We Know What You Did During Spring Break
Although Headlines staff were away April 2-6, we still collected and summarized the major news from that week and have posted here and here. So this week’s round up is really a quick look at the news of the past two weeks.
We start in Brussels. The European Union’s competition office on April 3 opened two antitrust cases against Motorola Mobility for possibly abusing its patents following complaints by two rivals, Microsoft and Apple. The cases are the latest stage in what has become a full-blown battle over the ownership of essential technologies that help power mobile and gaming devices, a fight that has engulfed Google and virtually all the other major players in the industry.
On April 4, Politico reported that the United States has yet to appoint a leader for an upcoming battle with other countries over Web management. Less than a year from a historic treaty negotiation that will redefine international agreements on Internet management, the U.S. has yet to name someone to head up the American delegation. The absence of an American point person in a process that will pit the United States, and other nations, against countries that would like to give the U.N. greater authority has started to worry some lawmakers.
On April 27, the Federal Communications Commission will consider a Report and Order on Enhanced Disclosure Requirements for Television Stations at its open meeting. Along those lines, the Benton Foundation this week published an op-ed by former FCC Commissioner Michael Copps that explores civic dialogue, political advertising, and television broadcasting. He writes:
Open government can only work when the people trying to kidnap the election process are required to tell us who they are. The fissures in our democracy can only widen if anonymous money retains its unchecked influence and lack of accountability. Let’s bring our campaigns and our country into the bright sunlight of full disclosure. This is one of those “if not us, who?” and “if not now, when?” moments.
In a blow to those who yearn for a la carte pay television, on March 30, a three-judge panel of the U.S Court of Appeals for the Ninth Circuit ruled that content owners' requirement that cable and satellite operators sell channels in bundles does not limit competition under the Sherman Anti-Trust Act. The court ruled that while content owners might be exploiting their market power by requiring desirable channels to be bundled with less desirable channels and therefore "enhancing the price of the tying product," the practice did not actually threaten an injury to competition. "Antitrust law recognizes the ability of businesses to choose the manner in which they do business absent any injury to competition."
On April 9, Facebook announced that it will acquire Instagram, the popular mobile photo-sharing service, for $1 billion in cash and shares. Instagram — with only 13 employees — had 30 million Apple iPhone users before it came to Google’s Android last week, where it got more than a million new users in just 12 hours. Still, despite all the usage, Instagram had not articulated a plan for generating revenue. So why would Facebook spend $1 billion on it? Facebook founder Mark Zuckerberg’s own blog post on the acquisition:
This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users. We don’t plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.
Om Malik's translation: Facebook was scared and knew that for first time in its life it arguably had a competitor that could not only eat its lunch, but also destroy its future prospects. Why? Because Facebook is essentially about photos, and Instagram had found and attacked Facebook’s Achilles heel — mobile photo sharing.
In a report released March 30, the White House claimed "great strides" in implementing its strategic plan on protecting intellectual property. Highlighting the importance of intellectual property, in another report released April 11, the Department of Commerce found that intellectual property-intensive industries support at least 40 million jobs and contribute more than $5 trillion dollars to, or 34.8 percent of, U.S. gross domestic product. On April 12, US and Chinese officials touted recent progress in intellectual-property protection in China and called for continued efforts. US officials continued to complain that high piracy rates in China are cutting into profits for rights owners, despite recent efforts by the Chinese government to crack down on Internet and software piracy. The US called for greater cooperation by China with intellectual-property agencies in other countries as well as more consistent enforcement. "China's IP system still makes it difficult for both foreign and Chinese companies to compete on a level playing field," US ambassador to China Gary Locke said at a roundtable in Beijing about intellectual-property protection in China.
In perhaps the biggest news in weeks – or, at least, the most headlines-grabbing news – the Department of Justice announced that it has reached a settlement with three of the largest book publishers in the United States -- Hachette Book Group, HarperCollins Publishers and Simon & Schuster -- and will continue to litigate against Apple and two other publishers -- Holtzbrinck Publishers, which does business as Macmillan, and Penguin Group (USA) -- for conspiring to end e-book retailers’ freedom to compete on price, take control of pricing from e-book retailers and substantially increase the prices that consumers pay for e-books. The department said that the publishers prevented retail price competition resulting in consumers paying millions of dollars more for their e-books.
The proposed settlement with Hachette Book Group, HarperCollins Publishers and Simon & Schuster, if approved in court, would require the companies to grant retailers -- such as Amazon and Barnes & Noble -- the freedom to reduce the prices of their e-book titles.
On April 4, the Pew Internet & American Life Project released new research that highlights the growing importance of e-book pricing. The Pew research finds that one- fifth of American adults (21%) have read an e-book in the past year -- and this number increased following a gift-giving season that saw a spike in the ownership of both tablet computers and e-book reading devices such as the original Kindles and Nooks. The rise of e-books in American culture is part of a larger story about a shift from printed to digital material. Some 43% of Americans age 16 and older say they have either read an e-book in the past year or have read other long-form content such as magazines, journals, and news articles in digital format on an e-book reader, tablet computer, regular computer, or cell phone. Those who have taken the plunge into reading e-books stand out in almost every way from other kinds of readers. Foremost, they are relatively avid readers of books in all formats: 88% of those who read e-books in the past 12 months also read printed books.2 Compared with other book readers, they read more books. They read more frequently for a host of reasons: for pleasure, for research, for current events, and for work or school. They are also more likely than others to have bought their most recent book, rather than borrowed it, and they are more likely than others to say they prefer to purchase books in general, often starting their search online.
We’ll be tracking the Department of Justice/e-book case as it may take some time to resolve. We’ve already seen headlines about 15 states filing their own suit against Apple and the publishers; how Amazon's Kindle e-readers and its bargain pricing of e-books apparently posed an existential threat for publishers; Amazon’s new plans to slash e-book prices; the possible impact on e-book lending at libraries; reaction from Apple, the Consumer Federation of America , the Consumer Electronics Association, and the Los Angeles Times. There’s lots and lots of analysis. We’re already seen predictions of the outcome of the suit and the impact on Apple [hint: not much]. Are fixed prices needed to save the industry? How is this like 1934 and Amazon like Macy’s? Follow the links and see.
So that's March 30 - April 12 in a nutshell. We'll be back next week and we'll see you in the Headlines.