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Daily Update for February 14, 2012
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for daily listening through iTunes, click here. No Flash? Click here to listen.
US Dept. of Justice approves Apple's purchases of Nortel, Novell patents
Yesterday, the U.S. Department of Justice Antitrust Division closed its investigations into three major acquisitions that were pending, opening the door to completion of these acquisitions by the companies involved. For Apple, the acquisition of patents from Nortel Networks Corporation and Novell Inc has been green lighted, clearing the way for the company to finalize the purchase of intellectual property. Apple, Microsoft, RIM and some other players had joined together as "Rockstar Bidco" to acquire patents at the June 2011 Nortel bankruptcy auction. Nortel had a portfolio of approximately 6,000 patents and patent applications, including many "standard essential patents" that the new owners will be able to license to other "industry participants." What makes standard essential patents so valuable is that they become part of industry standards (e.g., 3G, 4G, Wi-Fi) and must be licensed by manufacturers who wish to create compatible devices. Apple is also acquiring patents that were formerly owned by Novell and were acquired on behalf of Apple, Oracle, and EMC Corporation in April of 2011. It doesn't appear that Apple will be able to pull in license fees for these patents, as Novell had committed to cross-license the patents on a royalty-free basis for use in the "Linux system." A third part of the DOJ announcement could affect Apple indirectly. The DOJ has now cleared the way for Google to acquire Motorola Mobility, which not only manufactures smartphones and tablets but also holds a portfolio of "approximately 17,000 issued patents and 6,800 (patent) applications." Once again, there are hundreds of "standard essential patents" that Google will be able to license to other companies.
DOJ greenlights bid by Apple, Microsoft and RIM to buy Nortel patents
The US Department of Justice didn't just give the go-ahead to Google's acquisition of Motorola today, it also gave the greenlight to a $4.5 billion bid on Nortel's patents from a consortium of companies including Apple, Microsoft and RIM (who have dubbed themselves Rockstar Bidco). Nortel's portfolio includes some 6,000 patents, and the DOJ says the approval comes after it received clear commitments from Apple and Microsoft to license so-called standard essential patents on "fair, reasonable and non-discriminatory terms, as well as their commitments not to seek injunctions in disputes involving SEPs." To round things out for the day, the Justice Department has also given its clearance to Apple's acquisition of certain Novell patents, which have been held by CPTN Holdings pending approval. Its full statement can be found after the break.
Report: Google hires Apple exec to work on 'secret project'
Google appears to have scored another coup in its ongoing rivalry with Apple, having reportedly lured one of the company's senior directors to its Mountain View headquarters. Simon Prakash, pictured above, has worked at Apple for more than eight years, most recently serving as the firm's senior director of product integrity. According to VentureBeat, however, that tenure has come to a close, now that Google has hired Prakesh to work on a "secret project." The report speculates that this project could be helmed by co-founder Sergey Brin, and that it may be mobile-related, though declarative statements were few and far between. Prior to arriving at Apple, Prakash served as director of engineering design validation at Cielo Communications, and held managerial positions at 3Com. VentureBeat claims he'll be starting work at Google today, though the company has yet to issue any statement on the matter. Once finalized, though, the hiring could help dispel some of those "no poach" accusations flying around federal courts.
DOJ investigation yields fresh evidence against Google, Apple in antitrust lawsuit
Back in 2009, a small controversy began swirling around Google and Apple, amid allegations that the two companies had struck an informal agreement to not poach each other's employees. The Department of Justice launched an investigation into the matter in 2010, but details of the case were only made public for the first time yesterday. TechCrunch was the first to sift through the documents, and has uncovered some ostensibly incriminating evidence against not only Google and Apple, but Pixar, Lucasfilm, Adobe, Intel, and Intuit, as well. According to filings from the US District Court for the Northern District of California, these companies did indeed enter "no poach" agreements with each other, and agreed to refrain from engaging in bidding wars. The documents also suggest that they collectively sought to limit their employees' power to negotiate for higher salaries. Some of the most apparently damning evidence derives from archived e-mails, including one that Adobe CEO Bruce Chizen penned to Steve Jobs in May 2005. In the message, sent under the subject "Recruitment of Apple Employees," Adobe's SVP of human resources explains that "Bruce and Steve Jobs have an agreement that we are not to solicit ANY Apple employees, and vice versa." Pixar's Lori McAdams expressed similar sentiments in an internal e-mail from 2007, writing: "I just got off the phone with Danielle Lambert [of Apple], and we agreed that effective now, we'll follow a Gentleman's agreement with Apple that is similar to our Lucasfilm agreement." This would suggest, as the DOJ writes, that there's "strong evidence that the companies knew about the other express agreements, patterned their own agreements off of them, and operated them concurrently with the others to accomplish the same objective." The DOJ announced in September that it had reached settlements with the six implicated firms, but a class-action lawsuit is scheduled to get underway next week in San Jose.
Justice Department antitrust division probing Verizon cable spectrum deals
Looks like AT&T isn't the only major carrier having issues with the guv'ment lately. Remember that 20MHz AWS spectrum that Verizon got from Cox Communications for a cool $315 million this month? How's about that juicy spectrum Big Red scored from Comcast, Time Warner and Bright House for $3.6 billion? Well, it turns out those deals are raising an eyebrow or two over at the Justice Department, which just launched an investigation into the matter. A spokesperson for the department confirmed the probe with Bloomberg News but declined to provide further details. A source familiar with the investigation, however, says the antitrust division is involved. Apparently, there's concern that the deal puts too much control of the airwaves in the hands of Verizon. For its part, Verizon declined to comment, saying it has yet to receive information about the investigation.
AT&T abandons T-Mobile merger plans (updated)
AT&T has officially given up on its plans to buy out T-Mobile. In a statement, the company said it had agreed with Deutsche Telekom to cease pursuing a merger, which has come under increasing scrutiny from both the government and advocacy groups. The failed attempt to snatch up its smaller, German-owned competitor will ultimately cost Ma Bell $4 billion and it's not paying those dues without some grumbling. In the release the FCC and DOJ bear the brunt of AT&T's ire, which are accused of harming customers and exasperating the already looming spectrum shortage. Of course, this also hurts the carrier's ability to compete with Verizon which has been on a spectrum buying spree as of late. As a consolation prize Deutsche Telekom and AT&T have entered a roaming agreement, though the structure of that deal and whether it's purely international or domestic roaming remains to be seen. The complete press release from AT&T can be found after the break.
Judge to reconsider DoJ's AT&T antitrust suit
Late last month AT&T withdrew its application with the FCC to acquire T-Mobile, in an attempt, it said, to focus on winning approval from the Department of Justice, first. Now a district court judge is considering dismissing the US' antitrust suit against ole Ma Bell. According to Bloomberg, the DoJ is looking to either "withdraw without prejudice" or "stay" the suit, as a result of AT&T pulling its application from the FCC. Judge Ellen Segal Huvelle scheduled a hearing for December 15th to decide whether the deal is still possible in the proposed timeframe and the suit still worth pursuing. She had this to say: We don't have any confidence that we are spending all this time and effort and the taxpayers money and that we're not being spun. The landscape has changed. AT&T's lawyers remained steadfast, however, demanding the company's "day in court," and reiterating that approval from the DoJ would improve its chances of getting the thumbs-up from the FCC. For more sordid details on this legal ping-pong match, hit the source link below.
John Opel, IBM CEO during onset of the PC era, dies at 86
John Roberts Opel, the former IBM CEO who helped usher in the PC era, died last week at the age of 86. A native of Kansas City, MO, Opel received his MBA from the University of Chicago in 1949, after fighting in the Philippines and Okinawa during World War II. Upon graduating, he was presented with two job offers -- he could either re-write economics textbooks, or assume control of his father's hardware business in Missouri. Not particularly enthralled with either opportunity, Opel decided to think things over during a fishing trip with his father and a family friend. As fate would have it, that friend turned out to be Harry Strait, an IBM sales manager. Strait offered Opel a sales position at the company, fortuitously setting the young grad on a career path that would span 36 years. Opel's career, in fact, began and peaked at two inflection points that would come to define not only IBM, but the computing industry as a whole. When he came aboard, IBM was still producing typewriters and other accounting devices; but that would soon change, with the dawn of the computing era. In 1959, he became assistant to then-chief executive Thomas J. Watson Jr. Just five years later, he oversaw the introduction of IBM's System 360 mainframe computer. He was appointed vice president in 1966, president in 1974 and, on January 1st, 1981, took over as IBM's fifth CEO, replacing Frank T. Cary. During his four-year tenure, Opel led IBM's push into the burgeoning PC market, overseeing the launch of IBM's first PC, the 5150, just seven months after taking the reins. He was also at the helm in 1982, when the Department of Justice dropped its 13-year antitrust suit against IBM, allowing the firm to expand its operations. Opel took full advantage. Under his stewardship, IBM's revenue nearly doubled and its corporate stature grew accordingly. In 1983, Opel made the cover of Time magazine, under a headline that read, "The Colossus That Works." He stepped down as CEO in 1985, served as chairman until 1986 and would remain on IBM's board until 1993. On Thursday, he passed away in Ft. Myers, FL, due to undisclosed causes. John Roberts Opel is survived by his wife of 56 years, five children, 15 grandchildren and a legacy that extends far beyond these 400 words.
DoJ: Stingray cellphone tracking device falls under Fourth Amendment, but don't ask about it
In 2008, federal authorities arrested David Daniel Rigmaiden on charges of spearheading a massive identity theft ring in Arizona. Rigmaiden allegedly led this operation from January 2005 to April 2008, harvesting some $4 million off of more than 1,900 fraudulent tax returns. He was ultimately nabbed, however, thanks in part to controversial, and somewhat mysterious tool known as a "stingray" -- a device that effectively acts as a fake cell tower, allowing authorities to locate and track a cellphone even when it's not being used to place a call. Since his arrest, the 30-year-old Rigmaiden has been battling the feds in the U.S. District Court of Arizona, on allegations that their tracking tactics constituted an unlawful search and seizure, thereby violating his Fourth Amendment rights. For more than a year, the Department of Justice has maintained that the use of stingrays does not violate the Fourth Amendment. When it comes to sending data from a mobile device, the DoJ has argued, users should not have a "reasonable expectation" of privacy. Recently, though, the judge overseeing the case has indicated that he will press the feds for more information on how stingrays actually work -- something the government clearly has no desire to disclose. Prosecutors are so reluctant, in fact, that they may be willing to sacrifice their case against Rigmaiden in order to safeguard the stingray's secrecy. Read more about the latest developments, after the break.
AT&T reportedly talking to rivals about asset sales in effort to save T-Mobile deal
It's far too early to be writing it off, of course, but AT&T's proposed acquisition of T-Mobile is facing some fairly significant hurdles that could throw a big wrench in the companies' plans -- not the least of which is a lawsuit from the US Department of Justice. Now, according to Blooomberg, AT&T is proactively talking to a number of smaller rivals about selling some of its assets (namely, "spectrum and subscribers") in an effort to save the deal. While talks are described as "preliminary," AT&T has reportedly already reached out to MetroPCS, Leap Wireless, Dish Network, CenturyLink and even Sprint, although Bloomberg notes that any such sell-off may still not be enough to please the DOJ. As you might expect, all of those companies are remaining mum on the matter.
AT&T files response to DOJ suit, says regulators just don't understand
It's no secret or surprise that AT&T is unhappy with the DOJ's decision to try and block its merger with T-Mobile. But issuing public statements is one thing, officially filing papers in court is another. Ma Bell submitted a 25-page document arguing that the Justice Department's claims represent a misunderstanding of the market and dismisses competition from "innovative upstarts," like MetroPCS and US Cellular. AT&T's lawyers point out that T-Mo, currently the fourth largest provider, has been losing customers for years and it's German parent company may not be inclined to invest much in improving it. By contrast, AT&T has spent $30 billion over the last two years to boost network quality and capacity, yet still struggles to keep up with demand. We can't say the arguments are without validity, but the government's fear of a market dominated by just three companies with little incentive to innovate or drive down prices also seems well founded. Well, the pageantry officially gets underway on September 21st, when the US District Court hearings begin.
Daily Update for August 31, 2011
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes, which is perfect for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for listening through iTunes, click here. No Flash? Click here to listen.
US government files to block proposed AT&T / T-Mobile merger (update: companies respond)
You heard right. Bloomberg is reporting that the United States government (!) just filed court papers in Washington, D.C. to block the much ballyhooed tie-up between AT&T and T-Mobile USA. Oddly enough, T-Mobile and AT&T promised this morning that a total of 5,000 jobs would be hand delivered to the US if the two telcos were allowed to become one, but it'll take a heck of a lot more convincing now. For what it's worth, this doesn't mean that the deal is or isn't happening -- it's just another step in the process -- but it most certainly doesn't bode well for proponents. Nor for AT&T's share price. According to the report, the Justice Department feels that the deal would "substantially lessen competition" in the wireless space. In fact, it boldly stated the following: "AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market." If things end up falling apart, it's important to remember that AT&T would be forced to pay Deutsche Telekom $3 billion as a break-up fee, which ought to make Tiger Woods' misfortunes look like an outright bargain. Update: Full press release is now embedded after the break, and meanwhile, Federal Communications Commission Chairman Julius Genachowski has issued the following public statement: "Although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition." Update 2: Wayne Watts, AT&T Senior Executive Vice President and General Counsel, issued the following statement (seen after the break)... [Thanks to everyone who sent this in]
Google reaches $500 million settlement with DOJ over drug ads
We had heard that Google irked authorities at the Department of Justice when ads advertising illegal and counterfeit drugs started popping up. But, we didn't realize just how expensive the offense would be. The government is expected to announce a $500 million settlement with the web giant later today that cut quarterly profits by 22-percent. Google told the New York Times that it had since banned the advertisers, but admitted they never should have been allowed in the first place. We'll just have to go back to getting our cheap Viagra where we used too -- our spam folder.
Researchers use children's toy to exploit security hole in feds' radios, eavesdrop on conversations
Researchers from the University of Pennsylvania have discovered a potentially major security flaw in the radios used by federal agents, as part of a new study that's sure to raise some eyebrows within the intelligence community. Computer science professor Matt Blaze and his team uncovered the vulnerability after examining a set of handheld and in-car radios used by law enforcement officials in two, undisclosed metropolitan areas. The devices, which operate on a wireless standard known as Project 25 (P25), suffer from a relatively simple design flaw, with indicators and switches that don't always make it clear whether transmissions are encrypted. And, because these missives are sent in segments, a hacker could jam an entire message by blocking just one of its pieces, without expending too much power. What's really shocking, however, is that the researchers were able to jam messages and track the location of agents using only a $30 IM Me texting device, designed for kids (pictured above). After listening in on sensitive conversations from officials at the Department of Justice and the Department of Homeland Security, Barnes and his team have called for a "substantial top-to-bottom redesign" of the P25 system and have notified the agencies in question. The FBI has yet to comment on the study, but you can read the whole thing for yourself, at the link below.
Ramona Fricosu case to determine if decrypted laptop files are safe under Fifth Amendment
So far, we've pretty much decided that the Fifth Amendment of the US Constitution covers those zany thoughts within your skull. But when it comes to more tangible things, it's hardly as clear. In the past, convicted persons have been forced to cough up keys to what eventually becomes evidence, and in the case of one Ramona Fricosu, the US Department of Justice is assuming that a computer passphrase is no different. But that assumption is causing shock waves throughout the tech community, as the decrypting of one's laptop files is arguably causing someone to become a "witness against himself." Of note, no one's asking that Ramona actually hand over the password per se, but even typing in the unlock code while not being watched results in effectively the same conclusion. The San Francisco-based Electronic Frontier Foundation is clearly taking a stance against the proposal, noting that this type of situation is exactly one that the Fifth was designed to protect. Only time will tell if Fricosu's offered immunity as a token for complying, but the precedents that are set here are apt to be felt for decades to come. Tap that CNET link for an in-depth report.
Department of Justice probe eyes Sony's rechargeable battery business
After the headache-inducing bout of hacking woes that beset the corporation in recent weeks, a new Department of Justice-led investigation into Sony's US electronics division may have the company emptying that aspirin bottle. Details of the inquiry are scarce at the moment, but with the company's cooperation confirmed, all signs lead to an alleged price fixing of its rechargeable battery business. Citing data from a Tokyo-based research firm, a Bloomberg report indicates that a 2010 market surplus had Sony Electronics (amongst others) lowering battery prices at the expense of less financially-cushioned players. The notorious sector of the multinational's operations has been in the hot seat before -- namely, for actual laptop explosions -- but this time 'round the judicial maypole, it seems the Japanese giant may have been partaking in some anti-competitive shenanigans. If the DoJ hammer does happen to fall on Sony's already bowed head, the company could be facing a very expensive slap on the wrist and a fundamental change to its business practices. Luckily for Sony, we happen to believe in a little something called "innocent until proven guilty."
US DOJ greenlights Google's $900 million bid for Nortel patents; Apple, RIM also interested
It looks like Google will be able to bid on Nortel's patent portfolio after all, now that the Department of Justice has weighed in on the matter. According to the Wall Street Journal, El Goog's $900 million bid has passed a governmental antitrust review, just a few days ahead of next week's auction. Rivals like Microsoft, AT&T and Verizon had previously filed complaints with the DOJ, arguing that the sale of Nortel's 6,000 patents would give an unfair advantage to the auction's winner by providing it with a fresh arsenal for patent-infringement lawsuits. Google, however, claims it needs the portfolio to defend itself against legal challenges, since it has comparatively few patents to its name. The DOJ apparently sees nothing illegal with this argument, having determined that singular ownership of Nortel's intellectual property would pose no threat to market competition. This is obviously music to Google's ears, but the battle isn't over yet. Sources tell the Journal that both RIM and Apple are interested in filing their own bids for the patents, and have already begun discussing the matter with the Justice Department. None of the companies involved have commented on the story, but it'll all go down on June 20th, when the auction finally gets underway.
The AT&T / T-Mobile senate hearing: deciphering the war of words
Over the course of the next year, AT&T and its opponents will be in the ring, duking it out in a war of words in attempt to convince the government that a $39 billion takeover of T-Mobile by AT&T should or should not take place. Consumers have the most to win or lose here, yet we are resigned to watching from the sidelines as both sides lob countless facts and stats at each other like volleys in a tennis match. If you look at the merger process as a stairway to climb up, AT&T is still near the very bottom. Every rung will be full of intense scrutiny as it is: if the two companies are allowed to merge, the national GSM market becomes a monopoly, and the wireless industry as a whole would shift to only three national players plus a handful of less-influential regional carriers. The carrier's going to blow as much as $6 billion if the merger is not approved -- almost enough to buy Skype -- it can't just expect to put up some feel-good facts and stats to win the hearts of the decision-makers. AT&T has to be absolutely sure it'll come out victorious in the war, else it risks losing the trust (and money) of its shareholders. But to accomplish such a feat, it has to be on top of its game. There was no better time to show off what it's made of than last week's Senate Judiciary Committee hearing conducted by the Subcommittee on Antitrust, Competition Policy and Consumer Rights. When the Committee entitles a hearing "Is Humpty Dumpty Being Put Back Together Again?," it's either exercising a sense of humor or a preconceived notion of the merger due to the implication that Ma Bell is simply reforming. CEO Randall Stephenson appeared as a sacrificial lamb, going before Congress and his opponents to explain his side of the story, answer hardball questions, and endure a hard-hitting round of criticism. Continue reading as we take you topic by topic and examine what he -- and his opponents -- had to say about the merger.
