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Competing App Stores Elbowing In on Apple’s Action?

Competing App Stores Elbowing In on Apple’s Action?

Microsoft is the company often regarded as Apple’s nemesis — certainly judging from Apple’s own ad campaigns. In the mobile world, though, Microsoft has some catching up to do, particularly among consumers. Even with its new app store, it may not pose a huge threat. Nokia, on the other hand …

Much of the news affecting Apple (Nasdaq: AAPL) this week comes not from Cupertino, Calif., but from Barcelona, Spain, where the annual 3GSM Mobile World Congress is being held.

A number of Apple competitors, including Microsoft (Nasdaq: MSFT) and Finnish phone maker Nokia (NYSE: NOK) , announced their intentions to create mobile application marketplaces similar to Apple’s hugely successful iPhone App Store.

Even French wireless operator Orange is getting in on the game. The field of such marketplaces is getting crowded — already, Google (Nasdaq: GOOG) , Research In Motion (Nasdaq: RIMM) and Samsung have made similar announcements.

App Store Hoopla

It’s easy to forget that such marketplaces have been around in one form or another for years.

"Apple gets all of this press for the App Store, but places to go and buy applications, games and productivity applications have existed on carriers’ Web sites for a long time," said Charles Golvin, a wireless telecom analyst at Forrester Research. "Then again, no one did this as well as Apple."

Golvin doesn’t see the launch of new app stores as a threat to Apple. Rather, it shows that Apple’s competitors are validating Apple’s strategy and trying to play catch-up.

If there is a threat to Apple here, it’s mostly one of vying for the attention of mobile application developers, he told MacNewsWorld.

"A lot of the people who develop these apps tend to be smaller shops, and they have limited resources," Golvin said, "so they have to make opportunity cost decisions. It’s not a matter of developers saying, ‘We can make an iPhone app, a BlackBerry app, an Android app,’ and so on."

The Nokia Threat

If there’s one player out there right now with potential to weaken Apple’s position in the mobile market, it’s Nokia.

"[Nokia has] dominant market share around the world," noted Golvin. "If you look at the European market, Nokia is very strong in the high end. They have a lot of developers that have already made Symbian applications. So, if Nokia is successful in converting this developer base, it could have a really rich set of applications out there."

Still, Apple may have one advantage over the rest of the field.

"Apple was able to come and create its own rules and exclusive distribution channel," Golvin said. "There’s no way that Microsoft, Nokia or even [Research In Motion] will be able to create the same monopoly. There will certainly be other stores where you can buy Nokia apps. They have too many existing relationships and dependencies between them and their operator customers."

Speaking of Microsoft …

Like Nokia and Orange, the software giant will launch its own app store, called the “Windows Marketplace for Mobile.” The new app store will be accessible via mobile phones and the Web.

This isn’t exactly an innovation for Microsoft.

"Microsoft has done similar things like this before," said Matt Rosoff, an analyst at Directions on Microsoft, "but this is the first time there is a comprehensive store you can get to from the phone."

Windows Marketplace for Mobile is part of an updated version of the company’s Windows Mobile 6.5 operating system. To date, developers have created more than 20,000 applications for the Windows Mobile platform.

The purpose of the store is to make it easier for users of Windows Mobile smartphones to access and download Windows Mobile applications. However, many of its 20,000 mobile applications are geared toward business customers.

"I think Microsoft needs a more comprehensive entertainment strategy to draw in consumers, so maybe [Windows Marketplace for Mobile] will help," Rosoff told MacNewsWorld.

For now, Apple has the advantage of very good branding and the popularity of the iPod and iPhone business models, where the company controls everything having to do with the hardware and software, he said.

"That makes for a better consumer experience," Rosoff noted.

Stock Snapshot

Apple’s stock was at US$95.35 per share in late-day trading Tuesday, down about 6 percent from where it was on Feb. 10.

"The S&P is down 4 percent, and Apple tends to be a little bit more volatile than the S&P," Tavis McCourt, an equity analyst with Morgan Keegan, told MacNewsWorld.

"The only news event [that might have a bearing on Apple’s shares] is the 3GSM conference. There are a lot of competing app stores being launched, and people may think that competitors may be catching up to Apple on that — but I think that’s over-reading it a little bit." 


Obama signs stimulus bill

Obama signs stimulus bill

President Barack Obama signs the economic stimulus bill at the Denver Museum of Nature & Science, as Vice President Joe Biden looks on.

President Barack Obama signed the $787 billion economic stimulus package into law Tuesday in Denver, calling it “a balanced plan with a mix of tax cuts and investments.”

“Today does not mark the end of our economic troubles,” he said before the signing ceremony. “Nor does it constitute all of what we must do to turn our economy around. But it does mark the beginning of the end.”

Obama called the stimulus legislation — which was approved by Congress Friday with almost no Republican support — the most sweeping economic recovery package in the nation’s history.

He said it will create or save some 3.5 million jobs nationwide over the next two years and make the biggest investment in the nation’s roads, bridges and rail system since the interstate highway system was built starting in the 1950s.

Many GOP officials have complained that the package is too big, too unfocused and overloaded with “pork” projects that will have little immediate effect on the economy.

“Now that the stimulus bill has passed, my hope is that the president will now focus on inspiring confidence in the economy instead of the fear he promoted in order to get it passed,” U.S. Rep Mike Coffman, R-Aurora, who voted against the measure, said Tuesday in a statement.

"Americans looking for jobs and struggling to pay bills will be disappointed by the spending package," Michael Steele, chairman of the Republican National Committee, said Tuesday in a statement.

"The transparency and bipartisanship that President Obama promised the American people was sacrificed to pass a pork-laden bill without any public review or meaningful Republican support," he said, adding that the measure will "guarantee a larger debt burden on our children and grandchildren."

The bill-signing event doubled as a showcase for Colorado’s alternative-energy industry, with the president saying the stimulus plan will help the industry create new jobs, boost the nation’s energy independence and make the environment cleaner.

Obama’s four-hour visit to Denver was his first stop here since taking office Jan. 20.

He received his party’s nomination for the presidency in August at the Democratic National Convention here, delivering his acceptance speech outdoors at Invesco Field at Mile High.

In a 20-minute address Tuesday before an invited audience of officials and others, Obama cautioned that the stimulus measure — as sweeping as it is — will not solve the nation’s economic crisis by itself.

He said more steps are needed to right the American economy, including stabilizing the banking system, untangling the credit markets and helping homeowners.

“None of this will be easy,” he said. “The road to recovery will not be straight and true. It will demand courage and discipline, and a new sense of responsibility that has been missing – from Wall Street to Washington. There will be hazards and reverses along the way.

“But I have every confidence that if we are willing to continue doing the difficult work that must be done — by each of us and by all of us — then we will leave this struggling economy behind us, and come out on the other side, more prosperous as a people.”

He recalled his promise in his Invesco Field speech to “do all I could to give every American the chance to make of their lives what they will and see their children climb higher than they did. I am back today to say that we have begun the difficult work of keeping that promise.”


Facebook Withdraws Changes in Data Use

After a wave of protests from its users, the Facebook social networking site said on Wednesday that it would withdraw changes to its so-called terms of service concerning the data supplied by the tens of millions of people who use it.

The about-face was made known to many users in a message posted on the Facebook home page saying: “Over the past few days, we have received a lot of feedback about the new terms we posted two weeks ago. Because of this response, we have decided to return to our previous Terms of Use while we resolve the issues that people have raised.”

The posting invited users to click on a link to get more details.

Terms of service generally outline appropriate conduct and grant a license to companies to store users’ data. Unknown to many users, the terms frequently give broad power to Web site operators.

Earlier this month, Facebook deleted a provision from its terms of service that said users could remove their content at any time, at which time the license would expire. It added new language that said Facebook would retain users’ content and licenses after an account was terminated.

Last Monday, the company’s chief executive, Mark Zuckerberg, said in a blog post that the philosophy “that people own their information and control who they share it with has remained constant.” But, at that time, he did not indicate the language would be revised.

The changes in the terms of service had gone mostly unnoticed until Sunday, when the blog Consumerist cited them and interpreted them to mean that “anything you upload to Facebook can be used by Facebook in any way they deem fit, forever, no matter what you do later.”

Given the widespread popularity of Facebook — by some measurements the most popular social network with 175 million active users worldwide — that claim attracted attention immediately.

The blog post by Consumerist, part of the advocacy group Consumers Union, received more than 300,000 views. Users created Facebook groups to oppose the changes. To some of the thousands who commented online, the changes meant: “Facebook owns you.”

In a Facebook posting on Wednesday, Mr. Zuckerberg said: “A couple of weeks ago, we revised our terms of use hoping to clarify some parts for our users. Over the past couple of days, we received a lot of questions and comments about the changes and what they mean for people and their information. Based on this feedback, we have decided to return to our previous terms of use while we resolve the issues that people have raised.”


Hawaii Mortgage Lenders Look For Relief

Hawaii Mortgage Lenders Look For Relief

Obama To Announce Foreclosure Rescue Plan

HONOLULU - President Barack Obama is expected to announce a foreclosure rescue plan Wednesday — an estimated $50 to $100 billion plan to help slow the wave of foreclosures.

Mortgage lenders in Hawaii said they’re hoping the program will save struggling homeowners and stimulate the economy.

A rescue plan for homeowners is expected to help reduce mortgage payments by modifying loans.

The president of the Hawaii Association of Mortgage Brokers said he believes the program will stimulate and level out the market.

"We’re not having the same hardships as mainland however," said Greg Ravelo, HAMB President. "However never say never. We always have the backlash — the state of Hawaii does compare to the mainland. It’s always better to have something."

It’s called an aggressive plan to help responsible homeowners stay in their homes, but economists said the amount may help but it’s not helpful enough at least 2.3 million Americans had their mortgages foreclosed in 2008.

Nearly 3,200 Hawaii homeowners faced foreclosure last year, a 230 percent increase from 2007.

The number of foreclosures in Hawaii may not be as high as it is on the mainland but there are many struggling homeowners.

Mortgage lenders said the plan would be a positive move.

"Hopefully we are ahead of the curve we have learned as far as the market. We can make some corrections before things get in a worse situation, hopefully not," Ravelo said.

The plan would require applicants take an affordability test and have a reappraisal. Mortgage companies would adjust loan terms — in return for federal money.

It’s not clear whether or not homeowners must be delinquent to qualify, but experts said it’s never wise to skip a payment.

"When lenders look at your credit and you’re late on a mortgage payment compared to a car payment it’s going to weigh a lot heavier," Ravelo said.

One struggling homeowner said any assistance right now would be great and it’s time the government helps out the consumers rather than the banks.


Obama and the limits of liberalism

After only a month in office, President Barack Obama has bumped up against the realities of war-and-peace decisions that face any American president.

The president’s order not to withdraw from Afghanistan but to get further into it shows that there are limits to the liberalism he has espoused, even though he foreshadowed this move during his election campaign.

He is not the first US president to come into office promising change and then finding that more of the same is part of the policy mix.

The Carter experience

Jimmy Carter proclaimed an “ethical” foreign policy but then ran into the reality of the Soviet move into Afghanistan in 1979.

This led to a freezing of relations with Moscow, including a boycott of the Moscow Olympic games.

Worse was to follow for Mr Carter with the Islamic revolution in Iran and the seizure of the hostages at the US embassy in Tehran. President Carter tried to get their release through ineffective sanctions and then a rescue operation that came to grief in the desert outside Tehran.

It was an event that doomed his presidency, though he would probably have lost to Ronald Reagan anyway, because the US was then, as now, in an economic recession and, at that time, thoroughly demoralised.


Jimmy Carter chose not to go to war with Iran, something that George W Bush might have at least threatened.

A huge decision about war or peace potentially looming over the horizon for President Obama also concerns Iran.

It is curious how the same places crop up again and again in differing circumstances and never with an easy answer.

That potential crisis is of course over Iran’s nuclear activities.

Defying the International Atomic Energy Agency and the UN Security Council, which want it to halt the enrichment of uranium, Iran is continuing to enrich, though it says it has no intention of using this expertise to build a nuclear device.

Mr Obama has promised new contacts with Iran and everyone is waiting to see if this will include an offer to agree to some enrichment at least by Iran - or whether this confrontation becomes a crisis and even a war.

Iran might prove to be the crucial test of what kind of President Obama will be internationally.

Mr Obama has not developed the concept of an ethical foreign policy as Jimmy Carter did. He has not made that kind of commitment. But even presidents who want to avoid war sometimes find that war is, in their opinion, thrust upon them.

Bill Clinton managed to find his own solution, by limiting the kinds of wars he fought, turning them into campaigns instead.

He bombed but did not invade Iraq; he bombed and did not invade Serbia, resisting the pressure of UK Prime Minister Tony Blair for ground operations as well.

Truman and Korea

US President Harry Truman did go to war in 1950, when he opposed the invasion of South Korea by the North.

The Korean war was unpopular and Truman left office with his head high and his polls low. But history has revived his reputation.

If President Obama can avoid an attack on Iran yet resolve the argument with Iran, his reputation could be made in a different way.

But the danger for a liberal president is that he is seen to be weak if he does not take action.

Guantanamo prisoners

Another problem down the line will raise acute dilemmas for a liberal-minded lawyer president.

It concerns those prisoners held at Guantanamo Bay who might not face trial but who will not be released.

When the camp closes, which the president has ordered inside a year, there could a small number of these prisoners.

The question then will be whether to hold them in some form of preventive detention on US soil, perhaps after a ruling by a new national security court, which would give a legal veneer to detention without proper trial.

It would not be pretty in the eyes of the powerful element of legal, public and political opinion that has forced the promise of Guantanamo’s closure.

And for a president with his legal background, it would not be easy to justify on constitutional grounds.

It might well go all the way up to the Supreme Court - but it might be a decision that a liberal president would feel he had to take.


GM, Chrysler now say they need billions more

General Motors Corp. and Chrysler LLC summoned the prospect Tuesday of their collapse unless they get $7 billion in federal aid within six weeks — part of a dramatic plea for a total of up to $39 billion to survive the worst economic crisis in the history of Detroit’s signature industry.

Yet the automakers warned that any new money from the federal government would be much cheaper than the staggering cost of bankruptcies and forced liquidation of the two companies. By their estimates, bankruptcies would cost a combined $124 billion in federal loans and up to 3 million lost jobs.

Since GM and Chrysler submitted their last restructuring plans to Congress in December, their estimates of what they need to survive has grown by $14 billion combined, reflecting the worsening U.S. economy and a lack of credit for potential car buyers.

"Today’s plan is significantly more aggressive because it has to be," GM Chairman Rick Wagoner said Tuesday.

The plan calls for closing five more plants in the United States than previously announced, bringing total plant closures to 14 over the next three years, and eliminating 47,000 jobs worldwide this year and 20,000 in the United States by 2012. Chrysler said it would cut 3,000 jobs and eliminate three models from its lineup.

While officials didn’t identify which plants would close, the cuts are certain to send even more shivers through Michigan, which is already struggling under the weight of the nation’s worst unemployment rate.

"Everyone is very anxious because we need these jobs," said Liz Lackey, 51, of Roseville. She has worked for 14 years at Chrysler’s assembly plant in Sterling Heights. "We have no idea if we’re going to have a job or not."

Another crisis for Washington

The pleas for aid and the bleak economic outlooks from both automakers present yet another economic crisis for President Barack Obama in his first month in office, even as the stock market sank Tuesday to a near five-year low. White House spokesman Robert Gibbs said the president’s auto task force will review the reports closely in the next few days.

"It is clear that going forward, more will be required from everyone involved — creditors, suppliers, dealers, labor and auto executives themselves — to ensure the viability of these companies going forward," he said.

Both companies also urged the government to help suppliers, who have petitioned the U.S. Treasury for up to $25.5 billion in aid to survive weeks of idled production by U.S. automakers so far this year.

The auto task force headed by Treasury Secretary Timothy Geithner and National Economic Council director Lawrence Summers will meet for the first time later this week to review the plans. Sen. Bob Corker, the Tennessee Republican who played a key role in crafting the original loan deals, said he would reserve judgment on the automakers’ plans.

He did say he would like to see Obama insist on shareholder and labor concessions as a part of the restructuring plans.

"I think it would be very helpful for the Obama administration to say this is a line in the sand, these things have to occur," Corker told CNBC.

Where would aid come from?

The administration has not addressed whether it would grant more aid or where such money would come from, a potentially explosive political question. The companies’ $17.4 billion in loans to date have been drawn from the $700-billion bailout of the financial industry. Of that original $700 billion, $387.5 billion has been committed, and experts say the financial crisis could easily soak up the rest.

U.S. Rep. Thad McCotter, a Livonia Republican, said if the Obama administration backs the industry but has to come to Congress for cash on the heels of the hard-fought battle for a $787-billion stimulus package, it will be “a nightmare.”

"We just seem to be cursed with timing problems," McCotter said. "I think it’s going to be very difficult. We’ll have to see what the task force’s response to this is."

The detailed restructuring plans from GM and Chrysler, required by the government loans, outline a swarm of cuts necessary to survive a U.S. market suffering its worst decline of auto sales in four decades, and give each automaker a positive net value.

GM said it would focus on four core brands — Chevrolet, Buick, GMC and Cadillac — and plot a course to become profitable by 2011. The automaker said it would need $2 billion in March and $2.6 billion in April, along with $4.5 billion to replace a credit line by 2011 and a $7.5-billion line of credit if the market worsens.

Giving bankruptcy a hard look

The administration asked GM and Chrysler to address bankruptcy as part of their plans. GM detailed three bankruptcy options, saying its research showed the company’s filing could cost up to $100 billion, which would lower the chances of the government getting its money back, as well as drive away car buyers.

GM “remains convinced bankruptcy would be protracted with a significant possibility that exit would not be achieved,” the company said.

GM’s plan comes with several caveats. It warns that if its supplier Delphi Corp. can’t emerge from bankruptcy, its plans could be thrown off, and that its pension fund may need more money.

It’s asking for $6 billion in help from foreign governments for branches in Canada, Europe and elsewhere. And both GM and Chrysler warned they might have to limit sales of some models should the Obama administration allow California and other states to regulate greenhouse gas emissions from vehicles.

Chrysler’s remedies include cutting an additional 3,000 jobs this year, slashing total costs by $700 million, the end of three models — including the PT Cruiser and Durango — and the sale of $300 million in assets.

Chrysler Chairman Bob Nardelli said should the company fail to receive $5 billion by March 31, on top of the $4 billion it was granted last year, it would have to consider bankruptcy or an “orderly unwinding” of the company’s business. It also outlined the benefits of an alliance with Fiat SpA, saying the partnership could boost cash flow by $6.9 billion through 2016.

But the company’s submission to the Obama administration also included an “industry consolidation” option suggesting that if GM and Chrysler were to merge, the combined company could boost pretax profits by $40 billion to $54 billion between now and 2016. Chrysler and GM had talks last year, but Chrysler said GM had taken any deal off the table.

The two automakers and Ford Motor Co. reached agreements with the UAW for undisclosed reductions in hourly worker costs, which the government had said should be competitive with those at foreign-owned plants in the United States.

The UAW said it had not agreed to changes in retiree health-care trust funds at all automakers, but Chrysler said it had reached a tentative pact depending on sacrifices by bondholders.


NHS boss attacks e-records system

NHS boss attacks e-records system

Andrew Way, chief executive of London’s Royal Free Hospital, said technical problems had cost the trust £10m and meant fewer patients could be seen.

The Department of Health said lessons had been learnt from the trial.

The England scheme, part of a £12bn IT upgrade, aims to put 50 million patient records on a secure database by 2014.

The Royal Free, one of a number of early adopters of e-records, has been using the system since last summer.

The project, restricted to England, has been one of the most controversial aspects of the overall 10-year IT programme, which also involves an online booking system, digital imaging for X-rays and electronic prescriptions.

Mr Way said the cost of the problems had meant the hospital had been unable to invest in new equipment.

He also said technical glitches had caused more work for staff and meant out-patients’ bookings were taking four times as long.

As a result, the hospital has had to employ another 40 administrative staff to handle the extra workload, he added.

The faulty system had also prevented the hospital from billing other parts of the NHS for treatment.

Mr Way said: “I think it is very disappointing that the work we had to do as a trust has caused our staff so much heart-ache and hard work.

"Many of the medical staff are incredibly disappointed with what we have got.

"I have personally apologised for the decision to implement the system before we were really clear about what we were going to receive.

"I had been led to believe it would all work."

However, he said he still believed in the idea of replacing paper records with an electronic system, but it would need more work to get it right.

Improved care

Overall, the hospital has spent an extra £4m to get the system working.

On top of this, Mr Way estimates the Royal Free has lost £6m because of fewer patients and glitches with the system, meaning it was unable to bill other parts of the NHS for work done.

Nigel Edwards, of the NHS Confederation, which represents most health service organisations, said: “This isn’t the first hospital to have very significant problems with implementation.

“Hospitals need to be able to tailor what they have got to their needs, rather than being given this one-size-fits-all solution.” 

Michael Summers, vice chairman of the Patients’ Association, said the failure of a trust’s IT system potentially let patients down in many ways. 

"For example, what happens is that their medical records get lost. The patients have to wait longer for their treatment because of the muddle. 

"And in some cases, operations are postponed or patients are - the wrong patients are led to the surgery." 

A Department of Health spokesman said: “Many elements of the programme are complete, and patients and clinicians are now beginning to see the benefits these systems bring to improve patient care. 

"We are learning lessons from the deployment at the Royal Free of Cerner Millennium, which now has an effective patient record system, and we expect these lessons to help us improve further deployments." 

Prime Minister Gordon Brown vigorously defended the NHS IT project at a meeting of Commons select committee chairmen on Thursday. 

He said: “For all the problems that a huge project like that has created, you cannot say that that is not an advance.”


Fresh start for lost file formats

Fresh start for lost file formats

Long lost file formats could soon be resurrected by pan-European research.

The 4.02m euro (£3.58m) project aims to create a universal emulator that can open and play obsolete file formats.

Using the emulator, researchers hope to ensure that digital materials such as games, websites and multimedia documents are not lost for good.

The emulator will also be regularly updated to ensure that formats that fall out of favour remain supported in the near and far future.

Called Keeping Emulation Environments Portable (Keep), the project aims to create software that can recognise, play and open all types of computer file from the 1970s onwards.

As well as basic text documents it will also let people load up and play old computer games that technology has left behind.

"People don’t think twice about saving files digitally - from snapshots taken on a camera phone to national or regional archives," said Dr Janet Delve, a computer historian from the University of Portsmouth and one of the research partners on Keep.

"But every digital file risks being either lost by degrading or by the technology used to ‘read’ it disappearing altogether," she said.

Without work to preserve ways to access the formats that are common today, 21st century citizens risk leaving a “blank spot” in history, said Dr Delve.

Already the number of unreadable documents in archives is beginning to mount up.

Britain’s National Archive estimates that it holds enough information to fill about 580,000 encyclopaedias in formats that are no longer widely available.

Research by the British Library estimates that the delay caused by accessing and preserving old digital files costs European businesses about £2.7bn a year.

"We are facing a massive threat of the loss of digital information. It’s a very real and worrying problem," said Dr David Anderson, who will work with Dr Delve on the UK end of the project.

"Things that were created in the 1970s, 80s and 90s are vanishing fast and every year new technologies mean we face greater risk of losing material," he said.

Dr Anderson said emulation was more workable in the long term than the usual method of preserving old files which involves migrating information on to new formats with its attendant risks of data degradation and corruption.


Privacy groups slam new rules

Privacy groups slam new rules

Privacy groups say widely-anticipated recommendations on how websites collect, save and share information about users don’t protect the public.

The Federal Trade Commission’s new policies focus on targeted advertising that tracks consumer behaviour online.

"The time for baby steps to protect online privacy is long passed, there need to be laws," said Jeff Chester of the Centre for Digital Democracy.

"Self-regulation simply hasn’t worked," he said.

"The Commission is supposed to serve as the nation’s leading consumer protection agency. But for too long it has buried its mandate in the ‘digital’ sand, as far as ensuring US consumer privacy is protected online.

"The FTC should have recommended that Congress enact legislation and give people control over what information is collected and how it is used," Mr Chester told the BBC.

"Day of reckoning"

For the last year the Commission has been looking at the issue of online marketing, which has grown into a $20bn (£13.6bn) a year industry by pitching adverts at consumers based on what websites they have visited.

In its 48-page Staff Report on Behavioural Advertising, the FTC expanded on the agency’s guidelines for online marketers set out in 2007 and said it aimed to “encourage privacy protections while maintaining a competitive marketplace”.

"Industry needs to do a better job" said Commissioner Leibowitz

The changes concern “transparency and consumer control, reasonable security and limited data retention, consumer consent for major changes to existing privacy policies and affirmative consumer consent for using sensitive data for behavioural advertising”.

However two members of the FTC questioned whether the self-regulatory approach laid out in the new report will be effective.

"Industry needs to do a better job of meaningful, rigorous self-regulation or it will certainly invite legislation by Congress and a more regulatory approach by our Commission," Commissioner Jon Leibowitz wrote in a statement released with the report.

"A day of reckoning may be fast approaching," he warned.

"This staff report, while commendable, focuses too narrowly," said Commissioner Pamela Jones Harbour.

"Threats to consumer privacy abound, both online and offline, and behavioural advertising represents just one aspect of a multifaceted privacy conundrum surrounding data collection and use," she said.

"Hands off"

The comments of both Commissioners were applauded by a series of privacy groups who all said the Commission had “dropped the ball” on the issue of protecting consumers.

"The FTC did a punt" on the question of sensitive information regarding health, finances or children claimed Pam Dixon the executive director of the World Privacy Forum.

Children and teenagers are seen as the most vulnerable group online

"Instead of specifically saying how this information should be treated, the FTC encouraged the industry, consumers and privacy advocates to develop more specific standards to address the issue.

"This area is very difficult and we were looking to the FTC to help set specific standards. The bottom line is that the FTC fell down on the job," said Ms Dixon.

On the FTC’s issue of urging companies that provide online advertising to get users’ consent before collecting general data, criticism came from Chris Hoofnagle the director of the Centre for Law and Technology at Berkeley University.

"The cumulative burden of having to opt out of every company using this approach means no consumer will. The opt out in this context is calculated to fail," he said.

"The report was a downer" when it comes to protecting children and teenagers online, said Corie Wright, a senior counsel with the Institute for Public Representation which filed comments to the FTC on behalf of children’s advocacy groups.

"There are some populations, namely children and teenagers, that are so vulnerable that we should say ‘hands off’, don’t target these groups. They are not sophisticated or cognitively able to make decisions in a meaningful way about their data.

"It’s predatory to take their information and target them when they are not aware of what they are giving up," Ms Wright told BBC News.

The Commission, which awaits President Obama’s appointment of a new chairman, was described by Mr Chester as “the last official act of the Bush administration”.

"Growing industry"

In response to the FTC report, four of the major advertising trade organisations have agreed to step up efforts to maintain self-regulatory policies that were set over a year ago by the Federal Trade Commission.

Privacy groups worry about how much information people give away

The four bodies - the American Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association and the Interactive Advertising Bureau - have come together, they say, to “develop a cohesive and far-reaching self-regulatory effort for interactive advertising”.

This is the first time the entire marketing and media industry has come together in such a way.

Meanwhile search giant Google said while it supports “federal consumer privacy legislation it backs the FTC in its latest recommendations”.

"The FTC principles underscore that in a fast-evolving space like the Internet, a self-regulatory approach is the best way to protect consumers and promote innovation," said senior policy counsel Pablo Chavez.


Italy police warn of Skype threat

Italy police warn of Skype threat

Criminals in Italy are increasingly making phone calls over the internet in order to avoid getting caught through mobile phone intercepts, police say.

Officers in Milan say organised crime, arms and drugs traffickers, and prostitution rings are turning to Skype in order to frustrate investigators.

The police say Skype’s encryption system is a secret which the company refuses to share with the authorities.

Investigators have become increasingly reliant on wiretaps in recent years.

Customs and tax police in Milan have highlighted the Skype issue.

They overheard a suspected cocaine trafficker telling an accomplice to switch to Skype in order to get details of a 2kg (4.4lb) drug consignment.

Heated debate

Investigators say intercepts of telephone calls have become an essential tool of the police, who spend millions of euros each year tracking down crime through wiretaps of landlines and mobile phones.

But the law may be about to change.

Prime Minister Silvio Berlusconi’s right-wing government has drawn up a bill which would restrict police wiretaps to only the most serious crimes.

Much crime reporting in the Italian media is based on leaks of wiretaps and leading politicians, including Mr Berlusconi himself, have found to their embarrassment that details of their private telephone conversations have sometimes been leaked to newspapers.

Under the new law reporting of details of criminal investigations obtained through wiretaps would become illegal until a final verdict has been delivered.

Given the extreme slowness of Italian justice, this would mean that details of cases now before the courts might be reported by the press only in 15 years time.

Not only have Italian journalists been protesting at the new draft bill, but a heated debate is also going on about it within the country’s highest body for the administration of justice - the supreme council of the magistrature, composed of the country’s top judges.