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Microsoft's June security updates were bad news for online criminals who make their living stealing password information from online gamers.

The company's Malicious Software Removal Tool– a program that detects and removes viruses and other bad programs from Windows machines– removed game password-stealing software from more than 2 million PCs in the first week after it was updated to detect these programs on June 10.

One password stealer, called Taterf, was detected on 700,000 computers in the first day after the update. That's twice as many infections as were spotted during the entire month after Microsoft began detecting the notorious Storm Worm malware last September.

“These are ridiculous numbers of infections my friends, absolutely mind-boggling,” wrote Matt McCormack, a spokesman with Microsoft's Malware Response Center, in a Friday blog posting.

Between June 10 and June 17, Microsoft removed Taterf from about 1.3 million machines, he said.

Microsoft's September detections seriously hobbled the Storm Worm botnet, once considered a top Internet threat.

Password stealers such as Taterf are among the most common types of malicious software on the Internet. That's because there's big money to be made selling the virtual currencies used in online games for real-world cash.

Once a criminal learns a gamer's username and password, he can log into the game and sell the victim's virtual possessions for virtual gold coins. Those coins are then handed to another character in the game who sells the gold for real-world dollars at an online exchange such as IGE, said Greg Hoglund, CEO of HBGary and a co-author of the book “Exploiting Online Games.”

“There's no way to audit that money transfer, so effectively they're doing money laundering,” he said. “There's almost zero risk for the attackers.”

The password-stealing programs are often installed via Web-based attack code that exploits flaws in multimedia programs such as Adobe's Flash Player or Apple's QuickTime Player, Hoglund said.

The attacks are often technically sophisticated, exploiting previously undisclosed bugs in Windows software, said Roger Thompson, chief research officer with AVG Technologies. “The 'World of Warcraft' password stealers have provided most of the innovation over the last twelve months,” he said via instant message.

Microsoft's McCormack provided some data on where most of the password stealer detections occurred. Not surprisingly, China was the top country, with 529,003 detections.

Security experts say Chinese games are frequently the target of these attacks. Rounding out the top five countries for detections were Taiwan with 279,428, Spain with 235,381, the U.S. with 213,374 and Korea with 184,306.

About 330 million copies of the Malicious Software Removal Tool update were downloaded during this June period.

Gamers can make easy targets for criminals because some of them disable antivirus software to boost gaming performance, while others download free “cracked” versions of games, which can contain malware, McCormack said.

“So how does one avoid being infected?” he asked. “Running an up-to-date anti-virus solution is a good start. Running an up-to-date, patched browser is another necessity,” he said. “Enabling Automatic Updates helps a whole bunch, too.”

NEW YORK - A news discussion site and The Associated Press have resolved a dispute over an AP demand that the site remove some of the news agency’s content.

In a statement Friday, Rogers Cadenhead said he is “glad” the dispute over his site, the Drudge Retort, has ended. He said a larger conflict remains between AP’s view of acceptable use of its content and the practices of many bloggers. Cadenhead declined to comment further, referring all questions to his attorney.

An AP statement Thursday night said the company had provided additional information to Cadenhead about posting its material online, and both sides considered the matter closed. It also said the AP was having a “constructive exchange” with a “number of interested parties in the blogging community” about the relationship between bloggers and news providers, and intended to continue the dialogue.

Earlier this month the AP sent a legal notice ordering Cadenhead to take down seven entries on the Drudge Retort, his takeoff on the Drudge Report. The news agency said the postings were violating the AP’s copyright.

Cadenhead highlighted the disagreement in his personal blog, http://www.Cadenhead.org, and prominent bloggers rallied behind him, saying the posts in question were protected under the “fair use” provision of copyright law. That allows quotation of copyright material for commentary and certain other purposes without asking permission.

In response, the AP said it was working to develop guidelines for what it considered permissible use of its content by bloggers.

Cadenhead said in his blog post that he wouldn’t reveal details of his discussion with AP attorneys about their specific objections to the blog entries until the AP releases guidance for online use of its content.

The AP’s plan for such guidelines was met with new criticism from some bloggers, who said it was an attempt by the AP to create its own legal definition of what constitutes “fair use” of copyright material. AP has said it had no intention of trying to define a legal standard, and will seek to protect AP content without discouraging bloggers from legitimately quoting from it.

“I think it would be helpful for bloggers and users of social news sites to know what the AP believes to be fair use of their copyrighted work,” said Cadenhead’s lawyer, Wade Duchene. “I hope that any guidelines that are issued are not interpreted as an agreed definition of fair use” under copyright law, he added.

Duchene said he expected disputes between news organizations and bloggers over permissible use of copyright material online to continue, but he also said he was “hopeful that future disagreements can be handled in a less confrontational manner.”

AP spokesman Paul Colford declined to elaborate on the news cooperative’s statement.

AP is a not-for-profit cooperative owned by its member news organizations.

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On the Web:

Link to Cadenhead’s post on AP dispute on his personal blog:

http://www.cadenhead.org/workbench/news/3372

Cadenhead’s Drudge Retort Web site: http://www.drudge.com/

TORONTO - BCE Inc. on Friday won the right to go ahead with the largest leveraged buyout in history, a $35 billion deal that the telecommunications company’s bondholders fought, saying it would reduce their holdings to junk.

Canada’s Supreme Court overturned a lower court ruling that the sale of BCE, the parent of telecommunications holding company Bell Canada, to the Ontario Teachers’ Pension Plan and its minority U.S. partners didn’t adequately consider bondholders’ interests.

The court’s rationale for its unanimous decision is to be released later.

“We’re pleased with the Supreme Court’s decision and we’re continuing to work to complete an acquisition of BCE,” Ontario Teachers’ Pension Plan spokeswoman Deborah Allan said.

The last hurdle to the deal remains the banks, which are slated to provide US$33 billion in financing to complete what is a US$51 billion cash and debt takeover.

But Citigroup, Deutsche Bank, Royal Bank of Scotland and Toronto-Dominion Bank, the four banks that have committed to financing the debt portion of deal, issued a statement saying they expect the transaction will close “in accordance with the Definitive Agreement between BCE and the sponsors. We continue to negotiate the financing documents in good faith with the sponsors and stand behind our original commitment to the transaction.”

A leveraged buyout is an acquisition of a company using a significant amount of borrowed money to meet the cost of acquisition. Many takeovers do not involve significant debt.

BCE lawyer Guy Du Pont argued that BCE’s board had a duty only to do what is best for the company and its shareholders and their obligation to bondholders was to meet contractual obligations to pay interest and repay principal.

The bondholders claimed that saddling BCE with an additional US$33 billion in debt reduced their holdings to junk bond status and would cost them more than US$1 billion.

Shareholders overwhelmingly approved the buyout group’s offer of C$42.75 ($42.67) per share in September.

The deal, which is also the biggest takeover of any kind in Canadian history, was agreed to in June 2007, just before credit markets began to unravel in North America.

After June 30, 2008, the buyers would be entitled to walk away from the deal. BCE is also known as Bell Canada.

BCE shares have been trading well below C$42.75 for months, on fears that the deal would not be completed.

The Toronto-based Ontario Teachers’ Pension Plan — with assets of C$108 billion (US$106 billion) in 2007 — invests and administers the retirement funds for Ontario’s 353,000 active, inactive, and retired teachers. U.S.-based Providence Equity Partners and Madison Dearborn Partners LLC are also involved in the proposed buyout.

BCE, which has more than 54,000 employees, had annual revenue of C$17.8 billion (US$17.5 billion) in 2007. It had 5.8 million wireless subscribers, 8.64 million phone lines, 1.94 million Internet subscribers and 1.82 million satellite television subscribers in 2006.

Bell Canada and its proposed new CEO George Cope are expected to refocus the Montreal telecom operator as it faces more intense competition in its wireless and Internet data businesses.

Industry analysts also expect Bell to intensify efforts to compete more aggressively with Canadian cable TV operators such as Rogers Communications, Videotron and Shaw, which have been taking data, landline and other telecom business away from Bell in recent years.

WASHINGTON (Reuters) - The Federal Communications Commission on Friday said it wants to auction a section of wireless airwaves to buyers willing to provide free broadband Internet service without pornography.

The agency asked for public comment on its plan to auction an unused portion of the wireless spectrum with the condition that the winning bidder offer free Internet access and filter out obscene content on part of those airwaves.

Successful bidders for the spectrum would also be required to provide coverage to at least half of the United States within four years, and to at least 95 percent of the U.S. population by the end of the 10-year license, the FCC said.

“Additional obligations associated with the licensee's free broadband service would include a requirement to provide a network-based filtering mechanism for the free Internet service in order to protect children and families, and a requirement that the network allow for the use of open devices,” the agency said.

The FCC posted its proposal on its website at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-158A1.d oc .

(Reporting by Julie Vorman)

REDMOND, Wash. - A U.S. District Court judge in Los Angeles has ruled that Microsoft Corp. will have to pay Alcatel-Lucent more than $500 million for infringing on two patents.

One patent covers how software users fill out forms. The other is related to the use of a stylus on a tablet computer.

Judge Marilyn L. Huff on Thursday denied Microsoft’s request for reconsideration of a jury’s decision and the amount of damages the jury awarded Alcatel.

The Federal Communications Commission has granted Sprint Nextel a one-year reprieve to relocate its iDEN mobile customers to new channel assignments on the same 800-MHz frequency band.

The FCC wants to reconfigure its allocation of all communication channels at 800 MHz so commercial wireless services will cause less interference to spectrum slices assigned to firefighters, police, emergency responders, and other public-safety workers. However, the majority of public-safety licensees are not ready to retune their 800-MHz radios from current channels, leaving Sprint Nextel with nowhere to go.

“More than 60 percent of all NPSPAC (National Public Safety Planning Advisory Committee) licensees have had to file waiver requests seeking more time to finish retuning their systems,” Sprint Nextel noted. “Retuning nearly 1,000 NPSPAC licensees has proven to be more complex than anticipated and continues to challenge the resources of vendors, consultants, engineering companies, and public-safety agencies.”

The FCC was also expected to rule against Verizon on Friday after cable companies Bright House Networks, Comcast and Time Warner Cable complained that Verizon used private information to lure back landline customers who planned to switch to VoIP on cable.

Spectrum Shortfall

Sprint said it would face customer disruptions if it surrendered all of its current channels in “flash-cut” fashion without access to an adequate number of replacement channels in the 800-MHz band. Moreover, moving its customers to alternate channels in the 900-MHz band is not a viable option. “There are not enough 900-MHz channels available to make up for the channel-based capacity shortfall Sprint Nextel will suffer at 800 MHz,” the company said.

Additionally, if it vacated all its 800-MHz channels prematurely, Sprint said it would face limitations in its ability to provide service to several public-safety agencies that have already advised the FCC that they rely heavily on Sprint's iDEN network.

“Sprint Nextel needs a sufficient number of 800 MHz channels to serve its nearly 16 million iDEN subscribers,” the company said, “including employees of the Department of Homeland Security, members of the United States Secret Service, and police and fire departments across the country.”

The 60-Day Rule

Noting that no public-safety licensee has opposed the wireless network operator's request, the FCC agreed that its grant of a waiver to Sprint would not harm public safety. “In light of the large number of NPSPAC licensees that will require additional time to complete their relocation, Sprint does not have the practical ability to eliminate this shortfall through use of the 900-MHz band or construction of additional cell sites,” said FCC Associate Bureau Chief David Furth.

As a condition of the waiver, however, Sprint agreed to apply the so-called 60-day rule — “to relinquish its current channels in the 800-MHz band to any NPSPAC licensee within 60 days of being notified that the licensee is ready to use the channels.” Sprint also said it would continue to abide by the FCC's 800-MHz interim interference protection requirements.

“These safeguards have worked well in protecting public-safety licensees against interference during the transition to the new band plan,” the company said.

Mike Kent contributed to this article.

In preparation for this year's holiday shopping season, eBay and PayPal on Thursday announced improved protections for buyers and sellers on eBay.com.

For the first time, buyers who pay with PayPal will be protected on eligible transactions for 100 percent of an item's purchase price, with no cap on coverage. In addition, all U.S. eBay sellers will receive improved seller protection for eligible transactions when they are paid through PayPal.

“We're combining the power of eBay and PayPal to give all buyers and sellers more confidence and trust,” said Lorrie Norrington, eBay's president of marketplace operations. “Buyers who pay with PayPal on eBay will be covered, with no limits, on most transactions. Any seller who gets paid with PayPal will be covered on most transactions, too, and can ship to 190 countries worldwide where PayPal is accepted.”

Giving Paypal Users an Advantage

Norrington introduced the protections at the company's seventh eBay Live! community conference this week. Currently, 97 percent of eBay.com listings offer PayPal and more than 90 percent of active eBay users in the U.S. have PayPal accounts.

PayPal Buyer Protection covers eligible transactions on eBay.com for items that aren't received and for items that are significantly not as described. Beginning this fall, PayPal will remove the coverage limit, giving buyers more confidence when they pay for eBay purchases with PayPal.

PayPal's improved seller protection covers sellers against claims, charge-backs and reversals due to an unauthorized payment or an item that was not received. Under this improved protection, sellers can ship to buyers in markets worldwide where PayPal is accepted and be eligible for protection. PayPal's seller protection is provided without any additional cost, and beginning later this year, PayPal will remove the annual coverage cap.

PayPal's increased buyer and seller protections take effect this fall.

“Today's announcement makes it simple for our customers — we're providing protection whether a transaction costs $50 or $50,000,” said Scott Thompson, president of PayPal. “As PayPal celebrates its 10th anniversary this year, we're pleased to deliver these new protections and allow customers to shop on eBay with even more confidence.”

PowerSellers Get More Benefits

Along with the payment protections, eBay also introduced at eBay Live! incentives and rewards for its best PowerSellers.

For PowerSellers, eBay announced a discount program rewarding sellers who consistently provide the best customer experiences, as measured by eBay's Detailed Seller Rating. DSRs are a scorecard that buyers use to rate sellers on a 0-5 scale (five being highest) across four key metrics.

Sellers with DSRs of at least 4.9 across all four categories will receive 20 percent off their final value fees, the commission eBay charges sellers for sold items. Sixteen percent of PowerSellers immediately qualify for the discount, which will appear on July invoices.

But not all sellers are happy with the changes over the past few months, some of which have affected their ability to leverage the new PowerSeller benefits.

A seller named “1finesale” has closed up shop on eBay since the feedback-policy change. “I rarely had non-paying bidders, but within a matter of a few weeks had five … that has never happened before. Up until the change, I had a 99.9 percent positive feedback rating … I am with those that are finished with eBay, their fees, their policy changes to protect buyers but not sellers.”

Macware on Friday announced the release of Logo Design Studio Pro 1.8, an update to their logo design software for Mac OS X users. It costs $59.99, though updates for registered users are free.

Logo Design Studio Pro helps users looking for a creative logo to add to their stationery or corporate letterhead with more than 500 pre-designed logo templates. It sports Bezier curve-based editing tools, Boolean operations, more than 100 filters, alignment tools and other capabilities suitable for design environments.

New to this release is improved support for Scalable Vector Graphics (SVG), with more than 1,300 pre-designed SVG logo objects; a new browser to preview each SVG object in categories; and some bug fixes and enhancements.

System requirements call for Mac OS X 10.4 or later, 256MB RAM and 550MB hard disk space.

NEW YORK - Avery Axel was annoyed with his cable company, Comcast, and was considering switching to Verizon’s new FiOS fiber-optic TV and Internet service.

The picture on his TV would freeze now and then, and he had heard good things about FiOS. Then the 21-year-old student saw a TV commercial from Comcast that made fun of FiOS and claimed the cable TV company has a larger fiber-optic network.

“I thought to myself: Maybe I don’t have to switch, because if Comcast has fiber optics now, that means that they’ll be better,” said Axel, who lives in Roosevelt, N.J.

But after asking around online, he found that nothing’s changed about Comcast’s service: It still uses coaxial cable to connect homes. It does use fiber-optic cable further away in the network, as it has for many years.

“From what everyone said … this is kind of misleading,” Axel said.

Axel had fallen for one of a series of commercials run by every major cable company that competes with Verizon’s FiOS. Besides Comcast, Cablevision, Time Warner Cable, Cox and Charter have all run ads belittling FiOS.

The ads have a curiously similar message, emphasizing that cable networks “are” fiber-optic, even though none of the companies draw fiber all the way to the home, like Verizon does in most cases when it installs FiOS. This allows for higher Internet speeds and, according to Consumer Reports, better picture quality.

“Cable is deploying the rhetoric instead of the technology,” said Verizon spokeswoman Bobbi Henson.

Comcast spokeswoman Jennifer Khoury said the ad was referring to the fact that the company has the largest “residential” fiber network in the nation, stretching for 125,000 miles, and noted that a freezing picture doesn’t necessarily have anything to do with the network technology.

“Our ads reinforce the value and scope of our fiber network to our customers,” she said, adding that the fact that Verizon uses fiber to the home makes little difference to the services it can provide. Comcast has started upgrading its network to provide FiOS-like speeds in 20 percent of its markets this year.

Comcast has also started running newspaper ads with the message: “We already have a fiber-optic network serving ALL our homes” reads one in the Seattle-Post Intelligencer.

Fiber-optic lines have been the main conduit for telecommunications since the ’80s. In the late ’90s, cable companies upgraded their networks to draw fiber closer to homes, which allowed them to offer broadband, video on demand and other services. The fiber lines end at neighborhood nodes, where the signal is transferred to a coaxial cable shared among as many as 500 households. The shared nature of the coaxial network and its susceptibility to electrical noise limits its capacity.

Verizon’s FiOS network also shares capacity, but among fewer households, and the fiber itself has nearly unlimited data capacity.

Mike Weaver in Watauga, Texas, saw an ad from Charter Communications Inc. that talked about “advanced fiber optics,” and was disappointed when he realized that the cable company isn’t drawing fiber to the home. He wants the faster Internet speeds provided by FiOS, he said.

Charter spokeswoman Anita Lamont said the intent behind the current ads, which say the company has been using fiber for the last 10 years, “is to reassure current Charter customers that they too have fiber optic technology bringing their homes to life.”

In an ad from Time Warner Cable Inc., an enthusiastic Verizon salesman shows up at a doorstep and starts talking about “The Fiber” and makes a flourish that produces a burst of light. The homeowner holds up a bowl of cereal and retorts that “I think I’m taken care of in that department,” adding that Time Warner Cable has been using fiber for over a decade. “Welcome to the program!”

Time Warner Cable got into a legal tussle with Verizon over a longer version of the ad, which Verizon saw as implying that subscribers need a satellite dish to get FiOS. Time Warner Cable is no longer running the ad, said spokesman Alex Dudley.

“Lately it seems everybody is talking fiber optics,” says a suave man in Cablevision’s commercial for its Optimum cable service. “The Optimum Network is fiber optic. Your phone company? Talking fiber, even though a lot of their network … isn’t.”

A Cablevision spokesman did not return calls about the ad, which appears to highlight the fact that FiOS isn’t available in Verizon’s entire local-phone service area.

An ad for Cox Communications shows a curbside, accompanied by voiceover: “Years ago, Cox laid advanced fiber-optic cable right about here. Now the phone company wants to come along and do it too. The old phone company and its new network is about a decade behind Cox … Thanks, but … I don’t need any more fiber.”

Cox spokesman David Grabert said that ad is no longer on the air, but it is preparing a new batch of videos that “address Verizon’s competitive weakness.”

For its part, Verizon has taken some criticism for claiming in ads that FiOS provides “uncompressed” high-definition TV signals. All TV providers, including Verizon, provide digital TV signals that are compressed to reduce the bandwidth needed. Henson said Verizon was trying to convey that it didn’t apply additional compression to the video it receives, which some cable companies do.

It’s stopped running that ad, preferring instead to focus on customer testimonials about the picture quality.

On Thursday, Apple passed yet another significant milestone at its iTunes Store. The company announced that music fans have purchased and downloaded more than five billion songs. Movies could be the next digital medium to realize those numbers.

The iTunes Store is the largest music retailer in the U.S., according to the NPD Group. And iTunes customers are now renting and purchasing more than 50,000 movies every day, according to Apple.

Analysts said Apple's decision to give consumers the ability to turn previously purchased tracks into complete albums at a reduced price, and seamless integration with iPod and iPhone, has helped its cause.

“This is just further evidence, if any is needed, that the recorded music business is headed toward Internet distribution,” said Phil Leigh, a senior analyst at Inside Digital Media. “Apple is already selling more music than Wal-Mart.”

Are Movies Next?

In addition to its more than eight million songs, the iTunes Store peddles more than 20,000 TV episodes and more than 2,000 films, including more than 350 in high definition.

iTunes features movies from all the major movie studios, including 20th Century Fox, The Walt Disney Studios, Warner Bros., Paramount, Universal Studios Home Entertainment, Sony Pictures Entertainment, Metro-Goldwyn-Mayer, Lionsgate and New Line Cinema.

Apple is working to make it easy for consumers to access digital movies with initiatives like iTunes Movie Rentals, integrated podcasting support, and iMix playlist sharing.

Users can rent movies and watch them on their Macs or PCs, all current generation iPods and iPhones, and on a widescreen TV with Apple TV. iTunes Store customers can also purchase new movie releases from major film studios and premier independent studios on the same day as their DVD release.

“As far as movies are concerned, it's as certain as fleas on a yard dog that movies are going to the Internet,” Leigh said. One of the most in-demand gadgets now is the Netflix by Roku digital streaming movie box, he continued, which is a testimony to the growing adoption of digital movies.

Obstacles to Digital Movie Adoption

Still, analysts said there are obstacles standing between consumers and mainstream digital movie adoption. Perhaps the most significant obstacle at this stage is how the digital model threatens the conventional television business.

“Traditional television broadcasters are beginning to make some tentative moves to try to throttle Internet bandwidth, or at least meter it and charge you for usage,” Leigh said. “The reason they give is that the heavy users need to be charged more than the light users. But I think that's a red herring.”

The real reason, Leigh said, is that TV broadcasters can see the handwriting on the wall: Video distribution over the Internet is the wave of the future and it's going to bypass conventional cable TV. Leigh expects consumers to vigorously object to metered usage, which could leave the door open for telephone companies to compete in this arena more effectively.

“There are powerful companies in place that don't want to see video on the Internet,” Leigh said. “They are not going to be able to stop the trend, though it's almost certain they will try.”