The week in technology: Google talks the Talk

The business world was agog at the news that Google was launching not only an instant messsaging system, but a voice-over-IP service which could challenge established telecoms operators.

VoIP is of course old news, and established telecoms providers have much of that market to themselves anyway. But it’s the prospect of millions of home phone users switching over to free or almost-free VoIP services, along with the release of an OECD report into VoIP use, that has prompted ponderings about the future of the telecoms industry.

While Skype, built by the developers of Kazaa, has quietly risen to become one of the most powerful brands on the internet in less than two years, most of its users are on the free service and its revenues are reckoned to be as low as €100m a year.

Vonage, meanwhile, has been astoundingly successful in the US with its fixed-rate, all-you-can-eat phone call service that only requires a special attachment on a standard telephone.

Yet Google’s entry catapulted consumer VoIP to front pages around the world, including the Financial Times. Like Skype’s free offering, Google Talk is software-based, so it requires a PC, a broadband connection, a headset and probably at least a modicum of technical savvy to use.

In all the excitement, claims that Vonage is planning an IPO worth $600m didn’t seem hard to believe.

The news came just a couple of days after the beta version 2 of Google’s ‘Desktop’ software was released, with a surprisingly comprehensive array of functions that prompted some speculation that it could replace Windows, or at least web browsers.

As Google’s growth continues unabated, the New York Times ran an interesting story suggesting Google might be about to take over the tech arch-villain role that has been enjoyed by Microsoft for as long as anyone can remember. Although Google has long been a touchy-feely favourite of the tech world - or at least a close second to Tux, the Linux penguin - its relentless pushes into new areas and its draining of technology talent and venture capital is beginning to get up the noses of some in Silicon Valley.

Excite co-founder Joe Kraus told the NYT: “Microsoft is becoming IBM and Google is becoming Microsoft.”

Which begs the question: who the hell is becoming Excite?

AOL meets Spitzer

Well it’s probably not AOL. The internet service provider is now $1.25m poorer after coming under the eagle eyes of Eliot Spitzer, the New York’s attorney-general.

AOL was ordered to pay the money in penalties and legal costs, and agreed to change some of its customer service practices after an investigation based on complaints from about 300 of its New York customers. It may also have to provide refunds for up to four months subscription costs to those customers who complained.

The complaints centred around AOL’s cancellation policy. AOL customer service staff had been incentivised to retain customers who wanted to leave the internet service provider. Mr Spitzer said “in many instances, such retention was done against subscribers’ wishes, or without their consent”.

CNet reported another case in Ohio last April, which partially related to AOL’s cancellation policy, resulted in the internet service provider paying out $75,000 to the state.

UK department re-jigs EDS contract

The UK’s Department for Work and Pensions re-negotiated several of its contracts with EDS, the US computer services giant. The move sees the contracts rolled into one contract which extends to 2010, and will save the department about £1bn over five years.

The revised contracts with the DWP shows EDS is back in favour with Whitehall after a series of disasters

EDS came in for severe criticism in the UK after a £456m system it implemented for the Child Support Agency, which is part of the DWP, was so fraught with problems that the procurement of payments from absent parents was affected.

While the government itself was also blamed for requesting numerous changes to the system during its development, other government departments have been less forgiving. EDS lost its contract with the Inland Revenue in 2003 after the introduction of tax credits was bungled, and the National Health Service cancelled its EDS in 2004, citing “unacceptable delivery delays” for its e-mail and directory services.

Online gaming in China, and beyond

China’s government has imposed limits on the number of hours its citizens can spend playing online multi-player games (unfortunately known as MMORPGs), citing fears that players are damaging their mental and physical health with lengthy stints online.

The state-licensed operators of 11 online games, including World of Warcraft, The Legend of Mir II, and Blade Online, have agreed to restrict how many consecutive hours players can spend online without taking a five-hour break.

Gamers who continue playing beyond three hours will be hit where it hurts most: their characters’ attributes will be curtailed. After five hours, the characters will be severely limited.

A cynical Slashdot member doubted the altruistic aims of the games companies, pointing out that gamers could simply create new characters to avoid the limits. “Seems to me that the members of this “Beijing Accord” aren’t as concerned with the welfare of young people as they are with insuring that the average gamer must have accounts on two or three different games to keep playing as much as they’d like.”

It’s certainly true that the Chinese Government actually encourages online games - the BBC reported that it is holding a two-day games conference in September in the hope of attracting more foreign investment.

But for growing numbers of MMORPG players, the world of Mir, EverQuest, and their ilk are more important than the ‘real world’.

Not only have murders and messy divorces been blamed on disputes over online games and their attributes, but the games form the basis of an entire real-world economy based on fictional MMORPG characters.

The sale of gold and other assets accrued in online games are frequently carried out on real-world markets, such as eBay, and are estimated to be worth $880m a year. Last month Sony set up its own ‘secondary market’, for players of EverQuest 2, and CNet reports it has already turned over $180,000 in 30 days.

And in a William Gibson-esque twist, there are reports of ‘online gaming sweatshops’ being run out of rural China and South America, where workers are paid an hourly rate to sit in front of computers ‘harvesting’ valuable attributes, such online gold in Ultima Online or World of Warcraft. The gangmasters behind these underground operations then make hundreds of thousands of dollars selling the booty.

technology@ft.com