The Federal Trade Commission also had raised questions about the companys ability to protect customers privacy, Netflix disclosed Friday.

FTC spokeswoman Claudia Bourne Farrell declined to comment.

Netflix intended to release the movie records without any names or other personal information attached to the data, but critics contended that the protections wouldnt be enough to guarantee anonymity.

Those arguments were supported by two University of Texas researchers who said they were able to sift through data that Netflix released in its first movie-picking contest to identify certain people who rated movies.

The class-action lawsuit filed in a San Jose federal court had also alleged Netflixs first contest, which ran from October 2006 through August 2009, had violated a federal law prohibiting video rental firms from publicly sharing their customers movie preferences.

Netflix released the data about its subscribers movie ratings in an effort to improve its DVD-recommendation system by at least 10 percent. The offer of a $1 million prize attracted more than 51,000 contestants and generated a steady stream of free publicity for the company, based in Los Gatos.

A seven-member group of researchers, scientists and engineers prevailed in the competition and picked up their award at a September news conference where Netflix promised another contest that would help it do an even better job of recommending DVDs to its 12.3 million subscribers.

Netflix canceled the contest without every quantifying what the follow-up prize would be.

The company still hopes to work with researchers on ways to do a better job of identifying movies that people would enjoy watching, Neil Hunt, Netflixs chief product officer, wrote in a Friday blog posting.

Theres nothing in the lawsuit settlement preventing Netflix from turning to outsiders for help in developing better technology as long as there are adequate safeguards on privacy, said Scott Kamber, a New York attorney who filed the class-action complaint.

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The rules require Comcast Corp., for instance, to make channels that it owns - including E! Entertainment, Versus and the Golf Channel - available to rivals such as DirecTV Inc., Dish Network Corp., AT&T Inc.s U-Verse video service and Verizons FiOS video service.

The decision was a setback for Cablevision Systems Corp. and Comcast, which were challenging the FCCs decision to extend a ban on exclusive programming contracts for five years.

Comcast has nonetheless pledged to extend the program access rules to the local NBC and Telemundo stations it would control as part of its proposed combination with NBC Universal. Comcast is seeking FCC and Justice Department approval to buy a 51 percent stake in NBC Universal from General Electric Co.

Comcast said it was disappointed in Fridays ruling.

“The program access rules are based on an outdated and obsolete view of the competitive landscape,” Cablevision said in a statement.

DirecTV and Verizon hailed the ruling as a win for consumers.

“This decision protects consumers ability to view the programs they demand as they gain new choices among video providers,” Verizon said in a statement. The phone company has spent billions on its new FiOS fiber-optic network to deliver video and high-speed Internet services.

The circuit court decision comes amid growing concern in Washington about the rules governing access to both broadcast programming and channels owned by cable companies.

On Sunday, after talks broke down between ABC and Cablevision over the fees the cable company would pay to air the network, the ABC station in New York pulled its signal from Cablevision, causing subscribers to miss the first 15 minutes of the Oscars. A coalition of cable, satellite and phone companies seized on the incident to ask the FCC to prohibit broadcasters from interrupting signals during negotiations or before popular events, and to mandate binding arbitration.

FCC Chairman Julius Genachowski told lawmakers at a hearing Thursday that the FCC would review whether existing federal regulations still make sense.

Fridays ruling is the second key victory for cable rivals in as many months when it comes to program access rules.

Comcast, Cablevision and Cox Communications Inc. have relied on the loophole to deny sports programming to competitors such as DirecTV, Dish, AT&T and Verizon.

Genachowski praised Fridays ruling. “The commissions program access rules have played a vital role in making diverse and attractive video programming available to cable and satellite TV viewers,” he said in a statement.

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Jobs, 55, famously limits his salary to $1 per year, which leaves Cook the companys highest-paid executive. In 2009, Cook received an $800,400 salary; $800,000 in nonstock incentive compensation; and about $40,900 in company matches to his retirement account, life insurance premiums and cash for unused vacation days.

The COO also holds 13,741 shares of Apple stock and 500,000 additional restricted stock options that have not yet vested, according to a January filing with the Securities and Exchange Commission.

Cook took the company reins when Jobs, a pancreatic cancer survivor, went on medical leave from January through June 2009.

It was Cooks second stint leading Apple. Cook, who joined Apple in 1998, ran the Cupertino, Calif.-based company for two months in 2004 while Jobs recovered from surgery for pancreatic cancer. His performance then won him the promotion to chief operating officer in 2005.

Analysts credit Cook with solving problems that Apple was having with inventory management. That has been key to Apples ability to amass $25 billion in cash and short-term investments. Many people consider Cook as Jobs logical successor.

In the months leading up to Jobs medical leave, rumors about his health could send Apples stock soaring and sinking as investors worried that Apple would be lost without his vision.

But under Cooks direction in 2009, the company kept cranking out well-received products including updated laptops with lower entry-level prices and a faster iPhone with many longed-for features. Apple sold more than a million of the new iPhone 3GS during its first three days on the market.

Investors seemed confident in Cooks abilities. Apples shares rose 67 percent to close at $142.44 the Friday before Jobs returned to work last June. Since then, the stock has added another 59 percent to close Friday at $226.60.

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Ken Silva, the companys chief technology officer, said Thursday that the latest changes are needed to keep up with ballooning Internet traffic and with spikes in usage caused by major news events and computer attacks.

Traffic volume is expected to soar along with the expansion of technologies such as Internet-connected televisions, navigation systems and video streaming.

VeriSign is in two big businesses that are critical to the functioning of the Internet but both remain largely out of the publics view.

The most recognizable business involves selling “certificates” that Web sites can use to tell Web browsers that they are using encryption to protect data passing between a users computer and the Web sites servers. Thats important for banking and e-commerce sites in protecting customers data. VeriSign is one of several large vendors of such Secure Sockets Layer (SSL) certificates.

VeriSign also operates the registry of all “.com” and “.net” domain names. That means its responsible for ensuring that Internet users can reach sites registered with those names.

When someone enters a Web address into a browser, the traffic doesnt go directly to servers operated by that Web site. It often has to go through servers operated by VeriSign and other companies to translate the written name, such as verisign.com, into a numeric Internet Protocol, or IP, address that computers can understand.

The last major infrastructure upgrade VeriSign announced was in 2007, when the company said it would spend more than $100 million to boost capacity tenfold by 2010.

The amount represented about a quarter of the total $373 million VeriSign spent in those three years on all its capital expenditures.

Last year the VeriSign, which is based in Mountain View, earned $245.6 million on revenue of $1.03 billion.

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Meanwhile, Turkey and Russia found themselves on the groups “Under Surveillance” list of nations in danger of making the main enemies list.

Although Zimbabwe and Yemen dropped from the surveillance list, that was primarily because the Internet isnt used much in either country, rather than because of changes by the governments, Le Coz said.

Reporters Without Borders issued the third annual report ahead of Fridays World Day Against Cyber Censorship, an awareness campaign organized by the Paris-based media advocacy group.

Le Coz said repressive regimes seemed to be winning a technological tussle with dissidents who try to circumvent online restrictions. She said some U.S. technology companies have been aiding the regimes by selling products that could be used for such censorship, or by cooperating with authorities and requests for censorship.

Companies she cited include Cisco Systems Inc., which has been criticized by activists who say that it sells networking equipment that could be used in official efforts to monitor and control Internet use. In a statement Thursday, the company reiterated that it does not provide any government with any special capabilities, and said products sold in China are the same ones sold elsewhere.

Reporters Without Borders said it was optimistic about Google Inc.s public threats to leave China if the Silicon Valley powerhouse cannot reach a deal that lets the company offer search results there free of censorship.

“A year from now, I would be happy to tell you that Google opened the path,” Le Coz said. “Thats a bit idealistic.”

In fact, she worries that more democratic nations would be joining the list.

Australia is among the countries under the groups surveillance for its efforts to require Internet service providers to block sites that the government deems inappropriate, including child pornography and instructions in crime or drug use. Critics are worried that the list of sites to be blocked and the reasons for doing so would be kept secret, opening the possibility that legitimate sites might be censored.

In Russia, newly added to the watch list, politically active bloggers have been increasingly arrested, Reporters Without Borders said. In Turkey, several sites, including the video-sharing service YouTube, have been blocked.

China and Tunisia, meanwhile, have employed increasingly sophisticated filtering, while Iran stepped up its Internet crackdown and surveillance amid a disputed presidential election last summer. Countries such as China have defended their Internet practices and accused critics in the U.S. in particular of “information imperialism.”

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Several analysts say Palm Inc. might not remain an independent phone maker for more than a year or two. It just could be too late to stop the momentum enjoyed by Apple Inc.s iPhone and Research In Motion Ltd.s BlackBerrys - not to mention a growing crop of phones running Google Inc.s Android software.

Palm spokesman Derick Mains said the company had no comment.

Consumers have gravitated toward smart phones for their versatile features, such as Internet access and applications that can be downloaded. One out of six U.S. adults had a smart phone last year, according to Forrester Research.

But Palm - a leader in the early days of handheld computing - was slow to adapt. It began fighting back in earnest in January 2009 at the International Consumer Electronics Show. It unveiled the stylish touch-screen Pre and webOS, software that allows Palm phones to do something the iPhone cant - run multiple apps simultaneously.

Ed Colligan, who was then Palms CEO, said at the time that the new products somewhat marked a relaunching of Palm itself. But it hasnt gone as smoothly as Palm hoped.

Palm released the Pre last June, for use on Sprint Nextel Corp.s wireless network, and followed it in November with a cheaper model, the Pixi. Verizon Wireless started selling upgraded models of these phones in January, and AT&T Inc. plans to offer webOS phones later this year.

Despite widespread availability and positive reviews, consumers havent really embraced the products. Palm sold 810,000 phones in the quarter that ended Aug. 28. In the next quarter, sales fell to 573,000. And Palms latest report, due March 18, is not expected to be bright. Palm recently cut its forecast for that period, citing sluggish sales.

Discouraged investors have sliced the companys stock price by more than half since the Pre hit stores. In that same time, shares of Apple have risen nearly 50 percent to all-time highs, while RIM shares have fallen 11 percent.

One big problem for Palm is standing out in a crowded market dominated by Apple and RIM. Many analysts believe Palms latest products are good, but the company simply hasnt been able to make potential customers realize this.

Not for a lack of trying: Palm spent $74.1 million on sales and marketing in its last reported quarter, up 64 percent from the previous year.

Verizon and Sprint have advertised the Pre and Pixi, too, but now probably arent doing it as aggressively as they would if they had the phones exclusively.

For a larger phone maker such as Motorola Inc., in the midst of its own comeback attempt, an advertising blitz might not be such a big deal. But Palm is much tinier than its key competitors. It takes Palm an entire quarter to sell as many phones as Apple sells in a less than a week. RIM spent six times as much on a category it calls selling, marketing and administrative expenses in its last quarter as Palm spent on sales and marketing.

One thing Palm has: a CEO who helped make Apple what it is.

Right before the Pre launch, Colligan was replaced by Jon Rubinstein, 53, who spent a decade at Apple during its own comeback run. He started in 1997 and was a pivotal figure behind the brightly colored iMac computers and the iPod.

He came to Palm in 2007 as executive chairman under a deal in which Palm sold nearly a third of the company to private equity firm Elevation Partners.

Still, even the most astute leadership isnt enough in such a competitive market, Canaccord Adams analyst Peter Misek said.

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The drama initially raised hopes of a sharp drop-off in fraud, because criminals could no longer communicate with many computers infected with a type of malware known as “ZeuS,” which is mostly used to steal online banking usernames and passwords. Hundreds of criminal operations around the world use the malware.

Its unknown how many computers are infected with ZeuS, but its estimated to be in the millions. Cisco Systems Inc. said as many as 25 percent of the worlds ZeuS-infected machines were unplugged from the massive “botnet” overnight with the takedown of AS Troyak.

Botnets are networks of infected PCs that behave like criminals remote-control robots. They steal identities en masse and are used to attack Web sites.

But instead of a slam-dunk victory, the incident wound up highlighting the whiplash pace at which criminals can resurrect their illicit businesses after what should have been a devastating setback.

RSA, the security division of EMC Corp., said dozens of malicious servers that criminals used to spread ZeuS were connected to the Internet by AS Troyak. The service inexplicably went dark Tuesday, severing the ties between criminals and ZeuS-infected machines under their control.

Its not publicly known who pulled the plug. It could have been law enforcement, security researchers, or even the criminals themselves if they decided to move their operations to other servers.

Shutting down malware operations is a constant cat-and-mouse game.

Some services exist solely to host malicious content, and when their connections to the Internet are severed, its often relatively easy to find another provider willing to sell them a new connection.

RSA researchers wrote in a note to clients that their experience shows that “these kinds of drastic changes are usually short-lived, as in the long run, criminals tend to restructure their criminal activity and relaunch their online attacks.”

That apparently happened - and quickly. By Wednesday, researchers said the servers appeared to be back online, through a new Internet provider.

Cisco researchers said a total of 68 command-and-control servers were brought down, but that its unknown how many infected computers were connected to each of those.

One of the most high-profile takedowns of a malicious Web site hosting service involved a company called McColo Corp. whose Internet service was severed in the winter of 2008 after researchers amassed evidence of the companys wrongdoing.

Worldwide spam volumes almost instantly dropped by half, but within days started climbing again.

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Peter Dille, senior vice president of marketing for Sony Computer Entertainment, credited Nintendo Co. for “introducing motion gaming to the masses.”

Now its time for them to graduate to the PlayStation, which offers a new experience for both casual and hard-core gamers, he said at a press conference in San Francisco.

“The migration path from the Wii household to the PlayStation 3 household is a pretty natural path, partly because of the experience that you can get on the PlayStation Move but also because of the content that we find on PlayStation 3,” Dille said.

Used with the existing PlayStation Eye camera, Sonys new wireless motion controller can track players body movements. The controller, in turn, has on its end a light-emitting orb that is recognized by the camera.

“Nothing has ever been this precise,” said Shuhei Yoshida, president of Sony Computer Electronics Worldwide Studios.

The PlayStation Move will go on sale this fall. Complete details of prices have not been released, but a starter bundle including the PlayStation Eye, motion controller and one game will retail for under $100, Dille said.

Major game publishers such as Activision Blizzard Inc., Electronic Arts Inc. and Square Enix are developing Move-compatible games.

The latest announcement comes as both Sony and Microsoft Corp., maker of the Xbox 360, attempt to gain ground on Nintendo. Since the Wii first hit stores, it has consistently outsold rivals by attracting casual and nontraditional gamers like women and seniors.

Microsoft is planning its own offensive this year as well with its “Project Natal.”

Natal, which combines a camera, depth sensor, microphone and processor, eliminates the need for any button-mashing device. Microsoft is expected to release Natal in time for the Christmas shopping season but has not set a specific date.

Although demand for the Wii has slowed in recent months, it remained the most popular console among Americans in January with 465,000 units sold, according to market researcher NPD Group. Microsoft sold 332,800 units of the Xbox 360, trailed by 276,900 PlayStation 3 units.

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But the Internet Corporation for Assigned Names and Numbers, which oversees the allocation of Internet addresses globally, may revive ICM Registry LLCs bid yet again as ICANN meets this week in the Kenyan capital of Nairobi.

Last month, responding to complaints from ICM, an outside panel questioned ICANNs grounds for the latest rejection in 2007. As a result, board members have been weighing the matter ahead of formal consideration of the “.xxx” bid on Friday, ICANN CEO Rod Beckstrom said in an interview.

Beckstrom said he was not able to give details of those discussions for legal reasons, and he could not say when ICANN may reach a decision.

Stuart Lawley, ICMs chief executive, said he has been the victim of a process that he considered far from open and nondiscriminatory.

ICM, which planned to charge $60 for a site to register a “.xxx” name, first proposed “.xxx” in 2000 as a way to help the online porn industry clean up its act. Those using the domain would have to abide by yet-to-be-written rules designed to bar such trickery as spamming and malicious scripts.

And parents could set up Internet software to automatically block any site ending in “.xxx,” reducing the chances that minors and other Internet users would accidentally stumble on pornography online.

Given its voluntary nature, however, “.xxx” would unlikely have much effect on parents ability to block porn sites. And because a domain name serves merely as an easy-to-remember moniker for a sites actual numeric Internet address, even if its use is required, a child could simply punch in the numeric address of any blocked “.xxx” name.

Anti-porn activists, meanwhile, worry that the creation of a virtual red-light district would serve as an endorsement of the adult-entertainment industry, as “.xxx” would be sitting alongside other suffixes such as “.com” for commercial sites and “.edu” for schools.

Skeptics note that porn sites would likely keep their existing “.com” storefronts, even as they set up shop in the new “.xxx” domain name, thereby expanding the number of porn sites on the Internet.

When ICANN last considered “.xxx,” board members also expressed worries that the suffix would leave the agency in the business of regulating content, or the type of material that would find itself there.

The board also questioned whether “.xxx” had the support of the adult-entertainment industry, as many operators of porn sites were concerned that governments would later make the voluntary red-light district mandatory.

Lawley challenged ICANNs rejection before an independent review panel appointed by the International Centre for Dispute Resolution. That panel largely sided with him and concluded that ICANNs decision was “not consistent with the application of neutral, objective and fair documented policy.”

The panel said that after ICANN gave the bid preliminary approval in 2005, it shouldnt have revisited some of the key issues already reviewed. Board members had used the new evaluations in deciding to reject the bid two years later, in 2007.

Although the panels findings are nonbinding, ICANNs board was scheduled to discuss them Friday. It was not clear whether the board would vote on the matter or defer a decision for more discussion.

Lawley said the review panel was supposed to be ICANNs mechanism for accountability, and how the organization responds to the panels findings “will provide great insight into the true accountability of this vital organization.”

He said the process has so far cost his company about $8.5 million.

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More than 50 software makers have agreed to sell their Internet programs through Google, which will keep 20 percent of the sales. The prices are expected to range from $50 annually to several hundred dollars annually per user.

Intuit Inc., a maker of business accounting software, and Concur Technologies Inc., a maker of expense reimbursement software, are among the best-known vendors peddling their wares in Googles store.

All the applications sold in Googles store can be melded with Googles own cloud-computing services, said Vic Gundotra, the companys vice president of engineering.

Google views cloud computing as a way to deepen peoples dependence on its services and generate more revenue beyond the Internet search advertising that provides virtually all its income.

Cloud computing also provides Google with a weapon that could weaken one of its biggest rivals, Microsoft Corp.

Although its introducing more online alternatives, Microsoft still makes most of its money from individual computer licenses of its Windows operating system and software programs.

The applications store could also could provide fodder for the low-cost computers that will run on a Google operating system named after its Chrome Web browser. The first computers using Chrome OS wont have a hard drive, meaning they will need Internet access and cloud-computing services to perform the tasks routinely done on Windows-powered machines.

Google began offering a free online suite of e-mail, word processing, spreadsheet and calendar applications in 2006. It has been selling a more sophisticated package of online services for $50 per user for the past three years.

Cloud computing can be a tough sell to corporate decision makers worried about security risks and business disruptions if a technology glitch or major meltdown blocks access to vital applications and data stored on external servers.

Google has invested billions of dollars during the past five years to keep its systems up and running. Nevertheless, Googles applications users occasionally have been cut off from their e-mail accounts and other services.

About 25 million people working for more than 2 million businesses, government agencies and schools use Googles online applications, according to the company.

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