Microsoft's PDC was the source of the biggest news this week as the copany unveiled its Windows Azure cloud-computing platform. The company also let out some more details about the forthcoming Windows 7 OS and talked up its ambitions with Silverlight. Meanwhile, Google proposed settling lawsuits related to its book-scanning and indexing project, and word also seeped out through The Wall Street Journal that the company's search advertising deal with Yahoo could be scrapped because of regulatory issues.

[ Video: Catch up on the week in tech news with the World Tech Update ]

1. Microsoft launches Windows Azure for the cloud : Microsoft unveiled its Azure Service Platform, marking its entry into cloud computing, with Chief Software Architect Ray Ozzie saying that the platform will form the core of the company's services platform and be an online delivery option for all current Microsoft software. The company has been revealing bits of the strategy over the past three years and this week at its Professional Developers Conference set forth more details of how those parts fit within the Azure concept.

[ Get the inside scoop on Microsoft's cloud strategy straight from the project lead | For more news from Microsoft's Professional Developers Conference, check out InfoWorld's special report. ]

2. WSJ: Google and Yahoo may call the whole thing off: Google and Yahoo might back out of a proposed search advertising pact that the U.S. Department of Justice has not yet approved, The Wall Street Journal reported Friday. The companies signed the deal in June, agreeing that Yahoo would run Google's search ads and they would split the revenue. The DOJ has been reviewing the proposal for antitrust issues, and the companies voluntarily agreed to delay implementing the plan while that review is conducted. But the DOJ wants the companies to sign a consent decree and allow judicial oversight of the ad deal, according to the Journal.

3. Microsoft previews Windows 7 client OS: Microsoft's PDC wasn't all about Windows Azure; the company also showed off Windows 7, the next iteration of the Windows OS. The company discussed the five themes of the upcoming OS (mobile computing, services design, personalization, entertainment optimization, and compatability and stability) and further vowed that Windows 7 will fix the mistakes in Windows Vista .

[ Will the new Microsoft OS be better than Vista? Join the Windows 7 conversation in Randall C. Kennedy's Windows Sentinel blog. | See Tom Yager's first look at Windows 7. ]

4. HP, Dell, Toshiba recall Sony laptop batteries again: Dell, Hewlett-Packard and Toshiba have recalled 100,000 Sony laptop batteries that were made between October 2004 and June 2005 after reports of about 40 incidents of them overheating. The reasons for the recall are the same as a recall a couple of years ago, but the number of batteries involved is much smaller than the 9.6 million recalled then.

5. Are design issues to blame for vote 'flipping' in touch-screen machines?: E-voting machine vendors defend how their hardware is designed and emphasize that voters who find that touch-screen machines are "flipping" their votes -- changing them to a candidate they say they didn't vote for -- or who experience other glitches should immediately contact poll workers to let them know of the miscue. The issue of vote flipping has arisen during early voting in some states and has left some voting watchdog organizations concerned that such technical difficulties combined with expected high turnouts could cause big problems on Election Day next Tuesday.

6. IT slashes budgets, starts layoffs: Exclusive CIO survey: The IT blood-letting is beginning -- an exclusive CIO survey finds that 40 percent of CIOs expect to cut budgets because of the faltering economy, with contractors and discretionary tech projects among the first areas to be slashed. An additional 34 percent of CIOs aim to keep their IT budgets the same as a year ago, the October survey of 243 CIOs found. The percentages of CIOs who expect cuts or spending freezes has steadily increased across a series of studies done by the magazine in March, July and October.

7. Microsoft lays out Silverlight ambitions: Also at the Microsoft PDC, the company laid out its plans to continue improving the Silverlight platform, its competitor to Adobe's Flash. The company says a major update is due next year that will include offline capabilities and richer graphics support, among other upgrades.

8. Google settles copyright lawsuits with publishers, authors and Google agreement with publishers prompts a partial Harvard pullout: Google settled lawsuits filed by major publishers and authors contending that the company's scanning and indexing of copyright books without permission was tantamount to violating copyright on a massive scale. Google had claimed it was protected by the principle of fair use because only snippets of text for such books were displayed to match search queries. The Authors Guild and the Association of American Publishers strongly disputed that argument. The settlement came after two years of negotiations, and its terms involve Google paying $125 million in exchange for the right to display more of in-copyright books. Harvard University responded to the settlement by saying it is partially withdrawing from its book-scanning deal with Google while it evaluates the settlement terms.

9. New Android apps a mixed bag, should improve: Some of the first applications for the Android mobile OS market crash the G1 phone and otherwise don't work so well. One application uses commands written in Chinese. But analysts expect that better applications will soon be out as developers work on more of them and as the Android open-source developer community matures. Android is Google's mobile OS and so far is available on just the G1 phone, which T-Mobile USA started selling last week.

[ Special report: All about Google Android ]

10. 'Ruthless' Trojan horse steals 500K bank, credit card log-ons: A Russian cybercrime group has for almost three years maintained the Sinowal Trojan horse, which has stolen log-ons for more than 300,000 online bank accounts and about as many credit cards, RSA Security said. "The sheer enormity of this makes this unique," said Sean Brady of RSA. "And the scale is very unusual."