Judge Won't Dismiss Antitrust Charges Against Microsoft For Breaking 3rd Party Xbox Memory Cards

from the ruh-roh-microsoft dept

You may remember back in October of last year that Microsoft publicly warned Xbox users who were using 3rd party memory cards for their Xbox that it was about to break those cards, and that users should, instead, transfer data to Microsoft's own cards. Datel, a maker of third party cards apparently sued Microsoft, claiming antitrust violations in this move, and Eric Goldman points us to the news that a magistrate judge has rejected Microsoft's request to dismiss most parts of the lawsuit. Microsoft argued that there was no antitrust violation because Xbox buyers bought the box knowing they could only buy aftermarket parts from Microsoft. Datel responded by pointing out that the warranty that made that point was only presented to the buyer after they opened the box and "therefore, a consumer could not have knowingly and voluntarily accepted it prior to purchase." After looking at a few other factors, the judge refused to dismiss the claim, noting that "shopping for competing products in the Aftermarket is not clearly precluded by any contractual provision into which customers knowingly and voluntarily entered." Datel did lose on a separate complaint, though it can amend and refile. Either way, this is good news for the aftermarket business, and it seems likely that there will be a full trial that looks at this issue. Oh, and we should note that Microsoft just recently decided to target the very same Datel in a patent infringement lawsuit. Gee, I wonder why they picked Datel... Must be part of Microsoft's belief in showing how "important [a] role IP plays in ensuring a healthy and vibrant IT ecosystem." That, or the belief in punishing companies who sue you for antitrust with more legal fees.

Filed Under: 3rd party, antitrust, memory cards, xbox
Companies: datel, microsoft

How Google's Anti-Microsoft Lobbying Effort Came Back To Bite Them

from the that-was-an-easy-one dept

Two years ago, as Microsoft was trying to buy Yahoo, we were really surprised to find Google making a proactive lobbying and marketing effort to scuttle the deal. As we noted at the time, it seemed pretty likely to come back to haunt Google. Indeed, Chris Thompson is now taking a look back and believes that Google's decision to stir the pot over the Microsoft/Yahoo deal has probably been Google's biggest blunder to date. Not only did it eventually lead to Microsoft working out a much, much better deal for itself, it directly resulted in Google getting significantly more antitrust scrutiny, both in the US and abroad. Now, some of that scrutiny likely would have come anyway eventually, but Google definitely helped call much more attention to the situation and its own market position. The whole thing made no sense. Google should have known to keep its mouth shut and watched as Microsoft and Yahoo screwed up the deal on their own.

Filed Under: antitrust, lobbying
Companies: google, microsoft, yahoo

Justice Department Decides To Break Up E-Voting Company

from the how-about-just-opening-the-source-code? dept

As was rumored at the end of last year, the US Justice Department has decided to break up Election Systems & Software (ES&S), the dominant e-voting provider in the country. You may recall that just a few months earlier, ES&S (who has a long and troubled history of inaccurate, buggy and insecure e-voting machines) had purchased the remains of Diebold's e-voting business for just $5 million. Of course, Diebold also had a long and troubled history of inaccurate, buggy and insecure e-voting machines, so the two made a perfect match. In both cases, the companies relied on security by stonewalling -- insisting that nothing was wrong, despite lots of proof to the contrary, and refusing to let third party security experts ever look at their machines. Rather than breaking up the companies, why don't the feds just require that any e-voting machine use open source software that can be tested by anyone?

Filed Under: antitrust, e-voting, justice department
Companies: diebold, es&s, premier

Apple May Anger The Antitrust Gods: Pressuring Labels To Stop Participating In Amazon Daily MP3 Deals

from the ftc-calling-on-line-3 dept

Yet more indications that Apple no longer thinks it can really compete in the marketplace. After finally going on the offensive and suing HTC over its Google Android phone implementation, apparently Apple is pressuring music labels over how they deal with competitor Amazon when it comes to music downloads. Paperbag alerts us to the news that Apple is supposedly demanding labels not participate in Amazon's successful MP3 Daily Deal promotion.

Sources say that iTunes representatives have been urging labels to rethink their participation in the Amazon promotion and that they have backed up those warnings by withdrawing marketing support for certain releases featured as Daily Deals.

In response, label executives at Capitol, Capitol Nashville and Jive recently opted against participating in Daily Deal promotions they had been considering for Corinne Bailey Rae's "The Sea," Lady Antebellum's "Need You Now" and Ke$ha's "Animal," sources say.

Apple's concern, apparently, is over Amazon scoring temporary exclusives for early sales. Given Apple's dominance of the digital sales market, you could certainly see the FTC reading this as being an antitrust violation. It will be interesting to see if this effort comes back to haunt Apple.

Filed Under: antitrust, music, promotions
Companies: amazon, apple

No, Having To Pay To Downgrade From Vista To XP Is Not An Antitrust Violation

from the that's-not-how-it-works dept

Last year we noted that while it was amusing to see a lawsuit from someone angry that they had to pay to downgrade from Vista to XP on their computer, it was hard to see how it was an antitrust violation, as the lawsuit was alleging. As we joked, perhaps that could be Microsoft's new business model: keep coming out with worse and worse operating systems, but charge people more and more to stick with the older systems. Either way, as we expected, that lawsuit didn't last long and was recently thrown out. As the court found, there was no evidence that Microsoft actually benefited from users downgrading. It seems pretty clear that Microsoft has always wanted people to sign up for its latest operating systems, and it would greatly prefer that over anyone (paying or not) downgrading to older versions. It also turned out that the "fee" the woman who brought the lawsuit paid was not to Microsoft, but to the computer manufacturer (in that case, Lenovo). In fact, the court pointed out that, technically, Microsoft gave a "free" extra operating system with the deal, since the buyer received both Vista and XP, at no additional revenue to Microsoft.

Filed Under: antitrust, downgrades, vista, xp
Companies: lenovo, microsoft

AdWords Collections Attempt By Google Mutates Into Antitrust Lawsuit

from the didn't-expect-that,-did-you.. dept

Last year, we wrote about an odd antitrust lawsuit against Google by a company named TradeComet. The lawsuit was a joke. Basically, the company was an arbitrage player that tried to create spam-like pages that people would find on Google searches, and would make money by then getting people to click on pay-per-click ad links to get where they really wanted to go. Google properly classifies sites like this as spam, and its ranking methodology punished the site accordingly. It had nothing to do with being "anti-competitive," it was just Google making sure its search results were better for users. That lawsuit is basically in a holding pattern right now, as the judge considers Google's motion to dismiss.

However, a similar lawsuit has popped up, and it's a bit strange. Eric Goldman has all the murky details, of how a shopping search engine named myTriggers apparently got a line of credit from Google and used it to buy a bunch of AdWords search ads to drive traffic to its site (and then raised money based on the resulting traffic). Once again, Google rejiggered its algorithm, and suddenly the ads for myTriggers were a lot more expensive (by one to two orders of magnitude). The company couldn't pay its bill to Google, so Google hired a local lawyer (in Ohio) and went to court to try to get myTriggers to pay the $335,000 it owed. Simple enough.

Except that myTriggers returned fire by claiming antitrust violations by Google, and even went out and hired three separate lawfirms, including (conspiracy theory time) the same law firm that represented TradeComet and which is closely connected to Microsoft. As Goldman notes:

I am struggling to make sense of myTriggers' litigation choices. Assuming myTriggers even has the money, writing a $335k check to Google (and I bet Google would have taken less!) is almost assuredly cheaper than paying three law firms to mount an antitrust assault on a $20B/year behemoth. Assuming that myTriggers wants to maximize profits, then either (1) myTriggers thinks its odds are good enough that it will win AND make enough money to pay the 7 lawyers on the counterclaim's signature page plus their teams, or (2) the law firms struck an unbelievably sweet deal on fees.

Goldman also notes that Google probably wishes it hadn't filed a claim in a local Ohio state court, as the antitrust battle might now need to be fought there, rather than in a friendlier federal court closer to home:

Whatever the case, I suspect the antitrust claims caught Google flat-footed. A simple and low-stakes collections matter has blown up into a potentially significant lawsuit in an undesirable forum. Google chose Ohio state court for the collections matter despite its AdWords contract, so now it will have a tough time extricating itself from that court. But I suspect it would rather have an antitrust case in federal court, not state court--often (but not always) federal judges are more sophisticated than state judges and less susceptible to hometown bias. And I'm sure Google would rather fight antitrust claims on one of the coasts than in the Rust Belt, especially if myTriggers argues that Google's evilness cost Ohioans jobs. Google probably didn't mean to offer battle in this venue, but someone did a really good job of seizing the opportunity and forcing Google to fight the battle in a suboptimal setting.

As with the TradeComet case, the antitrust claim from myTriggers sounds incredibly weak, and it probably should be thrown out, but given the uncertainties of it being filed in the local court, Google may have to take it a bit more seriously. And, of course, the possibility of a secret Microsoft connection makes this even more interesting. Still, I can't see this getting that far in the long run. I hope that the judge recognizes the basic weaknesses of the case: here's a company that relied entirely on a single supplier who had every right to change its policies if it felt it didn't deliver a good customer experience, and it did so. myTriggers now seems to be suing as some sort of sour grapes for its own business failings.

Filed Under: adwords, antitrust, ohio
Companies: google, microsoft, mytriggers, tradecomet

Wal-Mart, Target Trying To Block Redbox From Purchasing DVDs?

from the how-nice-of-them dept

We've described how some film studios are in a huge legal fight with Redbox over DVD rentals. While some studios have come to their senses and are happy to work with Redbox, others have been trying to pressure the company into giving it a cut of rental revenue and/or delaying when it rents newly-released movies. Those studios convinced the big distribution wholesalers to stop selling to Redbox (which seems like a pretty clear restraint of trade or antitrust issue), and in at least one case had convinced retailers not to sell to Redbox. Of course, there are ways around that as well, and we even suggested that Redbox could crowdsource its movie purchasing.

In fact, to get around the studio blocks, Redbox was apparently already purchasing 40% of its DVDs at retail locations like Target and Wal-Mart. But both retailers are now making that more difficult. They've put in place limits directly targeted at Redbox, saying they won't sell more than five DVDs at any one time to any buyer. Yes, here we have a customer willing to buy an awful lot of product -- at full retail price -- and these retailers won't let them? While they claim it's to make sure movies are available for other customers, given the earlier reports of studios specifically asking retailers to block Redbox from buying, it makes you wonder. What sort of company would tell willing customers they can't buy a product that is available and in stock?

Still, in the end I doubt those limits will be very effective. Redbox still could go with that crowdsourced concept, and get its subscribers to purchase five DVDs at a time in exchange for free rentals. Eventually, the industry is going to have to realize that fighting Redbox is a mistake.

Filed Under: antitrust, dvds, rentals, restraint of trade
Companies: redbox, target, wal-mart

Justice Department Finds No Problems With Text Message Prices

from the fair-enough dept

Every so often an article pops up here or there talking about how ridiculous text message prices are on a per-byte basis. Eventually one of those stories got politicians involved, and the Justice Department began an investigation. Thankfully, the inquiry has ended, and the Justice Department found no evidence of anything wrong. Looking at the pricing on a per-byte basis is pointless and mostly meaningless. Most people who use SMS text messages on any sort of regular basis have bulk plans included with their regular plan. The "list" prices are really a small part of the market. The fact that most of the operators raised prices is certainly not evidence alone of any kind of collusion. And if prices really get to be too ridiculous, then people will just start to move to alternatives. This seemed more like an investigation brought on for PR purposes because someone didn't like the way something was priced.

Filed Under: antitrust, text messages
Companies: doj

US Court Brings Back Price Fixing Lawsuit Against Major Record Labels

from the all-priced-the-same? dept

For many years, we've wondered why the major labels haven't gotten in trouble for what appears to be clear price fixing -- having all of the major labels band together to both demand identical wholesale pricing and attempt to dictate retail pricing by partners as well. There have been various investigations by both local and federal officials, along with a few lawsuits -- but nothing has really gone very far. One lawsuit was tossed out by the district court back in 2008, but in a surprising move, the 2nd circuit appeals court has revived the lawsuit, claiming that the evidence is "sufficient to plausibly suggest" price fixing by the major labels with regards to digital music. So now it goes back to the lower court. I still doubt this will really have much of an impact, but it's nice to see some recognition of what's seemed pretty obvious for quite some time.

Filed Under: antitrust, price fixing, record labels
Companies: emi, sony music, time warner, universal music, vivendi, warner music group

Judge Says No Antitrust Violation In Hollywood Killing RealDVD

from the it's-just-a-mad-power-grab-by-paranoid-delusionals dept

In the ongoing saga of Hollywood's bizarre and self-defeating attack on RealNetworks for its RealDVD offering, a judge has dismissed Real's countersuit claiming antitrust violations by the Hollywood studios in effectively creating a cartel that controls the encryption on DVDs and refusing to license it to Real for the purpose of its DVD backup solution. The court basically said that there is no harm to Real caused by any actions of the Hollywood studios, because the real "harm" is in the fact that it created an infringing product in RealDVD.

This reasoning isn't surprising given the earlier rulings in this case, but is no less ridiculous when looked at in context (and with any bit of common sense). Remember, the product in question does not allow for anyone to make a bunch of copies and pass them along. It allows you to make a single backup copy for personal use -- a use that has been found to be perfectly fair use for software and music. It makes little sense that the law did not intend for movies to be backed up in this manner as well. The only reason this is stopped is because of the bogus DRM that the studios put on DVDs, known as CSS. This has been widely broken and does absolutely nothing whatsoever to stop copying of DVDs. The only thing that CSS serves to do these days is act as a tool for the Hollywood studios to team up to prevent products like RealDVD, because they can use the DMCA's anti-circumvention rule to claim that products like that circumvent the broken DRM they use. And, even if it's for a legal backup that can't be copied again (i.e., like RealDVD, it puts new DRM on top of it), suddenly it's "infringing" thanks to the DRM. In other words, the only purpose CSS serves is for the Hollywood studios to have full veto control over any software product that wants to be marketed legitimately, rather than underground. Under almost any definition of antitrust, it's difficult to see why this is not an antitrust violation. It's the major companies in a market, putting in place a tool whose sole purpose is to block others from offering up products.

Of course, the whole lawsuit and this whole charade is incredibly self-defeating for the studios anyway. Because now, instead of having a product on the market that limits what kind of copies people can make, instead, people who want to back up their DVDs simply get one of the long list of underground products out there that will let you rip your DVDs with no limitations whatsoever. It's simply stunning that the studios think it makes sense to drive users to such a solution. The only possible way it makes sense is if you put on your "studio thinking cap" and realize that the studios, in their infinite wisdom, think that they can ship these special -- much more expensive -- dual layered DVDs that have a DRM'd-up digital copy included. But, again, this should raise an antitrust flag, in that the studios are killing off the RealDVD product to try to protect their own sales of these DVDs with the silly Digital Copy technology. But, instead, many users are simply using the underground technology that doesn't cost them anything and gives them much more value.

Filed Under: antitrust, competition, copyright, css, dvds, realdvd
Companies: mpaa, realnetworks