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IT Confidential

First there were privacy policies, then privacy officers, then privacy services, systems, and tools. Call it Privacy Inc., the industry born from the paranoia inherent in a data-intensive society. Larry Ponemon, CEO of Privacy Council, a Richardson, Texas, privacy service provider, knows a thing or two about the privacy business. He created PricewaterhouseCoopers' privacy practice and was appointed to the Federal Trade Commission's Advisory Committee for Online Privacy. Ponemon had a telephone meeting last week to talk about how the USA Patriot Act, the legislation enacted shortly after Sept. 11 that expanded government's eavesdropping rights, has affected the privacy business. And business is booming. Not only is the travel industry rushing to implement largely untested privacy technology, such as biometrics, but government officials are throwing up surveillance technology, such as camera monitors, at a furious pace. "We might be relying on technology that's just too new to be effective," Ponemon says. He predicts there will be a national ID card, in the form of a smart chip embedded in drivers' licenses, and that it will lead sooner or later to what he calls a "privacy Valdez," a major spillage of personal data "where a lot of this information ends up in the wrong hands, being used the wrong way."

As for the Internet: "The ISPs are pretty much an open book to government in terms of sharing information," he says.

Storage powerhouse EMC sued Hitachi Data Systems last week over software patent infringement, a tactic it said it turned to after four years of trying to settle the claims out of court. The suit may reflect current market conditions. In 1998, EMC was the leader in data-replication software with its SRDF product. Since then, Hitachi has made significant gains with its equivalent TrueCopy software. HDS wouldn't comment, but a user of both systems says it doesn't bode well for EMC. "Where's this market going when vendors resort to lawsuits to generate revenue?" he asks. "This will probably end up turning out very badly for EMC."

The Recording Industry Association Of America says a company that stored digital music files on an internal server and allowed its employees to access the music has agreed to pay a $1 million settlement rather than face a copyright-infringement lawsuit. When the association got a tip that a technology consulting firm was running a dedicated server containing thousands of MP3 files on its network, it sent a letter to the firm telling it to deactivate the server and threatening to sue for copyright infringement. The firm agreed to pay the penalty. It isn't clear whether it's against the law for a company to store MP3s on an internal network, Jupiter Media Metrix analyst Aram Sinnreich says-but it might behoove some companies to create an auditing process to search their internal systems for potentially infringing files. "They should assess what their actual risk is of being audited and policed," he says, "and assess what it would cost them in terms of resources and employee morale."

Bob Pittman is back in charge at America Online. Pittman had led AOL until its merger last year with Time Warner. Since the merger, Barry Schuler has served as chairman and chief executive of the Internet business-the company's most valued asset until the dot-com bubble burst, sending the division into a two-year slump in online advertising that shows no signs of immediate improvement. Pittman will keep his current title of chief operating officer of AOL Time Warner, and Schuler will head the new home-networking solutions and digital home-services division. "Nobody understands AOL's operations and potential better than Bob Pittman, and no one is better qualified to manage this business," AOL Time Warner CEO-elect Dick Parsons said in a statement. "Bob is taking on this role at a time of both opportunity and challenge."

Uh-oh. Somehow that opportunity/challenge thing never turns out to be a 50-50 proposition. Not that I mind a challenge; it's just that the opportunity side hasn't kept its part of the bargain lately. You have an opportunity to send me an industry tip at or phone 516-562-5326. If you want to talk about a surveillance society, a litigious society, or those stupid

AOL commercials, meet me at's Listening Post:

To discuss this column with other readers, please visit John Soat's forum on the Listening Post.

To find out more about John Soat, please visit his page on the Listening Post.

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