Tag: ftc

EU ready to sue Google

Google OgleThe FTC might have been a little chicken in failing to sue Google for antitrust activities a few years back, but the European Union looks like it’s not frightened of taking the plunge.

A report in the Wall Street Journal said it wants firms that filed complaints against the search behemoth to allow the content to be made public.

That indicates that the EU is preparing formal antitrust charges against Google, sources told the WSJ.

The EU has spent five years so far investigating Google for alleged antitrust activities, infuriating American authorities who felt it has it in for US technology companies.

Google last year launched a charm offensive in Europe, in a bid to demonstrate that not everything it did was evil.

Google consistently denies that it acts as a bullying monopoly in the field of search – something that European publishers and others don’t necessarily agree about.

Google in FTC's sights again

The Federal Trade Commission is taking yet another look at Google, this time over allegations the company used its near-monopolistic position online to sell and serve graphic and video ads.

According to the Wall Street Journal’s secret sauces, the inquiry has just started and it is not certain it’ll evolve into formalities. The rumour comes shortly after the FTC finished its long running antitrust investigation into Google’s web search and search advertising, where the company was let off the hook.

Google brings in heaps of cash from display ads, roughly at 15 percent of the entire $15 billion market. This is helped in particular with ads on YouTube.

Google also turns money by finding ad space on websites across the net, through DoubleClick Ad Exchange, as well as making cash with DoubleClick for Publishers, an ad serving system at the top of the pack in the market. 

There are whispers that Google could be punishing publishers who use ad system DoubleClick for Publishers to utilise non Google technology to sell ad space. Google, a rival reportedly complained to regulators, dangles cash in front of clients so they use the company’s AdMeld service for managing ad space rather than tech from the competition.

It is even alleged that it could be waiving services costs if publishers go with Google.

When Google bought Doubleclick in 2007, the WSJ notes, the FTC decided to let the deal go ahead. Even so, it registered concerns that the buy-out had the potential to boost Google’s other ad products.

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.”

Korean FTC rakes in record fines

Korea’s Fair Trade Commission collected a record number of fines against companies accused of price fixing, in the first 11 months of 2011.

Companies were made to pay back a total of $923 million (1 trillion won), exceeding the commissions’ expectations of $372.3 million (402.9 billion won). The sum was larger as a result of several large scale investigations.

Price fixing has increased in Korea as firms search for ways to make bigger profits. This year alone, Hitachi, HP and AUO have been fined for allegedly jumping into bed with their friends and manipulating LCD and other technology prices.  

As a result of such cases, the FTC made $179 million ($194 billion won) in fines from LCD panel makers and other technologies.

Other cases that raked in the cash were three local instant noodle makers who
were found to have cooked up plans for nine years to match product prices, while eight construction companies were fined after an investigation on collusion to win deals for the four rivers restoration project.

The Korean FTC’s record fine earnings comes months after it was criticised by parties who claimed it should not be given the exclusive right to decide if companies should face investigation for antitrust activities.

The watchdog was criticised after a series of lenient decisions made by the organisation, which saw its critics allege that it seemed more eager to protect businesses than victims of unfair treatment.

Parents overwhelmingly oppose collecting kid's data online

Parents in the USA have expressed strong concerns about the sharing of children’s personal data over the internet

In a survey, released just before law makers decide on a proposal to strengthen child privacy laws, almost all – nine out of 10 – of 2,000 adults said advertisers had an obligation to get the go-ahead before collecting the name, address or any other personal data of a user under 13.

They have also said businesses should refrain from asking a for a child’s location or information about friends.
Currently the water is murky when it comes to how far regulators can go with the privacy of children. The argument is too much regulation can stifle the growing web, media and mobile industries, which often rely on sharing – and storing – information to grow their businesses.

There are also no firm regulations on what can or cannot be done. But this is set to change with the Federal Trade Commission planning to vote this month on revisions to a 1998 law written before the mobile computing boom.

New updates would require permission from parents to track children online with cookies and other tools used by advertisers to create user profiles.

The FTC also wants an update to ensure social networking sites such as Facebook and Zynga are responsible when their partner sites take data on kids. For example, if a child presses Facebook’s “like” button on a news or game site, Facebook would be equally responsible for the handling of that user’s data.

Facebook has rubbished these rules, arguing that it would not be feasible to do this, and it’s easy to see why, with the company monetising on third partner apps and games within the site that are unintentionally or intentionally aimed at younger children.

Back in August it was criticised by mothers after allowing a partner to promote a gambling game, which was brightly coloured and full of cartoon characters.

Although it was stated the game, published by JackPotJoy, was not suitable for minors, parents told us the design of the game could lull kids into gambling by offering them what “blatantly” looked like a game for children.

Facebook for its part said third-party apps liable for privacy violations of their partner sites “raised First Amendment concerns”.

Under the proposed changes, web companies would also have to gain permission from parents to ask for information that pinpoints the location of young users.

The survey seems to suggest that parents are in favour of this, with 80 percent opposed to allowing advertisers to collect and use information about a child’s activities online, even in cases where advertisers do not know the actual name and address of a child.

However, in the eyes of such sites, this could impose on their profits as it would prevent them selling the data to advertisers who could use this to send on voucher codes and coupons as well as suggesting similar games.

Kathryn C. Montgomery, Ph.D, professor of communication at American University and one of the leaders of the campaign to pass COPPA during the 1990s, said that children should be able to reap the benefits of the participatory media culture without being subjected to techniques that take advantage of their developmental vulnerabilities.

“We must ensure that the COPPA rules are updated effectively so that the generation of young people growing up online today will be treated fairly in the growing digital marketplace,” Montgomery said.

One parent said, speaking with TechEye, said it’s bad enough there aren’t secure controls on these sites to stop young children getting on, but then taking advantage of this and their habits is something else.

“It’s clear these sites let minors on because they are set to make some sort of revenue from their data through advertisers, but the morals are all wrong,” the parent said. “I want to be asked what data on my child can be collected, that’s the least these sites can do.

Google to thoroughly outmanoeuvre toothless FTC

While the EU forces Google to take some steps towards resolving antitrust allegations, the US’ FTC is proving outmanoeuvred and toothless.

Europe’s antitrust chief has publicly warned Google that it could face charges of breaching EU rules, and be fined, unless it does more to ease concerns that it used its search to block rivals. In the EU, Google seems on edge and is talking with the watchdogs often to avoid a court case.

However, there is something decidedly rotten in the way the matter has been handled in the US.

While trembling with fear about the EU, as Techradar points out, for almost 20 months Google has stared down an FTC antitrust investigation.

According to Bloomberg it has not even offered the FTC a settlement. If it doesn’t, the FTC will be forced to sue in a case that could take two to three years to litigate and cost a fortune to fund.

But Google does not seem to care. The idea is that if the company does eventually offer a settlement, it will be a face saver for the FTC and will not involve money changing hands.

While the legal process goes on, Google will continue to use the business practises that the FTC does not like to make a killing.

This is because the US legal system is too slow to take on complaints of this type. For example, by the time that the FTC dealt with Microsoft, Netscape was stone dead.

As far as cash rich companies such as Google are concerned, having to pay the US a billion is small change when you take into account the fact you have killed off your rivals and established yourself as a top monopoly. That is assuming that it will have to pay anything.

The only problem with that strategy is that Google’s rivals could sue it, long after the dust has settled with the FTC.

So all the search engine has to do then, is head off the FTC with a face saving token settlement about a year into the litigation process.

Google would have to agree that it would limit what it would otherwise be free to do. The FTC could say that the larger goal of keeping competition intact would win out and Google will have run its anticompetitive behaviour for long enough to do some damage.

A settlement would not be an admission of fault, which would make it difficult for Google rivals to use the FTC to help their own legal case. 

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. 

Korean FTC slaps LG with paltry fine

The Korean Fair Trade Commission has used its powers to fine billion dollar company LG  a huge fine of… $74,300 (85 million won).

The paltry penalty, for obstructing the FTC investigation into claims of unfair pricing practices in March,  is sure to make the billion dollar company quake in its boots.

LG has also been reprimanded for secretly moving its memory drives when investigators demanded that the door be opened.

Another manager at the company has also been accused of deleting files on his external drive after FTC agents ordered him not to do so, the Joongang Daily reported.

The watchdog began investigating the company after smaller retailers asked it to check if the company was providing its products at different prices.

However, many will be unimpressed at its lack of backbone issuing such a small fine.

Earlier this week critics hit out at the watchdog for being “too lenient”  and this latest incident isn’t compelling evidence to the contrary.

LG has somewhat become a favourite with the watchdog. In 2009 LG was let off the hook when it was investigated and found guilty of fixing the prices of home appliances between 2008 and 2009.

Critics claimed that the regulator’s leniency program meant that LG was exempted from the fine of $16 million (18.83 billion won).

Up until 2000, the FTC filed a complaint against two percent of the total cases detected.

However, this figure had dropped to 0.95 percent over the past 10 years even though the annual number of cases the agency handled had increased five- to six-fold during the same period.

Of the 3,505 cases the FTC detected in 2010, the agency filed a complaint in only 19 cases. In 1,763 cases, the agency ended up issuing a warning.

Critics say Korean FTC is "too lenient"

Korea’s Fair Trade Commission (FTC) is facing increasing criticism from parties who believe it should not be given the exclusive right to decide if companies should face investigation for antitrust activities.

The finger pointing comes after a series of lenient decisions made by the watchdog, the Korea Herald reports.

Currently the FTC holds the exclusive rights to such cases as a means to stop abuse by law enforcement agencies.

However, it is now coming under fire from officials in the Korean legal field who claim that the 32 year old system is waning and needs a refresh. There are also claims that the watchdog
seems more eager to protect companies than victims of unfair trade.

One example given here was when the regulator investigated and found guilty Samsung and LG, which dominate more than 90 percent of the domestic market, for fixing the prices of home appliances between 2008 and 2009.

However, critics claim that the regulator’s leniency program meant that LG was exempted from a fine of $16 million (18.83 billion won), while Samsung got its fine halved.

And in its old age the law is wobbling, with the Korea Herald reporting that up until 2000, the FTC filed a complaint against  two percent of the total cases detected.

However, this figure had dropped to 0.95 percent over the past 10 years even though the annual number of cases the agency handled had increased five- to six-fold during the same period.

It also pointed out that of the 3,505 cases the FTC detected in 2010, the agency filed a complaint in only 19 cases. In 1,763 cases, the agency ended up issuing a warning.

The low amount of fines has also caught the eye of critics, which pointed out that although the FTC usually imposed fines equivalent to around one to two percent of related profits, in other developed countries the rate increased to 15 to 20 percent of profits.

Politicians and civic groups now demand that tougher measures, including criminal charges, be adopted to prevent unfair trade among conglomerates together with abolishing the exclusive right of the FTC.

Compared to other countries, they say, unfair business activities like price fixing are more likely to happen in Korea, where the gap between large and smaller firms is deepening due to the powerful market dominance of major conglomerates.

Rep. Kim Jae-won of the ruling Saenuri Party said: “At a time when ‘economic democratisation’ is emerging as a new agenda, it is inappropriate to maintain the system.”

However, the FTC fought back claiming that antitrust cases should be handled differently from other criminal charges.

It said that that this was because the consequences needed to be considered carefully and added, before pointing out that in many countries, criminal charges were taken as “supplementary measures together with administrative punishment.”

It claimed that of 34 OECD member states, Korea was one of 13 countries that imposed criminal charges, while others such as Australia, the Netherlands, Sweden, Spain and Finland had no regulation for criminal charges.

The FTC said that of the 13 countries that imposed criminal charges, seven countries had no record of punishment over the past 10 years.

The exception fell in the US where the Justice Department oversaw antitrust cases together with fair trade authorities, it added.