July 2014

Event recap: Who governs the Internet?

During a discussion on “Who governs the Internet”, Ambassador Daniel Sepulveda noted that “The Internet is a platform for the creation and distribution of wealth.” If anyone knows this, it is Ambassador Sepulveda, who through his role as Deputy Assistant Secretary of State and US Coordinator for International Communications and Information Policy actively engages with government officials from all over the world -- all of whom seem to have a keen understanding that the Internet brings innovation and creativity that benefit individuals, civil society, and local economies.

This universal understanding of the benefits of the Internet is good news seeing as we’ve heard quite a bit lately about challenges the Internet has brought to the diplomatic table; countries pushing for data localization, raising privacy concerns, blocking social networks, and trying to keep up in the fight against cybercrime. The Internet governance landscape has entered a period of transformation. As pointed out by ICANN Chairman Steve Crocker, technological change is continuously testing the boundaries of organizational and political assumptions, and the policy framework must adjust. But even in this period of upheaval, it is not completely clear why Internet governance -- a relatively technical and bureaucratic issue -- should be receiving as much attention as it has recently. American University Professor and author Laura DeNardis said it best: “Arrangements of technical architecture are always arrangements of power.”

Perhaps the public is realizing that there is an awful lot of power in those Internet connections?

As Phone Growth Slows, Carriers Turn to Tablets

Wireless companies have been jockeying for new subscribers in a market where there are more active cellphone plans than there are people, a predicament that led to slowing growth and increased competition.

Carriers have found the answer in tablets, which represent one of the few places where the industry can wring out a new source of revenue after the companies have nearly tapped out smartphone upgrades. The companies are offering aggressive promotions to get customers to sign up. But the new tablet connections aren't as attractive as smartphones for two reasons: they don't generate as much revenue as smartphones and they aren't bringing in new customers. Rather, the majority of tablet sales are upgrades to existing customer plans.

Changing Old Antitrust Thinking for a New Gilded Age

[Commentary] In the past few months, it seems gigantic, industry-consolidating acquisitions are all the rage. Are these the new trusts? The answer may be yes, unfortunately.

Today’s trusts are eerily similar to those of the Gilded Age, except they seek not quite to eliminate the competition but merely to dominate the market with a few competitors at most. Those differences are important for the antitrust laws. The century-old antitrust laws do not seem up to the task. Perhaps it is time to create laws for a new Gilded Age and provide regulators the power to determine if megadeals are truly good for America. These megacompanies have good reason to rush to grow to enormous size. Today’s economy requires grand scale in many areas. Size gives these companies the ability to negotiate more ably with each other and meet looming technology threats. The potential round of mergers in the cable and media industry is about obtaining the leverage needed to negotiate cable access fees and deal with new broadcast technology on the Internet. These new combinations are also not monopolies.

[Steven Davidoff Solomon, a professor of law at the University of California, Berkeley]

Hollywood frets over Fox-Time Warner deal

The anxiety level in Hollywood ticked up several notches when news broke of an unsolicited $73bn bid by Rupert Murdoch’s 21st Century Fox group for Time Warner.

The deal would combine two of Hollywood’s largest film studios – 20th Century Fox and Warner Brothers -- and create a film company responsible for about a third of all US box-office sales and blockbuster franchises. 21st Century Fox has said it would maintain the independence of the fierce rivals 20th Century Fox and Warner Brothers. But behind the scenes the proposed 21st Century Fox purchase has caused alarm in the creative community that is Hollywood’s engine. “We are adamantly opposed to the idea,” says David Young, executive director of the Writers Guild of America West. “We think it’s a disaster for talent in Hollywood and bad social policy,” he adds. “Markets are efficient when there are a lot of people in them buying and selling. If markets get consolidated and there’s a concentration of power what we will see is writers being paid less to create and consumers having to pay more.”

House GOP makes digital push

Republicans repeatedly beaten down by the Democrats’ technological dominance have finally found a source of pride: an official House leadership operation that’s relentlessly digital. But that doesn’t mean the road to political parity on the Web is easy.

Turning the House into a more tech-savvy operation is a constant challenge, from the inevitable, unexpected glitches to the benefits of instant communication that compete with the risk of an embarrassing mistake. Institutional forces can also stifle even the best of innovation intentions, like the security concerns preventing lawmakers from using “cloud” storage.

Prosecutors Are Reading E-mails From Inmates to Lawyers

Jailhouse conversations have been many a defendant’s downfall through incriminating words spoken to inmates or visitors, or in phone calls to friends or relatives. Inmates’ calls to or from lawyers, however, are generally exempt from such monitoring. But across the country, federal prosecutors have begun reading prisoners’ e-mails to lawyers. The issue has spurred court battles over whether inmates have a right to confidential e-mail communications with their lawyers -- a question on which federal judges have been divided.

Officials Focus on E-Cigarette Ads Aimed at Youths

State attorneys general must investigate, and consider taking legal action against, e-cigarette companies that appear to be using some of the same advertising tactics that once drew young adults into smoking, Sean Riley, the chief deputy attorney general of Kentucky, told his law enforcement colleagues.

Kentucky has left behind its status as the state with the highest percentage of youth smokers. But he said he was concerned that e-cigarette advertising could reverse that progress. Jeffrey Weiss, the general counsel at NJOY, an independently owned e-cigarette company, said he agreed that the state and federal authorities must move to adopt regulations appropriately governing e-cigarettes, such as limiting sales to youths. But he said that the industry’s growth was actually a public health boon, given the role that e-cigarettes can play in helping people quit smoking cancer-causing tobacco cigarettes.

Apple Case Over Labor Code Is Granted Class-Action Status

A state court in California has granted class certification to nearly 21,000 current and former Apple employees over claims that the company failed to provide timely meal and rest breaks as required by the law, and sometimes denied workers rest breaks altogether. Judge Ronald S. Prager of the Superior Court of California for the County of San Diego granted the class certification for a large group of retail employees and workers at corporate headquarters.

Apple Reports $7.7 Billion Profit on Strong iPhone Sales

For Apple, the iPhone continues to be the device that makes the company tick. While top rivals like Samsung are starting to show weakness in phone sales, Apple sold 35.2 million iPhones in the third fiscal quarter, up 13 percent from the period a year ago.

Apple reported profit of $7.75 billion in the quarter that ended June 28, up from $6.9 billion in the quarter a year earlier. Revenue was $37.43 billion, up from $35.32 billion in the quarter a year ago. Healthy sales of Macs also helped fuel the growth, the company said. Apple reported selling 4.4 million Macs, up from 3.8 million in the same quarter last year, beating analysts’ expectations of about 3.9 million. The strong iPhone sales, thanks in part to a recent distribution deal with China Mobile, offset other, more disappointing results from Apple’s other signature product, the iPad.

Microsoft’s Profits Slide on Mobile, but Its Cloud Flourishes

Satya Nadella, Microsoft’s new chief executive, has said the two most important trends for the company’s future are mobile and cloud computing. But it is doing much better in cloud computing than in mobile.

In what amounted to its first financial report card since acquiring the mobile business of Nokia, the Finnish handset maker, Microsoft said its overall profits slid because the Nokia business continued to lose money. At the same time, though, Microsoft’s revenues got a big boost from the sales of mobile phones. Microsoft will continue to face a challenge in creating mobile products that excite people, even as it cuts costs to prevent Nokia from dragging the company’s overall profits down.

Benton

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