If Text Messaging Is Too Expensive, Why Are More And More People Using It?

from the trumped-up-controversy dept

Earlier this week, the chairman of the U.S. Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, Senator Herb Kohl, made a bunch of news for questioning why text message rates have become so high. He implies that because the number of national wireless carriers has shrunk from six to four thanks to mergers, that the four major carriers have too much market power. That sounds great, but is highly misleading -- as evidenced by a new report that notes that the number of text messages being sent is growing rapidly. If the price were such a huge problem, wouldn't that not be the case?

Part of the problem is that the Senator seems to only be looking at the a la carte pricing for text messaging. However, these days, most folks who use text messaging on a regular basis have signed up for some sort of bulk texting plan, that allows them to send hundreds of messages for a set price. The a la carte text message pricing is really only for those who rarely, if ever, use text messaging. Furthermore, if the mobile operators really are constraining the market and push things too far by driving the price even higher, then there are many alternatives that will quickly show up. As we've discussed in the past, it's only a matter of time until other options for messaging become popular on phones, such as instant messaging clients -- which can provide service for free. Once again, it seems like the gov't is stepping in and complaining where there's no real problem.

Filed Under: antitrust, herb kohl, text messaging

Is The Justice Dep't Really Thinking About Going After All Of Google's Business On Antitrust?

from the political-extortion dept

We've been somewhat confused by the talk of an antitrust action against Google for its ad deal with Yahoo (which doesn't seem likely to raise prices despite what critics say). However, it's become increasingly clear that the gov't is very likely going to move ahead with this. As we already noted, the Justice Dep't has already hired a well-known outside attorney to lead the charge. It seems unlikely that they would do that if they weren't planning to make a big splash. Plus, news is spreading that the Justice Department is already sharing info on its case with California's Attorney General and potentially other state Attorneys General as well.

Now comes the news that the Justice Department isn't just thinking about stopping the ad deal between Yahoo and Google, but in going after Google in general as a monopolist. This is positively ridiculous, and is clearly politically motivated and funded by companies who simply don't like Google. Yet, nowhere has there been any evidence that Google's size has been used to abuse pricing power or to make things more expensive for consumers. Rather, almost everything it's done has been to make things easier or cheaper for consumers.

Unfortunately, it appears that in this politically motivated world, where Google didn't "play the game," a bunch of politicians and Justice Department officials want to charge Google with the crime of "being too successful." Honestly, that's about all they seem likely to have on the company, because it's hard to see how it's abused its monopoly power in a way that actually harms consumers or prevents competition from entering the market.

Filed Under: antitrust, justice department, monopolies, politics, search
Companies: google

Will A Google/Yahoo Ad Deal Really Impact Ad Prices?

from the not-so-clear dept

The Association of National Advertisers (ANA) has sent a letter to the Justice Department opposing Yahoo's plan to hand much of its search advertising over to Google. We've already explained some reasons why this combination shouldn't set off antitrust alarms, but the reasons given by the ANA don't make much sense. It claims that the deal would basically mean that one company would control 90% of the market, which would lead to increased prices for advertisers. However, that doesn't necessarily seem true to follow -- because Google doesn't set prices for ads. Google's ad system is, famously, an auction system where the prices are set by the market. So it's difficult to see why the inclusion of Yahoo's ad inventory would significantly raise the prices -- unless the argument is that the market is artificially depressed right now, and this would just raise it to the proper levels. However, apparently, that might not matter much, as reports are coming out that the Justice Department has already hired a big time antitrust lawyer to use against Google. This is increasingly looking like a political attack on a company that is "big" rather than looking to see if its success actually harms or helps consumers.

Filed Under: advertising, antitrust, auctions, justice department, monopolies, prices, search marketing
Companies: google, yahoo

Time Warner Cable Accused Of Antitrust Violation For Requiring You To Rent Your Modem

from the illegal-tying? dept

A guy in Kansas is suing Time Warner Cable for its practice of requiring customers to "rent" their cable modem boxes. He claims that this is an illegal "tying" arrangement, since most subscribers would probably prefer to just own their modem boxes outright. Modem Box rentals have always been something of a scam. It's just a way to charge more for the monthly service, without having to include this extra "cost" in the price that they advertise to consumers. The guy is even noting that this requirement of renting a specific cable modem harkens back to when AT&T required you to rent your telephone from them. The courts struck that down, so hopefully they'll strike down this practice as well.

Filed Under: antitrust, cable modems, rentals
Companies: time warner cable

Dish And DirecTV Figure If XM And Sirius Can Merge...

from the try-try-again dept

You may remember back in 2001 that EchoStar, then owners of the DISH Network, tried to buy DirecTV from then owner Hughes (who was owned by GM at the time). However, after the Justice Department said no to the deal over antitrust concerns, it fell apart. However, the rumors going around are that the two companies (now just DISH Network and DirecTV, sans various parent companies) are thinking about trying again. Apparently, they believe that the regulatory and competitive environment that doomed round 1 wouldn't happen in round 2. And, of course, this time around, they can point to the fact that the two satellite radio systems, XM and Sirius, were allowed to merge (even if it took a year and a half).

Filed Under: antitrust, mergers, satellite tv
Companies: directv, dish network

Psystar Looking To Charge Apple With Antitrust Violations

from the this-will-get-interesting dept

Once "unauthorized" Apple clone maker, Psystar, was sued by Apple, we fully expected it to challenge the legality of Apple's EULA (end user license agreement) which forbade putting the software on non-Apple hardware (a provision that even Apple has been known to ignore). The comments to our post suggested that a more likely option would be for Psystar to claim that Apple was violating antitrust laws in requiring the software and hardware be bundled that way.

Indeed, it looks like both of those predictions were correct. Psystar's response is likely to focus on both the legality of the EULA and whether or not Apple violated antitrust law. As predicted, this case may be very interesting to watch -- and the end result could be very important for many other companies in the tech space.

Filed Under: antitrust, clones, eula
Companies: apple, psystar

If Everyone's Using Your Pirated Software, Are You Still A Monopolist?

from the questions-questions-questions dept

Apparently there's a new antitrust law in China that has local software companies scrambling to file suit against Microsoft for violating the law. However, Business Week has a rather pertinent question: if the vast majority of the Microsoft software in use in China is of the "pirated" variety, can Microsoft actually be held responsible for antitrust violations? After all, it's not directly responsible for that "monopoly" in the first place.

Filed Under: antitrust, china, piracy
Companies: microsoft

Is The FCC Just Toying With XM And Sirius Now?

from the and-next...-we-want-you-to-clean-our-offices-with-just-a-feather! dept

The 18-month saga of XM and Sirius trying to merger just keeps getting more and more ridiculous. Yesterday, we pointed to all of the silly hoops the FCC was trying to make the companies go through, that often had absolutely nothing to do with antitrust issues, and today comes the news that the FCC has fined the companies nearly $20 million for technical violations as some sort of precursor to merger approval. What do these technical violations have to do with the antitrust questions the FCC is supposed to be deciding? Absolutely nothing. Instead, it appears that the FCC is simply using its position as the decider over whether or not the merger goes through to get whatever licks in that it can against the two satellite radio companies, knowing that they'll have to obey quietly. Its like hazing. Because XM and Sirius need the approval of the FCC, it can just do anything it wants to them, such as adding bizarre requirements or even asking them to hand over $20 million.

Filed Under: antitrust, fcc, merger, satellite radio
Companies: sirius, xm

FCC's Adelstein Drags Out XM-Sirius Review Even More

from the unbridled-discretion dept

As we predicted last month, the FCC's approval process for the XM-Sirius merger continues to drag on. This is becoming absurd. The merger was announced almost 18 months ago, which should have been more than enough time for the FCC to reach a decision, or at least come up with its merger conditions for the companies to consider. Yet it was only last month that Chairman Martin came up with his initial proposed conditions, and now Commissioner Adelstein is proposing even more restrictions as a condition of approving the deal. As I've pointed out before, the way antitrust law is enforced is problematic because of the unbridled decision it gives to government bureaucrats.

Adelstein's laundry list of merger conditions appears to have no particular connection to preventing the abuse of monopoly power, the supposed purpose of antitrust law. For example, he would require a 6-year freeze on price increases. If he believes the merged company would have too much market power, then he should vote to deny the merger. If, on the other hand, the merged company would not have too much market power, then a price freeze isn't necessary because competition will be sufficient to keep prices down. But the idea that they have too much monopoly power today, but won't in 6 years, doesn't make a lot of sense. His other major requirement, more minority-owned and non-profit channels, has even less connection to limiting the firm's market power. More minority-owned radio stations may or may not be good policy, but it has nothing to do with antitrust law, and it seems problematic for the FCC to impose those sorts of requirements as part of the merger review process.

Filed Under: antitrust, fcc, merger
Companies: sirius, xm

When Judging Antitrust Claims Against Google, Look At Lock-In, Not Network Effects

from the low-barriers-to-entry dept

Bill Snyder has an article calling Google "Microsoft's evil twin" because if it completes its merger with Yahoo it will have 90 percent of the advertising market and will be able to jack up the price of online ads. Snyder cites the concept of "network effects" and suggests that Google's market share advantage will "weaken of Microsoft's e-commerce infrastructure will further discourage competition and stifle innovation." This argument is confused. Almost every business enjoys "network effects." Wal-Mart, for example, is able to use its large base of customers to extract lower prices from suppliers, and is then able to use its lower prices to attract more customers. That's a network effect, but it's not a problem. What regulators have traditionally been worried about is not "network effects" in and of themselves, but network effects combined with technological lock-in.

In the Microsoft antitrust case, for example, the "network effects" argument was that various vendors had invested billions of dollars in research and development on technologies surrounding the Windows platform, and that these investments created an almost insurmountable barrier to entry for new operating system vendors: the creator of a new OS would have to persuade hundreds of companies to spend billions of dollars re-designing their products for a new platform. In contrast, the switching costs in the advertising market are extremely low. A small website owner selling inventory on one advertising network one week can easily switch to another the next. Larger sites might take a little longer but it's still not a large investment. Switching costs are even lower for advertisers, who can advertise on multiple networks simultaneously and shift their allocations on a daily basis.

There are a ton of small advertising networks focusing on niche advertising markets. Without the risk of barriers to entry due to lock-in, there just isn't much reason to worry about Google's large market share. If advertisers and website operators become frustrated with Google's advertising network, they can and will switch to another one. And Google, knowing how low the switching costs are, will still have plenty of incentive to treat its customers well.

Filed Under: antitrust, lockin, network effects
Companies: google, microsoft, yahoo