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"The next morning we all wake up as Americans." -- Senator John Kerry, conceding the Presidential election to George W. Bush Since 1999, the Web site GuideStar has bought copies of tax-exempt organizations' filings from the Internal Revenue Service and posted the information for public review. Now, as the IRS ramps up its nonprofit investigations, BusinessWeek has learned the agency is buying back its own data to aid the effort.
GuideStar -- a nonprofit based in Williamsburg, Va., takes scanned copies of tax forms and puts them into a searchable database, providing a more efficient way to pore over financials. Using it, Boston Globe reporters found a $36 million private-jet expense tucked away on page 134 of a 191-page Florida foundation filing.
The government can use the help. In 2003, with limit-ed resources and technology, the IRS audited only 5,754 of the nation's 1.6 million nonprofits. The U.S. government, says GuideStar President Robert Ottenhoff, "doesn't have adequate resources to oversee the sector."
The IRS did introduce electronic filing for nonprofits back in February. But it says security concerns slow full implementation. Until then, the feds, like everyone else, can lean on GuideStar. Is Big Brother looming? In mid-October the U.S. gave contracts to four companies to develop passports with radio tags that contain more identity information, including biometric data such as facial recognition, in accordance with a 2002 border security law. The U.N.-affiliated International Civil Aviation Organization has set the standard for the chips, requiring them to be readable from a distance. The State Dept. wants them in all U.S. passports by the end of 2005. It's also demanding that other nations use the chips in their passports if they want to travel to the U.S.
Critics, concerned about privacy issues, allege "policy laundering": That is, to avoid criticism, U.S. officials tapped the obscure ICAO to set what some see as overly intrusive standards. "They chose a chip that can be queried remotely and surreptitiously," says computer security expert Bruce Schneier. If airport and border guards can read passports on the sly, so could other people with a radio chip reader -- whether terrorists or identity thieves.
The feds say access to the chips will be only through a special reader. More worrisome to privacy advocates, Congress is talking about using such a chip in driver's licenses, just "as we feared," says the American Civil Liberties Union's Barry Stein-hardt: "It would be an identity-theft nightmare." On Nov. 22, eBay (EBAY
) subsidiary PayPal will be left with a near monopoly on the $8.2 billion e-auction payments market. That's when PayDirect, a joint venture of Yahoo! (YHOO
) and HSBC Holdings (HBC
), will close its doors. A similar service from Citigroup (C
) folded last year. Analysts don't see much of a threat from the few remaining players. "Just about every vendor of significance in this market has left," says Penny Gillespie, an analyst at Forrester Research (FORR
That leaves parent eBay, which bought PayPal in 2002 for $1.5 billion, sitting pretty. PayPal is used in 66% of all consumer online auction transactions, says Jupiter Research, which sees the business growing 45%, to $11.9 billion in transactions by 2009. PayPal, which collects fees from sellers, charges 30 cents per transaction plus 1.9% to 2.9% of the proceeds. Buyers don't pay anything. In the third quarter, the subsidiary's revenues rose 56%, to $166 million, accounting for 21% of eBay's total sales.
A top priority for eBay CEO Meg Whitman is expanding PayPal beyond online auctions. On Oct. 25, PayPal began offering its services to Napster's digital music customers. And it's broadening its global reach. PayPal, currently offered in eight countries, will launch in more places in Europe in 2005. Are these good times for Big Oil or what? The net profit of the five biggest shareholder-owned companies -- ExxonMobil (XON
), BP (BP
), Royal Dutch Shell (RD
), ChevronTexaco (LVX
), and France's Total (TOT
) -- added up to a record $20.2 billion in the third quarter. That's twice the 2003 profits of the biggest auto makers. The five majors account for roughly half the profits of the world energy sector. They have plenty of cash to crank up oil exploration but say they're limited by a lack of good prospects, equipment, and personnel. So a big share of the oil windfall is going to shareholders in the form of stock buybacks and higher dividends. To crack down on teenage alcoholism, the Russian Parliament on Oct. 30 approved a law banning beer drinking in stadiums, streets, parks, and other public places except restaurants. The ban comes after August rules forbade beer ads on TV before 10 p.m. and mandated health warnings.
Still, the $6.5 billion beer market is set to grow 7% this year as more Russians adopt Western tastes. Local brewers say the vodka industry lob-bied hard for the new law, since public drinking of vod-ka has been outlawed since Soviet times. Jan Baan is back. The software-industry pioneer ousted from Baan Co., the former high-flier he founded, has emerged from five years in the shadows to announce his new company, Cordys. Like Baan, Cordys makes software for giant corporations. But while Baan made its name selling manufacturing software to the likes of Boeing (BA
), Cordys is focusing on software that knits together applications sold by hundreds of independent companies, from SAP (SAP
) to Siebel Systems (SEBL
Will Baan, 58, be welcomed with open arms? That's yet to be seen. He left the Netherlands-based Baan in 1998 after an accounting scandal. It has been sold twice since 2000 and has become a niche player.
With Cordys, Baan claims to have a leg up on rivals who have trouble getting all their old applications to work in concert. "We started from scratch, with no legacy," he says. Well, not exactly. There's that little taint of failure inherited from Baan Co. If you thought browsing through 500 cable or satellite channels gave you finger fatigue, better hold on to your remote. Soon you'll be able to surf through thousands of Internet channels. Tech startups such as DAVE Networks, Akimbo Systems, and TimeshifTV are taking a page from TiVo and rushing to create Net services that allow you to personalize your entertainment programming.
Viewers with Web access will be able to pay to download any available shows or movies to a hard drive. Some of the services require buying a set-top box, while others will record to a personal computer. Atlanta-based DAVE Networks expects to have 30,000 hours of programming available online by the January launch of its Xport receiver, which connects a TV and a broadband link. Users also can upload their own content in peer-to-peer networks akin to KaZaA and Grokster on the music side, offering content for free or for a fee.
Think of it as "me" TV. Television has become the next frontier in the race to complete the digital home. Microsoft, (MSFT
) TiVo, and even wireless carriers such as Sprint (FON
) believe the next digital wave after music will be video downloads -- everything from TV shows to movies to music videos.
Beginning next year, both major players and startups will be competing heavily to satisfy video junkies' cravings for television anywhere. Analysts figure consumers will be willing to pay tiered fees, starting as low as $4, to download premium content on a pay-per-view or subscription basis. But will adding more channels via Web downloads mean there'll be better stuff to watch? One of the keys to success will be how much new content studios and broadcasters choose to make available to online video customers.