December 2012

US Inquiry of Google Is Expected to Press On

The Federal Trade Commission is unlikely to finish until January its investigation into whether Google abused its power in the search market, people briefed on the investigation said.

The agency’s chairman, Jon Leibowitz, has consistently said that the commission was aiming to finish its inquiry by the end of 2012, and all signs have been pointing to an imminent settlement, including reports of a Google proposal to avoid formal punishment by promising to change some of its practices. Two people who have been briefed on the investigation said that some commissioners had asked for more time to consider possible penalties after recent reports portrayed Google as having persuaded the FTC to give the company little more than a slap on the wrist. The people briefed on the inquiry said that the FTC would most likely conclude its effort in early to mid-January. The commission is also continuing its look at whether Google abused its control of certain patents concerning mobile phone technology.

MetroPCS Holders Left Sitting by Phone

The US wireless industry is back in consolidation mode. But the spoils aren't going to all investors.

Since the start of the year, shares in Sprint Nextel, which Japan's Softbank agreed to buy control of in October, are up 133%. MetroPCS Communications, which Deutsche Telekom's T-Mobile USA is buying, is up only 15%. Is T-Mobile getting a steal? T-Mobile agreed in October to a cash-and-stock merger with MetroPCS. The deal, including a planned $4.09 cash dividend but excluding synergies, valued MetroPCS shares at between $9.27 and $16, depending on the multiple applied, according to Sanford C. Bernstein. Include the company's projected $800 million in synergies, and that value reaches $11.84 to $19.51 a share. Yet shares of MetroPCS closed Tuesday at $9.96. Indeed, the shares have fallen 27% since their closing price the day before the deal was announced. That leaves the door wide open to counterbids. But it is getting harder to see who might step up to make them.

Instagram seizes and sells your identity

[Commentary] Instagram, the wildly popular online photo-sharing company, just made its 100 million-plus user base very angry. Instagram released an "update" to its terms of service and privacy policies that will go into effect Jan. 16. Buried among the usual paragraphs of legalese was this remarkable paragraph: "To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you." Instagram's new terms also included this sneaky sentence: "You acknowledge that we may not always identify paid services, sponsored content, or commercial communications as such." In other words, when you upload photos to Instagram, you're waiving your rights to control how those photos are displayed. Specifically, when you upload a photo, you should expect that a company that's bought advertising services from Instagram can use your photo in their "display" without further permission. The lesson from the Instagram story is: If you're a user of any "free" social media site, educate yourself on what it's doing with your information. One way or another, you're going to have to pay.

With Instagram, Facebook Spars With Twitter

The battle lines are sharpening between Facebook and Twitter, as they fight to become the prime hub for photo sharing on the Internet. Facebook's Instagram was caught in an Internet uproar over new terms of use for its photo-sharing service.

After hours of irate customer reaction, Instagram clarified its approach, saying that it would not—as users feared—sell photos or use them in advertising. But the terms reflect a deeper-seated change at Facebook and in the commercialization of the social Internet. Facebook is pushing to churn profits from Instagram, which had no revenue when it agreed to an April purchase for roughly $1 billion. And to do so, it is heightening a rivalry with Twitter Inc., which was once the primary venue for sharing Instagram's stylized photos online. In recent months, the two have been increasingly at odds over their technology, strategy and now competition for mobile advertisers. Instagram disabled a feature that allowed its users to post their photos directly into Twitter. Instagram said it wanted its members to use its own online services. Twitter quickly struck back, announcing new digital image "filters" for its own photo-posting features. The filters, which are similar to those on Instagram, allow people to make over smartphone snapshots in black and white or in movie-style looks. Instagram has quickly become a formidable threat to Twitter.

Senate GOP objects to considering FISA bill, calls for vote on House version

Senate Majority Leader Harry Reid (D-NV) tried to bring up the bill reauthorizing the Foreign Intelligence Surveillance Act (FISA), but a Republican objected. “FISA, this is an important piece of legislation as imperfect as it is, it is necessary to protect us from the evil in this world,” Sen Reid said on the floor. “We need to finish this by the end of the week.” Sen Reid wanted S. 3276 to be considered with a limited number of amendments, but Sen. Saxby Chambliss (R-GA) objected and said he didn’t understand why the Senate couldn’t just pass the House FISA bill. He referred to a letter stating that the Obama Administration supports the House-version. Sen Reid said he believed the Senate would be on “thin ice” if it waited to pass a FISA bill until after Christmas.

Apple-Samsung Judge Weighs Damages After Rejecting Ban

Apple awaits a judge’s decision on its request for additional damages against Samsung for patent infringement after the iPhone maker lost its bid to block U.S. sales on 26 of the Galaxy maker’s devices. Apple failed to establish that consumer demand for Samsung products was driven by technology it stole, U.S. District Judge Lucy H. Koh in San Jose, California, said in her Dec. 17 ruling. While a jury found Samsung infringed six Apple patents, it isn’t in the public interest to ban Samsung’s devices because the infringing elements constituted a limited part of Samsung’s phones, Judge Koh said. The jury said Aug. 24 at the end of a trial that Samsung should pay $1.05 billion. Apple asked Judge Koh to increase the damages by $536 million, while Samsung says they should be reduced by more than $600 million. Judge Koh, who held a hearing on the matter Dec. 6, has yet to issue a ruling.

Apple Wins Ruling in Motorola Mobility Patent Case at ITC

Apple’s iPhone didn’t violate patent rights owned by Google’s Motorola Mobility for a sensor that prevents accidental hang-ups, a US International Trade Commission judge said. The patent is invalid, ITC judge Thomas Pender said in a notice posted on the agency’s docket.

The judge’s findings are subject to review by the full commission, which has the power to block imports of products that infringe U.S. patents. “We’re disappointed with this outcome and are evaluating our options,” Jennifer Erickson, a spokeswoman for Motorola Mobility, said. The commission in August ordered Pender to consider a possible violation after it cleared Apple of Motorola Mobility claims related to other patents for 3G technology. This is the second time the judge has said there was no violation of the patent, which applies to a sensor used to determine the proximity of a person’s head to the device.

Draft Bill: Sen Rockefeller Considering Violent Video Legislation

Sen Jay Rockefeller (D-WV), chairman of the powerful Senate Commerce Committee and historically one of the loudest voices for media violence regulation, wants to introduce a bill that would require the National Academy of Sciences to study the impact of violent video games and video programming on kids.

Commissioning studies is not as threatening a bill as one that would, say, authorize the Federal Communications Commission to regulate video violence as it does indecency, which Chairman Rockefeller has championed before. But it clearly indicates his interest in not letting the violence conversation end when the cable news cycle wheels on to the next big story, though it would have to continue without any immediate input from the study. The study would not be due for a year and a half, at least according to the draft language supplied by a source. The goal of the study is to determine if there is a causal relationship between video violence and aggressiveness or other harmful effects on kids, with a particular emphasis on whether video games have a "unique impact" due to their interactive, and "extraordinarily vivid" portrayals of violence. It also asks for the answer to whether violence in video programming has harmful effects distinguishable from other types of media and whether it causes long-lasting cognitive harm.

FCC rule change would favor big media

[Commentary] A cornerstone of American democracy is a free and open press providing diverse viewpoints. As Thomas Jefferson said in 1823, “The only security of all is in a free press. The force of public opinion cannot be resisted when permitted to be freely expressed.” In America today, however, a trend toward corporate media consolidation is drowning diverse opinions and eliminating local control. In 1983, 90 percent of the American media was owned by 50 companies. Today, 90 percent is controlled by just six corporations: General Electric, News Corp., Disney, Viacom, Time Warner and CBS.

The Federal Communications Commission may be on the verge of making a bad situation worse. It is considering a rule change that would clear the way for even more media consolidation. All Americans should be deeply concerned. We believe the public remains strongly opposed to the weakening of cross-ownership rules, as evidenced by 200,000 Americans who just in the past week signed a petition opposing the FCC’s latest proposal. That is why we call on the FCC to delay its scheduled vote in January by at least six months. In the intervening time, the commission should hold public hearings across the country, invite further public comment and get to work on practical measures to promote minority ownership and enhance diversity in media. The commissioners should listen to the voices of the American public instead of the corporate media that the FCC is supposed to regulate.

It's Official: Twitter Is Not a Fad

Whether because of its name, its outsize media hype, or its reputation for getting its users in trouble for ill-advised words, Twitter has struggled to be taken seriously by adult Americans outside the media and celebrity spheres. But while faddish firms like Groupon and Zynga have fallen by the wayside, new figures make it clear that the six-year-old microblogging site has lived up to its billing as the biggest thing to hit the Internet since Facebook.

Twitter announced (via tweet, of course) that it has reached 200 million monthly active users worldwide. That makes it either the second or third largest social network in the world, depending on what figures you use for Qzone, a Chinese Facebook substitute. More impressive is the speed at which it has reached that milestone. It was only last fall that Twitter was crowing about reaching the 100-million user mark, meaning that it has doubled in size in the past 15 months. When the company last shared its user tally, in March, it had 140 million monthly actives, so it has been adding active users at a rate of about 7 million a month. That's not quite as fast as Facebook's record-shattering growth at the same point in its development, but it's on the same order of magnitude.

Benton

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