Antitrust – Tech Narratives

Topic: Antitrust

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Bloomberg Reports DoJ Lawyers Likely to View Sprint-T-Mobile Merger Skeptically (Oct 11, 2017)

With all the renewed talk of a Sprint-T-Mobile merger in recent months, one big assumption has been that the Trump administration would view it much more favorably than the Obama administration did, and that it wouldn’t therefore be shot down this time as it was last time. However, Bloomberg reports today that the staff lawyers at the Department of Justice are mostly the same as under the previous administration, even if the leadership and presidency has changed in the interim, and that the lawyers themselves are likely to reach much the same conclusion today as then. In other words, if the deal is to be approved by the DoJ, it will likely happen over the objections and recommendations of the staff rather than with their support. That’s certainly not a deal-killer – SoftBank Chairman Masa Son has cozied up to the Trump administration on issues like job creation, and would presumably curry some favor on that basis. But this does make it more challenging for the deal to go through than many might have assumed. Last time around, the deal was called off before it even formally went through regulatory approval on the basis that it wouldn’t succeed, so I would guess that Son and others would be feeling out the regulatory authorities quietly behind the scenes again this time around to ensure smoother passage.

via Bloomberg

T-Mobile is Winning in US Mobile

Qualcomm Fined $773m by Taiwan for Antitrust Violations (Oct 11, 2017)

Following existing investigations and/or action over antitrust issues against Qualcomm in the US, South Korea, and China, Taiwanese authorities have issued a $773m fine against the company over the same issues. The government’s Fair Trade Commission found that Qualcomm acted anticompetitively when it forced licensees for its standards-essential patterns to accept onerous terms as a condition of licensing. The fine relates to a 7-year period in which the FTC says Qualcomm was paid around $13 billion by Taiwanese manufacturers (presumably HTC and contract manufacturers like Foxconn). This antitrust situation is going more and more badly for Qualcomm, but the biggest outstanding case is of course its fight with Apple, which is withholding its own and contractors’ royalties from the company pending the outcome of various lawsuits. It’s hard to see this all going Qualcomm’s way at this point, and it feels like it’s mostly a question of how much the royalty rate will end up being reduced, and therefore what the financial hit will be.

via Bloomberg

Qualcomm

Qualcomm is Anticompetitive

Google Officially Begins Rolling Out European Shopping Search Changes (Sep 27, 2017)

This is just a quick follow-up on yesterday’s item on Google’s second proposed remedy to the finding that its Shopping search feature violates the EU’s competition laws. Google has now begun rolling out the changes that were reported but not officially confirmed by the company, and the EU’s stance is still that it will have to wait and see how the changes pan out before it rules on whether the fix is acceptable. The separation and opening up of bidding to other companies certainly leaves the door open to similar remedies in the other cases pending at the European Commission as well as other areas it may choose to investigate, including Maps, News, and so on, which would create much more far-reaching effects for Google than this change alone. It’s going to be a tough few years for Google in Europe.

via WSJ

EU vs US Tech

Google Will Separate its Shopping Unit from Search to Satisfy EU Regulators (Sep 26, 2017)

After its initial proposal to address the European Commission’s concerns over its Shopping search feature apparently failed to pass muster, it appears Google is now offering to separate its Shopping search business from its core search business in the EU, and force it to bid for ten slots above the regular search results alongside other comparison shopping services. The reporting here from Bloomberg makes it sound like Google might still get more formal approval of its proposal, despite the EU Competition Commissioner’s remarks to Bloomberg last week which suggested that it would have to play things by ear. This solution will certainly seem less fishy than the first proposal, which I said had significant issues, but it’s still not clear whether it will meet the approval of either the EU or Google’s competitors. Certainly, Google is now going to have to bid for slots it previously received for free, which will dramatically change the economics of the Shopping search in the EU. But as long as Google has exclusive rights to its past data about the results from those links in the past, it will continue to have something of an unfair advantage over competitors in knowing what to bid for them in future.

via Bloomberg

EU vs US Tech

Apple Wins First Small Battles in Court Against Qualcomm (Sep 22, 2017)

I haven’t seen much coverage of this today, but it appears that Apple won a first couple of small battles in its various lawsuits with Qualcomm. A California judge ruled that Apple’s supply chain partners don’t have to pay the royalties they’re currently withholding until such a time as the proper amounts to be paid have been determined, and Qualcomm was also denied its request to end the litigation being pursued separately by Apple in other countries. These are initial steps in what’s going to be a potentially long and complex set of court cases between the companies, but it’s possible that the companies will end up settling once it becomes clearer which way the legal wind is blowing, and they would then likely drop all outstanding litigation. By themselves, these first decisions aren’t indicative of which way things are going to go, but they do put increased financial pressure on Qualcomm, which has seen reported revenues drop as Apple’s partners withhold royalties, which will likely push it to move to settlement sooner rather than later, something that’s probably good news for Apple.

via Apple Insider

Qualcomm is Anticompetitive

EU Competition Chief Says Google’s Shopping Remedy to be Approved by Competitors (Sep 22, 2017)

This seems like a totally bizarre stance from the EU’s Competition Commissioner in response to Google’s proposed remedy to its alleged abuse of its dominant market position. Google is reported to have offered an auction to fill the Shopping slot it previously occupied exclusively, and Margrethe Vestager says her office won’t approve the remedy as such, but will wait to see whether it works in the market. That’s enormously unfair as an approach because it means Google could act in good faith, believing it’s proposed an adequate remedy, only to find out much later than it hasn’t and is subject to back-dated fines. Given that the European Commission found that Google violated its rules, it should surely also be the arbiter of whether the proposed remedy fixed things or not. And allowing the comparison shopping services that prompted the investigation in the first place to be the judges instead seems particularly unreasonable given that they have a vested interest in continuing to extract concessions from Google. I said when the proposed remedy was reported last week that I thought it unlikely to be sufficient, but to leave Google in legal limbo on this point just isn’t reasonable. It gives the impression that the EU has an axe to grind with Google and wants it to suffer rather than simply providing the legal clarity it should be entitled to.

via Bloomberg

EU vs US Tech

Google Reportedly Offers to Auction Shopping Slots to Competitors to Placate EU (Sep 18, 2017)

A few weeks back, when Google filed its proposed response to the European Commission’s investigation into its Shopping feature, I suggested that there were only a few ways in which it might comply with the Commission’s requirements: “kill its Shopping product entirely in the EU; relegate it to either the organic or paid slots on a page rather than giving it the current prominent placement it enjoys; or create a broader “comparison shopping” section above the regular search results featuring both its own and competing services.” In the end, it sounds like what Google has proposed is a combination of those things – allowing other comparison shopping sites to bid to appear in the Shopping section where its own results currently appear exclusively, while placing an artificial cap on its own maximum bids to avoid dominating the results after the change.

The latter highlights the unlikelihood that the solution will be palatable to Google’s competitors or the EU – either it forces itself to sit out entirely from the bidding process, or it will regularly beat out competitors. Google knows better than anyone else what placement in that slot is currently worth, because it’s the only company that’s ever occupied it, and it therefore enjoys an unfair advantage. It could therefore set arbitrary caps in line with what it thinks those slots are worth, allowing competing companies to take the slots it doesn’t want to and reserving the best for itself. Either this has to be an open marketplace, in which case Google’s massive scale will likely allow it to beat out competitors for every slot it actually wants (as the WSJ points out it already does in many cases), or Google has to be excluded. This is where I go back to the solutions I proposed – either open up the Shopping slot in a similar fashion to Microsoft’s Windows browser choice options, or do away with the feature entirely. This proposed solution seems unlikely to pass muster with the EC.

via WSJ

EU vs US Tech