Wall Street Journal

EU Probes Tax Affairs of Apple, Starbucks

European Union regulators said they have opened formal investigations into the tax practices of Apple Starbucks and a Luxembourg-based division of Fiat, as part of a broader probe into whether multinational companies have enjoyed sweeter tax deals than are permitted under EU law.

The European Commission, which acts as the region's central antitrust authority, said it would examine whether generous tax arrangements granted to global corporations in three EU countries -- Apple in Ireland, Fiat Finance and Trade in Luxembourg and Starbucks in the Netherlands -- amounted to illegal state aid.

“In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes," said EU antitrust chief Joaquín Almunia.

The commission has requested information from two other EU countries -- the UK, in relation to Gibraltar, and Belgium -- as part of the same broad investigation, Almunia said. At issue are so-called transfer-pricing arrangements, under which companies can redistribute profit within a group by charging for goods or services sold by one subsidiary to another, typically located in different countries. Experts say transfer pricing can help companies to minimize their tax bills.

Almunia said that such arrangements could violate EU rules on state aid if certain companies are allowed to engage in transfer pricing that doesn't reflect market terms.

How to Use Tech Like a Teenager

[Commentary] Enough with complaining that young people these days are addicted to their phones. The question you should be asking is: What do they know that you don't? Believe it or not, there are advantages to using technology like a teen.

I asked a handful of 11- to 17-year-olds to tell me what apps and gear they couldn't live without. They taught me to question my own habits: Why do I use email to talk with friends? Why do I only share my best photos?

I found five practices that could change how you use technology.

  1. Only 6% of teens exchange email daily, according to the Pew Research Center. They reserve email for official communications, or venues like school where alternatives are banned. Instead, teens use a fragmented set of messaging apps based on the people they want to communicate with.
  2. There's also value in not having every single message stored on an email server. The idea is to just enable a regular conversation.
  3. Today, 91% of teens post a photo of themselves on social media sites, according to Pew. The lesson for adults is that you can express things in images that would be time-consuming to write out, or read.
  4. Adults assume that young people don't care about privacy. But look closer: Some 58% of teen social-media users say they cloak their messages, according to Pew, using inscrutable pictures and unexplained jokes to communicate in code. The lesson: You can be "public" without having embarrassing things on the permanent record.
  5. And the reason teens are such avid early adopters isn't that they have an innate knowledge of tech -- it's that they aren't afraid to break it.

Al Jazeera Wants Case With AT&T Kept Private

Al Jazeera America is trying to avoid unsealing a lawsuit it filed in 2013 accusing AT&T of improperly keeping the news channel off AT&T's U-verse cable-television lineup.

Al Jazeera got into the US cable market by acquiring Al Gore's Current TV. But AT&T refused to give space to the US version of the Qatar-based channel on U-verse, although it had carried Current TV. Each side said the other breached the affiliation agreement that governs their relationship, but the details on how aren't known because much of the case is under seal.

After being ordered to unseal the complaint, Al Jazeera said it would drop the case, wiping the public record clean of the lawsuit. Journalists, including a reporter for The Wall Street Journal, objected to the sealing.

Administration Overhauls Federal Health-Care Website

The Obama Administration is revamping HealthCare.gov and scrapping significant parts of the federal health-insurance marketplace in an effort to avoid the problems that plagued the site's launch last fall, according to presentations to health insurers and interviews with government officials and contractors.

But the makeover -- and the tight timeline to accomplish it -- are raising concerns that consumers could face another rocky rollout this fall when they return to the site to choose health plans. Some key back-end functions, including a system to automate payments to insurers, are running behind schedule, according to a presentation federal officials made to health insurers. Adding to the pressure, HealthCare.gov is still in the midst of transitioning to new government contractors to manage basic functions.

Among the changes in the new version of HealthCare.gov: a revamp of the site's consumer-facing portion including the application for coverage most people will use, as well as the comparison tool that lets them shop for plans, according to slides from a May 20 meeting for insurers held by the Centers for Medicare and Medicaid Services, which oversees HealthCare.gov. Federal officials told health plans the new versions of some of these functions will need to be tested with insurers before open enrollment begins Nov 15.

Cyberbullying Law Challenged in Court

New York's high court will consider one of the first legal challenges to state and local laws that make it a crime for people to bully others online, especially children.

The 2010 Albany County law, one of more than a dozen around the country that criminalize cyberbullying, pits free-speech advocates against a community that has given prosecutors a larger role in affairs that typically had been handled by schools.

The court's ruling could set the tone for other state high courts hearing challenges to such laws, as well as for states and localities considering criminal penalties for cyberbullying, legal experts said. Besides Albany, four other New York counties and more than a dozen states, including Louisiana and North Carolina, have similar laws.

Speech is generally protected by the First Amendment, but the US Supreme Court has carved out exceptions, such as true threats and fighting words.

Sprint, T-Mobile Move Closer to a $32 Billion Deal

Sprint and T-Mobile US have agreed on the broad terms of a merger worth around $32 billion and are working toward a final agreement, people familiar with the matter said.

Under the framework, Sprint would acquire T-Mobile for around $40 a share in a deal that could happen early this summer, the people said.

A deal could still fall through, but if completed would combine the country's third and fourth largest wireless operators, creating a bigger competitor to market leaders Verizon Communications and AT&T but leaving consumers with fewer choices for service. A deal would face strong opposition from regulators and a lengthy antitrust review, and Sprint would pay T-Mobile more than $1 billion in cash and other assets if it is shot down, the people said.

Comcast to Encrypt Email for Security

Google wants to make encryption hip -- and may have won a quick convert. Comcast, the nation's largest Internet provider by number of homes and businesses served, said it would begin scrambling customers' email to protect it from prying eyes.

The move came just hours after Google called out email providers, including Comcast, for not using encryption.

Comcast spokesman Charlie Douglas said the company is testing encryption and would begin using it more broadly on customers' email "within a matter of weeks." He said Comcast is "very aggressive about this."

The moves were an indication that some tech companies see privacy as a consumer issue after a year of leaks from Edward Snowden, the former National Security Agency contractor. Snowden's leaks prompted Facebook, Microsoft and Yahoo among others, to make it harder for government spies to read emails as they cross the Internet's backbone.

US Goes Back to Publishers on Prices

Two years after three major book publishers settled a major civil antitrust lawsuit with the federal government, the Justice Department has gone back to the publishers asking about any recent pricing discussions they may have had with others in the industry, say people familiar with the situation.

The inquiries, made in recent weeks by letter to Lagardere SCA's Hachette Book Group, CBS's Simon & Schuster and News Corp's HarperCollins Publishers, have created anxiety in the publishing industry.

The inquiries reopened a sensitive and costly issue that publishers thought they had resolved, and raised the possibility of additional constraints on how they do business. The department's latest move comes as Amazon is dominating sales of both print books online and e-books in large part through its discounting strategy.

The first of the publishers to renegotiate contract terms is Hachette, which is currently caught up in a bitter dispute with Amazon.com Inc. over e-book terms. As a result of the dispute, Amazon has delayed shipments of Hachette books and blocked preorders of new titles.

Precise terms being discussed aren't known, although Amazon is seeking a higher split of e-book prices, people familiar with the situation said. The significance of the Justice Department's latest move isn't clear. The inquiries don't necessarily mean any legal action is imminent or even likely, a person familiar with the situation said.

The three publishers the Justice Department has contacted are the ones who first settled the lawsuit. Two other publishers also named in the suit settled later. Apple went to trial, was found guilty of collusion and said it would appeal.

Turkey's Top Court Rules YouTube Ban is Unconstitutional

Turkey's top court ruled that a ban on YouTube is unconstitutional, paving the way to lift the two-month blockade, after the government cut off access to Google's video-sharing website for publishing leaked state secrets just days before critical March elections.

The Constitutional Court in Ankara sided 14-to-2 with individual appeals filed by Google's local attorney, opposition lawmakers and the Union of Turkish Bar Associations, ruling that YouTube's blockade breached freedom of expression, according to a brief decision published on its website.

Judges next will write up their detailed ruling and send it to Turkey's TIB telecommunications watchdog and the Transport, Maritime Affairs and Communications Ministry for implementation, thus lifting the ban.

China Is Projected to Overtake the US in Mobile Revenue

More evidence, if any was needed, that the balance of global mobile telecom power continues to tilt away from the West towards Asia.

China will overtake the US to become the world’s largest mobile phone market by revenue for the first time in 2014, according to a report from Strategy Analytics, a Boston, Massachusetts-based research group.

Mobile phone sales in China will rise 15% to 430 million units in 2014 driven by the country’s rapid shift to 3G and 4G smartphones, and generating a 53% surge in trade -- or wholesale -- revenue to $87 billion in 2014, it forecasts. In contrast, mobile phone sales in the US will flat-line at 163 million units, with revenues up just 4% to $60 billion, it adds. In 2013, both countries recorded almost identical revenue at around $57 billion, reflecting a wide difference in performance. Overall, mobile handset revenues are forecast to grow 13% worldwide during 2014.

Major Asian brands, such as Samsung, Huawei and Lenovo, are aggressively expanding their distribution channels and product ranges across the region to meet strong demand from Chinese consumers for more advanced mobile phones, say analysts. The revenue growth is propelled by a decrease in the ultra-low tier market and an increase in other higher-price range segments.