Tag: federal trade commission

Watchdog blocks $330 million component company acquisition deal

US authorities have blocked a proposed $330 million acquisition deal, with the buy out of PLX Technology creating a “near-monopoly” for Integrated Device Technology (IDT).
The Federal Trade Commission has put an end to the deal which it ruled would create an unfair advantage in the production and sale of PCIe switches, components which perform connectivity functions in electronic devices.
According to US authorities, IDT and PLX are the two biggest players in the PCIe market, worth $100 million a year globally.
The FTC said that the two companies are currently each other’s closest and most direct competitors. By joining together in a $330 million merger deal agreed in April 2012, the resultant company would own 85 percent of the PCIe market.
In the past customers have capitalised on the rivalry between the two component firms to drive down prices, but the proposed deal would eliminate this competition, potentially affecting value and quality. The rivalry has also resulted in more innovative features and better customer service.
“PCIe switches are important components in many computing, communications and consumer products,” said Richard Feinstein, Director of the FTC’s Bureau of Competition.
“The combination of IDT and PLX would hurt competition and lead to higher switch prices, lower innovation in the marketplace, and reduced customer service.”

Google attacked by antitrust watchdog over Frommer's buy

Google has snapped up travel guidebook brand Frommer’s, a deal which has been attacked by a consumer group over potential antitrust implications.

The acquisition will mean Google further increasing its online content services a year after the acquisition of restaurant ratings service Zagat. Frommer’s online and print publications will offer the search giant extensive local reviews and listings content. Owners John Wiley & Sons did not reveal how much the deal was worth.

Google has made other inroads into the travel industry, acquiring software firm ITA last year. Although the deal was eventually given the all clear by US authorities, the Federral Trade Commission was keen to ensure that Google would not be leveraging its dominant position unfairly.

Now it seems that the Frommer deal has raised the ire of consumer rights groups, with Consumer Watchdog demanding another antitrust investigation from the FTC.

The antitrust allegations centre around the firm moving away from its traditional services and further into providing online content.

“There is a fundamental conflict between being a search provider and a content provider,” John M. Simpson, Consumer Watchdog’s Privacy Project Director, said in a statement.  

“As Google has increased its content and services, it has unfairly favoured them in its search results and damaged competitors,” he said. “It makes absolutely no sense to approve this deal.”

Google is already in hot water with the FTC, having been landed with a record $22.5 million fine last week.  

The search giant also faced criticism from a UK MP over its tax payments which have been described as using the controversial “Double Irish” system. 

But according to Alan Davis, a partner at law firm Pinsent and Masons, the deal is unlikely to run afoul of competition authorities as Frommer’s does not have the dominant position that ITA had prior to its Google buy out.

“I don’t think that this particular acquisition is likely to be objectionable from a merger control point of view,” Davis said.  “I don’t think the competition authorities will be able to block or it or raise serious concerns about the acquisition at this stage in order to stop it taking place.”

According to Davis it is unlikely that the deal in itself would constitute anti-trust, though should Google unfairly leverage its own position search dominance then authorities could come calling again.

“There may be concerns down the line depending on how they treat other travel guides,” Davis said.

“If they act in some sort of discriminatory way in relation to how their search engine works and they give favourable discrimination to Frommer’s, then they could be subject to challenge for abuse of dominance,” he said.

FTC hits Google with record $22.5 million fine

Google has been hit with a $22.5 million fine for its tracking user activity on Apple’s Safari browsers, the largest ever handed out by the Federal Trade Commission.

Although the fine is the largest handed out by the FTC, $22.5 million is unlikely to cause Google too much hardship, with the company making about that much in just a few hours.

The FTC slapped the search giant with the fine after being found guilty of allowing tracking cookies on Safari, even when users had selected a ‘do not track’ browser setting.  The cookies can then be used by Google to generate ad revenues based on sites users have visited, through targeted advertisements.  

According to the FTC, Google had violated a previous agreement to abide by rules that prevent companies from misleading net users about online privacy policies.

Google has now been ordered to pay the record civil penalty and to disable all unauthorised tracking cookies.

“The record setting penalty in this matter sends a clear message to all companies under an FTC privacy order,” Jon Leibowitz, Chairman of the FTC, said.

“No matter how big or small, all companies must abide by FTC orders against them and keep their privacy promises to consumers,” he said, “or they will end up paying many times what it would have cost to comply in the first place.”   

But with Google under investigation antitrust both in the US and by the European Commission, the result comes at a bad time for the firm. The search giant maintains that the placing of cookies was done inadvertently. 

Search outfit argues Panda key to Google antitrust case

Product search site Foundem has claimed that Google is directly targeting household name search sites through Google Panda, the algorithm it says is central to ongoing antitrust cases.

Foundem kicked off the European Commission antitrust investigation against Google after they saw their site drop down the page rankings following the introduction of Universal Search in 2007.

Since Foundem first presented the case against Google, an official investigation has begun on both sides of the Atlantic.  This has centred around Google’s leveraging of its search engine dominance, 95 percent of the market in Europe, to favour its lucrative forays into maps, product search and more.

Now, with a high profile investigation also underway by the Federal Trade Commission in the US, Foundem believes that Google is on the verge of facing retribution from both sets of watchdogs after flouting anticompetitive laws with Panda.

TechEye spoke to the owners of Foundem, Shivaun and Adam Raff, who have been putting the case for Google’s abuse of its dominant position to both the EC and the Federal Trade Commission.

The pair believe that the search giant has upped its attack on rival sites in the face of anticomptetitive claims through the use of the Panda update to its search algorithm.

“Google Panda has struck a lot of very legitimate household names and established vertical search brands, and has done this in the face of antitrust investigations,” TechEye heard.

“Not many people have linked Panda and antitrust cases on each side of the Atlantic.  But Panda is not just relevant to the investigations, it is core to the investigations.  You could see this coming.

“With Panda the dial has been turned up to 11 in terms of necessity of fixing this.  So we hope the EC comes to a decision soon, and we do get the sense that the Commission understands the urgency of these issues.

Foundem believes Google is up for more than a wrap on the knuckles: “We are very confident that the EC will find Google guilty of abusing its dominant position in search and search advertising.”

Foundem does have some compelling data, which aims to show that Google has abused its position when it moved into product search.  Google boss Schmidt was called before the Senate in September to discuss antitrust allegations, and it is Foundem’s research that was used to illustrate the dominance of Google’s product search. 

In this video Schmidt can be seen squirming under questioning regarding Google using its search dominance to prioritise its own product searches on a page.  

Foundem’s owners are confident that measures will crop up to rein in attempts a world of ‘Google Everything’.

They believe Google must be stopped from sending rival companies spiralling down search rankings.

“In our complaint is included a set of very simple remedies that would seriously mitigate a lot of the damage caused,” Foundem told TechEye. 

“Google needs to clearly and conspicuously disclose when it inserts its own services into its search results.  It also needs to stop discriminating in favour of its own services.  Universal Search uses different ranking algorithms to insert its own services than it does for ranking everyone else.

“It needs to put those two sets of algorithms on a level playing field.” 

However, the Raffs do not think a ten percent fine from the EC is the best course of action. The money won’t matter.

“A ten percent fine is not significant to us or Google,” they argue. “What is really important to the thousands of innovative businesses being crushed by Google’s tactics is a set of remedies that stop its anticompetitive behaviour.”

Others too have come forward with complaints against Google, with French search site Twenga the latest to approach the EC, though Foundem’s owners believe that many are anxious about taking on the search giant’s might. 

This is perhaps understandable given the vast resources available to Google, with the likes of Foundem having to struggle to keep up the fight against the multi-billion dollar firm.

“People are understandably reluctant to put their head above the parapet,” Foundem told us.  “It would have been nice at the beginning to have more involved but it is not necessary now as things have advanced so far.

“But we have had discussions with other companies and they do indeed share our views.”

One which has come forward is Microsoft-owned Ciao, as well as Microsoft sponsored trade organisation ICOMP which has recently lobbied for a decision against Google.  This has led to raised eyebrows in the past over Microsoft’s level of involvement in other complaints.

Considering the search rivalry between Microsoft and Google, aligning with Microsoft, itself no stranger to antitrust cases, is inevitably going to draw attention.  

Unsurprisingly this is a topic which Foundem’s owners were cagey about when we broached the subject.  They are vehement in asserting that there has been no involvement from Microsoft, and believe that Google has benefited massively from a campaign of misinformation about Microsoft backing.

It may make a convenient headline to bill the antitrust case as a Microsoft versus Google feud, they say, but Foundem’s owners are adamant that this is baseless and detracts from a legitimate debate.

“Google has been very successful at diverting attention,” the Raffs suggest. “The danger is that it causes confusion, and that it turns into Coke versus Pepsi, or Microsoft versus Google rather than a proper debate.

“We are members of ICOMP but we would make it very clear that all of our actions are entirely independent: with the sole exception of our original Complaint to the EU, for which we received some legal assistance from ICOMP’s legal counsel. Every slide in our presentation, every step in our strategy, and every sentence in our documents are conceived and delivered entirely by us.

“Foundem’s Google penalties, and its ensuing campaign to have them overturned, started two and a half years before Foundem had even heard about ICOMP.”

Foundem hopes that the EC and the FTC, which is likely to make a ruling after Europe, will not let Google off the hook.

“If Google’s anticompetitive practices are not curbed it would be a complete disaster for the internet, for all businesses, and for all users of the internet,” Foundem suggests to us.

“The stakeholders involved in this case are pretty much anyone, when you consider how many people use Google. 

“How many people assume that they are getting unbiased and comprehensive search results?” 

FTC gets serious about Google search and Android

Details are emerging of the Google antitrust case, with the Federal Trade Commission taking aim at the company’s web search services and Android operating system.

Sources close to the Wall Street Journal have revealed that the US antitrust regulator is homing in on areas to attack Google following subpoenas issued six weeks ago

The FTC is trying to narrow its focus on Google’s supposed wrongdoings, no mean feat considering the length of the firm’s alleged rap sheet. Indeed it’s thought that the inquiry could go on for around a year.

However the FTC is reportedly homing in on two main areas where Google may have crossed a line.

The investigations look at whether Google’s pushing its own products across its search, with Google Places business, Shopping results and Finance service all under the FTC’s magnifying glass.

This extends to the FTC also looking at allegations of Google taking information from rivals such as reviews of local businesses or restaurants, using them on its site, and then demoting the rival’s services in its search results.

Following the probe turning official in June, Google is rather nonplussed about the action it is facing, despite growing cases of antitrust across the globe.  And indeed a spokesperson has said that it is “happy to answer any questions” about its business.

This butter-wouldn’t-melt façade is unlikely to fool anyone who views Google as a snooping megalomaniac.  In the meantime Google has been allegedly covering its tracks by getting rid of some offending material on its site.

It’s said the firm attempted to hoodwink the FTC by removing previews of sites such as TripAdvisor, though we found out that it would take a lot more to take the heat off itself with the FTC investigation in full swing.

We can, most likely, expect this game of cat and mouse to continue for some time. Who’s the cat and who’s the mouse?

Apparently, sources have indicated that the FTC will be knocking on the doors of those who felt they have been bullied by Google, and will seek documents and evidence to help its investigation.  So there will be little room for Google to hide in the long run.

Google is also being hounded over concerns that the Android operating system is being used to muscle other firms out, putting pressure on manufacturers to keep to its own services.

One such example is that of Skyhook Wireless, which has been wagging its finger at Google over its location sensing technology.  It reckons that Google was bringing its considerable weight to bear on smartphone manufacturers to ditch its service in favour of Google’s own.

Furthermore, with Android becoming an ever more dominant force in the mobile OS market, there are questions being raised about the firm’s search engine ubiquity on handsets.

Intel and FTC finally reach agreement on anticompetitive allegations

The Federal Trade Commission and Intel have at long last settled the anticompetitive conduct dispute, where Intel was accused of illegally getting the one-up on competition, such as AMD, in the chip market.

The FTC reckons that the new settlement will go beyond the previous limits to Intel’s monopoly, also applied by the FTC, and will “help restore competition that was lost” because of Intel’s alleged bullyboy tactics.

The settlement outlines that Intel is now prohibited from, in the words of the FTC:Conditioning benefits to computer makers in exchange for their promise to buy chips from Intel exclusively or to refuse to buy chips from othersRetaliating against computer makers if they do business with non-Intel suppliers by withholding benefits from them.

Essentially it is being asked to compete in a fair way, but all’s not fair in love, war and business. Intel must now change its intellectual property agreements with AMD, Nvidia and VIA so that the companies have increased freedom to consider mergers or joint ventures with other companies – without Intel breathing down their neck with legal threats about patent infringement.

Intel has thirty days after the order becomes final to offer each designated Intel competitor to amend patent agreements in writing by both parties. Competitors will be allowed to, without breaching the agreement, disclose licensed rights of the competitor’s patent agreements as long as a custom of the competitor or foundry agrees in writing to keep those terms confidential. 

Intel must also offer to extend, if Via wants it, the x86 licensing agreement five years beyond the current agreement terminating in 2013. It’s got to maintain its key PCI Express Bus for at least six years in a way that won’t limit performance of graphics processing chips.

According to the legal document, Intel may choose the specification of the PCI Express Bus, for example PCIe Base Specification 3.0, that will be included in each of its microprocessor platforms following the provision.

The FTC says these assurances will give incentives to manufacturers of complementary and potentially competitive products to Intel’s CPUs. It must also disclose to software developers that Intel computer compilers discriminate between Intel chips and chips from competitors, and that they may not register all features of non-Intel chips. Importantly, Intel is going to have to pay back all the software vendors who will want to recompile code using a compiler from one of Intel’s competitors.

Intel’s official line on the ruling is that it does not admit either any violation of law or that facts alleged in the complaint are true – and that the approved agreement is subject to a 30 day public comment period as well as final approval by the Commission, though Intel may be clutching at straws here.

Doug Melamed, who signed off the document, said: “This agreement provides a framework that will allow us to continue to compete and to provide our customers the best possible products at the best prices. The settlement enables us to put an end to the expense and distraction of the FTC litigation.”

In other words, it may shine badly on Intel that it has had so much said against it, but at least it won’t be putting as much into lawyers any more. Who are always, of course, the real winners.

The full settlement, signed by A. Douglas Melamed, Senior VP and General Counsel of Intel Corp and J. Robert Robertson of the Bureau of Competition, is available in full here

Intel could be close to deal with FTC

Intel may be close to a deal with the US Federal Trade Commission on the chipmakers antitrust case.

The FTC and Intel have been negotiating since last month to meet a self-imposed July 22 deadline to reach a settlement.

Reuters has mentioned that Intel and the FTC had reached a preliminary agreement that wouldn’t include a fine.

Under the deal Intel would be limited in is use of volume discounts for its central processing units, the main chips in personal computers, as well as chips that run graphics.

The reason there is no fine involved is because the FTC doesn’t have the power on its own to levy civil fines in antitrust cases.

The FTC accused Intel of illegally using its dominant market share to stifle competition for a decade.

The suit was filed after Intel was fined by the European Union in May 2009 and settled a civil case last November with AMD its closest competitor.

Intel wrote AMD a cheque for $1.25 billion. That followed a record EU fine of $1.45 billion at the time. 

Chuck Mulloy at Intel got in touch with us – the official line is: “The discussions with the Federal Trade Commission are ongoing.  Beyond that we have no comment on speculative reports concerning those discussions.”

FTC ends elaborate virtual company scam

The Federal Trade Commission (FTC) has put an end to an elaborate off-shore virtual company scam that stole millions, a penny at a time.

MacWorld reports how the scammers were able to use Regus to create fictional addresses near legitimate companies, allowing them to steal the tax identity of the real ones. Another legitimate service called Earth Class Mail was then used to transfer correspondence sent to the fictional address, while United World Telecom’s CallMe800 was used for forwarding calls. Fake websites were set up to further the illusion that the scams were genuine.

You might think having a foreign IP address would be the giveaway here, but they thought of that too and used American IP addresses located near their fictional office building.

The fake companies would charge people between 25 cents and $9, keeping the numbers small to avoid detection. Most fraud systems only come into effect after $10, showing that the scammers were well clued into the loopholes of the system. Even if people recognised that they had been illigitimately charged, they were unlikely to complain about 25 cents, particularly if the phone charges for making the complaint would likely cost more. 94 percent of the illegal charges were uncontested, but since over 1.35 million credit cards were charged the scammers made a whopping $9.5 million (£6.3 million).

To get the money out of the country the scammers hired people via e-mail spam. These naive people would then set up bank accounts and help move the money off-shore. One of these “money mules” mentioned by the FTC was James P. Smith of Brownwood, Texas, who worked for a fictitious Alex Moore, for four years, not realising that the whole endeavour was illegal. We advise people not to take jobs e-mailed to them that they did not apply for, especially if the offers can be found in the spam folder.

116 fake merchant accounts were created, 110 of which were with First Data, suggesting that the payment processing company may be a little lax in its vetting procedures, a fact that scammers would have a keen eye for.

“It was a very patient scam,” said Steve Wernikoff, an FTC attorney working on the case. “The people who are behind this are very meticulous.”

While the scam was quashed, none of the scammers have been identified or caught, allowing them to set up shop in another country.

Google Buzz gets reported to the FTC

Despite changes Google made to privacy settings in its social notworking tool Buzz, privacy advocate, the Electronic Privacy Information Center (EPIC) has gone ahead and filed a complaint with the Federal Trade Commission (FTC).

The complaint said that Google was operating unfair and deceptive trade practices by changing its Gmail service to a social networking service without asking its users for consent.

EPIC said: “The complaint argues that Google’s change in business practices and service terms violated user privacy expectations, diminished user privacy, contradicted Google’s own privacy policy, and may have also violated federal wiretap laws.”

The complaint focuses on the importance of email privacy alleging that “improper disclosure of even a limited amount of subscriber information by an email service provider can be a violation of both state and federal law.”

Gmail, EPIC continued, include deeply personal information – that includes the names and emails of estranged spouses, lovers, attorneys and doctors.

The activation of Buzz disclosed not only parts of users’ contact lists. “The fact that the auto-following lists were composed of users’ most common Gmail contacts was widely known and publicized, as well as easily deduced by individual users,” claimed EPIC.