The month in e-business - April 2000

Among this month’s highlights: Denial attacks traced to "mafiaboy", energy exchange formed, fiasco for Dutch ISP, row over "safe harbour"

Denial attacks traced to "mafiaboy"

Canadian police arrested a 15-year-old boy in connection with a series of denial-of-service attacks on prominent Web sites, including Yahoo, eBay, and The boy, who uses the pseudonym "Mafiaboy", was charged with the offences, which occurred in February. In the attacks, sites were overloaded with meaningless data, grinding them to a halt.

Energy exchange formed

Six large US energy companies are to set up a Net-based trading platform to bring together buyers and sellers of electricity and natural gas. The group, so far unnamed, includes American Electric Power, Aquila Energy and Duke Energy, and was set up as a rival to an exchange run by Enron. Enron's own site - - handled $27bn in transactions in its first four months of operation. The move demonstrates that companies are prepared to set up rival exchanges to gain a share of the lucrative trading exchange marketplace being set up in a string of sectors.

Fiasco for Dutch ISP

Dutch Internet service provider World Online, which went public in March in a high-profile launch, saw its stock price collapse. Founder Nina Brink left after a wave of unfavourable publicity following the sale of two thirds of her shareholding.

Row over "safe harbour"

The EU and US continued their arguments over data privacy, despite a reported agreement over the transfer of data between the two continents. The US, which favours self regulation rather than legislation, announced that agreement had been reached over a proposal dubbed "safe harbour" which would go some way to protecting personal data of EU citizens. But some EU countries insisted the agreement lacked teeth, and threatened to sink an agreement in the European Parliament. The row shows that privacy of personal data remains a thorny issue.

VW's marketplace

Volkswagen threw down the gauntlet to the e-supply chain set up by GM, Ford, and Daimler-Chrysler, by announcing its own online car parts exchange. VW's marketplace, due to be operational by the end of the year, will target automotive parts suppliers who have not linked up with the GM-led exchange. The announcement shows that some companies are prepared to go it alone, rather than join an exchange in which they would have less clout.

Shake-up at BT

BT shook up its operations amid criticism of its failure to offer competitive Internet services. The company reorganised its assets into four separate units: Ignite, a corporate Internet operation; a consumer division, BTopenworld; a mobile unit, BT Wireless, and Yell, its online directory business, which is expected to go public by the end of the year. BT's stock has fallen amid complaints over its Internet pricing structure, led by the Government.

E-bankrupcy set to grow

A gloomy Forrester research report suggested that most electronic retailers - or e-tailers - will be out of business by next year. A series of familiar names are already headed for trouble. Cookery site Cook Express has already filed for bankruptcy, while Dutch food and grocery retailer Royal Ahold said it would rescue cash-strapped US online grocer Peapod. One online fashion site,, was bought by cosmetics firm Estee Lauder to beef up its own presence. The move is likely to be repeated by a series of bricks and mortar companies keen to establish their online presence, backed by greater financial muscle.

Tesco hives off e-shopping

Tesco plans to operate its Internet shopping service as a separate subsidiary and expand its service into other International markets. The company is expected to invest upto £35m in in a bid to reach 90% of the UK population (currently 40%). It has ruled out floating off, preparing instead to keep it as a separate unit. Tesco claims to be the world's largest electronic grocer with over 400,000 customers, ahead of Californian operation Webvan. South Korea, where Tesco has an offline presence, is expected to be the first overseas operation offering an online service.

Net tax stalemate

A US electronic commerce tax commission failed to reach agreement on how Net sales should be taxed. Although there is currently a US moratorium on Internet taxation, it is due to expire next year. Lawmakers in some states want to keep the moratorium until 2006, while others have been subject to lobbying from offline businesses unhappy that their trade is being unfairly hindered by having to charge taxes. In addition, some states, such as Utah, are unhappy that state revenues will be cut by a continued Net tax moratorium. Also on the agenda is a permanent ban on Internet access taxes. Meanwhile, the EU is pressing ahead with plans for a tax on some digital services sold over the Net.

Glitches trouble IATA

The rush to trade online has left gaping security holes, air transport chiefs heard. An International Air Transport Association (IATA) conference on online commerce was told that a rush to get air travel online had led to security breaches, with employees giving out passwords to anyone claiming to be from their company's IT department. Delegates at the event in San Jose were told that the US government was paying closer attention to electronic commerce, and might eventually pass legislation that affects the way companies do business.

Web hosting launches

A string of suppliers are gearing up to provide outsourced Web hosting services for corporate customers. Cable and Wireless announced a plan to create the equivalent of a private "M25" for data traffic with a huge data centre in Swindon. IBM also joined the fray, announcing a link up with Qwest to build and operate a series of "cybercentres" in Europe and the US. Other entrants include BT and AT&T which said they would invest $2bn over three years to build a network of 44 Net data centres in 16 countries over three years. The moves are likely to encourage organisations to outsource much of their e-commerce operations to avoid having to worry about new technologies and scarce skills.

Microsoft moves to stem staff exodus

Faced with a haemorrhage of key staff to dotcom start-ups, Microsoft has put in place a new series of stock options and granted extra holiday time. The company gave the perks to a string of high level executives and top software engineers. Top-notch executives were reportedly told to take whatever holiday time they needed to balance work and family. Faced with a continuing antitrust battle, which has seen Microsoft tied up in negotiations with lawyers, some key staff have left Microsoft's Seattle home for the excitement of working at a smaller company.

Demon case resolved

UK Internet service provider Demon Internet agreed to settle a libel suit brought by a man who claimed his name was falsely associated with items posted on a Web site. Demon agreed to pay £15,000 damages plus costs after a complaint by Laurence Godfrey that the company had failed to respond to his concern over false postings under his name on newsgroup services it was carrying. The long-running case established a principle that ISPs can be publishers under English libel laws. Lawyers warned that the case effectively made a telephone company liable because of a defamatory conversation carried over its wires.

3G bids top £22bn

Bids for a tranche of five new wireless licences in the UK topped £22bn, but led to a string of high profile pullouts as the bidding price rose. The escalating price has led to fears that ultimately consumers will pay. Casualties have already included Finnish group Sonera, Richard Branson's Virgin Group, MCI WorldCom and Spanish telecoms company Telefonica. The auctions, which began two months ago, are for third generation - or so-called 3G - licences, covering e-mail and Internet access technologies. To recoup their costs bid winners are almost certain to offer 3G services first to corporate rather than domestic consumers.

That Microsoft ruling...

Talks broke down between Microsoft and the US Department of Justice over possible remedies in the antitrust court battle. The breakdown led to Judge Thomas Penfield Jackson's ruling that Microsoft had illegally shielded its Windows desktop monopoly from competition and tried to monopolise the market for Internet software on the back of it. Meanwhile antitrust specialists were said to be using Windows 2000 as a possible target during remedy negotiations. Microsoft shares plunged again on the news that Federal lawyers were demanding the breakup of the giant firm. hit by poaching

Most of the Web design team at - an ISP and entertainment portal co-owned by NTL and the Virgin Group - left to join e-consultancy Zefer. Zefer is just one US firm queuing to snap-up UK e-commerce talent. Skills-driven aquisitions of e-commerce service, consultancy and design firms continued as Extraprise and NetSolv moved to snap up UK firms.

Dotcom bubble bursts

Billions of pounds were wiped off the value of e-commerce company shares as the dotcom bubble burst. The stormy market conditions persuaded a number of companies to call off their stock market debut until the marketplace picks up. The share price fall marks a watershed in e-commerce - some fledgling companies are likely to be casualties of a more sceptical approach from investors. There will be benefits for e-commerce chiefs: more clout with software suppliers and more skilled staff on the jobs market.

Seven steps to the Web enterprise

The path taken by a traditional bricks-and-mortar company in evolving into a fully functioning Web enterprise can be divided into seven steps, a new report by research company Neaman Bond Associates claims.

The seven steps demonstrate the functional development of a site, moving from the step of introducing a Web-based corporate brochure to integrating with suppliers and creating a "virtual enterprise".

In traditional organisations, each functional layer is owned by different department.

According to Neaman Bond, the challenge faced by newer dotcom businesses is to emerge fully formed at inception with capabilities up to Level 4 on the chart below.

The business adaption model

Stage Technology Tag Transaction Focus ownership Organisational
1 Corporate brochure E-billboards Communication Corporate Communications
2 Product promotion E-brochures Product information Product marketing
3 Customer service CRM Identification Marketing
and communication E-merchandising Personalisation Sales
  1-to-1 marketing Communication Customer services
4 Sales and service E-tailing b2b Order processing Customer service
and communication E-banking Payment capability management
  1-to-1 marketing Communication Sales and finance
5 Integrated sales E-commerce - Contact history Marketing
and services B2B, B2C Customer profiling Sales and marketing
    Loyalty, persistancy  
    and churn analysis  
6 Supplier integration E-procurement - Market dynamics Operations
  B2B   Finance and
7 Functional integration The virtual   Corporate
  enterprise   development

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