Investor's Business Daily, March 11, 2004

Latest Lawsuits A Group Effort; Microsoft, EarthLink, Yahoo and AOL hope Can-Spam can help can e-mail spam

Technology is taking spam to court.

On Wednesday, four of the largest e-mail providers, often bitter rivals, banded together to take the battle against spam to a new level.

Microsoft Corp., Yahoo Inc., EarthLink Inc. and American Online, a unit of Time Warner Inc. said they had filed six lawsuits against what they called some of biggest senders of unsolicited e-mail, or spam. They filed the suits separately, but they'll work together on them.

Their goal is to slow the spread of spam, which comprises roughly half of all U.S. e-mail.

"Spam has become the largest problem on the Internet," said AOL General Counsel Randall Boe, in a group conference call broadcast over the Web.

"Good Day' For Net Users

The four tech firms filed the suits in accordance with a federal anti-spam law known as Can-Spam. It took effect Jan. 1. The law provides new enforcement for pursuing junk e-mailers. It also provides penalties against those that use fraud or evasive tactics in sending spam.

"If you are a spammer watching this today, this is not a good day for you," Boe said. "If you are a consumer and an Internet user, this is a good day for you."

The suits attempt to stop the flow of pitches for such things as pornography, prescription drugs and mortgage loans. One suit also targets senders of pitches for TV cable de-scrambling boxes and university diplomas.

Other Can-Spam violations named in the suits include sending e-mail without physical addresses and sending e-mail with phony "from" addresses. Such scams are widely used in a growing number of online identity theft cases.

Suits were filed in California, Georgia, Virginia and Washington state. Many defendants are listed as John Doe, though some are named, including a group in Canada called Head Programming Inc.

Annoyed consumers have worn out the "delete" keys on their keyboards dumping spam messages. The cost to companies could soar.

If nothing is done, by 2007 it could cost companies up to $198 billion in extra e-mail servers to handle the spam onslaught, says the Radicati Group Inc., a market researcher. "It's an absolutely huge problem," said Masha Khmartseva, a Radicati analyst.

The legal attack comes nearly a year after the companies made their first united pledge to fight spam. Since then, all four have stepped up their efforts to identify and block spam.

Collaborative Talks

"What you are seeing here today is the result of collaborative discussions by AOL, EarthLink, Microsoft and Yahoo, going directly after what we see are the biggest spammers on our network," said Matt Robinson, corporate counsel for Yahoo.

The suits might be an attempt to fill in gaps where technology has failed, says Sonia Arrison, director of technology studies for the Pacific Research Institute. "The filters are not working for the Internet service providers, so they're trying to find another way to (stop spam)," she said.

The companies disagree. A combination of technology, laws and lawsuits are needed, says David Baker, vice president of law and public policy for EarthLink. "We have to fight spam on a variety of fronts," he said.

Arrison suggests the providers charge a fee for e-mails sent. Consumers then could issue free-of-charge stamps to family, friends and anyone else from whom they'd be happy to receive an e-mail. Other senders would have to buy electronic stamps from ISPs.

"That would be a great way to authenticate e-mail," said Arrison.

Prior to Can-Spam, Internet companies such as EarthLink and Yahoo had pursued spammers in state courts, with some success. Last year, Yahoo sued four spammers. The results? Out of court settlements, injunctions and judgments against the spammers, says Robinson. "We have put some of these people out of business," he said, "and the net result is a better experience for our users."

Yahoo, Microsoft, AOL and EarthLink expect Can-Spam will make it easier to prosecute spammers.

But spammers are difficult to track. Some frequently change their e-mail addresses. And roughly half the spam in the U.S. comes from Asia or Europe.

"You really can't go after every single one of them," Khmartseva said. "The lawsuits are good, but it's not going to eliminate the whole problem."