July 2011

Borders Succumbs to Digital Era in Books

Borders Group's imminent demise marks the first major casualty of the digital era in buying and reading books. But the store closings also will mean fewer opportunities for shoppers to wander the book aisles, a loss that will affect publishers as well as competitors and authors.

The bookseller is expected to ask a bankruptcy judge Thursday to approve plans to start liquidating as soon as Friday. By the end of September, the remaining 399 stores of the second-largest U.S. bookstore chain will be shut down for good. The closures will make Barnes & Noble the only national bookstore chain in the U.S., leaving some Americans to drive long distances to find the largest collections of new bestsellers or wile away the hours among the stacks. Publishers, meantime, are losing one of their biggest customers as they struggle with declining demand for physical books. Borders' failure will hasten the dramatic changes under way in how consumers buy and read books.

Meanwhile, rival Barnes and Noble is attempting to reinvent itself as a seller of book downloads, reading devices and apps. Barnes & Noble's digital strategy represents a costly investment, but it's one that appeals to Liberty Media Corp., which is offering $1 billion to buy the company.

Amazon's shameful California tax dodge

[Commentary] The fact that Amazon refuses to collect California sales taxes obviously gives it a competitive advantage over all the brick-and-mortar bookstores and appliance showrooms with facilities here. If Jeff Bezos, Amazon's founder and chief executive, has a spare moment there in Seattle, he might go on his website and buy a copy of Norris' "The Octopus." (As a resident of Washington state, he'll have to pay sales tax.) In any event, he might skip to the end of the first chapter and consider how it might feel to have Amazon regarded as the poet-narrator describes the Southern Pacific: "The leviathan, with tentacles of steel clutching into the soil, the soulless Force, the iron-hearted Power, the monster, the Colossus, the Octopus."

ITIF on tax reform: Simpler doesn't always mean better

Policymakers’ push to make the tax code simpler and stop the government from picking winners and losers is the wrong approach to corporate tax reform, a new paper from the technology sector argues. The Information Technology and Innovation Foundation (ITIF) study contends that the U.S. tax code should promote what it sees as more deserving investments in areas like research and development.

The analysis argues that insisting on a revenue-neutral overhaul of the corporate tax code could limit economic and job growth. “In a world of intense international economic competition and a U.S. economy increasingly powered by innovation, a tax code that does not proactively ‘distort’ the investment decisions of enterprises in the United States is one that is doomed to leave the United States behind in international competition,” the paper argues.

Twitter presidential debate

The Republican presidential candidates will debate for the third time, but they won't get a chance to stare each other down or share a stage. It’s not even clear that all of them will be providing their own answers — they'll be participating remotely in the first-ever Twitter debate for a presidential campaign.

The debate, sponsored by TheTeaParty.net, will feature Newt Gingrich, Rick Santorum, Gary Johnson, Michele Bachmann, Thad McCotter and Herman Cain. Conservative commentator S.E. Cupp and conservative radio host Rusty Humphries will pose the questions, which the candidates will then be encouraged to answer in at most two or three tweets. Others can submit questions to the moderators and candidates by mentioning @140townhall in a tweet.

Twitter Is Still Whistling

Twitter is facing a federal government investigation, competition from Google+ and the departure of two of its founders. But Dick Costolo, Twitter’s chief executive, has a message for the naysayers: the business is growing just fine.

“We’re growing faster than we've ever grown,” Mr. Costolo said Tuesday at the Fortune Brainstorm Tech conference in Aspen. People send a billion Twitter posts every five days and 400 million people visit its Web site – not counting Twitter apps – each month, he said. Still, Twitter is in the early days of turning all that usage into revenue. Advertising on Twitter is growing rapidly, Mr. Costolo said. Last year, Twitter had advertisers in the low hundreds, and that number has increased seven-fold this year.

U.S. to Close 800 Computer Data Centers

The federal government plans to shut 40 percent of its computer centers over the next four years to reduce its hefty technology budget and modernize the way it uses computers to manage data and provide services to citizens. Computer centers typically do not employ many people to tend the machines, but analysts estimate that tens of thousands of jobs will most likely be eliminated.

The federal government is the largest buyer of information technology in the world, spending about $80 billion a year. The Obama administration is taking aim at some of that by closing 800 of its sprawling collection of 2,000 data centers. The savings, analysts say, will translate into billions of dollars a year and acres of freed-up real estate. The government is following the lead of private business. For years, companies have been using software that shares computing tasks across several machines in a data center. The task-juggling technology enables computers to run at far higher levels of efficiency and utilization than in the past, doing more computing chores with fewer computers and fewer data centers.

Open-Access Advocate Is Arrested for Huge Download

A respected Harvard researcher who also is an Internet folk hero has been arrested in Boston on charges related to computer hacking, which are based on allegations that he downloaded articles that he was entitled to get free.

A federal indictment unsealed in Boston on Tuesday morning on charges that the researcher, Aaron Swartz, broke into the computer networks at the Massachusetts Institute of Technology to gain access to JSTOR, a nonprofit online service for distributing scholarly articles online, and downloaded 4.8 million articles and other documents — nearly the entire library. Swartz, 24, made his name as a member of the Internet elite as a teenager when he helped create RSS, a bit of computer code that allows people to receive automatic feeds of online notices and news. Since then, he has emerged as a civil liberties activist who crusades for open access to data.

Ohlhausen Tapped for FTC

President Barack Obama announced his intent to nominate Maureen K. Ohlhausen to be a Commissioner at the Federal Trade Commission.

Ohlhausen is an attorney at Wilkinson Barker Knauer, LLP, where she is a partner in the firm’s privacy, data protection, and cybersecurity practice. Previously, she worked at the Business Software Alliance as Technology Policy Council. From 1997 to 2008, she served at the Federal Trade Commission in a number of leadership roles, including as Director of the Office of Policy Planning and, earlier, as an attorney advisor for Commissioner Orson Swindle. Earlier in her career, Ms. Ohlhausen worked at the U.S. Court of Appeals for the D.C. Circuit as a law clerk for Judge David Sentelle and clerked for Judge Robert Yock of the U.S. Court of Federal Claims. She is also a senior editor of the American Bar Association Antitrust Law Journal and has taught privacy law and unfair trade practices as an adjunct professor at George Mason University School of Law. Ms. Ohlhausen received a B.A. from the University of Virginia and a J.D. from George Mason University School of Law.

FBI arrests 14 in connection with PayPal attacks

The Federal Bureau of Investigation arrested 14 people as part of an investigation into a December attack on PayPal by the hacker group Anonymous.

The individuals are accused of conspiring to damage computers at PayPal, part of a wave of attacks known as "Operation Payback" aimed at firms that cut off payments to WikiLeaks following the site's release of classified State Department cables in November. According to an indictment unsealed in federal court in San Jose (CA), members of Anonymous coordinated distributed denial of service (DDoS) attacks against PayPal's servers using open-source software available as a free download. The indictment claims the attacks were referred to by group members as "Operation Avenge Assange," a reference to WikiLeaks founder Julian Assange.

Canada won't block $4.5 billion sale of Nortel patents

The Canadian government will not review the purchase of patents belonging to bankrupt Nortel Networks by a group that includes Apple Inc, Microsoft Corp and Research In Motion Ltd, the industry minister said.

Under the Investment Canada Act, the government must review foreign investments with a book value of more than C$312 million ($328 million) to determine if they are of "net benefit" to the country. But while the Nortel patents' sale price clearly exceeds that threshold, the book value may be far lower. Industry Minister Christian Paradis said investment review officials had come to the conclusion that the sale was not subject to a net benefit review after examining the applicable rules and threshold values.