TV Broadcasters Suing Songwriters' Org SESAC Over Pricing Power

from the tug-o'-war dept

Missed this one when it first came out, but Copycense points us to the news that TV broadcasters have sued SESAC, one of the collections agencies for songwriters and composers (the smallest, after ASCAP and BMI), claiming that SESAC is violating antitrust laws in how it prices music used in television shows -- especially for syndicated shows. The details are really quite fascinating. Local stations quite often run syndicated shows (such as sitcom reruns). When they buy the rights to run those syndicated shows, the package includes all of the related copyrights except for performance rights for any of the music included. Those have to be purchased separately by the broadcasters themselves. Now, for SESAC, representing the songwriters, this presents a golden opportunity. It's the only thing standing between the broadcaster and being able to show the syndicated shows -- and thus, it can ask for extremely high prices, or -- more commonly -- pressure the broadcasters into a high-priced "blanket license." Since the broadcasters can't change out the music (it's in the shows already), they generally have no choice but to go along. So, the argument goes, SESAC effectively has a monopoly position, and is abusing it.

Of course, the real "monopoly" here is copyright. At a quick glance, it certainly looks like SESAC is doing exactly what copyright allows -- but the structure of licensing for syndicated TV content allows SESAC to make life difficult for the broadcasters. So, I'm not really sure SESAC should really be faulted here, as it seems to be doing exactly what it was enabled to do thanks to overly broad copyright laws. At the same time, it also makes you wonder why the broadcasters don't go back to the TV program owners themselves and demand that they bundle the music performance rights as well, since there's more negotiating power there. So, while it does seem unfair for the broadcasters as the market is currently structured, I'm not sure it's an antitrust violation on SESAC's part. More a problem with how the industry licenses are set up, combined with copyright being way too broad in such situations.

There's also a separate interesting element to this lawsuit -- which is why it's SESAC being sued rather than ASCAP and BMI. ASCAP and BMI are both already limited due to previous antitrust fights and consent decrees against them, whereas SESAC has been more or less free to act this way. Either way, it's yet another lawsuit concerning aggressive use of copyright to try to demand as much money as possible, even for music that is a small part of an overall presentation of content.

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Why Is NY, Not The FTC Or DOJ, Filing Antitrust Claims Against Intel?

from the grandstanding dept

I have no idea if Intel is really guilty of antitrust violations or not at this point -- though, considering the fact that its products keep getting faster and cheaper, it's not as if there's been some obvious huge monopoly rents handed out somewhere. However, I do find it quite odd that it's Andrew Cuomo, NY's Attorney General, filing antitrust charges against the company, rather than the federal government. The DOJ and the FTC have been investigating Intel for a while, and haven't yet filed charges. Europe has -- but Europe seems to do that against any successful American tech company eventually, as the European standard for "antitrust" often appears to be "big successful American company" rather than any proof of antitrust behavior. To have Cuomo file such a case just seems misplaced. What does it have to do with New York? Given Andrew Cuomo's rather long history of silly grandstanding to bully companies for the sake of getting his own name in the headlines, rather than any actual legal basis, it feels like more of the same. Pick a big target, don't worry about the legal specifics, but get headlines to build up the name of Andrew Cuomo. It's pretty sad that Cuomo seems to keep attacking innovative tech companies solely for the sake of building up his own political reputation. Tangling up innovation in pointless lawsuits doesn't help the economy in the slightest.

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Looking At The Redbox Antitrust Fight

from the is-it-an-antitrust-issue-or-not? dept

Law.com has a nice article detailing the legal issues involved in the battles between Redbox and the various movie studios. The main question is whether or not it's an antitrust violation on the part of the studios to block distributors, wholesalers and retailers from selling DVDs to Redbox. The studios want (a) a revenue share from Redbox (b) Redbox not to offer new release DVD movies for rental and (c) Redbox not to sell used DVDs. The reasons are pretty obvious: Redbox is a much more competitive offering. Since it's a lot less labor intensive, it's able to offer the DVDs for much less (both rental and sale), and the movie studios are freaking out, because in their minds, their old revenue streams should never be allowed to decrease.

The statements from the studios on the dispute is incredibly disingenuous:

"The real complaint is Fox won't sell DVDs to Redbox on the terms Redbox demands, and that is not in our view an antitrust violation," said Watson, an antitrust expert who has teamed with Yosef Riemer, a litigation partner in Kirkland & Ellis' New York office, in representing Fox, part of News Corp.'s Fox Filmed Entertainment. "There's nothing in the law, antitrust or otherwise, that says a seller must sell its product at the price that the buyer demands on the date the buyer demands and through the distribution channel that the buyer demands."

Indeed, Watson is correct that no seller needs to offer the product at the price the buyer demands, but that's not what's being disputed here at all. Clearly, prior to Fox and some of the other studios throwing their hissy fit, the distributors had no problem selling DVDs to Redbox at the prices Redbox thought were reasonable. The studios sold the movies to the distributors at the usual price, and the distributors sold them to Redbox at the usual price. Everyone should be happy.

But... what happened now is that these studios (Fox, Universal and Warner Bros.) told not just the distributors (Ingram and Video Product Distribution) but also retailers like Best Buy and Wal-Mart to not sell to Redbox. That's restraint of trade. The studios have every right not to sell videos to whomever they want -- but those distributors and retailers can then sell to whomever they want. The studios should have no say in the downstream sales of the videos once they've been sold to the distributor, wholesaler or retailer. That's where the antitrust issue is. The studios are successfully controlling downstream sales.

The studios are either being disingenuous or are just playing dumb when they claim that there's no antitrust violation because end users can still rent movies from Blockbuster or Netflix. But, that's defining the wrong "user" for the market in question. The market is in being able to buy from the distributor/wholesaler, and the "customer" is a retailer like Redbox. And these studios have stopped that customer from being able to make a perfectly legitimate purchase. That's the antitrust issue, and it's amazing that the studios think anyone will believe their false market definition or this bizarre claim that this about Redbox demanding some special price. It's not. Hopefully the judge recognizes that and doesn't fall for the studios simply making stuff up.

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Complaints Against Google Book Scanning Project Reach Ridiculous Levels

from the did-you-really-just-say-that? dept

There's a tremendous amount of opposition to Google's "settlement" with authors and publishers over its book scanning project. I'm on the record as being very much against the settlement, but for very different reasons than most people. Frankly, I think Google's book scanning project is an incredibly useful and culturally valuable project, that will help expand culture and knowledge sharing. It's a way to not just preserve culture, but to share it. I can't see how that's a bad thing. In effect it's really no different than Google's search engine in how it works. It's basically building a giant index so that people can search on it, and be pointed to the results that they want. Think of it as the most effective and useful card catalog you could ever have. Did people think the library card catalog violated book copyrights? Of course not...

So my main complaint with the "settlement" is why it's needed at all. Google had a strong fair use case in how it was running the book scanning project, and I saw no reason to cave. In caving, it's only set up plenty of other copyright battles -- with music companies, the press, video companies and more -- all demanding their share of Google's profits, for no reason other than that Google has scanned their works and points more people to it. There are, certainly, other objectionable parts to the settlement, but my main objection is the idea that it's even needed at all.

However, many others are objecting to the settlement for a series of increasingly ridiculous reasons, that make little sense. Gary Reback, the famed anti-trust lawyer who helped bring the antitrust lawsuit against Microsoft a decade ago, is working with the Open Book Alliance -- a group that most certainly has admirable goals in terms of its own book scanning project, but which is clearly complaining about the "settlement" because it will give Google a leg up over its own efforts. Reback's filing over the matter makes the claim that that the agreement represents an antitrust issue:

"Google could never have achieved through free-market competition the dominant position in digital books it seeks through the proposed settlement," reads Reback's filing. "Unwilling to compete for share in the open market, Google chose instead to use court process to achieve dominance."

Really? As Danny Sullivan points out, despite Reback's claims, Google's dominant position in the digital book market was achieved via free market competition. To claim that it couldn't have been is simply wrong. It's then flat out misleading to suggest that Google "chose to use court process to achieve dominance" because it wasn't Google that used the process. Remember, it was the Authors Guild and various publishers who sued Google.

Next up, we have the Europeans, who are complaining about the Google book settlement as well. This is hardly a surprise. After all, it's been nearly five years since officials in France declared Google's book scanning project a threat to national French culture, and then got together with other European governments to dump billions of dollars into a ill-defined "competitor" that has produced little of consequence (and, indeed, seemed to have no direction). The competitor has been so useless that the French National Library -- whose boss first raised the alarm about the book scanning project five years ago -- has thrown in the towel and signed a deal with Google to allow the company to scan its books.

So, what's their complaint? Well, it's the same old complaint, that Google's book scanning project is somehow a threat to their culture:

European officials fear that if the Google project goes ahead in the US, a yawning transatlantic gap will open up in education and research.

James Boyle unleashes his wit in response:

"Oh my God! The Americans are about to create a private workaround of the enormous mess that we regulators have made of national copyright policy! They will fix the unholy legal screwups that leave most of 20th century culture books unavailable, yet still under copyright! They will gain access to their cultural heritage -- giving them a huge competitive advantage in education. This MUST BE STOPPED!! No one can be allowed to fix this for any other country because then we would be left alone stewing in our own intellectual property stupidity! We must forbid their progress in order to protect our ignorance."

Again, the settlement deal has tons of problems, and I still can't see how it's necessary or how it helps -- but many of the complaints about it are simply ridiculous.

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How Do You Claim Antitrust Against Someone Who Has A Smaller Marketshare?

from the ah,-the-internets dept

Last week, we noted that Italian investigators were looking into Google News for alleged antitrust violations in not telling newspapers how it ranks stories. As ridiculous as that assertion is in the first place, it looks even more ridiculous when you realize (as Erick Schonfeld figured out) that Google News is actually a much smaller presence online than Italy's two largest newspapers online. It makes you wonder how you claim an antitrust violation against someone, when your own marketshare is larger and you control the established brand names in the market.

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Italian Newspapers Get Gov't To Investigate Google For Not Sharing Ranking Secret Sauce

from the seriously-delusional dept

A bunch of folks have been sending in the news that Italian regulators have begun an investigation into Google, at the request of some Italian newspapers. The complaint is a typical one from newspapers who seem slightly clueless about how Google works. They say that Google News is unfair -- even though they can opt-out, but don't. The newspapers falsely claim that if they opt-out of Google News, they also have to opt-out of Google Search. That's simply untrue. But even if it were true, I'm not sure what the point would be. Getting traffic is a good thing. It's unclear why Italian newspapers (or any newspapers) don't like it.

In fact, the whole idea that Google News is unfair for sending traffic is undermined by the other complaint from the newspapers: that Google doesn't reveal how it ranks stories:

Because Google does not disclose the criteria for ranking news articles or search results, he said, newspapers are unable to hone their content to try to earn more revenue from online advertising.

Of course, that's silly. First, plenty of people have figured out how to optimize for Google -- there's a whole industry called SEO that does that. That doesn't mean that Google needs to reveal the secret sauce. But the best response to the demand for Google to reveal how it ranks stories comes from Danny Sullivan, who turns the story around, and wonders how newspaper would feel in the other direction:

No newspaper editor of any quality would allow an external interest to walk into their newsroom and demand to know exactly how to guarantee a front page article about whatever they want. But that's what the Italian papers seem to desire. Google has an editorial process for producing rankings, one that's done using automation -- but the papers seem to want to bypass those editorial decisions.

Exactly. The newspapers are basically demanding that their stories get ranked higher, but how would newspaper editors feel about the subjects of stories in the paper demanding that their stories be on the front page. After all, being on the front page would get the subject of a story more attention, and the newspaper isn't paying those subjects -- so the newspaper is "getting all the value." -- at least according to newspaper logic.

Sullivan also does a good job highlighting how useless it would be if the newspapers did get the details on how Google ranks stuff, because then everyone would just start writing stories to get to the top of the list, and any "advantage" would be lost. Separate from that, shouldn't we be just a bit troubled to find out that the newspapers are interested in figuring out how to write stories that top Google, rather than writing stories to better inform the populace?

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EU Antitrust Regulator Scolded For Simply Ignoring Evidence In Intel's Favor

from the well-that's-convenient dept

It's no secret that we think that EU antitrust regulators are way too aggressive in pursuing antitrust claims against US tech companies. The EU continues to view market size as a problem, rather than looking as closely at actual anticompetitive behavior. And, now, it's coming out that the EU's antitrust regulators may be so overzealous to take down companies that they'll ignore evidence that goes against their hypothesis. The EU's ombudsman has apparently issued a report scolding EU antitrust regulators for flat-out ignoring evidence from a Dell executive concerning Intel and AMD. The EU, as you probably know, fined Intel €1 billion a few months back, finding that the company had abused monopoly powers to force hardware makers into using its chips. But, the EU's ombud discovered that the antitrust regulators had interviewed Dell execs who said simply that AMD's chips didn't have the performance of Intel chips. In fact, in their tests, AMD's chips were "very poor," so they chose Intel chips entirely on the basis of performance. And... conveniently, the EU's antitrust regulators simply failed to record this info and did not include it in their report. Of course, you can make anyone appear to have violated antitrust rules if you purposely ignore all evidence to the contrary.

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Rep. Lofgren: A Real Antitrust Issue That Needs Scrutiny Is Copyright

from the about-time... dept

We talk here quite frequently about the fact that copyright (and patents) are gov't granted monopolies, and should be watched carefully because of that. Historically, economically speaking, gov't granted monopolies are bad for innovation and the economy. However, over the last few decades, there's been a big push by those who benefit from monopoly rents to try to redefine them as "intellectual property" rather than the more accurate description as a gov't granted monopoly. For the most part, our elected officials have bought into that language shift. Could that finally be changing back to a recognition that copyrights are monopolies and deserve the same scrutiny as any other economic monopoly? Today we saw a small move in that direction with a Congressional Rep admitting that copyrights are a monopoly and deserve scrutiny from the Judicial Dept. for that very reason.

I'm at the always-excellent State of the Net West event today, and the second discussion is about Antitrust in the Internet Era, and the discussion was introduced and led by Congresswoman Zoe Lofgren, who had a number of surprising (in a good way) remarks. On traditional antitrust issues, she's worried that antitrust actions aren't being used to stop anti-competitive behavior but for anti-competitive purposes. She notes that many in Congress don't really understand the purpose and reasoning behind antitrust and assume that dominance or marketshare automatically means there's an antitrust problem. And, of course, there is the problem of regulatory capture. So, she notes that you'll see elected officials basically read out talking points on antitrust issues from competitors -- rather than actually looking at whether or not there's real harm to the market. So, she suggests that the framework for antitrust issues should be looking at innovation and whether or not that's happening or is being hindered. Of course, the cynical out there (you know who you are) might suggest that these sound sorta like Google's talking points... Either way, she says she's trying to set up a seminar for the Judiciary Committee about antitrust, to get them better educated about the real issues related to antitrust, and that seems like a good thing.

However, much more interesting and unexpected were her brief comments at the end of her remarks, where she took on copyright, noting that it is a gov't granted monopoly that deserves antitrust scrutiny. She said, "Let's face it, copyright extension these days is 'limited' to the life of Mickey Mouse." And yes, there was sarcasm in her voice over the word "limited." The guy sitting next to me who works at Disney started shuffling uncomfortably.... Lofgren went on to say that copyright is being used to put up barriers to competition and innovation and is an issue that antitrust regulators really should be scrutinizing. This is really surprising, but really good to hear. Lofgren has been one of the (very) few elected officials who actually does "get" copyright issues, but this is the first time I've heard any elected official recognize that copyright is a monopoly/antitrust issue that deserves serious scrutiny for the way it's so frequently abused for anticompetitive purposes.

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Looking Back At The Microsoft Antitrust Suit: Did It Matter?

from the probably-not... dept

We've argued before that the antitrust lawsuit against Microsoft was misguided (though, I'll admit that I was in the camp that thought it made sense at the time, before realizing that was a mistake). The fact that the EU continues to go after Microsoft on antitrust issues seems even more silly. Farhad Manjoo has an article in Slate, officially about why it doesn't make sense to go after Google on antitrust charges, but with most of it detailing why Microsoft wasn't really an antitrust problem:

Many of Microsoft's assets turned out not to matter, because upstarts like Google and old foes like Apple found ways to innovate around them.

Indeed, in many ways Microsoft's size was a liability, not an asset. This is the classic innovator's dilemma; the company was so intent on protecting its cash cows--it derives most of its revenue from two products, Windows and Office--that it was blind to opportunities in new markets. Microsoft couldn't make a Web e-mail system like Gmail, because that would have threatened Outlook. And why should Microsoft bother with free online word processing apps when Office was doing so well? When journalist Steven Levy showed Bill Gates the first iPod, Gates' first reaction was, "It's only for Macintosh?" Gates saw the iPod through the lens of desktop computers; if the iPod connected only to Macs, it didn't pose a threat to Microsoft. What he didn't figure out was that the iPod would herald the iTunes Store, allowing Apple to become not only the most influential entertainment company in the world, but also the dominant software maker for mobile devices. Yes, the first iPod didn't work on Windows. In time, it would help render Windows irrelevant.

Indeed. This is a point that we've raised often before. Underdogs beat out big companies all the time, by changing the rules completely. When we talk patents, we hear people insisting that small inventors can't succeed because big companies will just "steal" their idea, but the simple fact is: if that big company recognizes the value in your idea, then you probably weren't going to succeed in the first place. The real innovators get responses like Gates' above to the iPhone. They come from so far out of left-field that the "big companies" don't see them coming (at all), even when they're right beneath their noses.

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Newspapers' Plan For Survival: Charge Money, Beat Up On Craigslist And Keep Repeating To Ourselves That We're Needed

from the good-luck-with-that dept

There's been plenty of coverage about the potentially antitrust-violating meeting of newspaper execs in Chicago recently, and late last week reports came out about some of the recommendations put forth by the American Press Institute at that meeting. The API apparently handed out two whitepapers, both of which are amusing, only in that someone actually thinks they're useful. The first was effectively saying: "Craigslist really sucks, so let's try to beat up on Craigslist." The second, more thorough whitepaper, rehashes a bunch of debunked ideas about how newspapers should lock up their content in order to charge for it, including such gems as: "Establish that news content online has value by charging for it." Apparently someone at the API is unfamiliar with the difference between price and value. You don't establish value by putting a price on things. You are able to put a higher price on things by creating scarce value. But the industry isn't looking to do that. It's looking to pretend its content has value, by locking it up. Unfortunately for the newspapers (but good for everyone else), economics doesn't work that way.

Apparently part of the plan to get around anti-trust issues is to create an intermediary, sort of like an ASCAP for the newspaper industry, which suggests a near total misunderstanding of the differences between news and music -- but if that's where the industry wants to go, why not let them and watch smarter business folks mop up the mess for profit.

In the meantime, an absolutely fantastic teardown of the API's whitepapers comes from John Temple, the former editor, president and publisher of the now defunct Rocky Mountain News. If anyone were susceptible to the backwards looking "let's try to recreate the way things were" argument, you would think it would be him. But, instead, he responds to the API's reports by describing just how backwards looking it is and why it should scare anyone in the news business:

Imagine you're a young business school graduate trying to decide where you want to start your career. (OK, I know there are no jobs, but imagine it anyway.) You attend a newspaper industry summit and hear one of the big ideas from an organization at the heart of this world is to compete with Craigslist. What do you think you would think? Talk about an industry looking in the rear view mirror. Isn't that an idea that might have had legs, oh, maybe five years ago? How could it represent in the eyes of that young business school graduate any kind of exciting opportunity today? The advice boils down to, "Let's win back our business from the guy who's eating our lunch." How is the newspaper industry going to attract any of the best and brightest into its ranks if its ideas are stale, at best?

What might even be more troubling about this proposal is how newspaper people seemed to denigrate the Craigslist brand, when all they need to do is talk to people -- including in their own buildings -- to find out that most of those who've used the site seem to genuinely value it. Why? Because it gets results and it's free.

Temple also points out two big problems with the API's suggestions. The first is that it's suddenly trying to get people to pay for what they're used to getting for free -- without adding any additional value worth paying for. And, the second (though related) is that they're not actually looking to do anything really new or unique to embrace what the internet enables. While plenty of other websites and services are embracing the technological power of the internet, the best this report suggests is "people who work at newspapers should start experimenting with social networks":

Of course leaders should always be learning. That's a given. But are they serious? Isn't this a little late? If newspaper industry leaders aren't doing this already, do they really belong in their positions? Why should shareholders pay executives to learn all they can when they should be able to find ones who already know what they're doing? If people need advice like this, should they be running newspaper companies?

All in all, the meeting itself, and the recommendations from the API certainly show an industry that's not looking to compete or add value. It's looking for ways to rebuild the walls that let it exist without competition in the past. It's a recipe for suicide.

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Appeals Court Brings Back Lawsuit Over Possible Antitrust Violations Over .com Registry

from the this-could-get-interesting dept

For a long time, there have been accusations of questionable sweetheart deals by ICANN and whoever got to manage certain top level domains -- with no controversy bigger than the question of why VeriSign got to retain the .com and .net registries, and raise prices on it, without any opportunity for other providers to bid on the business (for the .com registry at least -- there was bidding on .net). There were also complaints about a secondary market for "used domains" that VeriSign was setting up. A non-profit group had sued VeriSign, saying that these were antitrust violations, but the district court had thrown out the case, saying that the group, called the Coalition for ICANN Transparency, failed to properly state its case (despite having an opportunity to amend the original filing). However, an appeals court has reversed the lower court, and will allow the lawsuit to proceed, which could mean problems for VeriSign (and potentially cheaper domain name registrations).

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Is It An Antitrust Violation To Agree Not To Poach Employees From Competitors?

from the not-entirely-clear dept

The news broke this week that a bunch of big name Silicon Valley companies are under investigation by the Justice Department for their hiring practices and potential antitrust concerns. The specific issue appears to be that the companies may have agreed to not try to poach top execs from certain companies. Apparently there was nothing stopping the employee from getting a job at one of these companies, if they took the initiative -- but the companies wouldn't initiate the attempt. In most cases, the idea was not to poach from partners -- which might just be good business sense (pissing off partners generally isn't a good idea). Where it gets tricky is the accusation that some companies had written agreements not to poach, which could lead to some charges of collusion. Oddly, the NY Times article's title claims that the issue is "unwritten rules" when the details of the article suggest it's not the unwritten, but the written rules that are the problem. There have been studies that suggest that root of Silicon Valley's success was the easy movement of people from job to job -- so if it's true that companies are holding back trying to get the best employees to move around, they may actually be doing a lot more harm to themselves anyway. And, on the whole, it does seem like there's an awful lot of movement between big name companies. Just this week at the Conversational Marketing Summit, one of the speakers had a musical chairs presentation that went on for a long time showing a bunch of execs and how they played musical chairs between Yahoo, Google, Microsoft, AOL, News Corp. and Facebook.

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Newspapers Gather In Secret (With An Antitrust Lawyer) To Collude Over Paywalls

from the good-luck dept

You may have noticed a bunch of stories recently about how newspapers should get an antitrust exemption to allow them to collude -- working together to all put in place a paywall at the same time. That hasn't gone anywhere, so apparently the newspapers decided to just go ahead and try to get together quietly themselves without letting anyone know. But, of course, you don't get a bunch of newspaper execs together without someone either noticing or leaking the news... so it got out. And then the newspapers admitted it with a carefully worded statement about how they got together "to discuss how best to support and preserve the traditions of newsgathering that will serve the American public." And, yes, they apparently had an antitrust lawyer or two involved.

In the end, though, it won't matter. If a bunch of newspapers decide to lock up their content, they will only be digging their own graves. Smart newspaper execs will stay away and get all of the traffic. The wire services that compete with the Associated Press (such as Reuters, and CNN's new wire service) would be well served to put out a press release now hyping up the fact that their content is free. Other, smaller providers of news should trumpet how much they want people to come to them for news instead of paying, and then watch in amusement as the newspapers (whether it's an antitrust violation or not) discover both their advertising and their subscription money disappear.

Whether it's antitrust or not, it sure looks like collective suicide.

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RealNetworks Ups The Ante; Wants To Add Antitrust Charges Against The MPAA

from the your-move dept

With the lawsuit between the movie studios and RealNetworks off to an inauspicious start, it looks like RealNetworks decided to pull out the nuclear option: it's trying to add anti-trust charges against the movie studios to the case. The company claims it's come across evidence that the studios colluded to boycott RealNetworks and its attempt to let people back up their legally obtained movies. It would be interesting to know the details behind the evidence, as it could make the case a lot more exciting pretty quickly.

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Are Microsoft's Limitations On Netbooks Running XP Antitrust Violations?

from the not-really... dept

Michael Scott points us to someone asking how come the limitations that Microsoft puts on computer vendors who are selling netbooks with XP installed don't constitute an antitrust violation. I'm sure others may differ, but I can't quite see where the antitrust violation would be here. First, there are alternatives. Linux-based netbooks are still decently popular, so if Microsoft's limits were a real problem, then there are other ways to go. Second, I would imagine that someone could buy XP through third parties and install it on any machine they want. It's just that if they want to get a wholesale deal directly from Microsoft, the company puts certain limitations on it. So I don't see it as an antitrust issue.

That said... I have to admit that I don't understand why Microsoft puts these limitations on netbooks that run XP. My guess is that it's because they really, really, really want to move people off of XP and onto Vista (or Windows 7 eventually), and they're afraid that if they let more powerful netbooks run XP, that they'll start to become full laptop replacements -- and Microsoft's grand strategy of moving customers to the latest and greatest will stall out. However, that seems hard to support. It makes little sense to try to limit customers -- especially those who really want to buy your product. If Microsoft XP makes a computer more valuable to someone, why limit that choice?

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Apparently Google's Lawyers Were Prepped For Google/Apple Antitrust Inquiry

from the just-look-at-our-website dept

With the (not particularly surprising) news coming out that the FTC was looking at the relationship between Apple and Google (specifically the ties between the Board of Directors of both companies), John Paczkowski noticed that Google's outside law firm (full disclosure: it's our outside law firm as well, though it's a big, big law firm), Wilson Sonsini Goodrich and Rosati had not only already prepared a presentation on the issue but had posted it to its website. Soon after noticing it, WSGR pulled down the presentation. So Paczkowski pointed to the Google cache of it... only to see that disappear quickly as well. Amusingly, Danny Sullivan noted that it's still available in Microsoft's cache. Either way, it seems like Google should be quite prepared for the issue, though Eric Schmidt's initial responses to questions about it don't seem very reassuring. You would think that he would have thought through a slightly more nuanced answer than saying that he hadn't even considered leaving Apple's board. Either way, it seems pretty clear that Google is going to spend an awful lot of time in the antitrust spotlight -- justified or not -- over the next few years, and the company better get used to it.

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Attorney General Says He'd Adjust Antitrust Policy To Save Newspapers

from the right-answer,-wrong-question dept

Attorney General Eric Holder has now said that he's open to adjusting antitrust policy to help save newspapers. This is a bit startling, for a variety of reasons, some of which are good, and some are very bad. First, the entire point of antitrust legislation isn't about saving "industries," but about protecting consumers and the economy from harm. There are times when creative destruction is a good thing, and adjusting antitrust powers to protect an industry being destroyed would be bad. That said, I actually tend to agree that antitrust claims are invoked way too often, and usually in situations where there's really no monopolistic behavior or no real problem.

Specifically, what Holder seems to be referring to is whether or not newspapers should be able to own other media properties, such as TV or radio stations. The whole media ownership debate is silly. The rules against "media consolidation" were designed for an era when all your media came from a very small number of official sources. These days, thanks to the internet, people have significantly more media choices than they've ever had before, and more new ones seem to be springing up every single day. Worrying about media consolidation such as that is quite silly. So, if Holder is willing to dump those rules as being outdated and useless, that's great.

But that's not what he's actually saying. He's saying that he'd adjust the rules to save newspapers:

"I think it's important for this nation to maintain a healthy newspaper industry. So to the extent that we have to look at our enforcement policies and conform them to the realities that that industry faces, that's something that I'm going to be willing to do.... I think that we need to have a healthy, vibrant newspaper industry, and I don't mean just online."

Now that's a problem. He's singling out a specific product -- the newspaper -- rather than the actual benefit -- good journalism. In other words, he's saying that the government should be picking journalism winners (the newspaper over alternatives) rather than letting the market decide. To me, that's troubling. It also suggests that he could conceivably be open to even more ridiculous proposals, such as letting all of the top news properties collude. As AG, Holder shouldn't be looking to prop up specific businesses or products.

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AT&T Didn't Violate Antitrust Laws In Wholesale DSL Pricing

from the really? dept

Well, this is certainly interesting. Just as the US government seems to be hinting at the possibility of declaring Google a monopoly, the Supreme Court has overturned a lower court ruling on whether or not AT&T violated antitrust laws in pricing its wholesale DSL lines at a price above its retail rates (i.e., other DSL providers could resell AT&T DSL lines, but they would have to price them significantly higher than AT&T or lose money). The Supreme Court has now said that it's not an antitrust violation to have priced line sharing in this manner.

I can certainly see the arguments for both sides in this ruling. In theory, AT&T should have the right to price its offerings wherever it wants. But, that ignores that AT&T does have a monopoly in terms of government granted rights-of-way and subsidies, such that no other provider can realistically compete without similar government benefits. This isn't because AT&T grew into a monopoly, but because the government granted them those rights and subsidies. In the end, though, as much as I think we should encourage competition via line sharing, I think the Supreme Court made the right decision, in realizing that this isn't an antitrust issue, but a regulatory issue. When the gov't granted AT&T rights of way and subsidies, it could have (and probably should have) extracted certain requirements concerning line sharing. In not doing so, it implicitly allowed AT&T to price such line sharing at whatever ridiculous rates AT&T wanted. The solution isn't via an antitrust lawsuit as it is in making sure that granting such rights of way and subsidies comes with reasonable line sharing rules.

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Google, Too, Chooses Lobbying Over Competing

from the is-that-so-googley? dept

Microsoft's increasing regulatory headache from the European Commission concerns its Internet Explorer browser that comes standard with Windows. We've said before that this investigation is prima facie silly given the vibrant and increasing competition in the browser market, but it looks like things are just going to get worse for Microsoft. First, it was Mozilla deciding to complain that Microsoft was creating an unhealthy browser market by bundling IE with Windows. Now, Google is jumping onto the bandwagon and arguing that Microsoft's policy limits competition and harms innovation.

This is primarily problematic because the browser market is anything but uncompetitive. Firefox has created what is widely considered a better product, and, wouldn't you know it, gained considerable market share around the world (as high as 30% in some regions). More recently, Google introduced its own browser, Chrome, that launched to accolades and much user adoption. By introducing regulators into the browser market, these companies will all be distracted from providing users with the best possible product.

But what's even more confounding is Google's involvement. Obviously the company desires control of most browsers so it can set the defaults in its favor, but it is increasingly obvious that Google should not be bringing regulatory attention to the Internet -- especially when it comes to antitrust questions. Although claims of Google's "monopoly" are as specious as Internet Explorer's, making noise about antitrust is likely to come back and bite Google, especially given the rising number of political enemies they have.

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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New Antitrust Boss Has Already Expressed Concerns About Google

from the so-much-for-eric-schmidt's-relationship... dept

There have been some folks in the press who have repeatedly pointed out Google CEO Eric Schmidt's close relationship with President Obama to suggest that Google should be "protected" from government regulation. However, there's little to suggest that's necessarily the case. Plenty of folks who feel strongly anti-Google have close relationships with the administration as well. And, as Bloomberg notes, Obama's nominee for antitrust chief, Christine Varney, has recently described Google as a likely antitrust problem, noting the company "has acquired a monopoly in Internet online advertising." Of course, that's wrong on many levels (it doesn't have anything close to a monopoly in online ads), but this should at least serve as evidence that reports of Google's "control" over the administration isn't nearly as strong as some have been suggesting.

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