Spam war too big for Microsoft to fight alone

BY DAVID SPEAKMAN

One of the most profitable Internet business models is a direct marketing tactic expected to cost U.S. companies billions this year. The worldwide problem is so expensive that even cash-rich Microsoft Corp. has thrown down the gauntlet by coordinating with law enforcement agencies and organizing a détente with competitors to fight the intrusive culprit — e-mail spam.

Microsoft says it needs outside help to prevent unwanted e-mail from driving away its e-mail customers. A key ally is San Francisco software company Brightmail Inc., which recently inked a deal with Redmond, Wash.-based company to filter spam from Microsoft’s MSN Hotmail service.

Thirty percent of incoming e-mail to Internet service providers (ISP) is spam, and between 15 and 20 percent of corporate e-mail is spam, according to Ferris Research of San Francisco. Spam will cost U.S. companies $10 billion this year, says Ferris. That’s 20 times the price to rebuild the World Trade Center.

“Spam consumes computing resources, e-mail administrator and helpdesk personnel time and reduces workers’ productivity,” states a recent Ferris research report. “Despite the increasing deployment of antispam services and technology, the number of spam messages, and their size, is continuing to grow.”

Spam messages aren’t limited to text and links to Web pages. These days many spammers include graphic attachments and interactive audio and video presentations in their unsolicited e-mails. Those big attachments choke Internet bandwidth. Brightmail estimates spam accounts for about 41 percent of all global Internet traffic, making it by far Web’s the largest single use.

“Historically, Microsoft has redirected spam to a junk-mail folder in a user’s Hotmail account,” says Brightmail spokesman François Lavaste.

The problem has become so enormous that Microsoft stopped being passive and turned to Brightmail for help stopping spam from polluting its MSN service, he says. Hotmail also caps the number of “blocked” spam e-mail addresses at 250 — meaning users can block the first 250 and after that they’re out of luck.

“Microsoft is working on many fronts to help address the growing problem of spam for consumers,” the company declared in a written statement to Biz Ink. “This includes ongoing technological innovations, intensifying our efforts to cooperate with other ISPs in fighting spam, and working with [the] government to enforce current anti-spam laws.”

MSN’s arch rival, America Online ISP, relies on in-house software to block about 780 million spam messages a day — more than half the daily 1.46 billion incoming e-mails AOL processes.

“I get spam too, and I’m as fed up with it as all of our members are,” says Jonathan Miller, CEO of the America Online ISP, in a press statement addressing AOL’s antispam effort. “I, too, have become outraged by the tide of spam that’s drowning the legitimate e-mail I want to get.”

As much as 15 percent of each America Online monthly subscribers’ bill are costs associated with spam, according to past reports by AOL, which is owned by AOL Time Warner Inc. of New York.

Yahoo Inc. of Sunnyvale is also going it alone against spammers with its SpamGuard filtering software, launched in 1999.

“Yahoo continues to make headway in our fight against spammers who are infiltrating in-boxes with intrusive spam e-mail,” says spokeswoman Mary Osako.

By going it alone, AOL and Yahoo are in the minority. Brightmail claims six of the 10 largest Internet companies as clients.

“ISPs turn to Brightmail to keep up on the arms race with spammers,” Brightmail’s Lavaste says. “Our software has to adjust itself dynamically every 10 minutes because spammers constantly adapt to get through filters.”

Spammers are extremely persistent because they receive an attractive return on investment. On average, only one out of 100,000 people who receive a spam e-mail must respond for the marketing tactic to make money, Microsoft says.

While spammers are fattening their bank accounts, spam’s cost to society is so high that even the traditional junk mail and telemarketing industries are lobbying the U.S. Congress to act against unsolicted e-mail.

The Direct Marketing Association (DMA) is urging federal lawmakers to re-introduce the Anti-Spamming Act to create uniform, federal laws restricting e-mail spam. The bill (HR1017) failed to pass last year. If approved, it would replace a crazy quilt of state laws regulating e-mail spam.

California state Sen. Debra Bowen, D-Marina Del Rey, seeks support for legislation to strengthen the state’s anti-spam laws by allowing consumers to sue spammers $500 for each unwanted e-mail received.

Part of DMA’s motivation for a uniform, federal law levying heavy fines — as much as $11,000 for each unsolicited spam e-mail message sent — is to keep spammers from giving legitimate, direct marketing a reputation worse than it already has for filling mail boxes with junk mail offers and catalogs.

In the war against e-mail spam, U.S. Rep. Zoe Lofgren, D-San Jose, says she plans to introduce antispam legislation later this year.