AOL May Launch Own Internet ID Service

R. A. Hettinga rah at shipwright.com
Fri Jul 27 17:24:27 EDT 2001


http://washingtonpost.com/ac2/wp-dyn/A56191-2001Jul26?language=printer

AOL May Launch Own Internet ID Service

'Magic Carpet' Would Set Up New Battle With Microsoft, in Arena That Raises
Privacy Fears

By Alec Klein and Ariana Eunjung Cha
Washington Post Staff Writers
Friday, July 27, 2001; Page E01

AOL Time Warner Inc. is considering entering a race against Microsoft Corp.
and other technology companies to establish a single Web identity for
consumers, attempting to become one of the dominant Internet gatekeepers
for a vast array of personal information.

AOL's project, which it calls Magic Carpet, would allow people to store
personal information online to simplify transactions on the Internet,
according to an internal AOL document and industry executives. AOL Time
Warner would be chasing Microsoft, which has already developed a service
called Passport that has more than 160 million accounts. AOL officials
declined to comment.

An "identity service" gives consumers one place to store essential
information -- including their names, addresses and credit card numbers --
so they can use different Web sites and purchase things online with a
single user name and password. Many industry analysts believe such a
centralized service is critical to the continued growth of the commercial
Internet.

But identity services are alarming consumer groups and privacy activists,
who say it remains unclear how the companies that are collecting the data
will protect and share it. Critics say that just as AOL, Microsoft and
other companies are asking consumers to trust them as guardians of their
identities online, there have been breaches, many involving Microsoft
software, that raise questions about security.

Consumer groups asked federal officials yesterday to investigate
Microsoft's expanding efforts to collect and manage Internet user's
personal information. In a complaint filed with the Federal Trade
Commission, the nonprofit Electronic Privacy Information Center,
Junkbusters Inc. and 11 other groups expressed concern about how identity
services would be deployed in conjunction with the October debut of Windows
XP, Microsoft's new operating system. Under current plans, the XP software
would prompt users to sign up for Passport when they first connect to the
Internet.

The groups asked the agency to order the company to "revise XP registration
procedures so that purchasers of Microsoft XP are clearly informed that
they need not register for Passport to obtain access to the Internet."

They also alleged that Microsoft is playing down the risks involved in
sharing data. While the company assures people that their information will
be secure, the complaint said, hackers have breached Microsoft sites in the
past.

Advocates said their examination of the privacy implications of such
services will not stop with Microsoft. They will watch similar services
offered by AOL and other companies.

"We would at every opportunity urge the Federal Trade Commission to do
likewise," said David Sobel, EPIC's general counsel. "With greater
consolidation in the hands of large, powerful companies, the collection and
handling of personal information becomes more of a privacy threat."

Here's how Passport works: Users can sign up for the service at a Microsoft
Web site, such as www.passport.com, where they submit their name, address
and a password. They also can provide their credit card number and shipping
address. Users can access participating sites by clicking on a Passport
icon. The service also gives users access to e-mail and shopping.

Microsoft said it protects the Passport information by using encryption,
passwords and other methods. But privacy specialists worry that people
could be manipulated or victimized if personal information in Passport or
Microsoft's other online services is misused or obtained by hackers.

AOL declined to discuss what plans it has for identity services. "AOL has
made no announcements in this regard, so it doesn't make sense for us to
comment," spokeswoman Ann Brackbill said.

Magic Carpet, however, is referred to in an AOL strategy document on
Microsoft. And at a summit of Internet industry leaders in Carlsbad,
Calif., this week, Sun Microsystems Inc. chief executive Scott McNealy said
he had talked to Barry Schuler, chief executive of America Online, AOL Time
Warner's online unit, about the developing technology.

"Some people say, 'It's all roads lead to AOL'; other people say . . . 'It
doesn't force me to be an AOL subscriber to use it,' " McNealy said. "It's
a nice alternative choice to Microsoft, and maybe having two strong
companies go at each other will neutralize each other."

Other chief executives at the conference said they were working with AOL
and Microsoft's identity services. EBay Inc. chief executive Meg Whitman
said that ease of use for customers was her main goal, and that she would
work with both companies to make sure they can use both Passport and Magic
Carpet.

Microsoft officials, meanwhile, called AOL's Magic Carpet a case of
hypocrisy because AOL had recently conducted a Capitol Hill campaign
against Microsoft services, including Passport. In a March presentation to
members of Congress, AOL said the integration of Microsoft's identity
service into its operating system was "intended to create [a] chokepoint
for e-commerce."

"This is why AOL Time Warner has zero credibility with policymakers," said
Microsoft spokesman Vivek Varma. "The hypocrisy here is stunning. . . .
AOL's vision is to create a captive user base and feed that base Time
Warner content."

Without announcing it, AOL recently introduced a "Screen Name Service" on
its Web site, which lets users establish an identity to access a variety of
affiliated sites, such as its SchoolSports.com page. "Surfing the Web just
got easier. No need to remember multiple passwords -- just use your AOL
Screen Name at any Web site in the Screen Name Service Network," the Web
site says.

Also, for about two years, AOL has offered shoppers a "Quick Checkout"
service, which secures credit card information.

AOL's move into identity services dovetails with its recent $100 million
investment in Amazon.com Inc.

That deal gives AOL access to many of the online retailer's pioneering
shopping technologies. The companies also plan to collaborate on "digital
wallet" technology that would compete directly with Microsoft's Passport,
an Amazon.com official said.

A digital wallet could come in handy as more people buy more things online.
Retail sales on the Internet are expected to increase from $34 billion this
year to $104 billion by 2005 and $130 billion by 2006, according to the
research firm Jupiter Media Metrix.

Since Microsoft announced Passport, it has won the support of such
high-profile companies as Starbucks and 1-800-FLOWERS.com. Still, it has
been assailed by privacy advocates who say data such as someone's finances
and buying habits shouldn't be in the hands of the world's largest software
company.

Tonya Klause, a Microsoft spokeswoman, said concerns about the company's
online initiatives are unwarranted. Klause said Microsoft protects the
information it collects, and collects information only from people who
choose to share it.

Staff writers Robert O'Harrow Jr. and Leslie Walker contributed to this report.

© 2001 The Washington Post Company
-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'



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