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Intel Dodges Boycott Bullet;
Agrees to Change its 'Spy Chip'

By Ted Bridis  Associated Press
WASHINGTON — Facing criticism over privacy issues, Intel Corp. reversed itself and promised it will disable a new technology that helps identify consumers as they move across the Internet.

Customers can use software to activate the technology in its upcoming line of Pentium III computer processors, Intel spokesman Chuck Mulloy said Monday.

Intel, the world's largest computer chip-maker with $26.2 billion in sales last year, announced last week that its newest Pentium chip would by default transmit its unique serial number internally and to Web sites that requested it to help verify a user's identity.

But hours after privacy groups organized a boycott Monday, Intel said it will provide software that turns off the feature by default in future copies of its Pentium III processors, not yet distributed to the world's computer makers.

The company also promised to offer the software to owners of existing Pentium III chips already in production, making it easy to permanently turn off the technology.

Intel won't need to redesign its chips.

The concession came only hours after a boycott was announced in Washington by privacy groups, which launched a campaign complete with a parody of the company's ubiquitous "Intel Inside" logo. Theirs featured the familiar swirl but with the words, "Big Brother Inside."

"This acknowledges that consumers want Intel inside their computer, not inside their private lives," said Rep. Ed Markey, D-Mass., who urged Intel last week to reconsider its plans.

Intel's reversal saves the company the risk of a protracted, ugly fight with consumers over privacy — reminiscent of the company's awkward handling in 1994 of an obscure math flaw in its original Pentium chips.

At the time, Intel initially required outraged customers to justify their need for a replacement Pentium but weeks later reversed course and offered free replacements, along with an apology from its chairman.

Last week, Intel said its new technology could be turned off but was reactivated whenever the computer was restarted. But on Monday, the company said that was a misunderstanding: The Pentium's ability to transmit its serial number is, in fact, reactivated, but the software "switch" still disables the feature until the consumer chooses to use the technology.

Among other things, the technology offers a boon for electronic commerce, allowing companies and shoppers to feel more secure in the transmission of sensitive data.

Privacy groups involved in the boycott said they were "delighted that Intel has taken one small step toward respecting people's privacy," but said the boycott will continue until they see the details.

"You still have the problem of an ID number, and Web sites can force people to disclose that ID number as a condition to get into the sites," said David Banisar, an attorney with the Washington-based Electronic Privacy Information Center.

The privacy information center organized the boycott with Junkbusters Corp. of Green Brook, N.J., which lobbies on a range of high-tech issues.

The Federal Trade Commission, which last year pressed for a law that prohibits Web sites from collecting personal information from children without parental permission, said the Intel debate "highlights consumer concerns about how confidential is various information for them."

"This will certainly resonate on Capitol Hill and with the administration," said Jodie Bernstein, director of the FTC's consumer protection bureau.

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