Yahoo on Thursday acknowledged that CEO Terry Semel sat down with Time Warner Chairman Richard Parsons about orchestrating a deal with America Online, but said it walked away from the table once it learned of the terms. Google and Microsoft, however, are continuing their discussions.

Yahoo claims it didn't make an offer for AOL and "never looked back" after passing on the deal in October. Microsoft has been talking with AOL the longest, reportedly trying to convince AOL to drop Google and begin using MSN's search engine across its dial-up service and Web properties. Although AOL's subscriber business is slowly dying, it still holds a large chunk of the lucrative Internet advertising market.

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Sony BMG's CD anti-piracy technology that sparked an outcry for its rootkit-like tactics has now entered the court system. A class-action lawsuit was filed on November 1 in California by consumers who say their computers were harmed by the hidden software, and a second suit was to be filed this week in New York.

The groups claim that Sony's digital rights management, which attempts to stop computer users from copying a CD's audio tracks to a hard drive, is invasive and damaging to computer systems. Sony employed technology from First 4 Internet that uses low-level Windows commands to hide the DRM and prevent its removal.

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Just one week after the launch of Live.com, Microsoft has added support for Firefox to its new services-based Web site. But the upgrade is not entirely bug free; a minor flaw causes the tabs in search results to display improperly. The problem will be fixed shortly, according to developers.

Even with Microsoft embracing the popular IE alternative, some users refused to cut the company some slack. A commenter to the official Live.com blog questioned why Firefox wasn't supported at launch. "I don't understand why it wouldn't be written standards-compliant in the first place, rather than having to go back to the code to make workarounds," a reader named Simon wrote.

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Microsoft may have just shipped Visual Studio 2005, but the company is already starting to discuss its future plans for the development suite. Service Pack 1 is in the works for next summer, says Visual C# product manager Scott Wiltamuth, and Orcas -- the next VS release -- is being hashed out.

The first service pack for the older Visual Studio 2003 will also ship in the first half of next year, with Wiltamuth estimating an April release. Soma Somasegar, corporate vice president of Microsoft's Developer Division, echoed those timeframes, saying the company would provide hotfixes in the interim.

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Palm CEO Ed Colligan has reiterated his company's support for the Palm OS, responding to the recent barrage of Internet posts suggesting the company may be abandoning its namesake operating system.

In a letter sent to developers Tuesday, Colligan said that the PDA market is "not a zero-sum game" and the company will be producing handsets based on both Windows and Palm OS platforms for the foreseeable future.

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The future of BlackBerry e-mail devices became even cloudier Wednesday. A U.S. District Judge overseeing the case between NTP and RIM said he would not wait for the U.S. Patent Office to review disputed patents before deciding whether to uphold an injunction that would halt the sales of the popular device.

It is not clear if NTP's patents have any merit after an initial rejection by the patent office. However, a final decision on the matter could take up to two years.

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Microsoft chairman and chief software architect Bill Gates sent the following memo to fellow executives on October 30, calling for the company to make changes in response to the coming "services wave." Gates says Microsoft must act quickly and decisively to figure out the best way to deliver service-enabled experiences.

From: Bill Gates
Sent: Sunday, October 30, 2005 9:56 PM
To: Executive Staff and Direct Reports; Distinguished Engineers
Subject: Internet Software Services

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Alibaba.com, the company that now controls Yahoo's Chinese offerings, announced Wednesday that it was relaunching the Yahoo site to focus on search. The site currently holds second place in the country with a 32 percent search share, five points behind market leader Baidu.com.

The Chinese company took control of Yahoo! China in August, as part of a deal in which the Sunnyvale, Calif.-based company purchased a 40 percent share in Alibaba.

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Verizon Wireless announced on Wednesday that it had filed a lawsuit against a Florida-based private investigative firm over what it said were attempts to fraudulently access confidential information about Verizon Wireless customers.

According to the carrier, Global Information Group (GIG) made "thousands of attempts" by impersonating Verizon Wireless employees or customers. On Monday, Hillsborough County, FL officials seized information that GIG had gathered.

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Microsoft is not about to take the Web 2.0 revolution sitting down, says Bill Gates. In an internal e-mail sent out October 30 and obtained by BetaNews on Wednesday, Gates writes that Microsoft must change to take advantage of the evolution of computing from a software-based to a Web-based model.

The venerable leader of the Redmond company harkened back to his Internet Tidal Wave memo in December 1995. In that missive, he correctly argued that the Internet was about to change everything about computing, and Microsoft risked being left behind if it didn't adapt.

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Napster on Wednesday rolled out version 3.5 of its digital music subscription service, upping the quality of song downloads and adding personalized recommendations through a "Playlist of the Day." Napster has also cleaned up its user interface with simplified navigation.

All songs in the Napster catalog will now be available in a 192kbps bitrate rather than 128kbps, following the lead of Yahoo's Music Unlimited service. Yahoo stormed onto the online music scene earlier this year with lower pricing and higher quality downloads than competitors Napster and Real.

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The Associated Press is preparing to roll out a video news service early next year and on Wednesday selected MSN to stream the content and sell advertising before each clip. As part of the AP Online Video Network, members will receive a custom MSN player and up to 50 video clips per day.

Some of the advertising revenue earned by MSN will be shared with members, which include 3,500 newspaper and broadcast outlets. AP will retain full editorial control over the content, despite MSN's involvement, the organization said. Video will be in Windows Media format and MSN will also develop targeted advertising for local AP affiliates.

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French authorities said Tuesday that they are investigating two teenage boys who used their Web logs to urge others to join the unrest that is plaguing the European country. A 16 year-old from France and an 18-year-old national of Ghana have been placed under "judicial investigation," but have not been formally charged. A 14-year-old was also investigated and released without charges.

The three teenagers do not know each other but all had their blogs hosted by Skyrock, a popular youth radio station. Statements on the sites called for the arson of local police stations, as well as coordinated times for attacks. According to law enforcement, leaders of the violence in the country are increasingly relying on technology -- text messaging, chat rooms and the Internet -- to better organize violence.

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AMD appears to be making serious progress at chipping away Intel's dominance of the PC industry, as the company was able to narrowly beat out its larger rival in terms of systems sold at retail during the month of October, according to data from research firm Current Analysis.

The chipmaker had a slight lead in the desktop space in September, but was able to increase its strength this past month and overtake Intel overall. In total, 49.8 percent of retail systems included an AMD processor versus 48.5 percent running an Intel chip.

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As part of its monthly Patch Tuesday security bulletin, Microsoft has released one fix covering two critical vulnerabilities in Windows. The flaw affects the operating system's graphics rendering engine, and could lead to a remote attacker taking control of a system through the use of malformed WMF and EMF images.

Windows 2000, XP and Windows Server 2003 -- including 64-bit versions -- are at risk. Microsoft recommends that users download the patch immediately. "Any program that renders WMF or EMF images on the affected systems could be vulnerable to this attack," the company said in an advisory. Microsoft has also updated its Malicious Software Removal Tool Tuesday.

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