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EU Court to Rule on Microsoft Antitrust Fine Ultimate Edition™

John Paczkowski — Thu, 24 May 2012 16:43:38 +0000

June 27.

That’s the day Microsoft will learn whether anything has come of its challenge to the $1.14 billion penalty the European Union slapped it with eight years ago for failing to comply with its antitrust decision.

In just over a month’s time, the EU’s General Court will rule on Microsoft’s appeal of the fine, the culmination of a long, contentious legal battle over interoperability. Issued after it was determined that Microsoft had failed to comply with a 2004 antitrust judgment that required the company to charge fair and reasonable rates for its interoperability protocols, the $1.14 billion fine was the largest ever imposed by the EU against a single company, and the very first to be meted out for noncompliance with an EU court order.

It was also, in Microsoft’s opinion, “unnecessary, unlawful and totally disproportionate.”

“This case would not have arisen if the commission had been as explicit with respect to rates which it wanted Microsoft to charge as it had been with all other terms of licensing proposed by Microsoft,” Microsoft’s attorney Jean-François Bellis told the EU General Court at the time the company filed its appeal. “How can the Commission fine Microsoft for failing to apply reasonable rates from June 2006 to October 2007 when the final parameters were only determined on October 22, 2007?”

In short, Microsoft says it failed to comply with the order because EU regulators didn’t give it the guidance it needed to do so. Interesting argument, but will it carry any weight with the EU General Court?

FCC Proposes $25,000 Fine on Google

Amy Schatz — Sun, 15 Apr 2012 08:18:27 +0000

The Federal Communications Commission proposed a $25,000 fine on Google Inc., accusing the search giant of deliberately obstructing an investigation into whether the company violated federal rules when its street-mapping service collected and stored data from unencrypted Wi-Fi networks in 2010.

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Verizon and the Grift That Keeps on Giving

John Paczkowski — Mon, 01 Nov 2010 17:10:18 +0000

A new record for Verizon. In early October the company’s wireless division claimed title to the largest consumer telecommunications refund in history, saying it would pay $52.8 million to some 15 million subscribers who were charged for data usage, though they weren’t on data usage plans. Now, thanks to the Federal Communications Commission, it can claim another. The agency last week slapped the company with a $25 million fine, the largest in its history.

“I am pleased that Verizon Wireless is now taking the appropriate steps to repay 15 million consumers more than $52 million dollars,” FCC chairman Julius Genachowski said in a statement. “Their $25 million payment to the U.S. Treasury–the largest in FCC history–is an important recognition of the harmful impact on consumers.”

Take That, Mark Cuban! Bengals Receiver Chad Ochocinco Pays $520 a Word for NFL Twitter Fine

Peter Kafka — Wed, 25 Aug 2010 12:22:17 +0000

When the NFL banned in-game Twittering by its players last year, I’m pretty sure they had Chad Ochocinco in mind. And while it took nearly a year, the Cincinnati Bengals receiver finally got the league to flex its anti-social-media muscles, via a $25,000 fine for two tweets sent out last Saturday.

Ochocinco (old-timers may remember when he went by the name Chad Johnson) sent this one out about an hour before a preseason game against the Philadelphia Eagles:

Followed by this one, tapped out during the game itself:

By my count (contractions are tricky), those two missives contain a total of 48 words, which puts Ochocinco’s tab at $520 a word. Which means he trumps Mark Cuban’s $510 per-word Twitter fine he got from the NBA a year ago.

And Ochocinco is sorry. Sort of. Because tweeting is great, but exotic luxury cars are expensive:

Intel’s Q4 Blowout

John Paczkowski — Fri, 15 Jan 2010 19:00:00 +0000

[ See post to watch video ]

Intel Beats Bust? Big Time

John Paczkowski — Thu, 14 Jan 2010 21:18:23 +0000

When Intel last reported earnings, it surpassed Wall Street’s expectations and issued a strong outlook for the rest of 2009. So investors had high hopes for its latest quarterly report. And Intel (INTC) appears to have met them.

Reporting fourth-quarter earnings after market close Thursday, the company posted a profit of $2.3 billion, or 40 cents a share, compared with a profit of $234 million, or four cents a share, for the year-earlier period. Revenue was $10.6 billion, up from $8.2 billion for the same quarter in the year-earlier period.

A strong showing for Intel and one that blows the doors off consensus estimates that called for 30 cents a share in profit on revenue of $10.17 billion. And don’t forget that these results include a European Commission fine of $1.45 billion and a $1.25 billion settlement agreement with AMD (AMD).

“Curb your enthusiasm [for Intel]” Bank of America (BAC) analyst Sumit Dhanda told clients in a research note issued Wednesday that warned of a revenue miss from the chip behemoth. Curb your enthusiasm? Not likely after today’s results.

“Intel’s strong 2009 results reflect our investment in industry-leading manufacturing and product innovation,” Intel CEO Paul Otellini said in an earnings release. “This strategy has enabled us to generate unprecedented operating efficiencies while growing our traditional businesses and creating exciting new market opportunities, even in difficult economic times.”

Taking a wide view, Otellini adds, “Our ability to weather this business cycle demonstrates that microprocessors are indispensable in our modern world. Looking forward, we plan to deliver the benefits of computing to an expanding set of products, markets and customers.”

Looking ahead to the first quarter of 2010, Intel expects revenue of $9.7 billion, plus or minus $400 million. Evidently, the PC market is back.

Intel Beats Bust? Big Time

John Paczkowski — Thu, 14 Jan 2010 21:18:23 +0000

Looking ahead to the first quarter of 2010, Intel expects revenue of $9.7 billion, plus or minus $400 million. Evidently, the PC market is back.

Intel, AMD Announce Dual Core Litigation Settlement

John Paczkowski — Thu, 12 Nov 2009 14:36:38 +0000

Wow. Intel and AMD’s seemingly endless legal battles have finally ended. The two companies said early Thursday that they have reached a comprehensive agreement that resolves their many antitrust and patent disputes.

Under terms of the agreement, Intel (INTC) will pay AMD (AMD) $1.25 billion (nearly a quarter of AMD’s $4.46 billion market cap) and agree to “abide by a set of business practice provisions” presumably crafted to temper Intel’s allegedly anticompetitive practices. Here are details of the agreement:

Business Practices Provisions Prohibit Intel From:

Offering inducements to customers in exchange for their agreement to buy all of their microprocessor needs from Intel, whether on a geographic, market segment, or any other basis (Section 2.1.1.a)

Offering inducements to customers in exchange for their agreement to limit or delay their purchase of microprocessors from AMD, whether on a geographic, market segment, or any other basis (Section 2.1.1.b)

Offering inducements to customers in exchange for their agreement to limit their engagement with AMD or their promotion or distribution of products containing AMD microprocessors, whether on a geographic, channel, market segment, or any other basis (Section 2.1.2a-b)

Offering inducements to customers in exchange for their agreement to abstain from or delay their participation in AMD product launches, announcements, advertising, or other promotional activities (Section 2.1.2.b)

Offering inducements to customers or others to delay or forebear in the development or release of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.2 and 2.1.2)

Offering inducements to retailers or distributors to limit or delay their purchase or distribution of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.1)

Withholding any benefit or threatening retaliation against anyone for their refusal to enter into a prohibited arrangement such as the ones listed above.

In return, AMD will drop all its pending litigation against the company and pull out of regulatory complaints worldwide. Finally, the two rivals will enter into a five-year patent cross-licensing agreement.

In a joint statement, the companies said, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”

Interesting. Clearly, AMD CEO Dirk Meyer’s earlier comments about the ratification of its complaints about Intel’s business practices and the company’s hope for a future in which AMD’s “ability to succeed as a business is really determined by the quality of our products and customer relationships” was quite prefigurative.

During a call to discuss the settlement, Meyer said the accord marks the beginning of a new era, one that changes the game for AMD. “It is an important milestone for us, for our customers, our partners, and most importantly–for consumers and businesses worldwide,” Meyer said.

“It is the culmination years of litigation and regulatory engagement, and we are optimistic that it will usher a new era for our industry,” the CEO continued, further noting that change may not be immediate. “We recognize that it will take time for people to understand how the operating conditions in processor business have changed–but make no mistake–they have changed….We look forward to healthy competition with the mutual respect one would expect between world-class competitors.”

It is unclear if the settlement will affect the antitrust suit brought against Intel by New York Attorney General Andrew Cuomo last week as Cuomo hasn’t yet commented. But the European Union says it will not change its decision in May to fine Intel a record $1.5 billion for anticompetitive behavior.

“The European Commission takes note that Intel and AMD have settled all their litigation and that Intel is paying AMD compensation of one-and-quarter billion dollars,” said an EC spokesman. “But Intel has an ongoing obligation to comply with the commission’s antitrust decision and with EU competition law. The commission continues to vigorously monitor Intel’s compliance with its obligations under the EU antitrust decision.”

France Mulls Three-Strikes Law Amid Privacy Objections

Marisa Taylor — Wed, 16 Sep 2009 17:10:59 +0000

The French National Assembly on Tuesday approved a draft “three strikes” law that would allow authorities to cut off Internet access to piracy offenders.

The measure, which France’s Senate passed in July, was narrowly approved by the parliament with a vote of 285 to 225, and is viewed as a compromise to a similar law that was rejected for being too harsh. The current provision would slap offenders who ignore an email warning and a registered letter with a fine of up to 300,000 euros (about $440,000) or a jail sentence, and would even fine parents for their children’s illegal downloading.

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The EC Pay Intel's Legal Expenses? Uh, Good Luck With That One.

John Paczkowski — Wed, 16 Sep 2009 11:00:45 +0000

“Manifestly disproportionate.”

That’s how Intel describes the record $1.45 billion antitrust fine levied against it by the European Union, one the company evidently believes was meted out in error.

In an appeal filed with the European Court of First Instance, Intel asks that the European Commission’s antitrust ruling against it be annulled on the grounds that the EC failed “to meet the required standard of proof.”

Seems the chip giant feels the Commission’s analysis of its discounts and rebate programs was too shoddy to be trusted–especially when it’s being used as justification for the largest single penalty imposed on a company for antitrust breaches in Europe.

“The Commission fails to prove that Intel engaged in a long-term strategy to foreclose the competitors,” Intel (INTC) argues in its appeal. “Such a finding is not supported by the evidence and is impossible to reconcile with the fragmented nature of the Commission’s allegations (in relation to both products covered and time period) in respect of each Intel customer….The applicant also submits that all or part of the Decision should be annulled on the basis that the Commission infringed essential procedural requirements during the administrative procedure, which materially infringed Intel’s rights of defence.”

Clearly, former Intel general counsel Bruce Sewell, who left the company to take a job with Apple (AAPL) Tuesday, was busy right up until the time he packed up his desk.

Anyway, Intel asks the court to annul “whole or in part” the EC’s ruling and, barring that, to at least annul or reduce the fine imposed. Finally, it would also like to see the EC ordered to pay its legal expenses.

The EC Pay Intel's Legal Expenses? Uh, Good Luck With That One.

John Paczkowski — Wed, 16 Sep 2009 11:00:45 +0000

“Manifestly disproportionate.”

That’s how Intel describes the record $1.45 billion antitrust fine levied against it by the European Union, one the company evidently believes was meted out in error.

Clearly, former Intel general counsel Bruce Sewell, who left the company to take a job with Apple (AAPL) Tuesday, was busy right up until the time he packed up his desk.

Former Brocade CEO: Hello, BofA? Yes, I’d Like to Stop Payment on a $15 Million Check.

John Paczkowski — Wed, 19 Aug 2009 14:18:44 +0000

Another first for former Brocade Communications Systems (BRCD) CEO Greg Reyes. He was the first Silicon Valley CEO to be indicted on federal charges in the options backdating scandal of a few years ago and the first to be found guilty. And on Tuesday, he became the first to have his conviction overturned.

Citing misconduct by prosecutors, a three-judge panel of the United States Court of Appeals for the Ninth Circuit in San Francisco ordered a new trial for Reyes, who had been convicted of 10 charges of conspiracy, fraud, making false regulator filings and falsifying records for backdating hundreds of employee stock options.

A favorable turn of luck for Reyes, who had been sentenced to 21 months in prison and ordered to pay a $15 million fine for misdeeds that, according to that three-judge panel, had been grossly exaggerated and perhaps even fabricated.

“Deliberate false statements by those privileged to represent the United States harm the trial process and the integrity of our prosecutorial system,” Judge Mary Schroeder wrote in the 3-0 ruling. “We do not lightly tolerate a prosecutor asserting as a fact to the jury something known to be untrue or, at the very least, that the prosecution had very strong reason to doubt.”

The panel stopped short of throwing the case out entirely, noting that “there was no question that Reyes signed off on stock-option grants that were priced retrospectively and that the backdating allowed Brocade to understate its compensation expenses.” So the United States attorney could opt to retry the case, though that seems a bleak option at this point given the tenor of the ruling.

“This is the highest profile [backdating] case they had that went to trial, so I’d expect they will try it again, if for no other reason than for reputational purposes,” Wayne State University law professor Peter Henning told the Mercury News. “But talk about a case that’s stale.”

Intel Rejects New “Sponsor of the EU” Ad Campaign

John Paczkowski — Wed, 22 Jul 2009 18:30:23 +0000

Intel proclaims itself a “Sponsor of Tomorrow,” but the company isn’t going to be a sponsor of the European Union if it can help it. The chip maker filed an appeal today challenging the European Commission’s $1.45 billion antitrust fine against it–the agency’s largest ever in a monopoly-abuse case.

On what grounds? Intel (INTC) spokesperson Robert Manetta said simply that the EC’s “decision is wrong.” Said Manetta: “We believe the European Commission misinterpreted some evidence and ignored other pieces of evidence.”

Just how Intel intends to prove that isn’t yet clear. But we may find out in September when the court is likely to issue a summary of the company’s complaints.

Apple Defies Recession

John Paczkowski — Wed, 22 Jul 2009 18:00:08 +0000

[ See post to watch video ]

Is The Pirate Bay Really Going Legit? Of Course Not.

Peter Kafka — Tue, 30 Jun 2009 13:32:43 +0000

You can hear the head-scratching going on at movie studios and music labels across the world: What just happened to The Pirate Bay? Reports out of Sweden are murky at best. But supposedly, a Scandinavian software outfit is buying the world’s most notorious file-sharing site for about $8 million and will create a service that pays copyright owners when people download their work. Maybe.

You can read a confusing release from the supposed acquirer, Global Gaming Factory X, here, and an equally confusing post from The Pirate Bay’s operators, here. And The Pirate Bay guys, who are supposedly looking at a big fine and a jail term, say they didn’t actually own The Pirate Bay but will get some of the profits from the sale anyway and will use them to finance an “Internet project.” Etc.

Oh! And the Pirate Bay’s new owners say they can’t promise that copyright holders are actually going to get paid. Here’s Global Gaming CEO Hans Pandeya in the Financial Times:

However, Mr Pandeya said the company would not be able to compel any filesharers to pay content owners. “We are trying to create a different model that addresses the needs of the different parties. However, it is up to them if they want to participate,” he said.

So it’s understandable that Hollywood and big music are mute, or close to it, on the deal. Because it’s difficult to say exactly what the deal is. I was able to extract one statement from the IFPI, the international music trade group. Here’s chairman and CEO John Kennedy:

“We don’t know the details and there are many questions to ask about how this will work in practice, but we would be delighted if this resulted in the Pirate Bay turning into a legitimate licensed service.”

But let’s be honest: There’s no way The Pirate Bay is going legit. And if it does, it won’t be The Pirate Bay, but something else.

Instead of being a massive site that attracts a huge audience that wants to devour free content, it will be a small distributor of licensed content, and the masses will flock somewhere else for their free stuff. Because they don’t want licensed content, even if it’s legal and/or better quality. They want free stuff.

The movie studios and the labels should be able to pat themselves on the back, gently and cautiously, for getting The Pirate Bay’s current owners to more or less abandon the site.

The problem, as they’re well aware, is that The Pirate Bay was only a directory that sent users to “torrents” that allowed them to gobble up as much pirated stuff as they want. And shutting down the Bay doesn’t mean the torrents are gone. And it doesn’t prevent other directory sites from popping up, whack-a-mole style, all over the world.

Monster: Backdating BAD

John Paczkowski — Mon, 18 May 2009 18:09:19 +0000

Monster Worldwide has finally put its backdating case to rest. Nary a week after former COO James Treacy was convicted of conspiracy and securities fraud, the online employment search company agreed to pay a $2.5 million fine to the U.S. Securities and Exchange Commission to settle charges that it improperly backdated millions of dollars in stock options.

The company neither admitted nor denied wrongdoing, though CEO Sal Iannuzzi’s comment on the matter was fairly apologetic, as well it should be–after all, Monster had to restate its results for 1997 through 2005 to the tune of about $339.5 million (pre-tax). “This is an important step in closing an unfortunate chapter in the company’s history and putting the issue firmly behind us,” Iannuzzi said in a statement. “Our current executive team has spent the last two years refocusing Monster on its customers and shareholders, retooling the day-to-day management, and overhauling governance in an effort to adhere to the highest standards.”

European Commission Overclocks Intel Antitrust Fine

John Paczkowski — Wed, 13 May 2009 20:29:20 +0000

[ See post to watch video ]

Intel to Change "Sponsors of Tomorrow" Slogan to "Sponsors of the European Union"

John Paczkowski — Wed, 13 May 2009 10:59:40 +0000

Ouch.

European regulators slapped Intel with an antitrust fine and, as expected, it’s a large one–a record $1.45 billion, which dwarfs even the $1.2 billion fine levied against Microsoft in 2008. The largest ever assessed for monopoly abuse, the fine follows charges that Intel (INTC) abused its market dominance by illegally inducing PC manufacturers to use its chips over those of rival AMD (AMD).

“The Commission finds that Intel did not compete fairly, frustrating innovation and reducing consumer welfare in the process,” Neelie Kroes, the European Commissioner for Competition Policy, said at a news conference announcing the fine. “Given that Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for over five years, the size of the fine should come as no surprise.”

And after all, it could have been worse. The $1.45 billion assessment is quite a bit less than the maximum fine the EC could have levied–10 percent of a company’s annual revenue. Given that Intel made $37.6 billion in 2008, the EC could have slapped it with a penalty of $4 billion.

Intel denied any wrongdoing and said it would appeal. “Intel takes strong exception to this decision,” CEO Paul Otellini said in a statement released immediately after the announcement. “We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace–characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal. We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not.”

Intel to Change "Sponsors of Tomorrow" Slogan to "Sponsors of the European Union"

John Paczkowski — Wed, 13 May 2009 10:59:40 +0000

Ouch.

Now Go Away or We Shall Taunt You a Second Time

John Paczkowski — Fri, 09 May 2008 16:45:26 +0000

Microsoft (MSFT) is appealing the $1.38 billion fine given it by the European Commission for failing to comply with a landmark antitrust ruling in what it describes as a “constructive effort to seek clarity from the court.”

By “clarity,” Microsoft means an annulment of the EC’s February decision imposing the fine–the highest ever meted out in an antitrust case. But it’s not likely to get it. At least according to the EC. Said an EC spokesperson: “The commission is confident that its decision to impose the fine is legally sound.”

Translation: No. How’s that for “clarity”?

EU Fine Expands Microsoft's Support for Web Standards

John Paczkowski — Tue, 04 Mar 2008 15:20:01 +0000

Microsoft is serious about its newfound commitment to interoperability–serious enough to make Internet Explorer 8 Web standards-compliant out of the box.

In a complete reversal of earlier policy, the software giant has decided to make IE8 default to a standards-compliant mode of rendering Web pages that favors interoperability, rather than an IE7 rendering mode that favors Microsoft (MSFT). “Microsoft recently published a set of Interoperability Principles,” Internet Explorer General Manager Dean Hachamovitch wrote in a post to the IEBlog. “Thinking about IE8’s behavior with these principles in mind, interpreting Web content in the most standards-compliant way possible is a better thing to do. We think that acting in accordance with principles is important, and IE8’s default is a demonstration of the interoperability principles in action.”

Quite the change of heart. Guess a record $1.35 billion in antitrust fines changes your perspective on these things. Certainly, Hachamovitch implies as much in his post. Writes Hachamovitch, “While we do not believe any current legal requirements would dictate which rendering mode a browser must use, this step clearly removes this question as a potential legal and regulatory issue.”

It certainly does. And if you don’t believe Hachamovitch, just ask Brad Smith, Microsoft senior vice president and general counsel. He said exactly the same thing, using exactly the same words in a company press release announcing IE8′s Web standards compliance.

EU Fine Expands Microsoft's Support for Web Standards

John Paczkowski — Tue, 04 Mar 2008 15:20:01 +0000

Microsoft is serious about its newfound commitment to interoperability–serious enough to make Internet Explorer 8 Web standards-compliant out of the box.

EU Sets Guinness Record for World's Largest Microsoft Fine

John Paczkowski — Wed, 27 Feb 2008 19:00:06 +0000

[ See post to watch video ]

EU Sets Guinness Record for World's Largest Microsoft Fine

John Paczkowski — Wed, 27 Feb 2008 19:00:06 +0000

[ See post to watch video ]

European Commission Announces Microsoft Antitrust Fine Ultimate Edition™

John Paczkowski — Wed, 27 Feb 2008 16:31:06 +0000

If Microsoft (MSFT) believed its “new” commitment to interoperability would curry favor with the European Commission it was mistaken. Sorely mistaken.

This morning the EC slapped the software giant with another $1.35 billion in fines for failing to comply with its 2004 antitrust order. “Microsoft was the first company in 50 years of EU competition policy that the commission has had to fine for failure to comply with an antitrust decision,” European Commissioner for Competition Neelie Kroes said. “I hope that today’s decision closes a dark chapter in Microsoft’s record of noncompliance with the commission’s March 2004 decision and that the principles confirmed by the Court of First Instance ruling of September 2007 will govern Microsoft’s future conduct.”

The fine is the largest the EU has ever imposed against a single company in an antitrust case and brings Microsoft’s total European antitrust tab to about $2.5 billion, in current exchange rates. Quite a sum, to be sure. But for Microsoft, one that could easily come out of the “Found Beneath Bill Gates’s Couch Cushions” fund. Said Jeremy Allison, co-creator of the open-source workgroup file-and-print-server software Samba, “That’s not a fine, that’s just a way of getting their attention.”

In a statement, Microsoft said it was “reviewing the commission’s actions,” adding that the fine concerned past issues it thought had been resolved. “As we demonstrated last week with our new interoperability principles and specific actions to increase the openness of our products, we are focusing on steps that will improve things for the future,” the company said.

But Kroes wasn’t having any of it. “Talk, as you know, is cheap,” she said this morning. “We don’t want talk and promises.”