Microsoft Parrots Google In Suggesting Tie-Up With Yahoo Violates Antitrust Laws

from the just-stay-quiet dept

Back in February, we pointed out that Google was playing with fire in suggesting that a Microsoft-Yahoo merger would violate antitrust laws. It seemed fairly obvious that those statements would come back to haunt Google -- a company many others have been accusing of antitrust violations. And, indeed, even with Microsoft still trying to buy Yahoo, Microsoft is now making nearly identical antitrust claims against Google concerning its ad deal with Yahoo. It's all legal posturing, of course, in an attempt to get the government to annoy a competitor. As Declan McCullagh points out at the link above, if either company really believes that the other was violating antitrust laws, it's perfectly free to file a private antitrust lawsuit. But, instead, both companies are playing a game in trying to get the government to be a pest for the other -- and now they get to use each other's scary monopoly language when tossing around accusations as well. So once again, might we suggest that both Microsoft and Google might be better off keeping their mouths zipped on anything involving antitrust violations from the other one?

Filed Under: antitrust, congressional oversight, language
Companies: google, microsoft, yahoo

Supreme Court To Investigate If AT&T Is Violating Antitrust Laws With Wholesale DSL Pricing

from the competition? dept

In most cases, antitrust rules seem fairly bogus. They often are used to try to punish companies for being successful, even if they're not actually abusing any kind of monopoly situation. However, there are some cases where antitrust laws become a lot more interesting, when it comes to governments effectively granting monopoly rights to certain companies. That's what's happened with many telco services, where the government has basically provided monopoly "rights of way" to certain companies to put down infrastructure in places that no other company can. These rights of way were supposed to come with "common carrier" status, that would require the provider to allow equal access, without discrimination, even to companies that might "compete" in some manner or another with the core infrastructure provider. A few years back, however, the FCC made sure to classify broadband services as information services rather than telco services -- even if they were using the same infrastructure. This was great for the telcos, since information services weren't subject to common carrier restrictions like telco services were.

Yet, those broadband services still benefited from those rights of way, and they used their new found lack of restrictions to raise wholesale prices to smaller ISPs who offered services on their networks. A series of lawsuits followed, including an appeals court ruling that found that AT&T was abusing monopoly rights to offer prices that were simply out of line with market pricing -- making it effectively impossible for any other provider to compete. AT&T has appealed and now the Supreme Court has agreed to hear the case. This could be very important, as it could force a company like AT&T, which relies on these government granted rights of way, to offer up access to their network to potential competitors who could offer more reasonably priced services. This also could have a major impact on both the overall competitiveness of broadband in the US as well as network neutrality -- since having more competition would make it harder for AT&T and others to violate net neutrality.

Filed Under: antitrust, common carrier, supreme court, wholesale pricing
Companies: at&t, linkline

Yahoo-Google Deal Official; Now Can We Talk About Something Important?

from the well,-that's-that dept

Sorry corn farmers, it looks like Yahoo's potential deal with Microsoft has gone away, and Yahoo and Google have finally agreed to a plan that hands off a bunch of Yahoo's search ad inventory to Google, basically admitting that Google is just better at serving the long tail of the advertiser market.

Basically, this means that the search ad market battle is settled, Google has won. Yahoo's mistake all along was trying to play catch up and to build its own Google, rather than focusing on doing something different. Hopefully, Yahoo can now reinvent itself to focus on providing something that's not just a Google competitor, but which actually provides a different value proposition to users. Of course, at the rate Yahoo seems to be bleeding talent these days, that might not be so easy. Plus, of course, the feds are almost certainly going to take up the cry of those corn farmers, and investigate whether or not the deal violates any sort of antitrust rules. That's going to be a major distraction as well. So, rather than focusing on Yahoo's struggles, perhaps it's time to go focus on the next interesting startup. After all, that seems to be what a bunch of Yahoo's employees are doing.

Filed Under: advertising, antitrust, search advertising
Companies: google, microsoft, yahoo

Antitrust Law's Requirements Aren't Always Clear

from the rule-of-law dept

As Google and Yahoo negotiate a possible search advertising deal, the New York Times wonders if it would put Google in hot water over antitrust concerns. With Google and Yahoo as the number one and number two players in the search marketplace, respectively, their combined market share would be in excess of 80 percent—close to Microsoft's Windows market share in the early 1990s. And that will inevitably invite heightened scrutiny from government regulators. The article ponders what Google would need to do to avoid antitrust problems, and concludes that basically, nobody really knows. We know that Google has to avoid "predatory behavior," but the experts the Times spoke with differed on whether a search deal would be anti-competitive. One scholar thought it would be, while others thought it could be structured so as to pass muster under antitrust law.

It seems to me that this is a serious problem. Well-designed law is transparent and predictable. Eric Schmidt should be able to talk to any competent antitrust lawyer and get at least roughly the same advice about what the law allows. Of course, this ideal is never achieved perfectly, but in many areas of law, it comes pretty close. Property law, for example, operates under well-understood, predictable legal standards. This allows companies, with the advice of counsel, to make business plans without worrying too much about the risks of an unfavorable legal ruling. When the law is uncertain, as with patents on software, it creates all sorts of problems because companies make their best guess about what the law requires, make business plans based on that, and then often they wind up in court and find out the judge has a different idea of what they should have done.

Too often, I think this is the case with antitrust law. Ed Felten (who will be my PhD advisor starting this fall) has a post on the lessons of the Microsoft antitrust case ten years after it was filed. Now, as a life-long Mac user and a fan of free software, I can certainly find plenty to criticize in Microsoft's actions, both legal and technical, during the 1990s. But the antitrust case still makes me uncomfortable because I don't think that if I had stood in Bill Gates' shoes between 1993 and 1998 that I would have been able to predict which business decisions would have ultimately been found to be illegal by the courts under antitrust law. Felten uses the words "kinder," "gentler," and "more moderate" to describe the new, post-antitrust Microsoft, but "kind" and "gentle" are hardly legal standards. Ordinarily, we expect—indeed, shareholders demand—aggressive pursuit of profits by publicly traded companies. Steve Jobs is a brilliant business man, but he's neither kind nor gentle. If the law is going to demand that Microsoft forego the aggressive pursuit of profit in favor of "kindness" and "gentleness," it had better have some pretty clear rules about how much moderation is required.

This is a particular reason for concern when we remember that antitrust law is often invoked for political purposes. A cynic might suggest that the reason Microsoft has received less antitrust scrutiny in this decade than the last is not because it is "kinder" and "gentler" but because it has hired better lobbying and PR firms to plead its case in Washington. Certainly, the commenters on Felten's blog have plenty of complaints about Microsoft's recent business decisions. And indeed, this is one area where Google's approach has been strikingly different from Microsoft's behavior in its early years. Microsoft mostly ignored the political arena in the 1980s and 1990s. In contrast, Google has been proactively building a lobbying empire to ensure that it will have plenty of ammo to use in future policy battles, antitrust or otherwise. That means that if people do start asking questions about monopolistic behavior on Google's part, Google will be able to dispatch their army of lobbyists to head off any moves toward litigation.

This is a savvy strategy for Google, but I think it's problematic for democracy and the rule of law. The law should be based on clear and objective standards, not who has the most influential lobbyists. If the New York Times article above is any indication, the law's requirements are anything but clear. And that's a serious problem.

Filed Under: antitrust, clarity, market power
Companies: google, microsoft

Court Overturns FTC Ruling Against Rambus

from the bad-news-all-around dept

We've been covering the story of Rambus' tricks to get itself a patent that covered a standard by sitting in on standards meetings and then modifying its patents to cover the standard. The rulings on the various lawsuits have gone back and forth on this, and while Rambus has had some wins and some losses in court, last year the FTC stepped in and smacked the company down, noting that it had used questionable means to get itself an effective monopoly on the memory market. Unfortunately, that FTC ruling has now been overturned by an appeals court that said the FTC failed to show evidence of a monopoly. This is unfortunate for a variety of reasons. If the FTC's ruling had been allowed to stand, it would have shown how an ill-gotten patent would be the equivalent of an illegal monopoly. That seems like the proper result, as a patent clearly is a government granted monopoly. So, if the patent is gained through questionable means, then that monopoly should be considered an illegal monopoly. Unfortunately the appeals court disagreed, and that will make us all worse off, as it will give the government fewer tools to crack down on abusers of the patent system.

Filed Under: antitrust, ftc, monopolies, patents, standards
Companies: ftc, rambus

Yahoo So Desperate To Stay Away From Microsoft, It's Starting To Use Google Ads

from the now-that's-desperation dept

Last summer there was speculation that a bold step for Yahoo to take to revive its sagging prospects would be to ditch its own ad system and outsource it to Google. Despite Yahoo trying to catch up for many years, Google's ad system just works much, much better. It would save Yahoo a ton of money and probably create better returns -- even if it would help fuel Google too. However, Yahoo pretty much laughed off the suggestion... until now. Being aggressively pursued by Microsoft can have that effect -- especially as white knight rescuers seem few and far between (i.e., they don't seem to exist at all). So, with that, the news is breaking that Yahoo is finally going to test running Google's ads. It's a "small scale" test, only running for a couple weeks and only on a small percentage (less than 3%) of Yahoo's inventory. But, assuming it goes well, it'll likely lead to a much bigger shift. Of course, Microsoft was quick to denounce the deal, claiming that the Justice Department would have a field day over the antitrust issues raised, but so far Microsoft doesn't have such a great track record in getting the DOJ to act on its antitrust complaints.

Filed Under: ads, antitrust, outsourcing, partnerships
Companies: google, microsoft, yahoo

Why Would Antitrust Law Need A Specific Net Neutrality Clause?

from the if-it's-antitrust,-doesn't-that-law-already-exist? dept

We've made it clear from the beginning that the whole debate over net neutrality is really a red herring. It's really an issue about the lack of competition in the broadband space, which can mostly be chalked up to bad regulatory policy that severely limited competition in most markets. If there were serious competition in the market, there would be no worries about net neutrality, as competition would make sure that there were "neutral" options available. Regulating one way or the other on net neutrality is treating the symptom, not the disease. However, Rep. John Conyers is preparing to introduce legislation that would apparently make breaking neutrality an antitrust violation. This isn't a new idea. Conyers has pushed similar legislation in the past.

However, why would there need to be special antitrust legislation on net neutrality? If getting rid of net neutrality breaks antitrust laws, then shouldn't it break them as is? Why would you need to add a special section just to cover net neutrality? In fact, in the past, Google has threatened to use existing antitrust legislation against telcos that break neutrality. No matter what, though, any attempt to legislate neutrality runs a serious risk of how it defines neutrality. It seems like time might be better spent taking a step back and looking at fixing the real problem: the lack of competition and watching the whole question of net neutrality fade away as a result.

Filed Under: antitrust, congress, net neutrality

Major Labels Under Antitrust Investigation

from the yet-again dept

Apparently the Justice Department is suddenly worried that the four major record labels are colluding in creating a new online music subscription service. The last time this happened was back when the record labels tried to (wait, this sounds familiar) create online music subscription services -- which were universally panned, rarely used and eventually shut down. So, even if the labels are colluding, given their strategic vision, it seems rather unlikely that they're going to leverage their position to dominate the market. They certainly could hold back other services -- but it seems like they've been doing that for years already, just with their own shortsightedness.

Filed Under: antitrust, collusion, justice department, labels, riaa, subscription service
Companies: riaa

Both Microsoft And Google Are Probably Best Off Shutting Up About Monopolies

from the seriously,-keep-quiet dept

We found it somewhat ridiculous when Microsoft tried to play the antitrust card in complaining about Google's attempt to buy Doubleclick last year. However, it's almost as ridiculous for Google to now be playing the antitrust card against Microsoft for its effort to buy Yahoo. True, Microsoft actually is a convicted antitrust violator, but Google has clearly been beating Microsoft hands down in the internet search/advertising/portal game. In both cases, it's fairly silly, as it's obvious that there's a fair bit of competition going on in the space (and Google's own rise demonstrates how it's still possible for new entrants to rise up). It's no surprise that Google would prefer Microsoft doesn't end up buying Yahoo (even if the resulting integration mess might give Google a chance to distance its lead online), but having either side pull out claims of antitrust violations pointed at the other just seems pointless. About the only thing it's likely to do is come back to haunt them down the road, the next time either one is investigated for any kind of antitrust violations.

Filed Under: antitrust, internet advertising, mergers, search
Companies: google, microsoft, yahoo

Antitrust Lawsuit Wants To Force Apple To Add WMA Support To iPods

from the right-diagnosis-wrong-solution dept

We've noted a few times that people have gotten way too trigger-happy about invoking antitrust law any time a company does something they don't like. Antitrust law is supposed to prevent the abuse of actual monopolies like Ma Bell. It's not supposed to be an all-purpose weapon to be used against any company whose market share exceeds 50 percent. A lawsuit filed on New Year's Eve claims that Apple has violated antitrust law by declining to license the WMA DRM format from Microsoft for the iPod. There are several obvious problems with this. In the first place, while Apple has undeniably dominated the market for portable music players, there's no shortage of competition. Big companies like Microsoft, Sony, and Samsung make competing MP3 players. Consumers who don't like the formats supported by the iPod have no shortage of alternatives. Second, it's really not a good idea for the courts to be getting embroiled in technical debates over what formats devices should support. The issues involved are complicated, and the market evolves quickly. By the time the courts get around to making a final decision, the issue is likely to be ancient history. Third, it's hard to fault Apple for failing to support WMA-based DRM when even Microsoft itself broke compatibility with its old DRM scheme when it introduced the Zune. Surely if Microsoft can't be bothered to support its own audio format, it's hard to justify forcing Apple to do so.

It's also worth noting that none of this would be an issue if the DMCA didn't give digital rights management technology the force of law. This sort of thing isn't a problem with non-DRMed music formats because there are plenty of tools out there for converting from one music format to another. Without the DMCA, there would be similar tools for converting copy-protected music to the appropriate format. But under the DMCA, such a tool would be an illegal "circumvention device." Repealing the DMCA's anti-circumvention provisions is a much better solution because it would give consumers the freedom to play their music on the device of their choice without getting the courts involved in the messy business of deciding which MP3 players have to support which audio codecs.

Filed Under: anti-circumvention, antitrust, dmca, drm, itunes
Companies: apple, microsoft