Displaying items by tag: antitrust

Apple executive blasts Qualcomm during antitrust lawsuit trial

Written on Thursday, 17 January 2019 10:28

A prominent Apple executive has testified that Qualcomm refused to let the US technology behemoth use its chip technology in their latest line of iPhones due to an ongoing dispute between the two companies over licensing fees.

The admission was made by Apple COO Jeff Williams, during court proceedings in relation to an antitrust lawsuit filed by the US Federal Trade Commission.

Williams told the court that the global smartphone manufacturer expressed a desire to use both Qualcomm and Intel chips in its 2018 iPhones, but stated that Qualcomm withdrew support for Apple by refusing to sell them chips.

In addition to this, he disclosed that Apple has not been able to reach an agreement with the US chipmaker in relation to a new design since it filed a lawsuit in January 2017, which accused Qualcomm of using anticompetitive licensing tactics.

Williams also detailed the company’s fee negotiations with Qualcomm, noting Apple repeatedly traded exclusivity for a lower chip cost in order to keep the latter’s technology in its devices. Williams said, “We needed their chip supply, and we didn’t have a lot of options.”

Qualcomm has yet to mount its full defence in the litigation proceedings. However, it must be said that the claims made by Williams come in stark contrast to testimony provided by Qualcomm CEO Steve Mollenkopf last week.

Reuters published a report which claimed that the Qualcomm CEO declared that the chipmaker had sought an exclusivity arrangement not to shut out the competition, but instead to ensure it would recoup a $1 billion “incentive payment” made to Apple in 2011 in an effort to help cover technical transition costs incurred in switching chip suppliers from Infineon.

Williams’ statements were also contradicted by comments made by Qualcomm president Cristiano Amon during an earnings call in July 2018 noting the company would gladly be an Apple supplier again if the opportunity presents itself.

Mollenkopf also stressed that there was no reason the pair could not work together again noting that it makes sense that the technology leader in mobile should partner with the product leader.

Published in Devices

Google files appeal against $2.8bn EU antitrust fine

Written on Tuesday, 19 September 2017 10:45

Alphabet-owned Google is fighting back against the $2.8 billion antitrust fine it was given by the European Commission in June this year. The Californian tech giant has filed an appeal against the fine, which was the largest penalty ever given by the European Union’s regulator.

The European Commission had ruled that Google’s positioning of its own shopping comparison service at the top of Google search results was an abuse of power. If the practice continued, the Commission said, more fines would come Google’s way.

At the time when the fine was imposed, the EC’s Competition Commissioner, Margrethe Vestager, said Google was conducting activity that was “illegal under EU antitrust rules.” Google “respectfully disagreed” with the ruling, but was given 90 days to end its “anti competitive” practices or else face another fine amounting to 5 percent of the average daily global earning of Alphabet.

The company “has systematically given prominent placement to its own comparison shopping service,” the Commission claims. Furthermore, “Google has demoted rival comparison shopping services in its search results.”

For instance, rival comparison shopping services appear in Google's search results on the basis of Google's generic search algorithms. Google has included a number of criteria in these algorithms, as a result of which rival comparison shopping services are demoted. 

Evidence, according to the Commission, shows that even the most highly ranked rival service appears on average only on page four of Google's search results, and others appear even further down.

Google's own comparison shopping service is not subject to Google's generic search algorithms, including such demotions. As a result, Google's comparison shopping service is much more visible to consumers in Google's search results, whilst rival comparison shopping services are much less visible.

Google's “illegal practices” have had a “significant impact” on competition between Google's own comparison shopping service and rival services, the Commission claims. They allowed Google's comparison shopping service to make significant gains in traffic at the expense of its rivals and to the detriment of European consumers.

Given Google's dominance in general internet search, its search engine is an important source of traffic, the Commission claims. As a result of Google's practices, traffic to Google's comparison shopping service increased significantly, whilst rivals have “suffered very substantial losses of traffic on a lasting basis.”

The Commission is now looking at other areas where it suspects Google may have abused its monopoly power, notably its Android mobile operating system, speculates BBC Technology Correspondent Rory Cellan-Jones. The Commission’s ruling against Google “was seen as just the first shot in a wider campaign,” he said.

Published in Government

Mexican court rules in favor of America Movil

Written on Sunday, 27 August 2017 13:00

America Movil, Mexico’s largest telecom provider, won a victory this month, when Mexico’s Supreme Court ruled on August 16 that the operator doesn’t have to share its network to rivals free of charge. The court said a law requiring the company to allow rivals to use its network for free is unconstitutional.

Billionaire Carlos Slim Helu, the world’s fifth wealthiest person, runs the Mexican wireless telecom and pay TV giant, competing against rivals US telecom giant AT&T and Spain’s Telefónica. America Movil hoped the court would force its rivals to pay back fees – estimated between $600 million to $800 million – for using its network.

But the Supreme Court said the only authority to determine what interconnection fees AT&T and Telefónica should pay America Movil is the Federal Telecommunications Institute, Mexico’s telecommunications regulator, known as the IFT.

America Movil claims that Congress overstepped its role by implementing a zero charge service into Mexico’s telecom law for operators with over 50 percent marketshare. The landmark reform, introduced in 2014, sought to hinder America Movil’s market dominance in the country.

About two-thirds of Mexico’s mobile marketshare is dominated by America Movil, according to Dow Jones Newswire. But lower service fees were implemented as a result of newcomers in the market. Antitrust reforms were initiated to break America Movil’s control.

Under a new telecom law, America Movil was prohibited from charging other telecom carriers for connecting their calls made to customers on its network, while allowing those companies (Telefónica and AT&T) to charge America Movil for connecting its calls to their customers.

The reform was challenged by Mr. Slim’s attorney, who initiated the argument that it was unconstitutional for Congress to dictate telecom prices. The IFT has since been granted exclusive power by Congress to make those decisions.

The Supreme Court’s latest ruling is an “important resolution” America Movil claimed in a statement. The company said the ruling “restores the authority” of the IFT in determining interconnection prices. America Movil said the decision should be based “on international best practices, cost oriented methodologies, transparency and rationality.”

The company also emphasized that, despite the “unconstitutionality” of the zero tariff, rival carriers were not ordered to compensate Telcel, America Movil’s cellular service affiliate, for using its network.

The IFT said it will comply with the Supreme Court’s ruling and decide what rate, if any, to be paid to America Movil, but the group didn’t specify when. A report by Forbes predicts that its decision will come within two months, with rates being implemented in January of 2017.

America Movil has been accused of trying to reverse the antitrust movement. When Mexico’s Supreme Court last month said it would consider the company’s injunction, a group of 21 companies including AT&T and Telefónica, published a scathing advertisement in Mexican daily newspapers accusing America Movil of using “legal resources and devices” to overturn the reform against it.

Despite this, America Movil firmly holds around 70 percent of Mexico’s wireless market share, according to Reuters, and the antitrust rules did little to overturn the company’s dominance.

Published in Telecom Operators

Alphabet Inc., the parent company of Google and YouTube, posted its financial results on July 24 for the quarter ended June 30, 2017. The tech giant reported a 21 percent jump in quarterly revenue, maintaining a strong growth rate despite a massive anti-trust fine from the European Union.

The company said it made $3.5 billion in net income on sales of $26 billion. Alphabet’s profit would have been even larger if not for the record $2.7 billion EU fine. Alphabet was accused of abusing its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.

Anti-trust concerns have not come from the US. If it weren’t for the EU fine, Alphabet said its earnings per share would have been $8.90 in Q2, compared with $7 a year earlier. But with the fine, the company reported earnings per share of $5.01, beating an average estimate of $4.49.

The company will fight to continue bundling its Android operating system with popular smartphone apps such as Google Maps, said Google CEO Sundar Pichai in a conference call – a practice the EU anti-trust officials are investigating.

“It’s a very open market, open ecosystem, and it works well for everyone, and I expect that to continue,” he said, adding that billions of people use Google products worldwide.

"With revenues of $26 billion, up 21 percent versus the second quarter of 2016 and 23 percent on a constant currency basis, we're delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams," said Ruth Porat, CFO of Alphabet.

There are concerns, the company noted, that its costs have been rising faster than sales. Expenses would remain high as more searches shift to mobile devices. The uncertainty of expected profit appeared to weigh down on Alphabet’s share price, said Reuters, which fell about 3 percent to $967 after the bell.

The company’s revenue costs, a measure of how much it needs to spend to keep its platforms running before added costs such as research, rose 28 percent, according to the results, which is higher than the growth in revenue itself. The rising costs, such as Google paying to drive traffic to its search engine, affected the company more than expected, analysts report.

“This could be problematic going forward,” Doug Kass, president of Seabreeze Management, told Reuters.

Alphabet is focused on growing bigger, according to Porat, who was asked about margins during a conference call with analysts. She said, “As we’ve often said, we’re focused on revenue and operating income dollar growth and not on operating margins.”

She further noted that increasing costs are merely the result of more money being invested into high-growth products that she said would create value for Alphabet shareholders. The company currently holds $15.7 billion in cash and cash equivalents, according to the results, and a further $79 billion in marketable securities.

Alphabet competes head-to-head with social media giant Facebook for online advertizing revenue. According to eMarketer, Google is expected to have $73.75 billion in net digital ad revenue worldwide while Facebook is expected to make just $36.29 billion. Together, eMarketer reports, Google and Facebook rake in 49 percent of the market.

Other products under the Alphabet umbrella, such as the Pixel smartphone, the PlayStore and Google’s cloud business, saw revenue increase 42.3 percent to $3.09 billion. Google’s cloud business competes against heavyweights such as Amazon and Microsoft.

Some of Alphabet’s losses came from business units such as Waymo, its self-driving company, and thermostat-maker Nest, and the life sciences firm Verily.

Published in Finance

Uber has come under fire in Spain by Madrid authorities that have asked the anti-trust watchdog to investigate whether the ride-hailing app’s new cheap airport transfer service has broken competition rules, Reuters reported.

The competition regulator, CNMC, last year called for the government to lift a ban on Uber. But the app’s new Uber Airport service has brought Uber back under scrutiny, since it offers a tariff of 15-19 euros for a ride between Madrid’s Barajas international airport and the city center, which is much cheaper than the standard fixed taxi rate of 30 euros.

“[Uber Airport] could violate several articles of the Law of Unfair Competition and consumer rights, if it is proven that the service is being operated at prices below operational costs with the sole intention of gaining customers through unfair competition,” said the Madrid City Council in a statement.

Uber has faced similar condemnation around Europe, where it expanded into from the US six years ago, due to the fact that it is not bound by the strict licensing and safety rules that apply to some of its competitors.

In Spain, taxi drivers have gone on strike three times this year, arguing that ride-hailing apps like Uber, which are regulated under VTC licenses, often used for private chauffer services, constitute unfair competition because they do not meet the current regulations and pay less tax than taxi services.

There are currently more than 2,000 VTC-licensed taxis in Madrid, the only Spanish city where Uber is currently active, and about 15,000 traditional taxis, according to figures from the Ministry of Public Works.

The European Court of Justice recently ruled that Uber should be defined as a transport service rather than an app.

Published in Apps

Corporate data is becoming what oil is to Saudi Arabia, says Clear Peak analyst Brad Cowdrey – outrageously profitable. There is so much valuable data available to corporations today, he says, and its potential uses are “proliferating so rapidly” that not using it would be “negligent”. But the dominance of tech giants that rule the data world has prompted calls for them to be broken up, the same way Standard Oil was in the early 20th century, over antitrust concerns.

Data in the digital era has spawned the dominance of renowned technology giants. Today, the world’s most valuable listed firms all deal in big data: Alphabet (parent company of Google), Amazon, Apple, Facebook and Microsoft. These tech titans have seen their profits surge in recent years, collectively racking up over $25 billion in net profit in the first quarter of 2017. Alphabet is estimated to be worth a staggering US$498 billion compared to Apple's market cap of around US$495 billion.

Google’s 21st century data-driven mindset treats information “as a principal asset – like oil – that must be actively managed and leveraged,” says Cowdrey. But the value of firms like Google that profit from handling the data of billions of people has prompted calls for antitrust regulators to restrain those who control its flow – but some reports suggest that traditional watchdog methods are outdated.

The success of the dominant tech giants has undoubtedly benefited customers worldwide. For instance, Google’s search engine and Google Maps app has fundamentally simplified the lives of people around the world, the same way Amazon’s one-day delivery services have, and also Facebook’s revolutionary social media platform. Many of the services provided by these tech giants are free-of-charge, but customers end up paying in a less traditional way: handing over valuable data.

The cause for concern, a report by The Economist suggests, is that having so much knowledge about consumers gives internet giants “enormous power”. As of the first quarter of 2017, Facebook had 1.94 billion monthly active users feeding valuable information into the platform for the company to monetize into advertizing ventures. In the third quarter of 2012, the number of active Facebook users had surpassed 1 billion, making it the first social network ever to do so.

Regulators are entrusted to make sure that huge companies, like Facebook, don’t obtain too much power. But it has been suggested that the old way of approaching anti-competition concerns, such as in the era of oil dominance, is now “outdated”. New approaches are needed to tackle anti-competition in the modern tech industry.

Antitrust regulators came down hard on the oil industry in May 1911, when the US Supreme Court called for the dissolution of the Standard Oil Company, ruling it was in violation of the Sherman Antitrust Act. The court’s decision forced Standard to break into 34 independent firms spread across the US. Many of these companies have since split, folded or merged; today, the primary descendents of Standard include ExxonMobil, Chevron and ConocoPhillips.

Antitrust concerns soon affected the tech industry as the influence of American tech giants burgeoned. In April 2012, the US Justice Department filed an antitrust lawsuit against Apple and a group of book publishers alleging they colluded to fix e-book prices. The plan was put in place by Apple and the publishers because the companies feared Amazon, which was selling e-books below cost and was monopolizing the market.

Apple also faced a lawsuit filed in 2011 seeking hundreds of millions of dollars in damages for monopoly abuse regarding its App Store. Apple was accused of creating a monopoly by making its App Store the only place to purchase iPhone applications. Lack of competition thus pushed App Store prices higher.

Meanwhile, Google has been fighting multiple claims by the European Commission which has accused the company of blocking rivals in the lucrative online search advertising market. Google also rejected allegations that it abused the market dominance of its Android mobile phone operating system.

“Google has come up with many innovative products that have made a difference to our lives. But that doesn’t give Google the right to deny other companies the chance to compete and innovate,” said Margrethe Vestager, European Competition Commissioner, at a news conference in Brussels, Belgium, in July 2016.

The Economist report claims the traditional antitrust methods of the past are no long useful and need to adapt to the 21st century. For example, antitrust regulators watch out for how large companies have grown to determine when they should intervene. But in today’s digital era, antitrust regulators need to take into account the extent of firms’ data assets when assessing the impact of major deals, rather than the size of the company itself.

Another key trigger for regulators to monitor today is the amount of money which firms are willing to fork out to acquire another company. If the amount is unusually high, it could indicate that the company is attempting to eliminate a “nascent threat”.

For instance, Facebook’s purchase of WhatsApp, which had no revenue to speak of before it was acquired, should have raised flags when the instant messaging app was purchased for $19 billion. Facebook even attempted to acquire another rival, Snapchat, which rejected the offer.

Antitrust regulators need to become more “data-savvy” when analyzing the market today, the report says, such as using simulations to “hunt algorithms colluding over prices” or finding ways to boost promotion of competition.

Another solution could be to force online services to hand over data and give more control to those who supply it. In that respect, consumers would have more knowledge about exactly what information companies have about them and companies could be forced to reveal how much money they make from consumer data.

Governments could play a role by encouraging the emergence of new services in the industry by opening up more of their own data, the report suggests, or “managing crucial parts of the economy as public infrastructure” similar to India’s digital identity system, Aadhaar.

A further suggestion is for governments to “mandate the sharing of certain kinds of data” with the consent of users. This approach has been picked up in Europe by financial services requiring banks to make customers’ data accessible to third parties.

However, not all data is intended to be made public, and therein lies the problem with the information sharing era. Governments face a difficult time ahead, attempting to regulate the data economy which, for now, is dominated by a few giants – similar to the oil industry in its infancy.

The Economist report suggests that governments should share more data to equal out the competition and allow more businesses to thrive in the area of data and technology, but too much data sharing could threaten the privacy citizens and national security. While there is no simple solution, the need for effective regulation of the data economy is dire.

Published in Featured

Qualcomm fires back at Apple’s monopoly abuse accusations

Written on Monday, 23 January 2017 06:45

Qualcomm has fired back at Apple after it sued the company on Friday, 20 January, over allegations of monopoly abuse. Some analysts suspect Apple is taking advantage of the monopoly abuse lawsuit filed against Qualcomm by the US Federal Trade Commission, to pave the way for other mobile chipset makers, in order to forge more deals. Analyst Patrick Moorhead said he believes Apple “is not comfortable in feeling that they have only one [chipset] source and are taking this opportunity to go after Qualcomm.”

Apple claims Qualcomm owes it a billion dollars and says the company is refusing to pay since Apple cooperated with South Korean antitrust regulators looking into antitrust claims against Qualcomm in the country. However, the iPhone maker is being accused of hypocrisy since the company is facing its own monopoly abuse accusations regarding its App Store.

A lawsuit filed against Apple, Inc. in 2011, seeking hundreds of millions of dollars in damages for monopoly abuse regarding Apple’s App Store, was revived recently. A US appeals court received the civil suit on January 12. Apple has been accused of creating a monopoly by making its App Store the only place to purchase iPhone applications.

Lack of competition has thus pushed App Store prices higher. Google now holds a considerable market share over Apple in terms of how many apps and users it has, according to a 2016 report by App Promoters; in fact, it’s estimated to be as much as 75% market share for the Play Store.

Qualcomm has rejected Apple’s monopoly abuse claims as baseless, and insisted the iPhone maker “intentionally mischaracterized” agreements between the two companies as well as the value of Qualcomm’s technologies.

“While we are still in the process of reviewing the complaint in detail, it is quite clear that Apple’s claims are baseless,” responded Qualcomm general counsel Don Rosenberg in a statement. “Apple has intentionally mischaracterized our agreements and negotiations, as well as the enormity and value of the technology we have invented, contributed and share with all mobile device makers through our licensing program.”

The statement continues, “Apple has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent KFTC decision and FTC complaint, by misrepresenting facts and withholding information. We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits.”

Some analysts suspect Apple is trying to pave the way for other rival chipset makers to flourish, by taking advantage of the monopoly abuse claims being made against Qualcomm. Apple relies on Qualcomm for chip-based modems that enable iPhones and iPads to communicate with telecommunication networks. By playing into the antitrust claims against Qualcomm, Apple could forge better deals with its competitors, says Patrick Moorhead of Moor Insights and Strategy.

“I think Apple is not comfortable in feeling that they have only one source and are taking this opportunity to go after Qualcomm,” said Moorhead. “Qualcomm is being looked at on every continent on the planet; this is probably, strategically, the right time for Apple to do this.”

Published in Telecom Vendors

The European Commission continues to shine a light upon Alphabet Google and its alleged monopoly abuse. EU regulators brought a third antitrust charge against the online search giant on Thursday, July 14, accusing Google of blocking rivals in the lucrative online search advertising market.

The European Commission has once again highlighted the fact that Google, the world’s most popular internet search engine, favors its own shopping service in search results, resulting in an unfair market for its competitors to operate in. The new charge against Google accuses the company of abusing its dominant position by “artificially preventing third-party websites from displaying search advertisements from its competitors,” says an NBC News report.

“Google has come up with many innovative products that have made a difference to our lives. Bu that doesn’t give Google the right to deny other companies the chance to compete and innovate,” said Margrethe Vestager, European Competition Commissioner, at a news conference in Brussels, Belgium.

The accusations relate to Google’s ‘AdSense for Search’ platform, in which Google acts as an intermediary for websites such as online retailers, telecom operators or news websites, with searches producing results that include search ads.

Vestager, a former Danish economy minister who took over as the EU’s powerful antitrust commissioner in late 2014, has acted as a voice for the EU on the issue, and insists she is simply applying the law and promoting free competition. She has applied aggressiveness to the investigation in an attempt to make more of an impact.

“We have also raised concerns that Google has hindered competition by limiting the ability of its competitors to place search adverts on third-party websites, which stifles consumer choice and innovation,” said Vestager.

The EU’s consistent pursuit of Google, along with other major U.S. multinationals over tax issues and data control, has stirred no small amount of controversy in the U.S., with President Barack Obama speaking out last year, accusing Europe of veering toward protectionism.

But the EU hasn’t given up on its mission of fairness in business. Google’s AdWords and Ad Sense programs have reportedly been on the Commission’s radar since 2010, after Google’s rivals raised the issue, complaining about unfair advertising exclusivity clauses and undue restrictions on other advertisers. The two programs are the backbone of Google’s business which posted about $75 billion in revenue last year.

The European Commission also claims that Google had abused its dominant position in the search engine market by systematically favoring its comparison shopping service in its search pages. The charge for breaching the EU’s antitrust rules could see Google facing fines up to 10 percent of its global turnover for each case.

Google has stood its ground, saying it increased choice for European consumers. “We’ll examine the Commission’s renewed cases and provide a detailed response in the coming weeks,” said a Google spokesperson.

Published in Government