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DealBook Column: Tech Companies Tread Lightly in Statements on U.S. Spying

June 11, 2013 by Leave a Comment

Mark Zuckerberg, chief of Facebook, one of several companies that denied a direct role in government spying.Robert Galbraith/ReutersMark Zuckerberg, chief of Facebook, one of several companies that denied a direct role in government spying.

Someone’s not telling the whole truth.

In the wake of the news leak that the National Security Agency is engaged in a wide-ranging surveillance program of Internet users through a system called Prism, the world’s biggest technology companies responded by unilaterally denying any involvement in the government’s spying apparatus.

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Mark Zuckerberg, Facebook’s founder and chief executive, declared: “Facebook is not and has never been part of any program to give the U.S. or any other government direct access to our servers,” adding that, “We hadn’t even heard of Prism before yesterday.”

Larry Page, Google’s co-founder and chief executive, went slightly further. “The U.S. government does not have direct access or a ‘back door’ to the information stored in our data centers,” he said. Apple, Microsoft, AOL and Yahoo followed with denials as well.

And yet President Obama and the United States director of national intelligence, James R. Clapper Jr., have publicly confirmed the existence of the Prism system, without providing any details about it.

Of course, the news — as well as the responses — raises doubts about who is telling the truth and about how extensive the spying program really may be.

But perhaps just as important, the episode also raises questions about how publicly traded companies with hundreds of millions of consumers — companies that are regulated by the Securities and Exchange Commission and the Federal Trade Commission — can, and should, react to news when pressed about involvement in confidential government programs.

“They are in a very difficult position,” said Thomas A. Sporkin, a former S.E.C. enforcement official and now a partner at Buckley Sandler. “On one hand they want to project an image of protecting your privacy. On the other, they have statutory obligations to keep government programs confidential” or potentially risk criminal charges if they exposed a secret government program.

Companies could also face a problem if their disclosures were misleading to investors, but only if they materially affected the stock price or had some other adverse effect, lawyers said.

These companies did not just say “no comment.” They flat-out denied involvement. Mr. Sporkin said, “They are probably not being completely forthcoming, but they are probably not lying.” He noted that the statements were highly vetted by legal teams.

While the companies might have wanted to stick in “no comment” mode, a version of peer pressure kicked in, said one chief executive who spoke on the condition of anonymity because of the fragility of the situation. Once one company issued a flat denial, the others felt they had to follow suit, he said.

Indeed, the statements that companies like Facebook and Google made are probably truthful if taken literally. I don’t doubt Mr. Page when he said, “Press reports that suggest that Google is providing open-ended access to our users’ data are false, period.” The title of his statement, which appeared on Google’s corporate blog and was also signed by the company’s chief legal officer, David Drummond, was “What the…?”

But I also don’t doubt another part of his statement that was frequently overlooked: “We provide user data to governments only in accordance with the law.”

In other words, when the government makes a legitimate request — and through Section 702 of the Foreign Intelligence Surveillance Act, which was highlighted by the leak, the government can seek vast troves of information — Google and others comply.

It is possible, for example, that Mr. Page and Mr. Zuckerberg had never been told that the government’s program was called Prism. And it is highly unlikely the government has a password granting access to company servers despite early reports quoting a government document that used the phrase “direct access” and now appears as if it overstated the case.

At the same time, however, companies like Facebook and Google have clearly worked with the government to create systems to transfer vast amounts of private data that is sought by the N.S.A. and other government agencies. The New York Times reported last week, based on people briefed on the matter, that Google and Facebook discussed plans “to build separate, secure portals, like a digital version of the secure physical rooms that have long existed for classified information, in some instances on company servers.”

That is different from the idea that the government has “direct access” to corporate servers, but it still means that the companies are providing the government with enormous amounts of data.

One explanation for the distinction between the corporate denials and the leaked presentation was explained this way in The Washington Post, which along with The Guardian posted several slides from a 41-page presentation about the Internet program: “It is possible that the conflict between the Prism slides and the company spokesmen is the result of imprecision on the part of the N.S.A. author.”

Senior executives I spoke with at many of the technology companies cited in the Prism documents said they routinely provided the government with requested data, in some cases months’ worth of e-mail traffic for a certain address. They have teams of people whose entire job is to work with the government to comply with such requests, which come in daily if not more frequently. Once that information is transferred to the government, an agency can store that data and sort it, integrate it with other data to their heart’s content.

Mr. Sporkin, for example, said that when he was at the S.E.C., the agency would regularly make requests for stock trades and then store that information so it could use it later, sorting it and mixing it with other sources of data.

Most technology companies have a “terms of service” agreement that requires users to accept such a provision before signing up. Buried in the fine print of Facebook’s is this: “We may access, preserve and share your information in response to a legal request (like a search warrant, court order or subpoena) if we have a good faith belief that the law requires us to do so.”

Theoretically, a clever lawyer could make the case that the companies’ public denials have now become part of the terms of service and that customers are relying on them to be true. If those denials turn out to conflict with actions in the future, the companies — again theoretically — could face trouble with their customers and even possibly another arm of the government, like the F.T.C., setting up a true conundrum.

So while the nation’s biggest technology companies may not be a part of systematic large-scale spying program, it is clear that they are legally required to play a significant role in funneling data to the government. That leaves them on a tightrope balancing what they can say to their customers and investors while complying with their obligations to keep the government’s secrets.

A version of this article appeared in print on 06/11/2013, on page B1 of the NewYork edition with the headline: Tech Companies Tread Lightly In Statements On U.S. Spying.

Article source: http://dealbook.nytimes.com/2013/06/10/tech-companies-tread-lightly-in-statements-on-u-s-spying/?partner=rss&emc=rss

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E.U. Regulators Move Forward on Google Settlement

April 25, 2013 by Leave a Comment

The decision by the European Commission to gather reaction to Google’s proposal is intended to address complaints from competitors concerned that Google favors its own results over theirs. By announcing Thursday the start of market testing of the planned changes, the commission allows others in the industry to weigh in.

The commission said it needed to intervene because “Google has had a strong position in Web search in most European countries for a number of years now” and because it “does not seem likely that another Web search service will replace it as European users’ Web search service of choice.”

The details of the agreement were reported earlier this month, as Google for the first time agreed to the legally binding changes to its search results after a two-year antitrust investigation by European regulators, likely allowing the company to avoid fines and a formal finding of wrongdoing.

The market testing of the changes would last for one month and a final settlement could be agreed upon after the summer, according to Antoine Colombani, a spokesman for the E.U. competition commissioner, Joaquín Almunia.

The agreement would be legally binding for five years, and a third party would ensure compliance. If the deal is accepted, Google would avoid a fine and a finding of wrongdoing. But it could face a fine of as much as 10 percent of its global annual sales if it failed to keep its promises. Google did not issue any immediate comment.

The deal would allow Google to escape the type of lengthy and expensive antitrust battles that Microsoft faced in Europe over its media player and server software.

The European Commission has taken a tougher line with Google on the issue of how it runs its search rankings than has the U.S. Federal Trade Commission. In January, the U.S. commission decided, after a 19-month inquiry, that Google had not broken antitrust laws.

About 86 percent of all online searches in Europe are conducted using Google, according to the Web analyst comScore. In the United States, it has about two-thirds of the market.

One of the centerpieces of Google’s offer is to show links from competitors who offer specialized search services. In cases where Google sells advertising next to results for particular vertical markets like restaurants and hotels, Google would provide a menu of at least three options for non-Google search services.

That plan is analogous to a system Microsoft agreed to in 2009, offering users of newly purchased computers in Europe a ballot screen enabling them to download other Web-browser software from the Internet and to turn off Microsoft’s browser, Internet Explorer. Last month, the commission fined Microsoft $732 million for lapses in adhering to that settlement.

Google would also label results pointing to its own services — like YouTube — as Google properties and separate them from general search results with a box. The boxes would be mandatory, and probably heavily outlined, in cases where Google makes money from advertising that appears with the search results.

Google also would mark results from its own services like weather or news where it does not collect money from advertising. Those frames could be boxes with a lighter outline.

In areas in which all search results are paid ads, like shopping, Google will auction links to rivals.

Google is pledging to restrict the way it integrates content from other sites and media into its own products. It would need “to offer all specialized search web sites that focus on product search or local search the option to mark certain categories of information in such a way that such information is not indexed or used by Google,” the commission said in its statement.

Claire Cain Miller contributed reporting.

Article source: http://www.nytimes.com/2013/04/26/technology/26iht-google26.html?partner=rss&emc=rss

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Google Offers Changes in Europe to Settle Complaints

April 25, 2013 by Leave a Comment

The decision by the European Commission is intended to address complaints from competitors concerned that Google favors its own results over theirs. By announcing the start of market testing, the commission allows others in the industry to weigh in.

The commission said it needed to intervene because “Google has had a strong position in Web search in most European countries for a number of years now” and because it “does not seem likely that another Web search service will replace it as European users’ Web search service of choice.”

The market testing would last for one month and a final settlement could be agreed upon after the summer, said Antoine Colombani, a spokesman for the E.U. competition commissioner, Joaquín Almunia.

The agreement would be legally binding for five years, and a third party would ensure compliance. If the deal is accepted, Google would avoid a fine and a finding of wrongdoing. But it could face a fine of as much as 10 percent of its global annual sales if it failed to keep its promises. Google did not issue any immediate comment.

The deal would allow Google to escape the type of lengthy and expensive antitrust battles that Microsoft faced in Europe over its media player and server software.

The European Commission has taken a tougher line with Google on the issue of how it runs its search rankings than has the U.S. Federal Trade Commission. In January, the U.S. commission decided, after a 19-month inquiry, that Google had not broken antitrust laws.

About 86 percent of all online searches in Europe are conducted using Google, according to the Web analyst comScore. In the United States, it has about two-thirds of the market.

One of the centerpieces of Google’s offer is to show links from competitors who offer specialized search services. In cases where Google sells advertising next to results for particular vertical markets like restaurants and hotels, Google would provide a menu of at least three options for non-Google search services.

That plan is analogous to a system Microsoft agreed to in 2009, offering users of newly purchased computers in Europe a ballot screen enabling them to download other Web-browser software from the Internet and to turn off Microsoft’s browser, Internet Explorer. Last month, the commission fined Microsoft $732 million for lapses in adhering to that settlement.

Google would also label results pointing to its own services — like YouTube — as Google properties and separate them from general search results with a box. The boxes would be mandatory, and probably heavily outlined, in cases where Google makes money from advertising that appears with the search results.

Google also would mark results from its own services like weather or news where it does not collect money from advertising. Those frames could be boxes with a lighter outline.

In areas in which all search results are paid ads, like shopping, Google will auction links to rivals.

Google is pledging to restrict the way it integrates content from other sites and media into its own products. It would need “to offer all specialized search web sites that focus on product search or local search the option to mark certain categories of information in such a way that such information is not indexed or used by Google,” the commission said in its statement.

Google would need to provide “newspaper publishers with a mechanism allowing them to control on a Web page per Web page basis the display of their content in Google News,” the commission said.

Web sites and some print publications have complained in recent years of virtually disappearing from Google’s search engine if they posed a competitive threat or did not comply with Google’s terms.

Google would also need to end exclusive arrangements that prevent advertisers from using competing platforms.

Major technology rivals demanded a long period of market testing before the commission closes the search case.

“Google has taken a year to develop the proposal released today,” said Thomas Vinje, chief lawyer for FairSearch Europe, a group of Google’s competitors including Microsoft, Nokia and Oracle.

“We think it’s only fair that outside experts have more than a month to help the commission market-test the long-lasting effects of Google’s proposal on consumers and innovation,” Mr. Vinje said.

Other rivals took a tougher line.

“Instead of promising to end its abusive practices, Google’s proposal seems to offer a half-hearted attempt to dilute their anti-competitive effects by labeling Google’s own services and throwing in some token links to competitors’ services alongside them,” said Shivaun Raff, a co-founder of Foundem, a British comparison-shopping site that was one of the original complainants in the case.

“Neither measure will make a dent in Google’s ability to hijack the traffic and revenues of its rivals,” Ms. Raff said.

Microsoft and its allies like Foundem could appeal against the settlement, but it is unclear whether some of them want do so at a time when they are seeking to push the commission to start a new case against Google for the way it runs its smartphone operating system, Android.

Article source: http://www.nytimes.com/2013/04/26/technology/26iht-google26.html?partner=rss&emc=rss

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F.T.C. Takes Aim at Unwarranted Cellphone Charges

April 17, 2013 by Leave a Comment

WASHINGTON — Those surreptitious charges for flirting tips, yoga lessons and psychic services, long a problem on landlines, have become a costly nuisance for mobile phone users — and a new focus for regulators.

In the last two years, regulators have found that hundreds of thousands of mobile phone users have been charged for “premium text” services that they did not authorize, a practice known as bill cramming.

The crackdown has begun. On Wednesday, the Federal Trade Commission announced its first cellphone cramming case, accusing a company of taking advantage of consumers by tacking unwarranted charges onto their mobile bills.

In a civil complaint filed in Federal District Court in Atlanta on Tuesday, the F.T.C. charged Wise Media and two of its owners, Brian M. Buckley and Winston J. Deloney, all of the Atlanta area, with unfair or deceptive business practices. A fourth company, Concrete Marketing Research, was charged with receiving funds that could be traced to Wise Media’s actions.

The messages — promising horoscopes, love tips and other services — are sent as premium SMS service. The technology, in legitimate use, allows a consumer to buy digital content like games, with the cost being added to the consumer’s phone bill.

But the F.T.C. said that Wise Media illegally charged mobile phone users. In the typical instance, those charges amounted to $9.99 a month and recurred indefinitely, showing up on a consumer’s bill “with abbreviated and uninformative descriptions.” While the initial text messages often included instructions to text “STOP” to a given number to end the messages, the F.T.C. said the company frequently failed to honor that request.

The trade commission wants to freeze Wise Media’s assets and order the company to return to consumers all unauthorized payments it received from wireless customers. In its complaint, the F.T.C. said only that the defendants had made “millions of dollars” from placing unauthorized charges on phone bills.

Wise Media and Concrete Marketing could not be reached for comment. Wise Media’s most recently known phone number has been changed to an unlisted number. Mr. Buckley and Mr. Deloney also could not be reached. In a news release, the F.T.C. said the company had typically gone to “great lengths to hide its contact information from consumers.”

Jessica Rich, an associate director in the F.T.C.’s division of financial practices, said, “We’re now seeing mobile phone cramming emerging as more of a problem.”

More cases could follow.

Consumers are increasingly complaining about unwarranted charges to regulators, wireless providers and organizations like the Better Business Bureau. The commission recently found that 30 percent of the complaints it received in 2011 over cramming involved wireless phones, up from 16 percent the previous year.

Over the last year, the F.T.C. said, phone companies have at times refunded some of the charges to consumers, but most consumers do not notice the charges for months after they begin to occur, if at all.

Wireless phone companies in California alone refunded an average of more than $2 million a month last year to consumers who complained about unauthorized wireless text charges, according to the California Public Utilities Commission. Refunds were requested on only about 12 percent of the total monthly charges for those premium text services, the public utilities commission said.

Senator John D. Rockefeller IV, Democrat of West Virginia and chairman of the Senate Commerce Committee, said Wednesday that he believed phone companies had not done enough to prevent cramming from migrating from landline to wireless phones. “The F.T.C.’s action today confirms my fear that our success in stopping wireline cramming has forced crammers to find other ways to scam consumers,” he said.

Regulators are trying to be proactive.

On Wednesday, the communications commission conducted a workshop with companies and advocacy groups focused on cramming, and bill shock, a similar issue that arises when consumers receive large charges on their phone bills for going over their monthly allotment of data or phone minutes. The F.T.C. is conducting a similar workshop on May 8 to study mobile cramming.

The agency is also considering expanding its anti-cramming rules to include mobile phones.

Article source: http://www.nytimes.com/2013/04/18/business/ftc-takes-aim-at-unwarranted-cellphone-charges.html?partner=rss&emc=rss

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Google Submits Proposals to Resolve European Antitrust Concerns

February 1, 2013 by Leave a Comment

European officials were not willing early Friday to describe the proposals, and Google could not immediately be reached for comment. But it has been expected that Google will offer revisions to the way it conducts its online search business in Europe to address regulators’ concerns that the company’s activities are unfair to other Web publishers and its online competitors.

The European Commission, the executive agency of the European Union, has taken a tougher line with Google than the U.S. Federal Trade Commission, which decided in January that the company had not broken antitrust laws after a 19-month inquiry into how it operated its search engine.

Joaquín Almunia, the European competition commissioner and top E.U. antitrust official, has been formally investigating Google since November 2010. He has insisted that Google make changes to the most sensitive area of its business, online search.

If Mr. Almunia ultimately accepts Google’s offer, the company would avoid further investigation that could lead to a fine of as much as 10 percent of its annual global sales, which came to about $50 billion last year. Google would also avoid a guilty finding that could restrict its activities in Europe.

Mr. Almunia must first assess the offer made by Google and then decide whether it addresses his concerns sufficiently to allow the complainants to review it during a period of what is known as “market testing.”

In its deal with the F.T.C., Google agreed to make concessions in two areas that concerned European regulators. In one, Google will allow rivals to opt out of allowing Google to “scrape,” or copy, text from their sites. Google was expected to agree to the same terms with European authorities.

But in a second area of European concern — whether Google deliberately favors its own content in search results — the F.T.C. did not require changes.

Mr. Almunia has also demanded that Google put fewer restrictions the way it handles advertisements that are displayed alongside search results when a user types a query in a Web site’s search box.

The deadline for Google to submit the proposals by Thursday, the final day of January, was set in mid-December, when Mr. Almunia, after a meeting with Eric E. Schmidt, Google’s executive chairman, asked for “a detailed commitment text in January 2013.”

While Google is the dominant search engine in the United States, it holds even greater sway in Europe, accounting for more than 90 percent of searches in a number of major markets. That is one factor giving the Europeans greater leverage in trying to set rules on how Google ranks competing services.

Another factor is European antitrust law, which has long given competitors more protection than U.S. law provides.

Some experts have said that U.S. authorities could be playing a tactically clever hand by allowing the Europeans to push Google an extra mile. They suggested that the F.T.C. would be shielded from accusations it was attacking a U.S. champion, even though any concessions Google made to the Europeans on search could end up applying globally.

Article source: http://www.nytimes.com/2013/02/02/business/global/google-submits-proposals-to-resolve-european-antitrust-concerns.html?partner=rss&emc=rss

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Common Sense: Google Finds a Line Between ‘Aggressive’ and ‘Evil’

January 4, 2013 by Leave a Comment

Yet the company has been dogged for years by widespread allegations that it violates its own pledge by manipulating the search results that remain the core of the company and primary source of its enormous profits.

Google insists that its results have always been “unbiased and objective” and that “our search results are the best we know how to produce.” But for competitive reasons, it never disclosed the secret algorithms that produce those results, so no one outside the company knew for sure. A growing chorus of complaints from companies like Expedia, Yelp and, especially, Microsoft that Google manipulates the results to favor its interests at the expense of competitors led both the United States government and the European Union to take up the issue. On Thursday, after nearly two years of investigation, the Federal Trade Commission rendered a verdict: Google isn’t evil.

It may have been “aggressive,” as the commission delicately put it. But “regarding the specific allegations that the company biased its search results to hurt competition, the evidence collected to date did not justify legal action by the commission,” said Beth Wilkinson, outside counsel to the F.T.C. “The F.T.C.’s mission is to protect competition, and not individual competitors.”

The decision is “a huge victory for Google,” Randal Picker, a professor of commercial law at the University of Chicago Law School and a specialist in antitrust and intellectual property, told me just after this week’s decision. It’s also a vindication of the integrity of Google’s search results and the company’s credibility. “There’s never been any evidence that consumers were harmed by Google’s practices and no evidence that Google ever engaged in any manipulation that violates antitrust law,” Eric Goldman, professor of law and director of the High Tech Law Institute at Santa Clara University School of  Law, said.

The decision is also likely to set standards for competition on the Internet for years to come. It’s a blow to competitors like Microsoft, which has been stirring up opposition to Google for years, not to mention newer rivals like Facebook, Apple and Amazon. “The gloves will be off,” Professor Picker predicted. “The F.T.C. has indicated it’s going to be taking a very cautious approach toward regulating competition on the Internet.”

But will the decision ultimately prove to be good for consumers?

The F.T.C. did secure some concessions from Google regarding patent licensing and advertiser options. But to call those a slap on the wrist would be an overstatement. What mattered most to both Google users and competitors was Google’s search practices, which had never been put under the regulatory microscope to such a degree and which the F.T.C. left untouched.

Google’s search results have evolved significantly from its early, simpler days. When I typed “flight JFK to LAX” on Google this week, I got three categories of results: paid ads at the top and on the right; a Google-produced chart comparing flight options with the disclaimer, which you need to click on, that “Google may be compensated by these providers”; and so-called organic results below that. The first two organic results were entries for Expedia, a rival to Google’s travel site. But given the layout and size of my screen, none of the organic results were visible unless I scrolled down.

However clearly labeled, the prominence of Google’s own travel results gives pause to some antitrust experts. “Location is important,” Professor Picker said. “No one thinks otherwise. Years ago, it was important for airlines’ reservations systems to be on the first screen. But I’m not sure this is an antitrust problem.” Still, the issue is likely to be a focus of the European Union’s investigation of Google, and the European Union will probably be less sympathetic to unbridled competition on the Internet than the American authorities, and more inclined to protect competitors.

Article source: http://www.nytimes.com/2013/01/05/business/google-finds-a-line-between-aggressive-and-evil.html?partner=rss&emc=rss

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Bucks Blog: Buying a Gift Card, and Checking It Twice

December 19, 2012 by Leave a Comment

Although they may lack the drama of a brightly wrapped package, gift cards remain popular holiday presents for finicky or otherwise hard-to-buy-for recipients. The National Retail Federation deems them the “season’s hottest gift.”

But the cards are also popular targets of swindlers and thieves, who buy them with stolen credit card numbers and use them to buy merchandise, or resell them — sometimes in online auction forums. (The Federal Trade Commission suggests avoiding online card auction sites.)

“They’re one of the biggest targets of fraudsters,” because they can act as a conduit for turning stolen credit-card numbers into cash, said Avivah Litan, a security and fraud analyst with the technology research firm Gartner. “They’re harder to trace,” she said, because they’re not associated with a specific individual, as a credit card is.

Because this poses a loss risk to retailers, most knowledgeable, high-volume online gift-card sellers — Apple and Amazon, for instance — have highly sophisticated fraud detection systems to root out card fraud without having to bother customers unless absolutely necessary, she said.

But that is apparently not the case with all retailers. Just last week, a colleague reported the following experience after purchasing an online gift card from Bloomingdale’s.

He paid for the card online, via Bloomingdale’s Web site, expecting the gift to land in the recipient’s e-mail in-box on the designated day. But then he received phone messages from Bloomies asking him to call a special number, citing a potential problem with the purchase. When he called, he was asked for information to verify the purchase.

The customer-service representative, he said, told him that Bloomingdale’s verifies all online gift card purchases by phone, because they are among the first things a thief purchases with a stolen credit card.

I contacted Bloomingdale’s, first by e-mail and then by phone, to follow up. Could it possibly be true that the store verifies all online gift card purchases by phone? If so, why not just drop online sales of the cards and have customers order them by phone, since the sale is going to involve a call anyway?

A Bloomingdale’s public relations representative, Marissa Vitagliano, replied with an e-mail that did not really address the issue. “As with other types of cards, gift cards are not immune to exposure to fraud and theft,” she wrote. “The gift card owner should monitor the balance of the card regularly to ensure its value. If an owner would suspect a problem, he or she should immediately call the phone number on the card to report any concerns.”

She didn’t respond to further inquiries seeking details. So it’s unclear just what Bloomingdale’s formal policy is regarding verification of online sales of gift cards.

Have you ever been contacted by Bloomingdale’s or any other retailer after buying a gift card online?

Article source: http://bucks.blogs.nytimes.com/2012/12/19/buying-a-gift-card-and-checking-it-twice/?partner=rss&emc=rss

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Bits Blog: Google Antitrust Case Is Said to Be Nearing End

December 17, 2012 by Leave a Comment

10:08 p.m. | Updated Adding that Google and the F.T.C. declined to comment.

In the talks between the Federal Trade Commission and Google to negotiate the terms for ending the agency’s antitrust investigation, things seem to be going Google’s way, two people who have been briefed on the discussions said Sunday.

A key issue in the talks, accusations that Google biases its search results to favor its own services, has been taken off the table, said the two people, who spoke on the condition of anonymity because the negotiations are continuing.

As the negotiations now stand, Google would make a set of voluntary commitments. In addition, it would be sued and sign a consent decree, agreeing to license patents deemed essential for wireless communications on reasonable terms.

But the patent issue is a late entrant to the case. Subpoenas that the F.T.C. staff began sending to Internet companies last year laid out a wide-ranging investigation focusing on Google’s conduct in the search business.

The commission’s decision on the Google investigation is expected within days. If the government scrutiny concludes without addressing the accusation that Google’s search engine favors its own commerce services like shopping and local listings over rivals, it would represent a considerable narrowing of the ambitions of the original inquiry.

Politico reported on Saturday that the talks had moved away from search, adding details to reports that Google was resisting a consent decree in that area.

Google, according to the two people, has agreed to voluntarily refrain from copying summaries of product and restaurant reviews from other Web sites and including them in Google search results, a practice known as “screen scraping.”

The company would also agree to make it easier for advertisers to transfer their product, pricing and bidding data to competing ad networks, including Microsoft’s Bing search-and-ad service, the two people said.

Google, they said, would also refrain from striking exclusive deals with Web sites to use and feature Google’s search service.

Google declined to comment on the details of a settlement Sunday. It has said it was continuing to cooperate with regulators. A representative for the F.T.C. also declined to comment.

Google is also under investigation by the European Commission, which this year listed accusations of search bias as the first of four areas of Google’s conduct that it was investigating.

A version of this article appeared in print on 12/17/2012, on page A18 of the NewYork edition with the headline: Google Antitrust Case Nearing End.

Article source: http://bits.blogs.nytimes.com/2012/12/16/google-antitrust-case-is-said-to-be-nearing-end/?partner=rss&emc=rss

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For $2 a Star, a Retailer Gets 5-Star Reviews

January 27, 2012 by Leave a Comment

Some exalt themselves by anonymously posting their own laudatory reviews. Now there is an even simpler approach: offering a refund to customers in exchange for a write-up.

By the time VIP Deals ended its rebate on Amazon.com late last month, its leather case for the Kindle Fire was receiving the sort of acclaim once reserved for the likes of Kim Jong-il. Hundreds of reviewers proclaimed the case a marvel, a delight, exactly what they needed to achieve bliss. And definitely worth five stars.

As the collective wisdom of the crowd displaces traditional advertising, the roaring engines of e-commerce are being stoked by favorable reviews. The VIP deal reflects the importance merchants place on these evaluations — and the lengths to which they go to game the system.

Fake reviews are drawing the attention of regulators. They have cracked down on a few firms for deceitful hyping and suspect these are far from isolated instances. “Advertising disguised as editorial is an old problem, but it’s now presenting itself in different ways,” said Mary K. Engle, the Federal Trade Commission’s associate director for advertising practices. “We’re very concerned.”

Researchers like Bing Liu, a computer science professor at the University of Illinois at Chicago, are also taking notice, trying to devise mathematical models to systematically unmask the bogus endorsements. “More people are depending on reviews for what to buy and where to go, so the incentives for faking are getting bigger,” said Mr. Liu. “It’s a very cheap way of marketing.”

By last week, 310 out of 335 reviews of VIP Deals’ Vipertek brand premium slim black leather case folio cover were five stars and nearly all the rest were four stars. The acclaim seemed authentic, barring the occasional indiscretion. “I would have done 4 stars instead of 5 without the deal,” one man bluntly wrote.

VIP Deals, which specializes in leather tablet cases and stun guns, denied it was quietly offering the deals. “You are totally off base,” a representative named Monica wrote in an e-mail.

But three customers said in interviews that the offer was straightforward. Searching for a protective case for their new Kindle Fire, they came upon the VIP page selling a cover for under $10 plus shipping (the official list price was $59.99). When the package arrived it included a letter extending an invitation “to write a product review for the Amazon community.”

“In return for writing the review, we will refund your order so you will have received the product for free,” it said.

Anne Marie Logan, a Georgia pharmacist, was suspicious. “I was like, ‘Is this for real?’ ” she said. “But they credited my account. You think it’s unethical?”

While the letter did not specifically demand a five-star review, it broadly hinted. “We strive to earn 100 percent perfect ‘FIVE-STAR’ scores from you!” it said.

The merchant, which seems to have no Web site and uses a mailbox drop in suburban Los Angeles as a return address, did not respond to further requests for comment. As of last week, the company (as opposed to its products) had received 4,945 reviews on Amazon for a nearly perfect 4.9 rating out of five.

Amazon is expected to sell 20 million Kindle Fire tablets this year, making the market for cases potentially enormous. But it is also bitterly competitive, with dozens of models in Amazon’s Kindle showroom. With a modest investment, VIP pushed its product far above the competition, none of which had so much enthusiasm with so little dissent. Customers like Ms. Logan, who got something they had genuinely wanted for only a small shipping charge, were of course thrilled. And Amazon racked up more revenue.

Even a few grouches could not spoil the party. “This is an egregious violation of the ratings and review system used by Amazon,” a customer named Robert S. Pollock wrote in a review he titled “scam.”

He was promptly chastised by another customer. This fellow, himself a seller on Amazon, argued that he had both given and gotten free items in exchange for reviews. “It is not a scam but an incentive,” he wrote.

Under F.T.C. rules, when there is a connection between a merchant and someone promoting its product that affects the endorsement’s credibility, it must be fully disclosed. In one case, Legacy Learning Systems, which sells music instructional tapes, paid $250,000 last March to settle charges that it had hired affiliates to recommend the videos on Web sites.

Amazon, sent a copy of the VIP letter by The New York Times, said its guidelines prohibited compensation for customer reviews. A few days later, it deleted all the reviews for the case, which itself was listed as unavailable. Then it took down the product page itself.

Asked why Amazon did not seem to notice that at least a few consumers called into question the VIP deal on its own site, a spokeswoman declined to comment. Nor would she say exactly what happened to VIP’s other products, like the Vipertek VTS-880 mini stun gun, which also disappeared from the retailer.

The gun, like the Kindle case, received nearly all five-star reviews. “I bought one for my wife and decided to let her try it on me,” one man wrote in a typical display of the sort of effusiveness that VIP inspired. “We gave it a full charge and let me just say WOW! Boy do I regret that decision.”

Article source: http://feeds.nytimes.com/click.phdo?i=3d3aab69f3732ea3072b650ed5458c22

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F.T.C. Said to Be Near Facebook Privacy Deal

November 11, 2011 by Leave a Comment

SAN FRANCISCO — Facebook and the Federal Trade Commission are nearing a settlement over deceptive practices related to several Facebook features, including its privacy settings, according to two people briefed on the settlement.

Under the agreement, Facebook would agree to privacy audits for 20 years, one of the people said. It would also prohibit Facebook from making public a piece of information that a user had originally shared privately on the site without express permission, the person said. The individuals spoke on condition of anonymity because the F.T.C. commissioners have not yet approved the settlement.

But Facebook would not be required to ask users if they would like to participate in all sharing features on the site, including tools that it builds in the future.

A Facebook spokesman, Andrew Noyes, and an F.T.C. spokeswoman, Claudia Farrell, declined to comment. The settlement is part of the F.T.C.’s effort to protect consumer privacy online.

In March, Google and the F.T.C. agreed to 20 years of privacy audits and other measures after an investigation into deceptive privacy practices related to Buzz, its ill-fated social networking tool. It was the first time the F.T.C. had charged a company with such violations and imposed such regulations. Last year, after an F.T.C. investigation into two security breaches, Twitter agreed to establish a privacy program.

For Facebook, which has said it has voluntarily made its privacy settings simpler in the last 18 months, the settlement is occurring as it tries to smooth the path toward an initial public offering.

“This is part of the balancing act Facebook has to do,” said Jeff Chester, executive director of the Center for Digital Democracy. “It also needs to settle the privacy complaints in the United States and Europe before its I.P.O.”

But Mr. Chester expressed doubts that the settlement would appease critics of Facebook’s data-collection practices.

“The real test of the F.T.C.’s Facebook deal will be whether a user actually has control over their own information, or will this be a tiny digital bump on the road that does nothing to derail Mark Zuckerberg’s voracious appetite to swallow up our data,” he said.

Users, privacy specialists and politicians have attacked Facebook for automatically signing people up for new features on the site, instead of asking them first.

For a year and a half, the F.T.C. has pushed Facebook to offer granular privacy controls so people can choose to share or make private specific information they post on the site, according to a person involved in the talks.

Facebook has since added tools, like one for sharing with small groups of Facebook friends.

The settlement addresses several complaints that the F.T.C. has received from organizations like the Electronic Privacy Information Center.

It focuses on privacy changes that Facebook made in December 2009. Although the company said at the time that the changes would simplify settings users found confusing, they exposed information that could previously be made private, including profile photos, gender, friend lists and current city. Facebook also removed the ability to opt out of some features.

After a public outcry, Facebook in May 2010 limited the amount of information users were required to make public, and restored the ability to opt out of certain tools.

The settlement also addresses other Facebook features that the F.T.C. said were deceptive, including a program for giving applications from outside programmers the Facebook seal of approval that ended in December 2009, one of the people said.

Several people briefed on the settlement, which was first reported by The Wall Street Journal, said it was unclear how long it would take to complete the deal.

Nick Bilton contributed reporting from San Francisco, and Steve Lohr from New York.

Article source: http://feeds.nytimes.com/click.phdo?i=919a16aef476b18ebdabdda7246cfb5d

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