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The attack exposed a systemic vulnerability that could be exploited to more damaging effect in the future—and at least one Web site claims that "hundreds" of credit card numbers have already been taken.
EU, HACKERS NOT ON AOL’S BUDDY LIST
Online Service Deals With Expanded Merger Probe, Security Breach—Just In Time For AOLTV Rollout
Just in time for the debut of its long-awaited AOLTV venture, America Online is feeling a bit besieged.

The European Commission—fresh from its decision to expand its investigation of the pending Time Warner/EMI merger—announced today that it would be extending its probe to the proposed AOL/TW coupling. This development would seem to complicate TW chieftain gerald levin',390,400);">gerald levin',390,400);">Gerald Levin's earlier prediction that the deal would go down this Autumn (see story, 6/19).

The inquiry, slated to last for four excruciating months, will probe the proposed "vertical integration" of TW content (including film, TV, music and periodicals) into AOL, as well as the latter's recent promotion/distrib/sales agreement with Bertelsmann. The commission will seek to determine if these affiliations add up to an anti-competitive climate, resulting in AOL dominating European Net markets.

The Europeans, having been dominated before, don't really like it.

But the EC decision isn't AOL's only current headache. An attack by hackers on the online community's CRIS system, which houses users' account information, was a major embarrassment, especially coming as it did at the same time as the announcement of AOLTV. Estimates of affected accounts range from 200-500; AOL's user base is 23 million. Even so, the attack exposed a systemic vulnerability that could be exploited to more damaging effect in the future—and at least one Web site claims that "hundreds" of credit card numbers have already been taken.

Especially worrisome to the company and its users is the fact that AOL employees received e-mails containing viruses that—like the infamous "I Love You" bug—allowed the hackers ingress to the user database. The geek-gadfly site Observers.net pounced on this breach, criticizing AOL for hiring inexperienced teens to oversee sensitive portions of the company's infrastructure. Furthermore, the site's authors proclaimed, the problem still hasn't been fixed: "Since the hole that allows hackers to gain entry to CRIS (AOL's Customer Records Information System) is still wide open," asserts today's update, "someone has taken the opportunity to write a visual basic program that will go through CRIS and return credit card numbers to the hacker, based on a list of screen names harvested from chat rooms on the service, an anonymous source tells us." Statements by AOL dispute this, saying the database is thus far unsullied.

Despite these difficulties, AOL is upbeat about AOLTV, which will integrate its popular e-mail, instant messaging and other features into a set-top box to augment existing TV content and also aims to improve users' navigation of TV programming.

AOLTV was first announced in May of 1999; last week, AOL upped the ante by announcing a deal with cutting-edge digital box maker TiVo (in which America Online invested some $200 million) to enhance the AOLTV service.

Marta Grutka, a communications rep on behalf of the company's new ventures, emphasizes that AOL doesn't plan to compete with broadcasters by offering its own broadband programming through the service. "We don't want to interfere with the TV experience," she insists. "We want to make it more fun and enjoyable by allowing our community members to communicate with each other while watching TV."

But if the "vertical integration" so concerning the EC comes to pass, will AOL ultimately risk the wrath of broadcasters by developing unique, interactive TV content? It's easy to envision the contrary pressures of an open broadcast market and a unique content arsenal coming to a head down the line.

In the meantime, there's lots of jolly regulation bureaucracy and security-related press fallout to enjoy.

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