In an effort to curb the use of Hotmail to send spam, Microsoft will no longer support a Web authoring protocol in the free version of Hotmail. This means that only paying subscribers will be able to access their Hotmail accounts via Outlook or Outlook Express. The move not only plugs a hole exploited by spammers since at least Mar. 2003 but it could also bolster the appeal of Hotmail Plus—an important consideration, given that competitive Web-based mail services have turned extra storage (the main offering in Hotmail Plus) into a free commodity.

Reducing Outgoing Spam

Web-based e-mail is tempting for spammers because it allows them to sign up for an unlimited number of anonymous accounts. To make this more difficult, in late 2002 Microsoft began requiring new users to enter a sequence of blurred letters displayed as an image, which the automated programs used by spammers cannot read. (For an illustration, see "Human Interactive Proof" on page 31 of the June 2003 Update.)

However, since the late 1990s, Hotmail has supported Web Distributed Authoring and Versioning (WebDAV), an extension to the Hypertext Transfer Protocol (HTTP) that allows viewing and editing of files on Web servers. Microsoft did this so that Outlook and Outlook Express users could access their Hotmail accounts directly from their e-mail program, without using a Web browser.

In early 2003, spammers began exploiting this WebDAV support to create automated scripts that could send large quantities of spam from Outlook or Outlook Express through the Hotmail servers. In Mar. 2003, Microsoft responded by limiting the number of outgoing messages to 100 per day for free Hotmail accounts, but spammers simply signed up for more accounts and continued exploiting WebDAV.

Now Microsoft is taking another stab at addressing the problem: all free Hotmail accounts created after Sept. 27, 2004, will not support WebDAV. Existing subscribers to the free Hotmail service will continue to have WebDAV support for up to six months but eventually will have to sign up for Hotmail Plus, which costs US$19.95 per year, if they want to continue to access their accounts from Outlook or Outlook Express. (This capability will also be available through MSN Premium, which costs US$9.95 per month or US$99.95 per year and offers many other features, such as parental controls and an online version of the Encarta encyclopedia.) Although this won't stop the problem entirely—spammers could still use a stolen credit card number to sign up for multiple Hotmail Plus accounts, for example—it will make it easier to track spammers who exploit Hotmail accounts in this fashion.

Microsoft says that less than 10% of free Hotmail users were using WebDAV support for its intended purpose, meaning that the impact on users will be small.

New Subscription Customers?

In addition to reducing the tide of outgoing spam, the change could also draw new users to Hotmail Plus.

In the past, the main draw of Hotmail Plus (formerly known as Hotmail Extra Storage) was more storage space than the free Hotmail service, which topped out at 2MB. However, in spring 2004, Google began running a wide beta test of its Gmail service, which offers 1GB of e-mail storage. To remain competitive, Hotmail is increasing the amount of storage space to 250MB for free customers (the transition is expected to be complete in the United States by the end of 2004), and Yahoo has increased storage on free accounts from 4MB to 100MB. (For more background, see "Hotmail Strikes Back" on page 20 of the Aug. 2004 Update.)

Because so much storage is now available for free, only the heaviest e-mail users will find the 2GB of storage offered by Hotmail Plus compelling. However, free Hotmail customers who relied on WebDAV support will soon have a new reason to consider the subscription offering.