With those words, senior Apple executive Eddy Cue stuck to his take-it-or-leave-it business model of a 30 percent revenue share payable for transactions through the iTunes service. Despite my arguments to Mr. Cue in Apple’s Cupertino, Calif., offices last year on behalf of news publishers seeking different terms, to him there was no difference between a newspaper and an online game.

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Without mentioning Apple Inc. or the five publishers that are the target of the investigation, Sharis Pozen says she won’t hesitate to act against “collusive behavior at the highest levels of companies.”

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Several of the parties have held talks to settle the antitrust case and head off a potentially damaging court battle, these people said. If successful, such a settlement could have wide-ranging repercussions for the industry, potentially leading to cheaper e-books for consumers. However, not every publisher is in settlement discussions.

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However, antitrust enforcers in the U.S. and Europe remain concerned about Google’s commitment to license key Motorola patents to competitors on fair terms, those people said, and are likely to closely monitor Google’s use of the patents. The European Commission has set a deadline of Monday to decide whether to approve the acquisition.

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“We’ve built the system and had it on a shelf waiting for more legal certainty,” said Gordon Medenica, the director of the New York lottery, which is planning to start selling lottery tickets on the Internet next year. “We’re pleased for the opportunity this gives us.”

A number of statehouses and lotteries in search of new revenue have recently considered proposals to allow some form of online gambling. Washington, D.C., voted this year to allow its lottery to operate online poker, but the law hasn’t yet been implemented. Five state lotteries already offer modest Internet-based subscriptions for lottery drawings. Both Illinois and New York have drawn up more expansive plans to sell tickets online to their lottery drawings.

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In a nutshell, the department’s Office of Legal Counsel has determined that the Federal Wire Act, the 1961 law that had been interpreted to outlaw all forms of gambling across state lines, actually only applies to “a sporting event or contest.”

Well, what does this mean? It means that Internet poker isn’t barred by any federal statute.

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The two companies on Monday filed a joint motion to stay their pending federal court case until at least January. The move clearly wasn’t AT&T’s idea, however. The Justice Department said last week it would seek a stay in the case given that AT&T had pulled its paperwork with the Federal Communications Commission.

“If approved by the court, all pretrial and trial deadlines, including depositions and discovery, would be cancelled and a status conference would be held before the court on Jan. 18,” the Justice Department said in a statement. The government said that under the joint plan, AT&T will file a status report with the court by noon on Jan. 12 indicating “whether they intend to proceed with the transaction at issue in the litigation, whether they intend to proceed with another transaction, the status of related proceedings with the Federal Communications Commission (FCC) and their plans and timetable for seeking any necessary approval from the FCC.”

In a statement on Monday, AT&T said it is working with T-Mobile on “whether and how” to proceed with the deal.

“AT&T is committed to working with Deutsche Telekom to find a solution that is in the best interests of our respective customers, shareholders and employees,” the company said. “We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals so that we can deliver the capacity enhancements and improved customer service that can only be derived from combining our two companies’ wireless assets.”

Until now, AT&T has plowed full steam ahead with the proposed $39 billion deal, despite objections from a long list of competitors and regulators, including the FCC, DOJ, Sprint and C Spire Wireless (formerly known as Cellular South).

At a congressional hearing, Sharis Pozen, the Justice Department’s acting antitrust chief, said: “We are also investigating the electronic book industry, along with the European Commission and the states attorneys general.”

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The decision to release the analysis — which came despite AT&T’s objections — marked the latest blow to the deal, which is on life support after a lawsuit by the Justice Department and criticism from the Federal Communications Commission.

The FCC said last week it wanted to call a trial-like hearing to review the deal. AT&T responded by pulling its application at the FCC and the agency, after some discussion over the weekend, agreed Tuesday to let the withdrawal go through.

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The plan, according to the New York Times: Sell off some of T-Mobile’s assets (customers and spectrum) to Leap Wireless International.

Such a move would make Leap Wireless the fourth-largest carrier in the nation, while allowing AT&T to keep only those T-Mobile assets it really needs. But will it win AT&T the regulatory approval it needs to proceed? Seems unlikely. Transforming Leap into the nation’s No. 4 carrier doesn’t do much to preserve competition in a market in which AT&T and Verizon hold a clear duopoly.

But at this point, AT&T is evidently willing to try anything, even risking a $39 billion merger on a deal with a company that does around $700 million in revenue per quarter. And given the circumstances, who wouldn’t be making last-ditch efforts? If the deal fails to garner regulatory approval, AT&T will owe T-Mobile parent Deutsche Telekom $3 billion in cash and $1 billion worth of spectrum.

The move by Julius Genachowski, the FCC’s chairman, would be a setback for the two companies that are already facing opposition from the Justice Department, which filed a lawsuit to stop the deal. The FCC’s move would be another obstacle for the two companies to overcome. The agency’s hearing would happen the conclusion of the antitrust trial, according to this person.

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In a series of letters and presentations to the department’s antitrust division, the bookseller’s lawyers accused Microsoft of trying to corner the market for handheld operating systems by threatening companies using Google Inc.’s Android software.

“Microsoft’s willingness to bully small players with expensive litigation raises a substantial barrier to entry in any market in which it claims dominance,” B&N’s general counsel, Eugene DeFelice, wrote in a March letter to the department’s then-antitrust chief, Christine Varney.

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You gotta hand it to those geniuses over at the Googleplex, thinking up adorkable names for all their various plots and schemes.

And for its latest look-see of the Yahoo situation, it has revived an old one: “Project Porcupine,” presumably from the old joke about how you hug a porcupine.

Very carefully.

Or maybe you don’t hug it at all, which is why all the rumors about the search giant hooking up with some unnamed private equity firms have been so unclear and, well, hard to grab ahold of.

According to sources, there are three clear aspects of what is actually going on:

1. Interest in using Google’s vast cash hoard as part of an investment it would make in a deal — meaning the company was approached, which it is, often.

2. Desire of Google’s crafty Chief Business Officer Nikesh Arora to perhaps find a clever way to get ahold of Yahoo’s display inventory to add to Google’s own fast-growing DoubleClick display advertising subsidiary — meaning Arora has been making the rounds at Yahoo to gauge interest.

3. Pure enjoyment in messing with Microsoft execs — who are now allied with Yahoo via its Bing search technology — as well as getting up any price the software giant would have to fork over to be part of any consortium that will be cobbled together in what is sure to be a hopelessly complex deal.

Whether incoming or outgoing or just an early version of Mischief Night, any one of these options — while interesting to contemplate — is certainly fraught for Google.

Remember the trouble three years ago when Google tried to do a simple search-advertising partnership with Yahoo, in order to pull it out of the clutches of Microsoft?

That effort ended with a resounding oh-no-you-don’t by the Justice Department, which promised an antitrust lawsuit was awaiting such a move to bring together the No. 1 and No. 2 search services.

And if it was a no-no then, any formal relationship or even arm’s-length investment in Yahoo by Google would inevitably be more closely scrutinized this time around.

In fact, what I wrote in 2008 applies a dozen times more emphatically today:

“It is bad for advertisers, it is bad for consumers, it is bad for innovation, no matter how well-intentioned Google is.”

Fast forward to today, after Google has already played a worrisome game of chicken with regulators over a number of acquisition deals — which makes trying to bring back Yahoogle akin to reaching for the third rail.

But that’s not what it’s going to do, in truth, because — even though Yahoo is still a tempting target — there is usually only one outcome to hugging a porcupine.

Ouch.

The U.S. Attorney in the Southern District of New York filed a motion Tuesday to amend an earlier civil complaint to allege that Mr. Ferguson, Mr. Lederer and two other directors for the website, Full Tilt Poker, operated what the Justice Department says was a Ponzi scheme that allowed the company to pay out $444 million to themselves and other owners, which included other famous poker players.

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The Justice Department, which filed suit Wednesday in federal court to block the acquisition, and the FCC are separate agencies with different standards for assessing mergers. But the two worked together as the Justice Department prepared its suit, and the FCC has never approved a deal that the Justice Department rejected, according to FCC officials.

“It’s a DOJ decision, but there was a lot of input from [FCC Chairman Julius] Genachowski’s team,” an FCC official said Thursday of the ruling.

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Filed in the United States District Court for the District of Columbia, the DOJ’s complaint says T-Mobile “places important competitive pressure on its three larger rivals” and argues its purchase by AT&T would be bad for consumers.

“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the Justice Department said in its suit. “Thus, unless this acquisition is enjoined, customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger.”

And Federal Communications Commission Chairman Julius Genachowski said in a statement:

By filing suit today, the Department of Justice has concluded that AT&T’s acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws. Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices.

Agents in the Federal Bureau of Investigation’s Washington field office and fraud prosecutors in the Justice Department’s Criminal Division are handling a criminal investigation, which has been under way for at least a year, according to people familiar with the matter. Attorneys at the Securities and Exchange Commission are also investigating for possible civil violations, these people said.

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The Justice Department said that the forfeiture was one of the largest ever in the U.S. and represented the gross revenue received by Google as a result of Canadian pharmacies advertising on Google, plus gross revenue made by Canadian pharmacies from their sales to U.S. consumers.

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“It showed the power of the television medium and what it was able to provide for the online business,” says Steve Lipscomb, founder of World Poker Tour.

That power quickly attracted the U.S. Justice Department, which in June 2003 warned in a letter to media companies and the National Association of Broadcasters, that they should “know the illegality of offshore sportsbook and Internet gambling operations since, presumably, they would not run advertisements for illegal narcotics sales, prostitution, child pornography or other prohibited activities,” according to a copy of the letter viewed by The Wall Street Journal.

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The department’s antitrust division has been reviewing Google’s Inc.’s $900 million opening bid, although it hasn’t found any major competitive issues that would lead it to challenge its purchase of the patent portfolio, the people said.

The agency has greater concerns about another possible bidder, Apple Inc., which has often asserted intellectual property rights against other companies. Apple has been in talks with the Justice Department to address its concerns, those people said.

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News of the antitrust lawsuit pushed down the companies’ share price. VeriFone was off 6.7 percent at $46.64 and Hypercom was down 12 percent at $9.59, in 4 p.m. composite trading on the New York Stock Exchange.

The Justice Department said the two companies control more than 60 percent of the U.S. market for point-of-sale terminals used by the largest retailers.

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“How cool would it be if you could type ‘flights to somewhere sunny for under $500 in May’ into Google and get not just a set of links but also flight times, fares and a link to sites where you can actually buy tickets quickly and easily?”

That was Google’s exact wording for explaining why it wanted to buy ITA Software for $700 million. And, after nine grueling months of antitrust review–and agreeing to a number of severe conditions–the Justice department approved the merger.

On Monday, Kayak didn’t let the opportunity pass by to poke fun at its biggest new competitor. In a blog post, complete with a smiley-face emoticon at the end of the sentence, Kayak wrote: “Great idea, Google. Glad we thought of it…like a year ago.”

Kayak’s service–found at Kayak.com/explore–lets users enter a starting location, a month they’d like to travel, and any stipulations (such as budget) or activities (such as a beach or golf destination).

So, to answer Google’s question, Kayak found a nice $430 flight to Hawaii in May that Google’s Mountain View executives could take from the nearby San Jose airport.

(Of course, Kayak acts tough now. Never mind that it was one of the leading companies opposing the acquisition mere months ago, and is still waiting in the wings for the right moment to go public.)

One would be a travel agency, focused on selling air, hotel and car rentals and the other would be TripAdvisor, the travel reviews site that operates in 27 countries and 19 languages.

The split-up was a surprise today, many brows furrowed as to the significance of the timing, since the travel industry is facing a number of major disruptions.

Today, reports said Google and the Justice Department could ink a deal over the next couple of days that would allow the search giant to purchase flight-data company ITA Software for $700 million. One of its biggest partners, Kayak.com, is also zeroing on its IPO. Kayak is also beginning to book hotel rooms directly with its customers, rather than always redirecting to other sites, such as Expedia.

But much of the thought process has to do with what Expedia thinks its business is worth, compared to Wall Street’s valuation.

While Expedia’s travel agency business garners the most attention, it is TripAdvisor that has the bigger growth story, but in many respects is hampered by being tucked under Expedia’s  much larger wings.

Expedia CEO Dara Khosrowshahi told the WSJ that TripAdvisor is now big enough to be on its own. “It is a matter of size, globalization and diversification of revenues…It is really ready to stand on its own.”

On its own, it could be worth as much as $4 billion, according to some estimates, which is way above the $237 million Expedia purchased it for in 2004.

TripAdvisor makes money from advertising as well as from affiliate fees when users book through other sites, such as Priceline or Orbitz. TripAdvisor is the high-growth and high-margin business of Expedia today.

In 2010, TripAdvisor’s revenues totaled $486 million, up 38 percent compared to the year-ago period. Operating income in 2010 totaled $260 million, increasing 33 percent year over year. Its margins are slightly above 50 percent. Contrast that to Expedia’s overall transaction business, which is much larger, but is seeing a more modest annual growth at 20 percent.

But a lot of that growth story is not as easy to see on the surface.

Meanwhile, one of Expedia’s largest competitors, Priceline, continues to be appreciated in the public markets. Its stock hit a recent 52-week high after one analyst boosted its price target to $610 from $575.

In after hours trading yesterday, Expedia shares jumped 14 percent to $25.51 after closing $22.40 in the regular session. Today, Citi Investment reiterated its Buy rating at a $29 price point and called it a value play.

Not all analysts believe the break-up is the right thing to do.

Fitch Ratings, which is watching closely to see how the plan will affect the company’s bond ratings, wrote that TripAdvisor as a stand-alone entity will likely represent a significant new competitor to Expedia. It believes that TripAdvisor will now have much more flexibility to pursue a model that’s similar to competitors such as Kayak, which can promote hotel direct bookings in favor of directing traffic to online travel agencies, such as Expedia.

That is a particular concern because a large majority of Expedia’s revenue comes from hotel bookings, which has higher margins than airplane tickets.