Microsoft is taking a stand on an emerging technology that threatens to reshape software pricing models. The company is expected to detail changes to its server product licensing to better accommodate virtualization software, an emerging technology that big companies are eyeing as a way to consolidate servers and cut costs. Advocates argue that virtualization lets companies reduce the number of servers they need by letting jobs run more efficiency on a smaller number of machines. Virtualization software such as Microsoft’s Virtual Server, EMC’s VMware, and XenSource’s Xen lets a server simultaneously run multiple operating systems, or multiple instances of the same operating system. Each instance essentially behaves as a self-contained computer.

Scam artists who target online banking customers are adapting their techniques to try to defeat a range of sophisticated new security features designed to thwart phishing attacks, according to experts. In recent months, companies that monitor phishing attacks have noticed an increase in malicious programs that record computer screen activity. The rise in so-called screen scraping may be an attempt to counter new electronic banking programs that use a combination of mouse clicks and keyed entries to give customers access to their online accounts.

Microsoft has not yet launched a paid anti-virus product, but questions about software bundling and unfair competition are already swirling in Europe. Rival Symantec acknowledged that it has responded to a request for information from European Union regulators regarding the state of the security market and Symantec’s role in it. But some are speculating that EU antitrust officials have bigger fish to fry. Some company watchers believe that Microsoft might be embarking on more product bundling

A new variant of the Sober email worm has started spreading as an attachment that claims to be an old class photo sent by a schoolmate. But if recipients open the file, they don’t see a picture of themselves in braces. Instead, a worm tries to steal their information and then mail itself to others. Antivirus software maker Sophos said the Sober variant is now the second most commonly reported virus, accounting for approximately 10 percent of all reports in the last 12 hours.

Two UK men have received jail terms for conspiring to create a computer worm for an international hacking group. Jordan Bradley, a 22-year-old electrician from Darlington, was sentenced to three months at Newcastle Crown Court after pleading guilty to "unauthorized modifications to the contents of computers with the intent to impair the operation." Andrew Harvey, an unemployed 23-year-old from Durham, was sentenced to six months after pleading guilty to the same charges.

Microsoft claims it has not gained anything from the recent spate of security flaws that have been discovered in Firefox, even though the open-source browser is a rising rival to the software giant’s Internet Explorer. Peter Watson, chief security advisor at Microsoft Australia and New Zealand, told ZDNet Australia that the software maker did not get any pleasure from seeing Firefox suffer a string of security vulnerabilities, despite the open-source browser’s growth seemingly being stunted over recent months.

As part of its monthly patching cycle, Microsoft on Tuesday plans to release eight security alerts for flaws in the Windows operating system. At least one of the alerts is deemed "critical," Microsoft’s highest risk rating, the company said in a notice posted on its Web site on Thursday. Last month, Microsoft planned one critical alert for Windows, but pulled it at the 11th hour because of quality issues.

America Online has agreed to buy Weblogs Inc., a network of Internet sites focused on niche topics ranging from food to gadgets, for around $25 million. Weblogs includes roughly 80 advertising-supported sites published by a group of more than 100 bloggers. Examples include Autoblog, BloggingBaby and Engadget, Weblog’s most trafficked site, which is aimed at "rabid gadget freaks."

Two major Internet backbone companies are feuding, potentially cutting off significant swaths of the Internet for some of each other’s customers. On Wednesday, network company Level 3 Communications cut off its direct "peering" connections to another big network company called Cogent Communications. That technical action means that some customers on each company’s network now will find it impossible, or slower, to get to Web sites on the other company’s network.

An Internet security specialist says a new threat forces computers to install faked Google software, which then goes phishing. The latest cases involve bogus Google software spread via IM, and appear to be a variety of the infamous CoolWebSearch phishing scheme, according to FaceTime Security Labs. CoolWebSearch has never been spread via IM before.