the largest. Bolan thinks getting
Yahoo's ad platform is particularly attractive to Microsoft because of
the growing influence of social networking sites, such as MySpace and
Facebook. There, ads can be delivered based on a user's particular
interest.

"This is clearly the most valuable space on the Internet today and
continues to astound onlookers and participants alike with its
growth," Bolan wrote in a report.

Late last year, Microsoft invested $15 billion for a minor ownership
stake in Facebook and to serve as its partner in delivering ads to the
social networking site's booming audience.

Yet while it's clear Microsoft wants to bolster its Web presence,
Google is also proving to be the leader in other areas.

Later this year, mobile phones using a Google-based operating system
will start hitting the market, a threat to Microsoft's Windows Mobile
platform, which can be found on smart phones made by Samsung,
Motorola, LG and others.

"They are competing with everything Microsoft does," Bolan said of Google.

On Friday, Yahoo's shares rose $9.20, or 48 percent, to $28.38, while
Microsoft declined $2.15, or 6.6 percent, to $30.45. Microsoft's stock
drop was due in part to the public admition of defeat and perhaps to a
sentiment on Wall Street that it may need to raise its bid.

Bolan thinks $50 billion, or $35 a share, is possible.

The decision on whether to accept the Microsoft offer rests with
Yahoo's board of directors, which said in a statement Friday it is
evaluating the offer.

Nonetheless, sentiment was strong Friday that a pairing with Microsoft
would be wise for Yahoo.

"It's one plus one equals three for Microsoft and for Yahoo a very
graceful exit," said Zorik Gordon, chief executive of ReachLocal, an
Internet ad firm with offices in Chicago. It places ads for clients on
the ad networks for all three Internet players.

The potential deal would "create a more formidable competitor to
Google," Gordon said.

James Bilefield, the CEO for ad placement firm Openads and a former
Yahoo executive, said the pairing is "a logical fit and Yahoo needs to
do something dramatic."

But he's not so sure his clients, companies that place ads across
multiple networks, would benefit if a major player was removed.

"That means there could be less choice," he said.

Antitrust question

The Justice Department's antitrust division said it would look at the
deal if Yahoo accepted.

Bolan said he believes there is a "90 percent chance" this deal will go through.

"By going public with the bid, they have completely forced" the hand
of Yahoo's board. And while Yahoo CEO Jerry Yang has indicated
previously he is committed to turning around the company he founded,
"he also has fiduciary responsibility," Bolan said. "Shareholders may
be asking where else can I get that $31 a share?"

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