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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.
Google's potential $500M fine linked to illegal online pharmaceuticals
When Google revealed it would take $500 million first-quarter charge ahead of "potential resolution of an investigation" by the United States Department of Justice, the company offered few details. A three-line non-explanation pointed the finger at "advertising by certain advertisers." Now The Wall Street Journal reports that the mysterious half-billion-dollar hit may stem from advertisements placed by "rogue online pharmacies" that break US laws. The DOJ investigation has focused on whether the search behemoth knowingly accepted ads from shady pharma sites, but it's unclear whether those sites sold counterfeit or expired drugs, failed to require doctor's prescriptions, or both. Obviously, if the company profited from illegal activity, it can be held liable -- a fact Google knows all too well after a 2007 settlement over ads for online gambling. The impending fine would rank among the highest paid to the US government; this news, by the way, did not come from Facebook.
US DoJ approves Google's acquisition of ITA, but not without stipulations
The United States government may be dissolved tomorrow, but it's certainly taking care of one final piece of business before going into shutdown: this. If you'll recall, Google announced its intentions to acquire ITA for $700 million in July of last year, and as we cruise into the start of America's summer travel season, all signals are go. Today, the US Department of Justice approved Google's request to move forward with the buy, but rather than having the entire travel search market under its wing, El Goog's going to have to make a smattering of concessions in order to get the right signatures. For starters, the search monolith will allow ITA's existing client contracts to extend into 2016, and it'll let both current and new customers license ITA's QPX software on "fair, reasonable and non-discriminatory terms." No one's saying when the integration will be complete (or start, for that matter), but we're desperately anxious to see just how Kayak and Bing Travel react after this launches in earnest. Power to the searchers, as it were.
Senator asks DOJ and FCC to do their jobs, provide friction for AT&T / T-Mobile tie-up
There's always one. Back in the winter of 2009, Senator Kerry made public his request for Fox and Time Warner to keep the Bowl Games online, and one Chuck Schumer took to writing an open letter to Steve Jobs regarding the iPhone reception woes that eventually led to a dedicated press event (mostly) disputing the matter. Now, Minnesota Senator Amy Klobuchar is urging the FCC and DOJ to "take a close look at the proposed AT&T and T-Mobile merger," noting that the outcome would undoubtedly have a huge impact on consumer choice, price and service in the wireless industry. Of course, it's not like these two wouldn't be doing just that in the coming months, but it's good to see a fire starting early in Congress to make sure due diligence is done. Having a carrier that provides service to 42 percent of all US wireless subscribers has the potential to seriously shift the economics of things, and potentially more interesting are the implications of a rejection. In fact, many are suggesting that AT&T will likely have to sell off major assets and promise expansion to rural / poor areas in order to gain approval, which ties in nicely to Verizon Wireless CEO Dan Mead's own comments regarding concessions. We're also hearing that regulators could take as long as 18 months to fully investigate, and you can bet we'll be following the play-by-play as it all unfolds.
Former Apple employee admits he sold confidential info, cost the company in excess of $2 million
Paul Devine, the man who last August collected a pretty lengthy list of charges against his name from the FBI and IRS -- which collectively amounted to an accusation of "screwing Apple" -- has now admitted his guilt. Specifically, Devine has fessed up to wire fraud, conspiracy and money laundering, in which he engaged while exchanging confidential information about upcoming Apple products for cold hard cash from interested parts suppliers. He's now having to forfeit $2.28 million in money and property that resulted from his nefarious exploits, with sentencing scheduled for June 6th. Devine's lawyer is quoted as saying he's a "good man who made a mistake, and now he's trying to make amends." Indeed, the mistake of getting caught and the amends of trying not to go to prison. Jump past the break for a full statement on the matter from the US Department of Justice.
FTC and DOJ monitoring Apple's new subscription policy
Both the Justice Department and the Federal Trade Commission are aware of the new policy Apple implemented for media companies with applications in the App Store. The new terms state "that if an app offers customers the ability to purchase books outside of the app, the same option is also available to customers from within the app with in-app purchase." A prime example is the Sony Reader app which was reportedly rejected from the App Store because its iOS app linked to its own digital store and did not use Apple's in-app purchase system to sell its eBooks. This new policy takes effect June 30 and will drive many purchases through the App Store, giving Apple a 30% cut. U.S. regulators are taking a closer look at this policy to determine if it runs afoul of any federal antitrust laws. This interest is preliminary and may not turn into a formal investigation or sanctions against the company. The European Union is also closely monitoring this situation, but is currently not taking any action either. Apple was under the microscope last year following its decision to ban iOS applications developed using third-party tools such as Adobe Flash. Both the FTC and the European Commission launched an investigation, but Apple reversed this policy before a decision could be made by either regulatory body.
EU plans to end Apple antitrust investigation in light of relaxed iPhone rules
It seems like Apple's legal team is constantly embroiled in a pitched battle of some sort, but this weekend they might get to relax -- citing recent iPhone policy changes, the European Commission's decided to stop breathing down their necks. Though the EU originally joined the US Department of Justice and Federal Trade Commission in investigating why Cupertino chose to block third-party dev tools and ads earlier this year, the fact that Apple recently relaxed both restrictions (and created a repair program for iPhones purchased abroad) satisfied European regulators. "The Commission intends to close the investigations into these matters," it wrote earlier today. There's no guarantee that the US powers-that-be will exercise similar leniency, of course, but we wouldn't be surprised -- even inside Apple, the DoJ's got other fish to fry.
Apple, Adobe, Google, Intel Intuit and Pixar: now free to cold call each other's employees
Attaboy, DoJ! Out of (almost) nowhere, the United States Department of Justice announced today that it was requiring six well-known technology outfits to stop entering into "anticompetitive employee solicitation agreements," and we're guessing you will have heard just a few of these names: Adobe, Apple, Google, Intel, Intuit and Pixar. As the story goes, these six companies were all mixed up (but not all together, mind you) in agreements that forbid each other from cold calling employees from a rival firm in order to offer them a different job. According to the DoJ, those arrangements acted as a "significant form of competition to attract highly skilled employees," and it has now filed a civil antitrust complaint today along with a proposed settlement that, "if approved by the court, would resolve the lawsuit." We're also told that some of the agreements were put into place as early as 2005, and they were "formed and actively managed by senior executives of these companies." Yikes. Hit the source link for the full report, and feel free to call back that "Unknown" caller that keeps hitting you up on your Adobe line -- it's probably Pixar with a seven-figure offer.
Apple, others talking to DoJ about anti-poaching agreement
Apple, Google, Pixar, Intel, and a few other companies are currently in talks with the Department of Justice about an alleged anti-poaching agreement, according to sources speaking to the Wall Street Journal. The government is considering accusing the companies of agreeing to not hire each others' employees for a certain period of time. If, as a law professor tells the Journal, the government finds that these companies are actually agreeing to not poach, then employees could be hurt by not having access to the best deal available. For their part, the companies are reportedly arguing that non-poaching agreements are a requirement, especially when companies are so closely collaborating on various technologies and standards. Apple and Google, for example, would want to create the best products possible for customers, and wouldn't be able to do that if they had to worry about their employees possibly getting hired away by the other partner. There's no actual lawsuit yet -- this is still just an investigation, and the Journal says that there are "some companies more willing to settle to avoid an antitrust case than others." But we'll see -- if the Department determines that the companies did make an agreement and that employees were punished by it, then the case could end up in court eventually.
HP agrees to pay $55 million to settle investigation into illegal kickbacks
The company that kicked Mark Hurd to the curb for financial impropriety has today reported it'll pay $55 million in a settlement with the US Department of Justice relating to some fiscal delinquency of its own. HP was accused of greasing up the wheels of business, as it were, by throwing cash around to companies who would recommend its services to state procurement agencies. This particular set of allegations related to a federal contract obtained by HP in 2002, and the settlement also extinguishes investigation into whether or not the computer vendor had provided incomplete information to the US government. That's all well and good, but we have to question the size of these levies. Today's also the day that HP's announced a new $800 million supply contract with the US Air Force -- would a fine that's less than a tenth of the contract's value really deter HP's entrepreneurial spirit?
