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US Justice Department clears Softbank acquisition of Sprint
Softbank and Sprint have been on pins and needles ever since January, when the US Department of Justice asked the FCC to delay the carriers' merger as it scrutinized the deal over national security concerns. The two networks can breathe a little easier this weekend, as the DOJ just dropped its request for more time. There's "no objection" to the acquisition following a review, the agency says. Not that the companies are completely out of the woods: the FCC has to approve the buyout, and there's still the small matters of Dish's bids for both Sprint and Clearwire. Softbank may not want to drop its backup plan just yet.
If Apple vs. US goes to the Supreme Court
Forbes has an interesting take on on Apple vs. the US Government in the current antitrust case that stems from deals Apple made as it entered the e-book business. Forbes speculates whether the case could head to the Supreme Court and how Apple might do in that venue. Writer Roger Parloff believes this case is not a typical antitrust case saying, "Far from being a dominant player in the book industry, Apple was a new entrant. Far from instigating the scheme, it was -- even on the government's view of the evidence -- an opportunistic late-comer who exploited a pre-existing situation." Apple was trying to enter a field dominated by Amazon, and Amazon was selling books below cost to stimulate Kindle e-reader sales. Apple's position is it was trying to overthrow a monopoly held by Amazon, rather than trying to create a new one. The other defendants in the case, the e-book publishers, have all signed consent decrees admitting no wrong-doing. Apple will argue it was not part of any price-fixing scheme and entered the e-book business after the publishers were already allegedly colluding. It isn't known if the case will ever go before the Supreme Court, but Parloff and some other legal experts have weighed in with a belief that the Supreme Court is quite pro-business now, and Apple might have an advantage. Meanwhile, the Justice Department argues Apple has used its considerable weight to help the publishers in a pricing conspiracy. "Apple knew that ... the [higher] retail price would sharpen [publishers'] incentives to follow through on raising prices across all retailers." It's clearly not an open-and-shut case, and new laws or regulations could come out if it. Apple has been standing pat, and the outcome will certainly be very interesting.
Justice Department calls Apple the 'ringmaster' in e-book price fixing case
Back in April 2012, the US Justice Department filed an antitrust lawsuit against Apple and a number of publishers for allegedly colluding to raise the price of e-books on the iBookstore. The original suit targeted five publishing companies; Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster. While Macmillan and Penguin were initially keen on fighting the allegations, all five publishers have since settled with the US Justice Department. As such, Apple is the last man standing. As part of its investigation into Apple's actions, the Justice Department collected evidence which it claims demonstrates that Apple was the "ringmaster" in a price fixing conspiracy. According to the New York Times, which took a look at various court filings in the case, one such piece of evidence is an email from former Apple CEO Steve Jobs to James Murdoch of News Corp. The email reads, "Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99." While that in and of itself seems rather innocuous, that's just the tip of the iceberg. The Times adds: In July 2010, Mr. Jobs, Apple's former chief executive, told the chief executive of Random House, Markus Dohle, that the publisher would suffer a loss of support from Apple if it held out much longer, according to an account of the conversation provided by Mr. Dohle in the filing. Two months later, Apple threatened to block an e-book application by Random House from appearing in Apple's App Store because it had not agreed to a deal with Apple, the filing said. When Random House ultimately signed on the dotted line, Eddy Cue sent an email to Jobs stating that one of the reasons Random House agreed to Apple's terms was because "I prevented an app from Random House from going live in the app store." Apple, for its part, seems intent on defending itself fully. Indeed, Apple believes its strategy was simply a means to break what it affectionately calls "Amazon's monopolistic grip on the publishing industry." Remember that in the wake of the Justice Department's allegations, Apple in April 2012 issued the following statement: The DOJ's accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we've allowed developers to set prices on the App Store, publishers set prices on the iBookstore. In recent filings, Apple argues that there was no collusion amongst the parties involved to the extent that it negotiated contracts with each publishing company independently of the others. Apple further claims that the particulars of each agreement varied from publisher to publisher. Apple also argues that publishers, on their own accord, had already decided to abandon the wholesale pricing model championed by Amazon, a model wherein the price of e-books is determined by retailers and not publishers. To that end, Apple contends that publishers did not need to be coerced into Apple's agency model for e-books, a model where publishers themselves determine the pricing structure. Indeed, Apple notes that one of the consistent points of contention during the negotiation process actually centered on "Apple's price caps" and its desire for a 30 percent commission on e-books sold. In other words, the publishers were, by and large, already on board -- it was only the details that needed to be ironed out. One thing's for sure -- this will certainly be an interesting case to keep an eye on. Two months ago we reported that Apple CEO Tim Cook will testify during the trial, which is scheduled to begin on June 3.
DoJ reportedly asks service providers to dodge Wiretap Act
It's funny how a few tweaks can make a Government program go from completely legal, to questionably so. A new secret authorization puts the US Justice Department on the fuzzy side of the legal line, approving the expansion of a program originally intended to monitor the internet traffic of military defense contractors to include energy, healthcare and finance sectors. The original program, known as the DIB Cyber Pilot, was voluntary, requiring users to approve monitoring via a login interface. Specific details on how the new program differs aren't known, but CNET reports that the Justice Department has begun issuing letters granting legal immunity to providers who violate the Wiretap Act for the sake of the program. These letters were sent to AT&T and other internet service providers, though it isn't clear how many have gone out. Electronic Privacy Information Center executive director Marc Rotenberg summarized the situation for CNET, "The Justice Department is helping private companies evade federal wiretap laws. Alarm bells should be going off." The operation was approved by Executive order earlier this year, but remains on shaky ground. Still, these legal complications could soon vanish: if signed into law, the CISPA (Cyber Intelligence Sharing and Protection Act) would formally authorize the program. The expanded program doesn't go into effect until June 12th and will only apply to areas of critical infrastructure. Hungry for more information? Don your tinfoil hat, and check out CNET for the entire report.
WSJ: Microsoft, unnamed business partners being investigated by US government over foreign bribery
Microsoft is under investigation by United States regulators over software bribery claims involving foreign government officials, the Wall Street Journal reports, citing "people familiar with the matter." The piece says both the US Justice Department and the Securities and Exchange Commission are looking into the Redmond, Washington-based software giant, investigating allegations of kickbacks in China, and its "relationship with certain resellers and consultants in Romania and Italy." Though neither the Justice Department nor the SEC would confirm the investigation, Microsoft told the WSJ, "We sometimes receive allegations about potential misconduct by employees or business partners. We cooperate fully in any government inquiries," without confirming the situation. With regard to China, Microsoft's allegedly being investigated for kickbacks that its Chinese subsidiary is said to have paid for software contracts in the region. In Romania the situation is said to be similar to that in China, but in Italy it's said to involve customer loyalty plans. Update: Microsoft further outlines its response to the allegations here (though still without confirming whether or not the investigations are taking place).
Macmillan settles up with DoJ, Apple now stands alone in e-book price fixing case
It took awhile to read the writing on the wall, but Macmillan has finally settled the antitrust lawsuit brought by the US Justice Department for the publisher's alleged e-book price fixing. In doing so, Macmillan joins Hachette, HarperCollins, Simon & Schuster and Penguin in choosing not to go to trial against the DoJ's lawyers. It's an about-face from Macmillan's initial stance in settlement negotiations, when it claimed that the DoJ's terms were far too onerous. Why settle now? Company CEO John Sargent told the Wall Street Journal that the company changed its tune not because it was guilty, but "because the potential penalties became too high to risk even the possibility of an unfavorable outcome." Should the settlement terms be approved by the court, retailers will be able to discount Macmillan titles, regardless of existing contracts, for 23 months starting from December 18, 2012. With Macmillan bowing out, Apple remains as Uncle Sam's lone legal opponent at the trial scheduled in June. Given Apple's staunch denial of wrongdoing and general willingness to litigate, it seems we may be in for some more legal fireworks this summer.
Senator Schumer calls on DOJ to drop e-book price-fixing suit
Believe it or not, but that whole e-book price fixing fiasco is still an ongoing issue for the Justice Department. New York's senior senator, Chuck Schumer wishes it wasn't however, he simply wants the DOJ to drop the case and walk away. In a lengthy (factually questionable) op-ed in the Wall Street Journal the distinguished gentleman from the great state of New York said that a successful suit against Apple (he didn't bother to call out the others involved) would set the e-book industry back several years and allow Amazon to dominate the market unchallenged. He also makes a broader call for the administration to develop more clear guidelines for deciding what non-merger cases to pursue. Unfortunately, we have to point out, that his argument is undercut by some questionable data referenced in the editorial. According to Schumer Amazon once owned 90 percent of the e-book market -- a number that, if true, most certainly predates the release of the Nook. This is followed by an insinuation that Apple all but single-handedly toppled the retail giant with the launch of iBooks, cutting Amazons market share to just 60 percent. While the latter number sounds about right we'd hesitate to lay responsibility for that 30 point drop entirely at Apple's feet. To dig into Schumers op-ed yourself hit up the source link.
E-book price fixing court date set for 2013
The Justice Department has been ready to take Apple to task over these recent allegations of e-book price fixing, and now a court date has been set: Apple will have to face the music almost a year from now, on June 3, 2013. Apple, Macmillan and the Penguin Group are the targets in the case, and while each of them has denied any formal price-fixing in the past, the court will do a little formal digging into those claims. A year is quite a long ways away, but stay tuned and we'll see exactly what case the Justice Department plans to lay out against Apple and the other publishing companies then. [via Engadget]
Justice Department clears Google of WiFi wiretapping violations
Two years ago, Google drove its way into a fair amount of hot water when it accidentally (as was claimed) scooped up private data over WiFi while collecting Street View and location data. Now, the Justice Department has cleared the prolific mapsters of the wiretapping violations. The DOJ made its decision not to push for prosecution based on reports from employees and investigating key documents reports Wired. The Wiretap Act (which is the relevant one here) was argued to only pertain to "traditional radio services," by US District Judge James Ware, but neither the DOJ or FCC said they could find any evidence that Google accessed the date it snared. In an extra move of openness, the search giant has also released the entire FCC report on the Street View investigation (redacted to protect identities) which can be found in the more coverage link. So, next time you see the famous camera-topped wagons roll around, you can leave your tin hat in the closet.
Apple says e-book price fixing charges 'simply not true,' Macmillan also responds
Not that we were expecting Apple and Macmillan to simply fess up and say, "you're right, totally tried to circumvent the free market," but both companies have come out swinging pretty hard against the allegations of price fixing. Apple has rejected the charges, calling them "simply not true." A company spokesman, Tom Neumayr, went so far as to tell Reuters that Cupertino was actually fostering competition by "breaking Amazon's monopolistic grip on the publishing industry." John Sargent, the CEO of Macmillan, defended his company's behavior in blog post, saying the publisher had done nothing illegal and that the concessions sought by the DOJ in settlement negotiations were "too onerous." It looks like the next step for both is to face off with the US government in court -- a daunting task, no matter how large your war chest.
Reuters: Justice Department ready to sue Apple over ebook price fixing (Updated)
A report from Reuters suggests the Department of Justice could file a lawsuit against Apple today over alleged ebook price fixing. Publishers involved in the price-fixing scheme are supposedly settling with the government, while Apple has stayed out of the negotiations. As a result, Apple could face legal action by the government as early as Wednesday. Reuters reached out to Apple and the company declined to comment. Update: The Justice Department released its official statement on Wednesday afternoon. The DOJ confirmed it filed an antitrust lawsuit in U.S. District Court for the Southern District of New York against Apple and five book publishers including Simon & Schuster, HarperCollins, Hachette, Penguin Group (USA) and Macmillan. Hachette, HarperCollins, and Simon & Schuster agreed to a settlement for alleged ebook pricing fixing, while Apple, MacMillan and Penguin Group are fighting the charges in court. The settlement requires these publishers to let Amazon and other retailers lower the price of digital books. It also ends "their anticompetitive most-favored-nation agreements" with Apple and other ebook sellers.
Apple reportedly stays out of ebook settlement talks
Apple doesn't appear to be rushing to settle antitrust claims in the price-fixing investigation into ebooks. The Wall Street Journal and others are reporting today that Apple and two other publishers are reluctant to settle, according to people knowledgeable about the investigation. There are price-fixing probes active in both in the US and Europe. If a deal can't be reached, the matter will escalate into a full-blown lawsuit from government regulators. The issue stems from allegations that Apple and 5 publishers decided together to fix the price of ebooks using the so-called 'agency pricing model', where publishers set a price and take a 30% cut. All the companies could receive massive fines if they are found guilty. The pricing method came about as Apple and publishers tried to compete against Amazon, which was discounting books -- sometimes taking a loss -- to sell the Kindle.
Justice Department preparing Apple iBooks antitrust lawsuit
The Justice Department is reportedly preparing to go after Apple, Simon & Schuster, Hachette, Penguin, Macmillan and HarperCollins following its investigation into alleged e-book price-rigging. The case centers around a deal to switch to agency pricing, where the vendor takes a 30 percent cut of each sale, rather than the wholesale model that gives publishers more flexibility to reduce prices or even sell e-books at a loss. Some publishers are now trying to agree on a new policy in an effort to stave off the kind of federal suit that nobody wants to wear.
US gives its blessing to Google's Moto purchase
When it rains, it pours. Just hours after European regulators gave the green light to Google to snatch up Motorola Mobility, the US Justice Department gave the couple its own blessing. The $12.5 billion purchase has drawn serious scrutiny from both regulators and Big G's own partners, though, consensus seems to be that Mountain View is more interested in Moto's patents than in entering the hardware business. Though the Justice Department doesn't see the merger as an immediate threat to competition, it did issue a stern warning that it "will not hesitate to take appropriate enforcement action to stop any anticompetitive use of SEP (standard essential patent) rights." The concern is an understandable one since all the major players in the mobile space, Motorola included, have been at each other's legal throats for some time now. There are still a few more interested parties who will have to give their own consent to the combination including China, Israel and Taiwan. But, with two of the biggest potential blockades giving Google the thumbs up, it's looking more and more likely that the purchase will go through.
E-book publishers are now being investigated in the US, not just Europe
Just two days after the European Commission announced that it was investigating Apple and major international publishers for possible e-book price fixing, the US Justice Department has made it clear that it's also launching a probe into the possibility of "anticompetitive practices involving e-book sales." Although Justice Department officials didn't name which companies they're looking into, it's very likely that they're focusing on the same agreements between publishers and the major e-book platform owners -- either Apple or Amazon or both.
AT&T withdrawing merger application with the FCC while pursuing win with the Justice Department
AT&T apparently believes its idea to merge with T-Mobile is headed for trouble, and today the telecommunication giant announced it has withdrawn its joint application for FCC approval ahead of what was going to be a US $39 billion dollar deal. The two companies say they are going to focus efforts on getting approval from the Justice Department for the merger, but that seems a stretch since last August the Department of Justice sued AT&T claiming the merger was anti-competitive and in violation of antitrust laws. AT&T said it plans to book a $4 billion dollar charge in the 4th quarter in preparation for the deal failing and it having to make a large payment of up to $6 billion dollars to T-Mobile which was guaranteed to the German owned company as a break-up fee. It's likely that AT&T auditors are wanting AT&T to take the financial hit now, and the action that AT&T announced today is a sign the company has low confidence it can convince the FCC or the Justice Department that the deal is good for consumers. AT&T claimed the merger would create many new US jobs, while the US government claims the merger would result in a massive job loss and higher prices for cellular service. AT&T was the first company to offer the Apple Phone. T-Mobile is now the only US carrier that does not sell it. Earlier this year both Verizon and Sprint have been able to offer the popular smartphone.
AT&T may get a discount if T-Mobile bid concessions prove too expensive
When the DOJ blocked AT&T's deal to snatch up T-Mobile, did you think Ma Bell would end up shelling out some ridiculous sum to lock things up? Well, the opposite may be the case -- according to Bloomberg, the company can get a reduced rate if regulator's requests become too pricey. A discount of sorts would be available to AT&T if the remedy to-do list surpasses 20 percent of the deal's original $39 billion price tag (about $7.8 billion). Also of note here: the company could leave the proverbial table altogether if the concessions top the 40 percent mark, only owing a break-up penalty... and shelling out the $3 billion contingency fund to Deutsche Telekom AG.
AT&T willing to make concessions to save T-Mobile merger, sources say
Now that the US government has moved to block its merger with T-Mobile, AT&T is gearing up for a long and potentially pricey legal battle with the Department of Justice. According to Reuters, however, the provider is also working on a settlement offer, in the hopes of bypassing the courtroom altogether. Sources close to the matter say AT&T will soon present its proposal to antitrust regulators, who are concerned that the company's purchase of T-Mobile may hinder market competition. Details on the proposal remain vague, though it will likely include promises to keep T-Mobile's low-cost data and calling plans, along with pledges to sell off some of its own assets. But some insiders say the carrier may have to sell up to 25 percent of T-Mobile's business in order to put regulators' minds at ease. AT&T has yet to comment on the report, though one of Reuters' sources claims that its lawyers are "pretty determined that they can find a solution, and they are pretty confident."
U.S. looks to block AT&T, T-Mobile merger (Updated)
Both the New York Times and the Associated Press are reporting that the Justice Department is suing to halt the proposed merger of AT&T and T-Mobile, citing serious competitive issues with the US $39 billion deal. The complaint says "AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market, thus, unless this acquisition is enjoined, customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger." AT&T announced its desire to merge in March, and the proposal has drawn fire from consumer groups, lawmakers, and rivals like Sprint which has been urging the government to stop the merger. AT&T and Verizon are the sole US sources for the iPhone, but rumors have mentioned Sprint and T-Mobile as possibilities. Update: AT&T isn't giving up. As Engadget reports, Wayne Watts, AT&T Senior Executive Vice President and General Counsel, issued the following statement: "We are surprised and disappointed by today's action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated. We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court. At the end of the day, we believe facts will guide any final decision and the facts are clear. This merger will: · Help solve our nation's spectrum exhaust situation and improve wireless service for millions. · Allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population; · Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most. We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court."
US Justice Department and FTC looking into Apple's new subscription policy
Apple unveiled its new app store subscriptions earlier this week with a decent amount of controversy and even an official statement from Rhapsody saying it would not comply with the new regulations. The new policy requires any company offering subscription services to offer the same service, at the same price (or less) through Apple, with Apple skimming 30 percent off the top. It also no longer allows apps to have links to external sites where purchases can be made. Now, reports the Wall Street Journal, antitrust enforcers in the US are having a preliminary look into the new arrangement. So, what does that mean? Well, these kinds of pre-investigations are pretty common, so it could mean nothing at all. Or, it could lead to a more formal investigation into if the policy violates antitrust laws. When asked for comment on the story, unsurprisingly, no one at Apple, the FTC, or the Justice Department would comment. We'll keep our eyes on this one and let you know if anything more exciting happens.
