June 24, 2011

Voting to Pull the Weeds is Good -- Pulling Them Is Even Better

At the ICANN Public Forum in Singapore yesterday, I likened the ICANN to a community garden: fertile, colorful and above all, worthwhile, but not without a few troublesome weeds. Today’s Board vote to adopt the recommendations of the Accountability and Transparency Review Team (ATRT) is a vote to pull those weeds.
 

As good as voting for this weed-pulling exercise is, completing it will be even better. 

 

No other issue in ICANN’s portfolio – including new gTLDs – is as important to the long-term viability of the multi-stakeholder model for DNS management than making necessary improvements to accountability and transparency. 

 

New gTLDs may expand ICANN’s reach and scope, but it is a commitment to true accountability and transparency that will protect ICANN against those who would impose external control over it. Indeed, now that ICANN is dramatically expanding the universe that it oversees, accountability and transparency have become even more important to its continued viability. 

 

I hope that nobody involved with the ICANN process needs to be reminded that the multistakeholder model for DNS management is locked in a mortal struggle, as sovereign governments and organizations like the UN’s International Telecommunications Union (ITU), continue their efforts to wield more direct control over the Internet, and by extension the DNS. 

 

An ICANN that is demonstrably accountable to its global constituency is an ICANN that is well defended against these efforts, but as long as ICANN remains stalled on making real improvements to accountability and transparency, it remains vulnerable to the claims of some governments that it is not adequately representative of Internet users worldwide. 

 

ICANN’s vote today establishes a clear path forward. A comprehensive weeding work plan if you will. 

 

While not perfect, the recommendations of the Accountability and Transparency Review Team represent a significant and meaningful set of improvements for ICANN to undertake. Implementing those recommendations – and implementing them effectively – will constitute the most significant set of accountability improvements that ICANN has ever undertaken.  

 

As always with ICANN, the devil will be in the details, in this case, how quickly and effectively ICANN implements the ATRT provisions, and, of course, whether they are able to establish effective metrics by which to gauge their success. The lack of effective communication regarding the ATRT during this week’s meeting in Singapore was not the most auspicious start to this process. If ICANN is going to improve its accountability, it should start by being accountable about how it makes those improvements. But the board vote is hopefully the start of a clean slate, and a new commitment to the principles, as well as the letter of the recommendations. 

 

There's a Chinese expression that if you don't grab the roots of the weeds when you garden, then the weeds will come back when the spring wind blows.  ICANN now has its orders to grab the weeds. 

 

It’s time to start pulling. 

April 02, 2010

This Week in Antitrust

This week's look at antitrust news features a group of liquid-crystal display panel manufacturers accused of conspiring to fix prices, the Federal Trade Commission's antitrust investigation of Intel and the effects it will have on the computer industry, a milk-pricing investigation in New York, and the dismissal of Novell's antitrust complaints against Microsoft.

Samsung/Sharp - Samsung, Sharp Must Face Class-Action Antitrust Suit (Update3) | Bloomberg News

After admitting guilt to price-fixing, an international group of flat-panel producing companies will now have to stand another court-ordered assault against their money vaults. Karen Gullo reports on this development from San Francisco:

 Samsung Electronics Co., Sharp Corp. and other makers of liquid-crystal display panels must face group claims in an antitrust lawsuit by purchasers of televisions, computer monitors and laptops, a judge ruled.

U.S. District Judge Susan Y. Illston in San Francisco certified the case as a class action on behalf of direct purchasers who bought the flat-panel screens or goods containing them from 1999 to 2006, according to a court filing yesterday. Consumers in 22 states and the District of Columbia also can sue the companies as a group for damages, Illston ruled.

And, interestingly enough, it's not just the end-users that are getting their day in court.

Dell Inc., the third-largest personal computer maker; Nokia Oyj, the world’s largest maker of mobile phones; and AT&T Inc. also sued LCD makers in federal court in San Francisco claiming they were victims of price-fixing by the manufacturers.

The amount of money the group collectively stands to lose is significant but by throwing themselves on the mercy of the court, and settling rather than fighting, Samsung, Epson, Sharp and other involved parties might come out with some of their loot still in hand.

Intel - FTC’s Intel Anti-Trust Case Proposes Huge Changes to the Computer Industry | The Portlander

Although the article is a bit dated, Peter S. Kastner detailed look at the FTC's complaints against chip manufacturing giant, Intel, reveals some of the inner workings of exactly how many pounds of flesh the US government hopes to remove, and in what way. Kastner writes:

The U.S. Federal Trade Commission’s (FTC) antitrust and competitive complaint has already faded from the 24×7 news cycle.  In an announcement December 16th entitled ‘FTC Challenges Intel’s Dominance of Worldwide Microprocessor Markets,’ the FTC stated it has sued Intel, charging that it has “illegally used its dominant market position for a decade to stifle competition and strengthen its monopoly.”

A close reading of the FTC’s contemplated relief for Intel’s alleged conduct shows the government mandating the most sweeping changes ever proposed as to how the Intel-compatible computer market works.  No surprise that Intel would be hurt badly by these mandates and have to adjust.  But these industry changes would also dramatically change the computer ecosystem, and the consequences would not be good for PC consumers.

Kastner correctly points out that should the FTC's remedies be implemented, the result for chip makers and those who use their products (basically everyone these days) will be the reinvention of the digital wheel. There's plenty of detailed analysis and some choice passages from the FTC's proposed solution in the rest of Kastner's piece. Click on, fearless, and constant, reader!

NY Dairy Farmers - Schumer, US antitrust official hear milk-pricing complaints from NY dairy farmers, consumers | StarTribune

Consolidation in the dairy industry has led some farmers to believe there are anticompetitive practices keeping them from getting their fair share of milk profits and New York's Senator Charles Shumer plans to get to the bottom of things. His first move was to research the problem as the Associated Press' Carolyn Thompson describes:

A report released by Schumer's office in November found that the price paid to dairy farmers fell by almost half since January 2009. At the same time, the retail price of milk fell just 15 percent.

Others in the agriculture business are also lending credence to the claims by dairy farmers in New York that there is some malicious behavior afoot.

About 40 percent of what consumers pay for milk goes back to the farm where it was produced, said Jonathan Taylor of the New York Farm Bureau.

"Many in the dairy industry view this low farmer share in the retail price of milk as proof of anticompetitive behavior by dairy processors and manufacturers, which have undergone phenomenal consolidation over the past two decades," he said. "Like David and Goliath, a family farm is at a distinct disadvantage in dealing with such businesses."

Not even enough for grocery money get back into the hands of farmers such as the Maine family who "called 2009 'the worst year of our lives.'" Whether or not there are anticompetitive forces at work in the dairy business, one thing is sure: farmers are not making a living selling their milk while the people handling it and reselling it are. One company that buys milk from farmers for resale, Dean Foods, even reported "record profits" at a time when "dairy prices were in freefall across the country."

Novell/Microsoft - Remaining Novell antitrust complaints against Microsoft dismissed | ZDNet

Although they recently scored a victory against software rival SCO, Novell didn't fare quite so well in its bid to get the court system to force Microsoft to reveal interoperability secrets. After failing to gain a profitable market share against Microsoft's Office Suite with their competing WordPerfect and Quattro Pro products, Novell decided to sue their way to happiness with less than satisfactory results. Mary Jo Foley provides much-needed clarity:

The U.S. District Court in Maryland dismissed the last two outstanding antitrust claims Novell filed against Microsoft in 2004 involving WordPerfect and Quattro Pro, two software products Novell owned between 1994 and 1996.

And here's the beef:

Novell claimed Microsoft withheld interoperability information it needed to enable those products to run well on Windows. Microsoft tried to get Novell’s complaint dismissed, claiming that it was Novell’s “own mismanagement and poor business decisions” that tanked WordPerfect and Quattro Pro. Plus, Microsoft argued, since Novell sold WordPerfect to Corel now 12 years ago, their claims should be barred under the Statute of Limitations.

You can't win them all, Novell. Sorry that your office productivity software products were so terrible that you couldn't give them away but suing isn't always the best way to get revenge.

Bristol-Myers Squibb Co. - Judge Tosses Antitrust Suit Vs. Bristol, Sanofi Over Plavix | Fox Business

A group of retails recently lost in their bid to prove "that a proposed patent-litigation settlement among drug makers in 2006 deprived pharmacies of inexpensive, generic copies of the blockbuster blood thinner Plavix." Bristol-Myers Squibb didn't see it that way and the judge agreed.

Kroger and the other plaintiffs, including Walgreen Co. (WAG: 37.72, 0.64, 1.73%), CVS Caremark Corp. (CVS: 36.23, -0.33, -0.9%) and some drug distributors, filed their antitrust lawsuit beginning in 2006, arguing the proposed Plavix patent settlement was anticompetitive. They said the deal closed off the possibility of a more favorable settlement, one that might have avoided a trial and resulted in the availability of generic Plavix well before the 2011 patent expiration.

But Sanofi, Bristol and Apotex argued that the antitrust suit should be dismissed because Kroger and the other plaintiffs lacked standing under antitrust law.

Judge Michael Watson of the U.S. District Court for the Southern District of Ohio lays out the end game in this significant trial with smiles for the victors and silence from the vanquished:

"Plaintiffs fail to demonstrate that the alleged antitrust violation was a necessary predicate of Plaintiffs' injury and the asserted injury is speculative," the judge wrote in a 49-page opinion released Friday.

A Bristol-Myers spokeswoman said Bristol and Sanofi are pleased with the decision. A Kroger spokeswoman and a lawyer for Kroger and other plaintiffs couldn't be reached. An Apotex spokesman couldn't be reached.

Bonus antitrust piece o' the week: Lawyers Galore in FTC's Intel Case by Jenna Greene at The Blog of Legal Times (or BLT for short)

March 19, 2010

This Week in Antitrust

Yes, gentle reader, it's that time again! Today's the day you've been looking forward to all week: ACT Online's "This Week in Antitrust" Friday feature covering antitrust-related news highlights with a special focus on the microchip industry.  Figuring prominently in this most recent selection of relevant and topical articles is video card superstar NVIDIA, who is pulling out all the stops in its significant support of the FTC's on-going attack of Intel and their competing Graphical Processing Unit (GPU) line of chipsets. Also of note are rumored monopolistic practices in the food industry, a promise by a European company to play nice in response to antitrust charges, and an analysis of Google-Yahoo monopoly myths.

NVIDIA/Intel - The Case for Innovation: FTC, NY State, EU v. Intel| NVIDIA.com

As one of the premier manufacturers of Graphical Processing Units (GPUs for short), NVIDIA has long worked to create top-of-the-line video cards that integrate smoothly with computer chipsets manufactured by other industry heavies such as microchip titan Intel. After a long honeymoon of playing nice, NVIDIA found itself being locked out of key gateways to integrate their complex and expensive-to-develop GPUs with Intel's various motherboard chips and decided to join in the dog-pile of litigation descending on Intel by the likes of the European Union and, closer to home, the Federal Trade Commission. By way of a backgrounder, the helpful people at NVIDIA have created a website specifically dedicated to tracking the on-going investigation against Intel for monopolistic practices, including the following trio of bad behaviors:

  • First, Intel has harmed competition in the markets for CPUs and GPUs. Intel has already paid fines and settlements totaling nearly $3 billion to address its anticompetitive conduct in the CPU market.
  • Second, consumers have not been able to choose from among the range of potentially available technologies that one would see in a healthy, functioning market. Technologies like NVIDIA's game-changing graphics and chipset products have been kept in short supply or blocked from the market entirely by Intel's anticompetitive practices.
  • Third, and perhaps most importantly, Intel’s conduct has stifled future innovation, inhibiting the development of new processor technologies that incorporate faster and more powerful graphics-based computing. This graphics-based computing not only provides a more enjoyable graphics experience for the consumer, but has the potential to improve our ability to achieve important social and economic goals through research and development.

Never let it be said that Intel is nothing if not a dominating force in the chip-fab market, no. But is it entirely fair to fling claims of monopolistic practices and bring forth yet another lawsuit yearning for a solid judgment that Intel is indeed acting in a manner that requires the intervention of the antitrust goons? In this case, Intel feels strongly enough that it is doing what is true and righteous to enlist a bit of "turn around is fair play" logic. Once again, some further explanation of what's what by NVIDIA:

NVIDIA and Intel are in ongoing litigation pending in the Court of Chancery for the State of Delaware. At issue in those lawsuits is the scope of the companies rights’ under two license agreements signed in 2004, including whether Intel can block NVIDIA’s ability to connect its chipsets to Intel’s Nehalem CPUs.

A move to block NVDIA's linking to Intel's newer CPUs, such as the Nehalem line, would spell sure disaster for the GPU giant. So, NVIDIA is fighting back with it's own counter-suit, seeking, among other things, "a legal declaration that the license agreements should be enforced as they were agreed to by the companies and that it is legally able to make chipsets compatible with Intel’s Nehalem CPUs. Likewise, NVIDIA is a seeking an injunction to stop Intel’s public statements that NVIDIA is not licensed to make chipsets for Nehalem." There's plenty more legal wrangling in store if you'll simply click on the above linked site and take but a few moments to parse the facts for your very own self. I highly recommend it as a bit of pre-weekend gray matter exercise, if for no other reason.

NVIDIA/Intel - NVIDIA Launches Website Detailing Antitrust Case Against Intel- Hothardware.com

And for a less-tainted viewpoint on the NVIDA/Intel death-match, we turn to Joel Hruska and his timely yet topical review of NVIDIA's explanatory (and possibly inflammatory) website. He writes on why there's so much acerbic finger-pointing going on between the two chip behemoths:

There could also be a bit of personal enmity at work here. The two companies have been headed for a collision for several years. NVIDIA's chipset division was a competitive threat against Intel's while published benchmark comparisons left Intel lurching along like an arthritic, three-legged elephant. Then Intel announces that it'll be getting into graphics and changing the entire way 3D rendering is done. NVIDIA counters those statements with some choice comments on how Intel's GPU looks like something from five years ago, waits until Intel's Atom is really making waves, and launches Ion. Two months later (immediately following legal paper-waving), Intel gets caught red-handed distributing internal FUD about NVIDIA's Ion.

And how is Intel faring under the withering assault on its extremely dominant CPU market share?

As for Intel, the company has already taken quite a bit of heat from multiple governments and investigations worldwide. In all such cases Intel has maintained that it competes fairly and that its strategies do not harm consumers. To be fair, the company's activities have never been found to be illegal in a court of law, but none of the administrative bodies (including the FTC) have ever found Intel's argument compelling enough to not launch an investigation once the question of whether or not monopolistic abuse occurred was set before the organization.

Not so good for Intel, it seems. For now, both sides could be accused of playing "he said, she said" but with the US Federal government and European Union breaking out the Little Acme Junior Gman Investigation Kit, complete with heavy duty magnifying glass, Intel might end up with the short end of the stick. At the very least, there is probably some hand-wringing at headquarters as Intel struggles to catch up in the smartphone integrated chipset market.

Monsanto/Food Industry, et. al - Food sector faces sweeping antitrust investigation- Los Angeles Times

As luck would have it, not all of the antitrust legislation in the pipeline is focused on Intel. Seems there is an investigation by the U.S. Attorney General into widespread unfair and monopolistic practices in the food industry. P.J. Huffstutter reports on how the business of big food is coming under scrutiny for the missing money between farmer and consumer. From Ankeny, Iowa:

Speaking at a public workshop organized by the Justice Department and the U.S. Department of Agriculture at a community college, [U.S. Atty. Gen. Eric] Holder told the packed conference hall that "concrete action" would emerge from the unusual coordination between the two federal agencies.

The gathering was the first in a yearlong series of public meetings to examine whether consolidation in the food sector, and alleged monopolistic practices in agriculture, are driving food prices higher.

The government is also trying to ferret out reasons for the sometimes vast gaps between what farmers are paid for the food they produce and the retail prices that shoppers pay at the grocery store. Time and again, federal officials underscored that the government was going to push for more transparency in the food sector's business practices.

Farmers who had gathered for the workshop heartily voiced their feelings that big food business is squeezing the smaller rural farmer out of the picture. Assistant U.S. Atty. Christine Varney, Holder's antitrust chief offered some welcome ideas on how the Federal government will help them:

Varney, whom many people here say is spearheading the Justice Department's ramped-up probe into big-business antitrust concerns, promised that the government was undertaking an "unrelenting quest to find the correct balance" within the agricultural industry.

That would mean, she said, ensuring healthy competition in the food sector -- which would allow fair deals for farmers and fair pay for agriculture workers in processing factories, while making sure the public had "food on their table that's safe, healthy and a decent price."

That sentiment was met with cheers in the conference center at the Des Moines Area Community College. Every seat was full, occupied by hundreds of farmers and unionized food workers.

You can find additional reporting on this move by the US government to make sure big ag is playing fair in a related article, Ag antitrust enforcement vowed, at The Omaha World-Herald. As far as Monsanto is concerned, they are doing nothing but help small American farmers.

Monsanto officials defended the company's market dominance in the seed industry, saying the firm had done nothing wrong. Its success, they said, was due to strong demand for so-called Roundup Ready seeds it developed to produce crops capable of tolerating its herbicide Roundup. The company's patent expires in 2014.

"That's why we have such a high market share," Jim Tobin, vice president of industry affairs at Monsanto, told the crowd. "It's not because you have to have Roundup Ready to grow soybeans. It's because farmers chose it."

Electricite de France - EU drops EDF antitrust charges | Yahoo! News

Aoife White, AP Business Writer, has the inside track on how far a promise can go in getting one's self moved from the "Naughty" to the "Nice" list and reveals just how this slight-of-hand worked for one huge corporation.

BRUSSELS – European Union regulators on Wednesday dropped antitrust charges against French power company Electricite de France after it pledged to amend contracts with key corporate customers.

In a deal made legally binding Wednesday, EDF is promising to make sure that every year many large electricity users can pick rival suppliers. It will also allow them to resell power to others.

EDF can be fined up to 10 percent of yearly revenue if it breaks these commitments.

Also of interest is what EDF was forced to include in its promise. White clarifies for the constant reader:

EDF settled the dispute by agreeing that some 65 percent of the electricity that it sells under contract to large customers will return to the market every year because contracts will end or customers will be able to opt-out of the contract for free.

Future contracts with major energy users can't be longer than five years unless the customer can opt out without cost at least every five years.

EDF must also now stop blocking its customers from buying part of their power needs from other suppliers — and stop preventing customers from reselling electricity.

Not exactly a "Get out of Jail Free" card but good enough, it would seem, to keep EDF on track and back in the black for a while.

Google/Yahoo! - Debunking the Google-Yahoo Antitrust Myths | The Precursor Blog

And what exactly are these "antitrust myths" about search megaliths? Scott Cleland hopes to answer that exact query in his aptly titled article and starts things off on the right foot with this first of many "myths" needing a bit of debunkification:

Myth #1: There can’t be an antitrust problem as long as consumers are just one click away from a competitive search engine.

  • This is intentional misdirection.
    • Google does not get paid by users, but by advertisers and websites. 
    • The antitrust concern here is not about “competition” for free search engine use, but competition for paid search advertising.

Google is exploiting the “Internet choice paradox” where because users have near infinite choices to reach Internet content, they assume content businesses must have as much choice in advertising to Internet users as users have in reaching content. They don’t.

And to prove it, Cleland has 4 other pertinent items to round out his quintet of mythical reasons why he thinks that "This antitrust investigation of Google is much deeper, broader, and more serious than the market appreciates." Onwards, and upwards!

March 18, 2010

Prices Down. Speed Up. Feb 2010 Edition

16
Is the drop in average computer chip price over the past year. The same computer processor that cost you $100 in February 2009, cost only $86 this past February according to the Bureau of Labor Statistics study released yesterday.

122
Is the number of months in a row that the average price for computer chips has dropped since 2000 according to the BLS numbers.

2x
Is the average increase in speed and computation power in computer chips every 2 years. 

0
Is the number of industries with a comparable year over year price decreases and performance gains.


Why?

For all the allegations made by the Federal Trade Commission and others about Intel’s anti-competitive tactics, none of these has trickled down into consumer harm.  This reality will make it difficult for the FTC and is likely the reason the FTC chose to use its Section 5 authority rather than its authority under Section 2 of the Sherman Act.

March 12, 2010

This week in Antitrust

This Friday's round up of antitrust-related news highlights current activity in a number of different areas of interest including the rise of niche microchip manufacturers, Intel's continuing struggle to maintain dominance in the mobile device market, a move by airlines in Europe to placate fears of unfair business practices, and a drug company's efforts to clear its name from the ranks of dastardly monopolists.

Intel - Semiconductor IP: lntel vs. ARM and Tessera’s Expiring Patent | Sramana Mitra

Intel and ARM are not the only players in the smart device chip game but are certainly among the major providers of System on a Chip (SoC) platforms. For an increasingly important variety of gadgets that require completely integrated functionality and low power consumption on one microchip, the market is currently big enough to support a handful of specialty chip manufacturers who are slowly chipping away at Intel's (and ARM's) dominance. Sramana Mitra has some excellent analysis of the current chip state-of-affairs in her topical blog post from late last week. She writes on a niche operator that is capitalizing on camera-based handsets:

Tessera is looking to cash in on the growing market for camera-based handsets. Recently, it announced that Samsung Electronics has integrated Tessera’s OptiML Focus solution in its notebooks. Tessera has been building out its imaging and optics portfolio with the help of five acquisitions since 2005: part of Shellcase, a wafer-level image sensor packaging technology provider; Digital Optics, a micro-optical solutions developer; Eyesquad, a smart optics technology supplier; part of Dblur Technologies, a software lens technology developer; and FotoNation, an embedded imaging solutions provider.

Mitra also points out the significant portion of the 3G market space owned by InterDigital, a company focused on "advanced digital wireless technologies" and holder of a number of key patents for cell phone technologies.

InterDigital, which has a 55% share in the 3G handset license market, reported a 20% increase in fiscal 2009 revenue of $297.4 million and net income of $87.3 million or $1.95 per share, more than triple its 2008 income. During 2009, the company repurchased shares for $25 million under the $100 million share repurchase program authorized in March 2009. It ended the year with $409 million in cash.

For a mostly unheard of company, InterDigital is doing quite well, thank you, while Intel continues to struggle to forge lucrative IP deals in the face of ARM's smartphone product dominance. "Intel is welcome to the market, but at the moment, ARM rules the mobility market..." is how Mitra sums up the situation and with the numbers to back up her conclusion, she's right on target. Be sure to check out the entire piece for more stock market figures and a few explanatory graphs to complete a well-crafted look at the mobile microchip business.

British Airlines et. al - BA, American, Iberia offer EU concessions | Yahoo! News UK

A number of international kingpins in the airline business are coming under close European Union scrutiny after rival airline, Virgin Atlantic, cried "Foul!" in reaction to the "U.S./EU 'Open Skies' agreement, which liberalizes trans-atlantic aviation" that "would lead to higher prices for consumers." Virgin's superstar CEO, Sir Richard Branson, offers his thoughts on the European Commission's decision to drop its investigation:

"I continue to question why the Commission is even considering these proposals to try and put right the consumer harm of this monster monopoly when it does not seem to have any evidence of concrete consumer benefits," Richard Branson, president of Virgin Atlantic, said in a statement.

Branson, who met Competition Commissioner Joaquin Almunia this week to discuss the issue, said Virgin would attempt to show why the alliance should be stopped.

Branson might be barking up the wrong tree, as the airline industry has a long history of creating alliances in order to placate those who cry "Monopoly!" at the thought of increased route-sharing and profitability.

Alliances are seen as a lucrative alternative to mergers and large-scale investments.

The Commission said in a statement that the airlines had offered to give up some landing and take-off slots for routes from London to Dallas, London to Boston, London to Miami and possibly London to New York should competitive conditions change.

The carriers also proposed to allow access to their frequent flyer programs on those routes as well as London-Chicago and Madrid-Miami, and submit data on their cooperation.

The United States Department of Transportation (USDOT) is also in on the gig, with a tentative "All clear" given to the latest partnership but Branson would still have 45 days to lodge his complaint before receiving the final bad news. But not to worry, there will be other opportunites for Sir Richard's Revenge: "The Commission is also probing proposed alliances between members of Star Alliance, and members of SkyTeam, both rivals of Oneworld." Maybe they should just all join hands and form one mega-merger and bury the monopoly hatchet, once and for all.

Monsanto - Monsanto’s Seed Patents May Trump Antitrust Claims, Lawyers Say | Bloomberg News

Major food agribusiness leader Monsanto's legal woes continue to stack up but there may be some relief in sight for the beleaguered seed seller. Jack Kaskey and William McQuillen offer up some excellent reporting on how the US Department of Justice might just be the company's worst, and best friend, in its bid to continue what some are decrying as unfair, and monopolistic, business practices. They report:

Monsanto Co., facing antitrust probes into its genetically modified seeds, may benefit from previous court rulings in which intellectual property rights trumped competition concerns, antitrust lawyers say.

The Department of Justice and seven state attorneys general are investigating whether the world’s largest seed company is using gene licenses to keep competing technologies off the market. At issue is how the St. Louis-based company sells and licenses its patented trait that allows farmers to kill weeds with Roundup herbicide while leaving crops unharmed. The company’s Roundup Ready gene was in 93 percent of U.S. soybeans last year.

DuPont Chemical, a competing firm in the agribusiness marketplace, is hoping for some relief in their struggle to knock Monsanto off the top of the modified seed sales mountain.

“When you have that sort of monopoly power, it can lead to abuse, which is what we’ve been experiencing over the past several years,” said Thomas L. Sager, DuPont’s general counsel.

Wilmington, Delaware-based DuPont claims Monsanto protects its lead in biotech seeds, including the Roundup Ready seeds sold since 1996, by controlling whether competitors can add their own genetics.

Monsanto also has begun switching seedmakers and growers from Roundup Ready soybeans to the newer Roundup Ready 2 Yield version in advance of the original’s patent expiration in 2014. DuPont says Monsanto is using incentives and penalties to switch the industry to the new product in a way that unlawfully extends the Roundup Ready monopoly.

Whether Monsanto's cleverly-contrived plans to offer incentive and penalties that unfairly compressed seed sales into their hands is worthy of being called anticompetitive remains to be seen, but one thing is sure, at 93% of all soybean stock showing the presence of Monsanto's Round Up Ready genetic alterations, a true monopoly is only a few percentage points away.

Google/Microsoft - EC antitrust probe is latest clash in Google-Microsoft war | IT World

Microsoft is redoubling its efforts to make sure Google feels the pain of the antitrust "hurt locker" that has been an unwanted presence for the Redmond, Washington software giant. Sharon Gaudin has some pertinent bits and pieces on this increasingly energetic and serious game of IP brinkmanship for the constant reader to consider:

The EC announced late last month that it had initiated an antitrust probe into Google based on complaints from three European companies, two with connections to Microsoft.

Microsoft CEO Steve Ballmer last week acknowledged his company's role in pushing government regulators to pursue such investigations.

"We're not being silent; we're expressing some of the issues and frustrations we see. Certainly, sometimes that is unsolicited, but oftentimes, it's because we've been asked," Ballmer told an audience at the Search Marketing Expo in Santa Clara, Calif.

Microsoft's complaints to the EC are just the latest skirmish in an escalating battle between Google and Microsoft on several fronts, including the operating systems and enterprise apps markets, and the online search business in particular.

Indeed, Google is the dominant presence in the global Internet search  and search advertising markets and Microsoft is keeping a close eye on the Mountain View, California company.

Julia Holtz, Google's top antitrust lawyer, questioned Microsoft's motives in seeking an antitrust probe via complaints made to the EC by Ciao GmbH, a Munich-based company acquired by Microsoft in 2008, and Foundem, a Bracknell, England-based price comparison site and a member of the iComp trade group, which is largely funded by Microsoft."

It seems Google used some of its search algorithms to sniff out Microsoft's relationship to Ciao and Foundem as an effort to divert attention from its own troubles. And yes, Microsoft scores bonus points with this rejoinder by Dave Heiner, vice president and deputy general counsel at Microsoft: "Ultimately, what's important is not who is complaining, but whether or not the challenged practices are anticompetitive."

Pfizer - Pfizer Still Dealing With Antitrust Issues | The Motley Fool

Well-known big pharma company Pfizer has successfully completed its acquisition of rival drug manufacturer Wyeth but continues to strive to placate European Union officials' concerns of monopolistic practices. Motley Fool Brian Orelli has a some words of insight to help shed light on Pfizer's sell-off of some less-desirable businesses:

Pfizer's (NYSE: PFE) acquisition of Wyeth has been done for months, but the pharma giant's still making moves to satisfy regulators. In order to keep the European Commission happy, today the company sold off some of its animal-health products marketed in the EU to Eli Lilly (NYSE: LLY). The terms of the deal weren't disclosed, but Eli Lilly did say that the products will come with a manufacturing plant to help make them.

This move should help Pfizer rebuff additional concerns over its ginormous market presence although it could also cost the company dearly with the loss of significant amounts of pet-centered product lines. Here's Orelli's take on what potential Pfizer stockholders should keep in mind:

...[I]nvestors shouldn't ignore animal-health products either. Added together, Pfizer's animal products contributed over $2.7 billion to its coffers last year and Eli Lilly's animal health division added $1.2 billion.

Good stuff, people. Have a great weekend, and see you again next week: same ACT time, same ACT place.

Bonus antitrust-related piece o' the week: Intel - Intel digs in to fight FTC lawsuit over chip competition| USAToday

March 10, 2010

ICANN Takes Wrong Turn on New TLD Contracts

The pen is mightier than the word...or should be. When ICANN Chairman Peter Dengate-Thrush, an accomplished attorney, said last year that he wouldn't let one of his own clients agree to a contract that could be unilaterally changed after it was signed, the Internet community breathed a sigh of relief.

 

But when the Chairman backed away from that stance earlier this week in Nairobi, it became clear that we should have held our breath a little bit longer.

 

ICANN's Draft Applicant Guidebook (DAG) is the bible for companies and organizations seeking to launch a new top-level domain. The latest iteration of the DAG, released last year, included a provision that would allow ICANN to summarily rewrite the terms of its contracts with new domain operators, even after those contracts are signed.

 

Members of the community roundly criticized the proposal which turns the fundamental covenant of a contract on its head, and has ramifications that extend far beyond prospective operators of new domains. When Dengate-Thrush signaled his own concern with the provision, many assumed that it was well on its way to being removed, or at the very least replaced with something more reasonable.

 

This week, however, the Chairman backed away from that position, saying that ICANN would need the flexibility to make changes to already-singed registry contracts. This has the potential to be a serious blow, not just to new registry operators, but also to clarity, contractual compliance and due process throughout ICANN.

 

Contracts form the backbone of ICANN's larger compact with the global Internet community. The subject of contracts, and of contract enforcement has been a repeated theme in the larger discussion of accountability and transparency within the organization.

 

On the eve of a critical review of ICANN's transparency and accountability, it would send a terrible message if ICANN were to take a giant step away from contractual certainty and fairness.

 

ICANN is under great pressure to finalize the DAG and launch the new TLD round, but this is an issue that cannot be overlooked. The community has spoken through the bottom-up process, and has said in a clear voice that this contractual provision is unacceptable.  Even the most fervent proponents of the new TLD round cannot wish for a contractual obligation that can be changed at ICANN's whim.

 

The place to address this is here in Nairobi. ICANN needs to send a clear signal that it understands the community's concerns, and will work quickly to develop a contractual structure that is fair to all.

 

With any luck, new registries won't have to consider Dengate-Thrush's extremely sound legal advice, and not sign.

March 05, 2010

Free Press forgets Day Job, Decides to become Small Business Advocacy Group

Today, Free Press, an organization dedicated to free speech and media on the internet, decided to take on the mantle of a small business advocacy group, without bothering to look what small business actually needs. 


Free Press called for the FCC to "take immediate action to solve to competition problem", but what they want would not result in a single new piece of dark fiber being lit, or even one new rack of edge caching servers being bought. Instead, more lawyers will be paid to argue about new ways to regulate an industry that is already regulated. 

We understand that Free Press thinks the internet is broken and too expensive, but for small businesses cost is simply not the biggest issue. As both consumers and online firms, companies are more interested in getting a faster connection, rather than a cheaper one. 

We'd rather err on the side of getting more infrastructure built out, rather than increasing the number of anti-trust lawyers in DC. Instead of worrying about duopolies, we need to focus on ways to create more opportunities for businesses to get paid for their hard work. Allowing for multiple business models to succeed - or fail, through the old-fashioned method of providing goods and services that customers want. 

The four principles of net neutrality outlined in 2006 provide an excellent roadmap for keeping the internet competitive; any device, any content, any application and any provider provides the tools we need to succeed.

This Week in Antitrust

The third in a series of round ups of the tech industry's various antitrust cases and related topics, this week's entry focuses on Apple's use of the ARM microchip in its coming blockbuster, the iPad, and how Intel seems to have missed the custom 'System on a chip' (SoC) boat entirely. Also included are a few pieces of interest on Microsoft, Google, and Yahoo! with competition and antitrust being the featured topics.

Intel - Analysis: Intel Faces Challenge In Smartphone Markets As Alliance with TSMC "Fizzles"| SiliconValleyWatcher

Tom Foremski, former Financial Times reporter who currently focuses on "the business and culture of disruption," takes a look at Intel's struggle to compete in the custom microchip market in a recent piece and highlights the failure of the chipfab titan to adapt to a rapidly changing market. Of particular interest is the choice of a competing chip model, ARM, for use in a growing number of smart gadgets, e.g., Apple's iPad and HTC's "Desire" phone.

A year ago, Intel, the world's top semiconductor maker, announced an alliance with TSMC, the world's largest chipmaker.

TSMC, headquartered in Taiwan, makes chips for other companies. It invented the "fabless" chip industry, which is now the largest sector of the global chip market.

In the first deal of its kind, Intel licensed its Atom microprocessor design to TSMC, so that third parties could design custom chips combining Atom, with technologies from many sources. The goal was to provide something similar to the UK's ARM microprocessor design, which is used in many custom chips, such as the A4 found in Apple's iPad.

But this hasn't worked out.

Intel's Atom chip works swell in devices with larger batteries to power its increased energy needs, but falls short in smaller, more complex, tech items such as the latest generation of smartphones. Foremski offers up some thoughts on what lies ahead for Intel if it can't get up to speed on its system on a chip (SoC) offerings, and quick. "Intel certainly has the talent and resources to make future Atom designs that are competitive with ARM in terms of power consumption and size. But the longer this takes, the more design wins for ARM. Once a company is committed to an architecture, it is very expensive to switch to a different one." And Intel even reveals their prospects for grabbing a larger share of the marketplace are are slim, admitting "...that a lack of customer demand has put the partnership [with TSMC] on hiatus for the short term. Which is to say, there will be no jointly developed Atoms arriving anytime soon."

Apple/Intel - For Chip Makers, the Next Battle Is in Smartphones | The New York Times

In her standout, full-length article, Bits Columnist Ashlee Vance digs into Apple's prescient choice of using a bespoke chip based on the ARM architecture instead of trying to make due with the outdated and power-hungry Intel Atom processor. Chip manufacturers are gearing up for an all-out Armageddon over market share in the rapidly growing SoC market and expect there to be casualties along the way. Vance details the battlefield for the gentle reader:

...[T]he chip wars are about to become even more bloody. In this next phase, the manufacturers will be fighting to supply the silicon for one of the fastest-growing segments of computing: smartphones, tiny laptops and tablet-style devices.

The fight pits several big chip companies — each trying to put its own stamp on the same basic design for mobile chips — against Intel, the dominant maker of PC chips, which is using an entirely different design to enter a market segment in which it has a minuscule presence.

Consumers are likely to benefit from the battle, which should increase competition and innovation, according to industry players. But it will be costly to the chip manufacturers involved.

Due in part to Apple's choice of a main processor based on the ARM model for the coming iPad touch-based tablet computer, Intel is trying to play catch up as quickly as possible but has some stumbling blocks to deal with first. More information on Intel's struggle from Vance:

...Intel is about to enter the phone fray, both to expand its market and defend itself against the ARM chip makers. Its Atom line of chips, used in most netbooks and now coming to smartphones, can cost two to three times as much as the ARM chips, according to analysts. In addition, the Atom chips consume too much power for many smaller gadgets.

But with 'deep pockets' and a long history of chip market domination, Intel shouldn't be counted out just quite yet but they certainly are spending a lot of time on the canvas these days and are rapidly approaching the need for the cut man to step in and do some triage.

Microsoft on Google - Microsoft CEO: Google merits regulatory scrutiny | KVAL.com

Earlier this week, Microsoft CEO Steve Ballmer sat down to have a chat with reporters during a search engine conference and clearly noted his intentions to "keep the regulatory heat on Google" to help increase Microsoft/Yahoo!'s own search market share. Michael Liedtke reports:

Ballmer said Microsoft believes Google Inc. has done things to gain an unfair advantage in the Internet's lucrative search advertising market. He didn't specify the alleged misconduct.

"We are expressing some of the issues and frustrations we see" with antitrust regulators, Ballmer said. "Sometimes (it's) unsolicited, sometimes because we have been asked."

Google declined to comment Tuesday. But it has said its actions are aimed at providing better experiences for Web surfers and advertisers.

This is not the first time in recent memory that Microsoft has attempted to turn up the pace and aggressiveness in pursuing legal means to crush Google's search engine dominance.

As part of its efforts to challenge Google, Microsoft has sought help from Twitter and Facebook - two popular services for sharing information and photographs.

Microsoft, like Google and Yahoo, pays an undisclosed sum for better access to Twitter's index of short messages. In a bigger partnership, Microsoft spent $240 million for a 1.6 percent stake in Facebook and processes search requests on that site.

Responding to questions, Ballmer played down the possibility of Microsoft buying Twitter or Facebook, which are both privately held.

The search engine crown is firmly held by Google but Microsoft is eagerly beavering away at increasing their market share with good results. With Google being accused of unfair and monopolistic practices in the European Union, Microsoft's previous experience navigating such lawsuits might in handry and should help them  increase the role their proprietary Bing search engine plays in bringing in the hits.

Intel - Apple's iPad: trouble for Intel's mobile push? | Reuters

 Ian Sherr's timely story offers additional evidence of Intel's struggle to adapt to a fluid and difficult smart device environment, including gems like this:

While Apple likely will not market the chip publicly, analysts say the new processor underscores how rival chip designs may eventually win out over Intel Corp's designs in the emergent hot category of mobile devices like smartphones and tablets.

Intel says the first smartphones using its chips go on sale by 2010's second half, as it tries to stake out a corner in the wireless market and replicate what it did for the formerly red-hot netbook category it now almost completely dominates.

But analysts point to an uphill battle against Nvidia Corp, Marvell and Qualcomm Inc, already making headway with cheaper, low-power processors based on designs by ARM Holdings PLC.

Intel is very heavily invested in the aging x86 chip architecture, which is holding back necessary and vital R&D efforts to bring down both the cost and power usage of its rival chip, Atom. "If you look at the stuff Intel's put out there at previous press events and developer forums, you see mobile Internet devices that are kind of clunky, really thick, low-battery life type of devices," [Wedbush Morgan analyst Patrick] Wang said. "They've been worried." As far as Apple's choice to go with their custom ARM-based chip, known as the A4: "'If it's a reminder that Intel is not ready for this kind of prime time, it is a sign that ARM is upscaling,' said IDC analyst Shane Rau. 'It's a sign that the ARM ecosystem is executing.'" Will Intel be able to turn its titanic x86 chip towards the New World of smartphones in time to avoid a collision with the looming iceberg of SoC irrelevance? Tune in next week to find out more!

February 26, 2010

This Week In Antitrust

Here is the second in a series of weekly round ups of the tech industry's various antitrust cases and "potential" antitrust concerns. Recent antitrust news has increasingly focused on European Union moves to curb American domination of the global tech market with some Stateside stories thrown in for good measure.

Microsoft - Microsoft's chief counsel Brad Smith sharp, able to relate to people | The Seattle Times - Business & Technology

Microsoft's general counsel, Brad Smith, brought not only a wealth of pertinent legal and antitrust knowledge to the table during the long, drawn-out negotiations with the European Union over the company's alleged monopolistic practices, but also offered a much-needed sense of humor and a penchant for putting a human face on an otherwise stark series of interactions. Sharon Pian Chan reports:

A joke can help even a billion-dollar fine.

Even when Microsoft was facing major antitrust sanctions from the European Union, legal counsel Brad Smith was laughing with Europe's antitrust lawyer about the similarities between the negotiations to the end of the movie "Fatal Attraction."

Each time they thought they had reached a settlement to resolve monopoly concerns about Microsoft Windows and Internet Explorer, someone would come back and try to kill the agreement, like psychopath Alex Forrest rising from the bathtub with a knife.

Settling the case was crucial, because in a previous ruling the European Commission had fined Microsoft $1.4 billion.

Although Microsoft has implemented a kind of user voting system for browser choice in its popular Windows operating systems in response to a separate EU case, the tech giant has yet to see how its appeal of the stunningly huge fine will play out. Surely Smith's easy style, combined with his solid legal arguments, will help ease things in a favorable direction.

Google - Digital book fight pits Google against Justice Department | The Buffalo News - Business Today

Online search and advertising titan Google is hoping it can overwhelm the powers-that-be with the depth of its antitrust knowledge and gain the upper-hand in a class action lawsuit over the company's on-going book scanning project, Google Books. From San Francisco, the Associated Press' Michael Liedtke provides more details on Google's upcoming battle with the US Department of Justice.

Determined to create the world’s largest digital library, Google Inc. is betting it knows more about U. S. antitrust and copyright laws than the government regulators enforcing them.

The Internet search leader took an audacious step toward realizing its book ambitions late Thursday with a 67-page brief filed in New York federal court.

Among other things, the documents dismissed the legal concerns that the U. S. Department of Justice has raised about a class-action settlement proposing to give Google the digital rights to millions of hard-to-find books.

The DOJ is calling the recent approval of the Google Books effort by U. S. District Judge Denny Chin "a bridge too far" and asserts its belief that Chin "lacked authority" to give the massive digital library the "all clear." That's not to say the DOJ isn't trying to slyly endorse Google's efforts with a bit of subtle nudging in the right direction. "Despite those red flags, the Justice Department endorsed the concept of Google’s digital library. The agency also outlined ways Chin could dictate changes that would satisfy some of its concerns." Every antitrust case has at least two sides but strangely enough, the DOJ is playing both good cop and bad cop in this particularly acrimonious instance.

Microsoft/Yahoo! - Microsoft Plus Yahoo vs. Google, So It Begins | Hitsgarden.com

Microsoft's CEO Steve Ballmer and Chief Council Brad Smith are quite excited at the recent decision by both the US Department of Justice and the European Union's Antitrust Commission, as evident in their quoted responses courtesy of article author, Jason. Ballmer offers his enthusiastic PR spin for the gentle reader:

“Although we are just at the beginning of this process, we have reached an exciting milestone,” said Microsoft Chief Executive Officer Steve Ballmer. “I believe that together, Microsoft and Yahoo! will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers.”

Then Microsoft General Counsel Brad Smith weighs in on the good news:

“We appreciate the thorough reviews conducted by the DOJ and the Commission and we welcome the thoughtful decisions reached by each agency. We also commend the collaborative efforts the regulators undertook to understand the search advertising market. Likewise, we are grateful for the efforts of regulators in Australia, Brazil and Canada who previously cleared the agreement, as well as those regulators we continue to work with in Korea, Taiwan and Japan,” noted Brad Smith, Microsoft senior vice president and general counsel.

Microsoft will offer its search engine, Bing, for use by Yahooligans while Yahoo will maintain control over the "relationship sales force for the duo’s premium search advertisers worldwide." Currently, the search market overseas is massively dominated by one player, Google, who controls more than 90 percent of the European market, and the MicroHoo deal aims to change that.

“We’re hopeful that this agreement is a first step for a viable competitor to emerge,” Smith added. “As we said when we announced the deal last July, the agreement required regulatory clearance in the U.S. and Europe before it could close. Now that we’ve received those approvals, we will begin the work of implementing the agreement. And we will continue to work with regulators in other relevant jurisdictions to ensure they have the information they need to evaluate the deal before it takes effect in those specific markets.”

Micron/Hynix/Infeon et al. - Long-Running Antitrust Litigation Against Computer Memory Manufacturers Nears an End | Law.com

In other antitrust news, a lengthy, and complicated legal case is drawing to a close. Dan Levine at The Register, explains how a ruling by Northern District of California Judge Phyllis Hamilton dealt a stunning blow to the 'indirect' plaintiffs in the case.

[Hamilton] ruled that the plaintiffs did not have standing to pursue a swath of claims against the companies. Under antitrust law, indirect customers did not participate in the same market as the DRAM manufacturers, Hamilton ruled.

"A contrary conclusion runs the risk of opening the floodgates to potential litigation," Hamilton wrote in 2008. "In today's current business climate, and with increasingly globalized markets, nearly all markets that service one another can be said to be 'related' to such a degree that the impact of one upon another could allegedly be 'proven' with the use of econometrics."

Hamilton acknowledged the "devastating" effect of her ruling on the plaintiffs' case. They appealed, but it was a risk: Should the 9th Circuit affirm Hamilton, her holdings would extend far beyond the DRAM case.

There still remains the matter of a final agreement by the indirect purchasers of the memory chips with the defendants in question, but as soon as Hamilton approves the contents of the final document, the criminal case will finally come to an end.

February 03, 2010

What happens to the art when the artist can’t make a living from his or her work?

Why do we choose the products we choose, when there are so many alternatives?  I watched the ITIF Forum: “Info-Communism:” A Progressive Path Forward or a Political and Intellectual Dead End? On ustream ustream today  ITIF and Jonathan Zuck, the president of ACT, raised this very fundamental question.   

Although the discussion that followed by the panel was interesting, I am not sure that the panelists ever really answered Jonathan’s question. 

It seems like an important one.  Certainly it is relevant for anyone who hopes to make a living off of their photos, poems, or code.   It is in fact a critical question for everyone who enjoys the products of these creative entrepreneurs.   

On today’s panel,  the discussion centered on intellectual and political movements that seek to level the playing field by opening up access to art to all, without fee, the creations of the few who toil to innovate.  By name alone, these movements--“free culture,” “openness movement,” and “extreme Net Neutrality”--sound inviting.  Who would be opposed to a level playing field?  Why would anyone want to pay more to enjoy what they could have for free?

There are lots of examples of how we share more in real time today than was ever possible before.  We trade quotes and pictures and lyrics with people we have never met before from all corners of the globe.  Sites like Flickr flickr show the amateur photographer in all of us what it means to aspire to great beauty.  This is all wonderful to be sure.  Free – looks like it works fine.  But, there is a rub.

Certainly these same folks that enjoy such art would likely think they are paying the artist a compliment if they share this shot with others.  They probably don’t spend much time pondering the fair use exception carved out by the Supreme Court in its 1984 decision in Sony Corporation of America v. Universal City Studios, Inc. 464 U.S. 417 (1984) when they use the pictures they downloaded as their wall photo.   But what of the photographer who hopes to make a living off of the sale of his or her work? 

There are, to be sure, some areas of grey in the current understanding of what fair use means in the digital economy.  Everyone understands what it means to give someone credit for work well done and talents well used – and even this simple courtesy is often overlooked.    

At one level there may be a qualitative difference between similar things:  one may have more artistry; be more elegant; or, more clearly capture the essence of efficiency.  Should the author, poet or developer who labored and honed his or her skills to create this artistry not be rewarded for the hours of training?

The real debate, however, probably has less to do with defining boundaries in the currently foggy areas of fair use, or imposing norms of civility and kindness, and more to do with human nature of striving for excellence and wanting to be rewarded for the effort.  How do you encourage investment and creativity?  

Jonathan’s question highlighted that people tend to gravitate towards the work of professionals.  In other words, people seem to like that work best.  Viewers gravitate to the music, movies and art of professionals so it behooves us to allow those professionals who simply work harder and for longer on their craft to enjoy the fruits of that labor. 

Jonathan raised the example of the “Hope” poster.  His point was that while there is a lot of debate over fair use surrounding that poster, he finds himself asking why when there were over 100,000 photos of Obama that could have been used for free up on Flickr, why did that person choose a professional image?   Jonathan suggested, and rightly so, that the user of this shot sought to profit from HIS art, shouldn’t the inspiration for that art profit as well?

What happens to the art when the artist can’t make a living from his or her work?  After all Free is great – until it isn’t.