Merger antitrust is in the business of making predictions about the near future. Market definition in particular rests on the premise that product markets today will be reasonably similar to product markets tomorrow, or else it makes little sense to speculate about effects in the post merger world. Rapid innovation makes this exercise all the more challenging, as discussed in a recent post. Antitrust lawyers are not alone in that predicament. Charles Stross, one of my favorite SF writers, recently remarked on his blog:

Here, in a nutshell, is why writing near-future SF has become so difficult. Say you want to set a story 30 years out, and as part of your world-building exercise you want to work out what technologies will be in widespread use by the time of the story. Back in 1900 to 1950 you could do so with a fair degree of accuracy; pick a couple of embryonic technologies and assume they’ll be widespread (automobiles, aircraft, television): maybe throw in a couple of wildcards for good measure (wrist-watch telephones), and you’re there. But today, that 30-year window is inaccessible. Even a 15-year horizon is pushing it. Something new could come along tomorrow and overrun the entire developed world before 2023.

SF, of course, is not really about predicting the future. If anything, it is about predicting the present. In other words, what we predict for the future tells us more about our present state of the world than about any future state of the world. Much of 1950s and 1960s SF is ludicrous in its technological predictions (where’s my jetpack?), however, it speaks volumes about pre-Chernobyl, pre-global warming technological optimism. The same can be said for antitrust opinions. Was Philadelphia National Bank right in predicting a tendency towards concentration? How about Von’s Grocery? As predictions of the future, those opinions are of questionable value. As diagnoses of the then present state of the legal hive mind, however, they are uncanny.

Given that antitrust and SF are both in the future business, we might usefully apply SF genre categories to antitrust decisions! Here are my picks.

• Hard SF: U.S. v. Oracle; FTC v. Staples
• Soft and Social SF: U.S. v. Brown University; Brown Shoe v. U.S.
• Cyberpunk: U.S. v. Microsoft
• Time Travel: FTC v. WholeFoods
• Alternate history: Hoffman-La Roche v. Empagran
• Military SF: U.S. v. Lockheed Martin Corp. (Complaint)

Technorati Tags: antitrust, science fiction

From the AP (via the Washington Post):

The European Union fined Microsoft Corp. a record $1.3 billion Wednesday for the amount it charges rivals for software information.

EU regulators said the company charged “unreasonable prices” until last October to software developers who wanted to make products compatible with the Windows desktop operating system.

The fine is the largest ever for a single company and brings to just under $2.5 billion the amount the EU has demanded Microsoft pay in a long-running antitrust dispute.

Microsoft immediately said the issues for which it was fined have been resolved and the company was making its products more open.

The fine comes less that a week after Microsoft said it would share more information about its products and technology in an effort to make it work better with rivals’ software and meet the demands of antitrust regulators in Europe.

…

Microsoft fought hard against a March 2004 decision that led to a 497 million euro ($613 million) fine and an order that the software maker share interoperability information with rivals within 120 days. The company lost its appeal in that case in September.

Microsoft was fined $357 million in July 2006 for failing to obey that order.

The EU alleged that Microsoft withheld crucial interoperability information for desktop PC software _ where it is the world’s leading supplier _ in an effort squeeze into a new market and damage rivals.

The company delayed compliance for three years, the EU said, only making changes in October to the patent licenses for companies that need data to create software that works with Microsoft.

Microsoft had initially set a royalty rate of 3.87 percent of a licensee’s product revenues for patents and demanded that companies looking for communication information _ which it said was highly secret _ pay 2.98 percent of their products’ revenues.

The EU complained last March that the rates were unfair. Under threat of fines, Microsoft two months later reduced the patent rate to 0.7 percent and the information license to 0.5 percent _ but only in Europe, leaving the worldwide rates unchanged.

The EU’s Court of First Instance ruling that upheld regulators’ views changed the company’s mind again in October when it offered a new license for interoperability information for a flat fee of 10,000 euros ($14,900) and an optional worldwide patent license for a reduced royalty of 0.4 percent.

Microsoft does not yet have a statement about this on its website, but one should appear here shortly.

Westlaw has a new tab on the topic of Global Competition and Antitrust. The new tab looks at the content from a global perspective, and offers you the option of searching all of the content together, by type, or by jurisdiction.  Also included is a filing tool, which will allow the user to quickly retrieve detailed information on merger requirements for over 50 countries.

Yesterday, EC competition authorities “raided” the European offices of Intel and several electronics retailers.  According to the Financial Times:

European Commission officials visited Intel’s Munich offices, as well as Europe’s biggest electronics chain, Media Markt, its second-biggest, DSG International, operator of the UK’s PC World, and French retailer PPR.

“The Commission has reason to believe that the companies concerned may have violated EC treaty rules on restrictive business practices and/or abuse of a dominant market position,” the regulator said.

It stressed that the raids did not prejudge the outcome of the investigation.

Intel, Media Markt, PPR and DSG confirmed the visits and said they were co-operating with the investigation.

The Commission’s move comes at an unusual stage in its long-running probe into Intel, which began nearly seven years ago after a complaint from the US company’s smaller rival, Advanced Micro Devices.

Having carried out raids in 2005, the Commission formally accused Intel six months ago of trying to do deals with computer makers to push AMD out of the central processing unit business.

The latest raids appear to be focused primarily on Intel’s relationships with retailers, rather than computer makers, suggesting that the Commission may be enlarging the scope of its inquiry.

InformationWeek reports that the House might hold a hearing on the antitrust implications (if any) of a potential Microsoft acquisition of Yahoo.

“Microsoft’s bid to acquire Yahoo is certainly one of the largest technology mergers we’ve seen and presents important issues regarding the competitive landscape of the Internet,” said Judiciary chairman John Conyers Jr., D-Mich., and ranking Republican Lamar Smith, R-Texas, in a joint statement released Friday.

The Judiciary Committee’s Task Force on Antitrust and Competition Policy will give the proposed deal “a careful examination” at a hearing slated for this coming Friday, the statement said.

The committee will hear from experts — as yet unidentified — who will weigh in “on whether this proposed consolidation works to further or undermine the fundamental principles of a competitive Internet.”

Alos, the Department of Justice’s antitrust division “would be interested in looking at the competitive effects of the transaction.”

Technorati Tags: Microsoft, Yahoo, antitrust

On Tuesday, U.S. District Judge Colleen Kollar-Kotelly extended the antitrust decree until November 2009.  According to Bloomberg:

U.S. District Judge Colleen Kollar-Kotelly in Washington yesterday extended an antitrust decree governing the conduct of the world’s largest software maker until November 2009. The judge agreed with a group of states that said Microsoft withheld important information on communications links from its competitors.

Kollar-Kotelly said in her ruling that she might extend the court supervision beyond 2009 depending on the company’s compliance. “The door remains open for the court to reassess the need for continued oversight,” she said.

…

The court decree enforcing the settlement was due to expire last year. In extending it through 2009, Kollar-Kotelly said she based her decision “upon the extreme and unforeseen delay in the availability of complete, accurate and usable technical documentation” from Microsoft. The delay “prevented the final judgments from achieving their principal objectives,” she said.

…

“The extension should not be viewed as a sanction against Microsoft,” Kollar-Kotelly said. She commended Microsoft “for its willingness to address issues as they arose” and said, “In many respects, Microsoft’s conduct has been a model for parties engaged in complex and protracted litigation.”

Still, “the fact remains that more than five years after the final judgments were entered, the technical documentation” is “still not available to licensees” in a usable form, the judge wrote.

…

In her 78-page opinion, the judge agreed with the states’ argument that the failure to give companies technical data meant that “the various provisions” of the decree “have not yet been given the opportunity to operate together as a comprehensive remedy.”

“The court cannot know” what impact the documentation “will have on the market once it is finally available,” Kollar- Kotelly wrote.

The judge said the increase from 10 Microsoft employees originally assigned to produce the technical data in 2006 to the 320 engineers and program managers involved last year shows the “insufficiency of resources” the company had devoted to the project.

Microsoft said 41 companies have licensed the protocols and 13 of them are selling software products developed with them.

The Opinion is available online.

We never have, and never will, give legal advice on this blog. It is not legal advice, however, to suggest that companies do not take legal advice from journalists. In particular, Apple should heed the legal advice of its antitrust lawyers and not Adrian Kingsley-Hughes. In an article titled “Does Apple Have A Monopoly?” he writes:

I think that if Apple is to avoid trouble, the company first needs to acknowledge that it commands a huge market share, and that with that kind of market share comes responsibility.

Before Apple acts on this advice (or not), it would be wise to consult with its own antitrust lawyers. In fact, I will go so far as to suggest that before any company “acknowledge[s] that it commands a huge market share” it consult with its antitrust lawyers.

On a more serious note, this is my favorite part of the article:

While those users with an understanding of iTunes and audio formats know that iTunes doesn’t totally lock you into using iPods forever more, for the average user, getting the tracks out of iTunes and into a form that another player can play is near to impossible.

I think it would be fair to replace “those users with an understanding of iTunes and audio formats ” with “those users who have read the instructions.” When I bought my first iPod several years ago, I knew nothing about iTunes and and virtually nothing about audio formats. After less than 10 minutes with the instruction book and the iTunes help file, I was up to speed.

Yesterday, the Supreme Court asked the Solicitor General for the United States’ views on an antitrust case. According to CNN Money:

The Supreme Court on Tuesday asked the Bush administration for its opinion on an antitrust lawsuit several small Internet service providers filed against AT&T Inc.

…

LinkLine Communications Inc. and three other ISPs sued AT&T Inc., then known as SBC Communications, in 2003 for violating antitrust laws by engaging in a so-called ‘price squeeze.’ The price squeeze allegedly occurred when AT&T, which provided the ISPs with wholesale access to its network, left only a slight difference between the wholesale price and its own competing retail Internet service, leaving the ISPs with little room to profit.

AT&T asked a federal district court to dismiss the suit, arguing that antitrust law doesn’t require it to assist its competitors by offering access to its network. The company only provided such access because it was required to do so under telecommunications law, AT&T said in court papers.

The district court and an appeals court ruled against AT&T, allowing the suit to proceed, pending the outcome of AT&T’s appeal to the Supreme Court.

This way off topic, but after watching the “meanest thing [Gizmodo] did at CES” I really want one of these.

A few days ago, another lawsuit was filed against Apple for maintaining a monopoly in the digital music market (via slashdot). According to Information Week:

The complaint against Apple claims that the company controls 75% of the online video market, 83% of the online music market, more than 90% of the hard-drive based music player market, and 70% of the Flash-based music player market.

…

The complaint takes issue with Apple’s refusal to support the Windows Media Audio format. “Apple’s iPod is alone among mass-market Digital Music Players in not supporting the WMA format,” it states, noting that America Online, Wal-Mart, Napster, MusicMatch, Best Buy, Yahoo Music, FYE Download Zone, and Virgin Digital all support protected WMA files.

This is based on the proposition that music companies “are generally unwilling to license their music for online sale except in protected formats.” Such assertions look increasingly tenuous as unprotected music becomes more widely available through legitimate channels. Amazon.com, for example, claims to offer “Earth’s biggest selection of a la carte DRM-free MP3 music downloads with more than 2.9 million songs from over 33,000 record labels.” A week ago, Amazon said that Warner Music Group would make its artists’ songs available in the unprotected MP3 format. EMI last year also began offering unprotected music online. And that’s to say nothing of Web sites like Amie Street that have been offering unprotected music from independent artists for even longer.

Apple, for its part, might reasonably claim it doesn’t want to license WMA from Microsoft, a cost the complaint speculates is unlikely to exceed $800,000, or 3 cents per iPod sold in 2005.

But the complaint goes beyond software licensing politics and charges Apple with deliberately designing its iPod hardware to be incompatible with WMA. One of the third-party components in iPods, the Portal Player System-On-A-Chip, supports WMA, according to the complaint. “Apple, however, deliberately designed the iPod’s software so that it would only play a single protected digital format, Apple’s FairPlay-modified AAC format,” the complaint states. “Deliberately disabling a desirable feature of a computer product is known as ‘crippling’ a product, and software that does this is known as ‘crippleware.’ “

More at The Unofficial Apple Weblog (“Here we go again”), MacUser (”People never get tired of suing Apple”) and Apple Unvarnished (”The lawsuit heads off into ridiculousness …“).

Technorati Tags: Apple, iTunes, antitrust

The FTC announced this morning that:

it will not seek to block Google Inc.’s proposed $3.1 billion acquisition of Internet advertising server DoubleClick Inc. In a 4-1 vote to close its eight-month investigation of the transaction, the Commission wrote in its majority statement that “after carefully reviewing the evidence, we have concluded that Google’s proposed acquisition of DoubleClick is unlikely to substantially lessen competition.”

The FTC has also posted online the statment of the Commission, the Dissenting Statement of Commissioner Harbour, the Concurring Statement of Commissioner Leibowitz, the Closing Letter to Counsel for Google Inc., and the Closing Letter to Counsel for Hellman & Friedman Capital Partners V, LP (i.e., DoubleClick).

On the off chance that any of our readers have BlackBerries (a remote possibility to be sure), Google has recently launched a moblie package of applications for BlackBerries and now allows synchronization between Google calendars and BlackBerries.  Details at the Google Operating System blog.

The Apple iTunes Store is offering a new service, called iTunes U. There are lectures, recorded at various universities, inlcuding Duke, UC Berkeley, MIT, Penn, Yale and several others. There are lectures on economics, for example, or on Law & Society (I picked up a couple of lectures on Max Weber). The general slant in law-related offerings seems to be broader topics with political and historical implications. But there are several topics that are technical enough. It pays to spend some time browsing, since it isn’t easy to access the content by topic. Also, and I hope that this can be fixed, the lectures are listed alphabetically and it is not always easy to tell the order in which the lectures were given. I am listening to a course on economics by Prof. Gordon Rausser (UC Berkeley) at the gym these days. There are also links to course webpages and course materials. And the lectures are all free.

The sound files of the Oyez Project are also available through iTunes—they let you listen to Supreme Court oral arguments. The 2006 term is up, and older recordings, sorted by subject matter are added regularly.

I very much liked Cory Doctorow’s keynote address at this year’s OSCON on the normative aspects of our technological choices. Open societies need open and autonomy-promoting infrastructres: economic, political, legal, and technological. Design choices are rarely value neutral, indeed, there is a ghost in every machine. As we noted earlier on this blog (in broadly Rawlsian terms) in the context of net neutrality:

Net neutrality is first and foremost a question about the background institutions of a just society. The end-to-end Internet architecture is about to put an end to one-way sender-recipient communication that has all but destroyed the discursive nature of the political process. Net neutrality is about a basic infrastructure of equality built into the protocols of our communication, providing equal freedoms for all. The Bill of Rights was not about maximizing total welfare. It was — and is — about guaranteeing a fully adequate set of equal political and civil liberties to everyone. Architecture mirrors legal code. We insist on equal access to public spaces, and — despite congestion — we insist on equal access to public roads. (And where we do think about congestion pricing, we engage in a full-blown policy debate, in which economics is one but not the only concern.)

Technorati Tags: policy