Displaying items by tag: antitrust
EU fines Qualcomm over alleged antitrust violation
US chipmaking giant Qualcomm has been fined 242 million euros by the EU for an antitrust violation.
The fine is the second penalty imposed on the company by Brussels, the previous fine being 997 million euros back in 2018.
“Our investigation found that Qualcomm abused” its dominant position in the market between mid-2009 and mid-2011 by “engaging in predatory pricing,” read the statement issued by the EU.
According to the EU’s case, the chips in question are “key components so that mobile devices can connect to the internet” and that “Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor,” said EU antitrust commissioner Margrethe Vestager.
The EU also stated that Qualcomm sold chipsets to Huawei and ZTE, strategic customers which are Chinese tech giants, “with the intention of eliminating Icera, its main rival”.
Qualcomm said in a statement that it would appeal this decision as a means of exposing “the meritless nature” of it.
The EU fine, according to the chipmaking giant’s General Counsel, Don Rosenberg, is “unsupported by the law, economic principles or market facts, and we look forward to a reversal on appeal.”
Rosenberg added that the Chinese tech giants chose Qualcomm because “rival chipsets were technologically inferior”.
Qualcomm was also recently fined in Korea and Taiwan for antitrust concerns. In fact, the chipmaker finalized a two-year-long legal battle with Apple over royalties.
Trump has criticized Vestager’s cases against US tech giants such as Amazon, Google and Apple. In fact, Google was previously given 3 major fines from the European Commission amounting to a total of 8.25 billion euros.
Apple South Korea proposes settlement to avoid antitrust allegations
Apple’s South Korea unit has proposed a settlement agreement with the country’ antitrust regulator, the Fair Trade Commission (FTC).
Tech titans face clampdown from Australian regulator
The Australian Competition and Consumer Commission (ACCC) called for new regulations on Facebook, Google and other tech behemoths which could have far-reaching ramifications on their money-making procedures and their ability to choose which content consumers would consume.
The country’s competition watchdog devised some recommendations which, if confirmed, would be among the most restrictive towards tech giants. These recommendations were created in an effort to limit the power of these tech giants due to global concerns of their influence and various other issues such as anti-trust, privacy abuse and the role they play in spreading discriminatory content and misinforming the public.
The ACCC plans to issue its final report by the end of June, following its 18-month inquiry into the issue. This report is expected to comprise of various proposals pertaining to controls that will be imposed on tech giants which handle a large quantity of personal data to use for marketing purposes such as the use of algorithms to coordinate which advertisements to display to customers, which tailored search results will appear and other tailored content.
In the lengthy preliminary report which was issued in December last year, the ACCC raised concerns about the market power of tech companies like Facebook and Google and how their operations are characterized by a “lack of transparency”, especially with regards to the use of our data.
The report, which was initiated by the conservative government, read,: “We are at a critical point in considering the impact of digital platforms on society.” It also shed some light on the impact the tech giants had on Australia’s new industry.
In fact, it was found that since 2014, two tech titans were receiving a huge fraction of the revenues generated from digital advertising which resulted in the number of newspapers and online journalists falling by over 20 per cent.
“While the ACCC recognizes their significant benefits to consumers and business, there are important questions to be asked about the role the global digital platforms play in the supply of news and journalism in Australia,” read the report.
The competition watchdog stated that it wanted to make sure the big firms did not “favor their own business interests, through their marketing power and presence across multiple markets”.
“There are also issues with the role of digital platforms in determining what news and information is accessed by Australians, how this information is provided, and its range and reliability.”
Rod Sims, ACCC chairman, stated that regulatory authorities In the UK, Europe and the U.S. were monitoring the outcome of their inquiry very closely as they are all still in the process of determining their policies regarding the issue.
Many are of the belief that the ACCC’s recommendations are impractical and a little radical.
Prime Minister Scott Morrison’s government has already begun to take action against the growing influence of Big Tech. This includes enabling criminal penalties for social media execs which allow the spread of violent or hateful content on their platforms.
Head of DIGI, the lobbying group formed by various tech behemoths to deal with the regulator, Sunit Bose, said, “We obviously need really clear rules for the internet that protect privacy, safety, the economic and social benefits of technology while also protecting competition and innovations.”
She also argued that the Australian regulator’s recommendations would hurt Big Tech, as well as start-ups and smaller companies that lack the resources to deal with the new regulations.
“the prospect of having to disclose such sensitive information will serve as a deterrent to global digital companies and start-ups initiating or expanding their operation in Australia,” she said.
US chipmaker sees shares plunge after antitrust ruling
The US manufacturer of superchips that powers our smartphones has seen its shares plummet following an antitrust ruling.
Merger deal between US operators receives support from FCC
The $26 billion merger deal between US telecommunication operators T-Mobile US and Sprint has received the backing of a key official at the US communications regulator FCC (Federal Communications Commission).
Apple executive blasts Qualcomm during antitrust lawsuit trial
A prominent Apple executive has testified that Qualcomm refused to let the US technology behemoth use its chip technology in their latest line of iPhones due to an ongoing dispute between the two companies over licensing fees.
The admission was made by Apple COO Jeff Williams, during court proceedings in relation to an antitrust lawsuit filed by the US Federal Trade Commission.
Williams told the court that the global smartphone manufacturer expressed a desire to use both Qualcomm and Intel chips in its 2018 iPhones, but stated that Qualcomm withdrew support for Apple by refusing to sell them chips.
In addition to this, he disclosed that Apple has not been able to reach an agreement with the US chipmaker in relation to a new design since it filed a lawsuit in January 2017, which accused Qualcomm of using anticompetitive licensing tactics.
Williams also detailed the company’s fee negotiations with Qualcomm, noting Apple repeatedly traded exclusivity for a lower chip cost in order to keep the latter’s technology in its devices. Williams said, “We needed their chip supply, and we didn’t have a lot of options.”
Qualcomm has yet to mount its full defence in the litigation proceedings. However, it must be said that the claims made by Williams come in stark contrast to testimony provided by Qualcomm CEO Steve Mollenkopf last week.
Reuters published a report which claimed that the Qualcomm CEO declared that the chipmaker had sought an exclusivity arrangement not to shut out the competition, but instead to ensure it would recoup a $1 billion “incentive payment” made to Apple in 2011 in an effort to help cover technical transition costs incurred in switching chip suppliers from Infineon.
Williams’ statements were also contradicted by comments made by Qualcomm president Cristiano Amon during an earnings call in July 2018 noting the company would gladly be an Apple supplier again if the opportunity presents itself.
Mollenkopf also stressed that there was no reason the pair could not work together again noting that it makes sense that the technology leader in mobile should partner with the product leader.
Google files appeal against $2.8bn EU antitrust fine
Alphabet-owned Google is fighting back against the $2.8 billion antitrust fine it was given by the European Commission in June this year. The Californian tech giant has filed an appeal against the fine, which was the largest penalty ever given by the European Union’s regulator.
The European Commission had ruled that Google’s positioning of its own shopping comparison service at the top of Google search results was an abuse of power. If the practice continued, the Commission said, more fines would come Google’s way.
At the time when the fine was imposed, the EC’s Competition Commissioner, Margrethe Vestager, said Google was conducting activity that was “illegal under EU antitrust rules.” Google “respectfully disagreed” with the ruling, but was given 90 days to end its “anti competitive” practices or else face another fine amounting to 5 percent of the average daily global earning of Alphabet.
The company “has systematically given prominent placement to its own comparison shopping service,” the Commission claims. Furthermore, “Google has demoted rival comparison shopping services in its search results.”
For instance, rival comparison shopping services appear in Google's search results on the basis of Google's generic search algorithms. Google has included a number of criteria in these algorithms, as a result of which rival comparison shopping services are demoted.
Evidence, according to the Commission, shows that even the most highly ranked rival service appears on average only on page four of Google's search results, and others appear even further down.
Google's own comparison shopping service is not subject to Google's generic search algorithms, including such demotions. As a result, Google's comparison shopping service is much more visible to consumers in Google's search results, whilst rival comparison shopping services are much less visible.
Google's “illegal practices” have had a “significant impact” on competition between Google's own comparison shopping service and rival services, the Commission claims. They allowed Google's comparison shopping service to make significant gains in traffic at the expense of its rivals and to the detriment of European consumers.
Given Google's dominance in general internet search, its search engine is an important source of traffic, the Commission claims. As a result of Google's practices, traffic to Google's comparison shopping service increased significantly, whilst rivals have “suffered very substantial losses of traffic on a lasting basis.”
The Commission is now looking at other areas where it suspects Google may have abused its monopoly power, notably its Android mobile operating system, speculates BBC Technology Correspondent Rory Cellan-Jones. The Commission’s ruling against Google “was seen as just the first shot in a wider campaign,” he said.
Mexican court rules in favor of America Movil
America Movil, Mexico’s largest telecom provider, won a victory this month, when Mexico’s Supreme Court ruled on August 16 that the operator doesn’t have to share its network to rivals free of charge. The court said a law requiring the company to allow rivals to use its network for free is unconstitutional.
Billionaire Carlos Slim Helu, the world’s fifth wealthiest person, runs the Mexican wireless telecom and pay TV giant, competing against rivals US telecom giant AT&T and Spain’s Telefónica. America Movil hoped the court would force its rivals to pay back fees – estimated between $600 million to $800 million – for using its network.
But the Supreme Court said the only authority to determine what interconnection fees AT&T and Telefónica should pay America Movil is the Federal Telecommunications Institute, Mexico’s telecommunications regulator, known as the IFT.
America Movil claims that Congress overstepped its role by implementing a zero charge service into Mexico’s telecom law for operators with over 50 percent marketshare. The landmark reform, introduced in 2014, sought to hinder America Movil’s market dominance in the country.
About two-thirds of Mexico’s mobile marketshare is dominated by America Movil, according to Dow Jones Newswire. But lower service fees were implemented as a result of newcomers in the market. Antitrust reforms were initiated to break America Movil’s control.
Under a new telecom law, America Movil was prohibited from charging other telecom carriers for connecting their calls made to customers on its network, while allowing those companies (Telefónica and AT&T) to charge America Movil for connecting its calls to their customers.
The reform was challenged by Mr. Slim’s attorney, who initiated the argument that it was unconstitutional for Congress to dictate telecom prices. The IFT has since been granted exclusive power by Congress to make those decisions.
The Supreme Court’s latest ruling is an “important resolution” America Movil claimed in a statement. The company said the ruling “restores the authority” of the IFT in determining interconnection prices. America Movil said the decision should be based “on international best practices, cost oriented methodologies, transparency and rationality.”
The company also emphasized that, despite the “unconstitutionality” of the zero tariff, rival carriers were not ordered to compensate Telcel, America Movil’s cellular service affiliate, for using its network.
The IFT said it will comply with the Supreme Court’s ruling and decide what rate, if any, to be paid to America Movil, but the group didn’t specify when. A report by Forbes predicts that its decision will come within two months, with rates being implemented in January of 2017.
America Movil has been accused of trying to reverse the antitrust movement. When Mexico’s Supreme Court last month said it would consider the company’s injunction, a group of 21 companies including AT&T and Telefónica, published a scathing advertisement in Mexican daily newspapers accusing America Movil of using “legal resources and devices” to overturn the reform against it.
Despite this, America Movil firmly holds around 70 percent of Mexico’s wireless market share, according to Reuters, and the antitrust rules did little to overturn the company’s dominance.
Alphabet posts strong Q2 results, despite EU anti-trust fine
Alphabet Inc., the parent company of Google and YouTube, posted its financial results on July 24 for the quarter ended June 30, 2017. The tech giant reported a 21 percent jump in quarterly revenue, maintaining a strong growth rate despite a massive anti-trust fine from the European Union.
The company said it made $3.5 billion in net income on sales of $26 billion. Alphabet’s profit would have been even larger if not for the record $2.7 billion EU fine. Alphabet was accused of abusing its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service.
Anti-trust concerns have not come from the US. If it weren’t for the EU fine, Alphabet said its earnings per share would have been $8.90 in Q2, compared with $7 a year earlier. But with the fine, the company reported earnings per share of $5.01, beating an average estimate of $4.49.
The company will fight to continue bundling its Android operating system with popular smartphone apps such as Google Maps, said Google CEO Sundar Pichai in a conference call – a practice the EU anti-trust officials are investigating.
“It’s a very open market, open ecosystem, and it works well for everyone, and I expect that to continue,” he said, adding that billions of people use Google products worldwide.
"With revenues of $26 billion, up 21 percent versus the second quarter of 2016 and 23 percent on a constant currency basis, we're delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams," said Ruth Porat, CFO of Alphabet.
There are concerns, the company noted, that its costs have been rising faster than sales. Expenses would remain high as more searches shift to mobile devices. The uncertainty of expected profit appeared to weigh down on Alphabet’s share price, said Reuters, which fell about 3 percent to $967 after the bell.
The company’s revenue costs, a measure of how much it needs to spend to keep its platforms running before added costs such as research, rose 28 percent, according to the results, which is higher than the growth in revenue itself. The rising costs, such as Google paying to drive traffic to its search engine, affected the company more than expected, analysts report.
“This could be problematic going forward,” Doug Kass, president of Seabreeze Management, told Reuters.
Alphabet is focused on growing bigger, according to Porat, who was asked about margins during a conference call with analysts. She said, “As we’ve often said, we’re focused on revenue and operating income dollar growth and not on operating margins.”
She further noted that increasing costs are merely the result of more money being invested into high-growth products that she said would create value for Alphabet shareholders. The company currently holds $15.7 billion in cash and cash equivalents, according to the results, and a further $79 billion in marketable securities.
Alphabet competes head-to-head with social media giant Facebook for online advertizing revenue. According to eMarketer, Google is expected to have $73.75 billion in net digital ad revenue worldwide while Facebook is expected to make just $36.29 billion. Together, eMarketer reports, Google and Facebook rake in 49 percent of the market.
Other products under the Alphabet umbrella, such as the Pixel smartphone, the PlayStore and Google’s cloud business, saw revenue increase 42.3 percent to $3.09 billion. Google’s cloud business competes against heavyweights such as Amazon and Microsoft.
Some of Alphabet’s losses came from business units such as Waymo, its self-driving company, and thermostat-maker Nest, and the life sciences firm Verily.
Uber under fire for offering cheap rides from Madrid airport
Uber has come under fire in Spain by Madrid authorities that have asked the anti-trust watchdog to investigate whether the ride-hailing app’s new cheap airport transfer service has broken competition rules, Reuters reported.
The competition regulator, CNMC, last year called for the government to lift a ban on Uber. But the app’s new Uber Airport service has brought Uber back under scrutiny, since it offers a tariff of 15-19 euros for a ride between Madrid’s Barajas international airport and the city center, which is much cheaper than the standard fixed taxi rate of 30 euros.
“[Uber Airport] could violate several articles of the Law of Unfair Competition and consumer rights, if it is proven that the service is being operated at prices below operational costs with the sole intention of gaining customers through unfair competition,” said the Madrid City Council in a statement.
Uber has faced similar condemnation around Europe, where it expanded into from the US six years ago, due to the fact that it is not bound by the strict licensing and safety rules that apply to some of its competitors.
In Spain, taxi drivers have gone on strike three times this year, arguing that ride-hailing apps like Uber, which are regulated under VTC licenses, often used for private chauffer services, constitute unfair competition because they do not meet the current regulations and pay less tax than taxi services.
There are currently more than 2,000 VTC-licensed taxis in Madrid, the only Spanish city where Uber is currently active, and about 15,000 traditional taxis, according to figures from the Ministry of Public Works.
The European Court of Justice recently ruled that Uber should be defined as a transport service rather than an app.