November 17, 2024

You are here: Home / Archives for technology sector

Europe Expected to Levy Big Fine Against Microsoft

March 5, 2013 by Leave a Comment

It would be the first time the European Union has punished a company for neglecting to comply with the terms of an antitrust settlement. Microsoft and European antitrust officials reached a settlement over the browser-access issue in 2009. But last October, the Union’s antitrust chief, Joaquín Almunia, charged Microsoft with failing to live up to its terms.

Mr. Almunia’s office could not be reached, and Microsoft officials declined to comment, although the company has previously emphasized that the failure was a mistake it regretted.

Mr. Alumunia had warned Microsoft last summer that on some occasions its software was still not providing users to the full access to competing Web browser programs, as called for in the 2009 settlement. The company apologized in July, calling it a technical problem of which it had only recently become aware.

In October Mr. Almunia put Microsoft on notice that it must include adequate access to rival browsers in European versions of its next-generation operating system, Windows 8, which was about to go on sale.

The significance of the action expected Wednesday could reach beyond Microsoft. It come as Mr. Almunia’s office is negotiating with Google to try to settle the commission’s concerns about that company’s dominance of the Internet search and advertising markets.

“It’s important for the commission to show it’s serious in this case because this will set a precedent, and because the commission increasingly uses settlements to help reach solutions more quickly especially in the fast-moving technology sector,” said Nicolas Petit, a professor in competition law and economics at the University of Liege in Belgium.

“The commission also has an incentive to slap on a big fine in this case to ensure that companies, which are hard to monitor, get the message that it will be costly down the road if they get caught defying settlement orders,” said Mr. Petit.

In theory, Mr. Almunia can levy a fine totaling up to 10 percent of a company’s global annual l revenue. In Microsoft’s case that could mean a penalty of $7 billion, but analysts say it is highly unlikely to reach that level.

The largest single fine ever levied by the European authorities in an antitrust case was €1.1 billion, or $1.4 billion, in 2009 against Intel for abusing its dominance in the computer chip market. Intel is still appealing that ruling.

Microsoft has paid a long series of fines to European regulators over the past decade.

In 2008, Microsoft was fined nearly €900 million in so-called periodic penalties for defying a decision that regulators had imposed on the company.

In June, the General Court, the second-highest in the Union, handed a small victory to Microsoft by reducing the fine by €39 million to €860 million after finding that the commission had miscalculated the amount.

Microsoft also paid fines of €497 million and €281 million for separate but related offenses, bringing the total to €1.7 billion during its battles so far with European regulators.

Although Microsoft has lodged court appeals in the past against punishment handed down by the commission, it may be reluctant to do so this time to put the previous acrimony to rest as it focuses on its rivalry with Google. Microsoft is among the companies that have complained about Google’s business practices to the commission.

The latest dispute stemmed from the settlement of a case concerning Microsoft’s dominance in Internet browsers — a dominance that the company has relinquished to market forces in recent years.

In Microsoft’s 2009 settlement, the company did not pay a fine but instead committed to installing a system called Browser Choice Screen with Windows. It was intended to offer users alternatives like Google Chrome and Mozilla Firefox to counter the strength of Internet Explorer, Microsoft’s own browser product. The choice must be offered for five years, according to the agreement.

Millions of European users of the Windows 7 SP1 version of the software may not have been offered a choice of browsers between February 2011 and July 2012, Mr. Almunia said.

The company said it only learned of the error when the commission sent a notification about reports it had received indicating that alternative browsers were not being offered on some personal computers.

Article source: http://www.nytimes.com/2013/03/06/technology/europe-expected-to-levy-big-fine-against-microsoft.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

A Victory for Google as F.T.C. Takes No Formal Steps

January 4, 2013 by Leave a Comment

By allowing Google to continue to present search results that highlight its own services, the F.T.C. decision could enable Google to further strengthen its already dominant position on the Internet.

It also enables Google to avoid a costly and lengthy legal war of attrition like the antitrust battle that Microsoft waged in the 1990s. That fight took an enormous toll on Microsoft and opened the door for competitors like Google to become the technology sector’s new leaders. Now, a weakened Microsoft was among those most vocal in complaining that Google was unfairly abusing a monopolistic position to thwart its rivals.

Google, which attracts 70 percent of all search queries in the United States, has used its search business, which generates billions of dollars in profit annually from advertising, to expand into businesses that include maps, restaurant reviews and travel bookings. Competitors worry that the F.T.C.’s decision will allow Google to continue to make inroads at their expense.

The decision sets up a potential conflict with European officials, who are working with Google to resolve similar concerns about the way the company operates its search engine in Europe, where it is even more dominant than in the United States.

Web search has become vital to the success of many businesses. Being ranked higher in search results can mean a great deal more traffic and revenue; being ranked lower can hurt both. Google has long claimed that it uses a neutral algorithm for search queries, something that competitors disputed.

But Jon Leibowitz, chairman of the F.T.C., said that “While not everything Google did was beneficial, on balance we did not believe that the evidence supported an F.T.C. challenge to this aspect of Google’s business under American law.”

The five-member commission voted unanimously to close its investigation without bringing charges, although some staff members argued vigorously that Google should face sanctions for using online search results to draw consumer traffic to its own services. The F.T.C. said it had found that Google’s practices improved its search results for the benefit of users and that “any negative impact on actual or perceived competitors was incidental to that purpose.”

Google did agree to make some minor changes to its search practices related to search advertising. The F.T.C. said those commitments were enforceable if the company violated them, but the agreement avoided a formal consent decree or litigation, weapons that the F.T.C. had available.

One F.T.C. commissioner, J. Thomas Rosch, said in a partial dissent that the commission would not be able to hold Google to its promises in any meaningful way, as it might do through a contempt proceeding or a fine.

Competitors said the war was not over. Fairsearch.org, a group of Google rivals including Microsoft, said Thursday’s action left the F.T.C. “without a major role in the final resolution to the investigations of Google’s anticompetitive practices by state attorneys general and the European Commission. The F.T.C.’s inaction on the core question of search bias will only embolden Google to act more aggressively to misuse its monopoly power to harm other innovators.”

In a less-watched part of the investigation, which will have a less direct impact on consumers, the commission found that Google had misused its broad patents on cellphone technology, and it ordered Google to make that technology available to rivals. That order may benefit phone manufacturers that use either Google’s Android operating system or competing systems. Some F.T.C. officials said that in the long run, the sanctions could be a bigger victory for consumers, encouraging the development of more innovative devices.

But the broadest impact of the F.T.C.’s action is to present more competitive challenges to companies that do specialty searches, for things like travel or shopping. Consumers will continue to see what has now become familiar on Google — the presence of results that link to Google’s other businesses. When a consumer searches for “airfare to Los Angeles,” for example, the most prominent results are generated by Google’s own travel business, rather than by the likes of Expedia, Priceline or Kayak.

On the company’s Web site, David Drummond, a senior vice president at Google and its chief legal officer, wrote, “The conclusion is clear: Google’s services are good for users and good for competition.”

Mr. Leibowitz, the F.T.C. chairman, called Google’s lifting of content from other Web sites “the most troubling of its business practices related to search and search advertising.” The company agreed to stop taking its rivals’ content, particularly reviews of things like restaurants or consumer products, for use in its own specialized search results.

Yelp, a consumer review site, complained that Google took parts of its reviews and placed them in its own results. When competitors objected, Google threatened to remove them entirely from results, something Mr. Leibowitz said “is clearly problematic and potentially harmful to competition because it might harm incentives to innovate.”

Google also agreed to stop contractual restrictions that prevented small businesses from advertising on competing search platforms.

Last year, some F.T.C. staff members pushed hard in reports to the commission that the company’s actions constituted “unfair methods of competition,” an area that, like that of antitrust, is policed by the F.T.C. But the trade commission faced a struggle in proving malicious intent — that Google changes its search algorithm to purposely harm competitors and favor itself.

Antitrust lawyers say anticompetitive behavior cannot be proved simply by showing that a change in the algorithm affects other Web sites and causes sites to show up lower in results, even though studies have shown that users rarely look beyond the first page of search results.

Article source: http://www.nytimes.com/2013/01/04/technology/google-agrees-to-changes-in-search-ending-us-antitrust-inquiry.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Ex-Nortel Executives’ Fraud Trial to Begin

January 16, 2012 by Leave a Comment

Prosecutors contend that after Nortel suffered steep financial losses in the dot-com crash at the turn of the century, its postcrash bookkeeping was also fraudulent. On trial are Frank A. Dunn, Nortel’s former chief executive; Douglas C. Beatty, the former chief financial officer; and Michael J. Gollogly, the former controller. The three men were dismissed in 2004 and the company has since been largely broken up and sold.

All three men deny that they committed any fraud.

Nortel’s fall has spurred lingering resentment in Canada. Many of its shares were held by small investors who saw their value wiped out. The collapse also led to an important player in Canada’s technology sector’s coming under foreign control, even if many of the companies that bought Nortel’s assets, like Ciena of Linthicum, Md., maintain substantial operations staffed by former Nortel employees in Canada.

As is the custom in Canada, prosecutors will not publicly detail their case against the former executives until the trial begins in the Ontario Superior Court of Justice in Toronto. But their comments at pretrial hearings, and the charges themselves, indicate that the complex case largely rests on the government’s accusation that the three executives manipulated the company’s financial statements to create a slim and fictional profit. That profit, in turn, led to about $5 million in performance bonus payments to the three accused, prosecutors contend.

Brian H. Greenspan, one of the lawyers representing Mr. Gollogly, said that there are no allegations that the action of the executives caused the company’s collapse. Nortel filed for bankruptcy protection in January 2009.

“The trial has nothing to do with the demise of Nortel,” Mr. Greenspan said on Friday. “It has nothing to do with the bankruptcy; it has nothing to do with the investors who lost money during the fall of Nortel.”

He said that Mr. Gollogly had not manipulated the financial statements to obtain bonuses but “made an honest attempt to get the books in good order.”

He added, “It’s not as if a restatement means something is criminal.”

Gregory L. Lafontaine, the lawyer for Mr. Beatty, said, “Our position is that there was absolutely no fraud committed here by anybody, and we’re confident that the evidence will bear that out.”

Mr. Dunn’s lawyer did not respond to a request for comment but has said in earlier statements that his client had not committed any fraud.

The case is expected to be complex. Prosecutors have turned over about four million documents to the defendants, and the trial is likely to take several months.

Article source: http://feeds.nytimes.com/click.phdo?i=2c6450d289e3727d714373df690571c3

Filed Under: Business News Tagged With: , ,

Italian Software Maker Contests Microsoft’s Purchase of Skype

September 28, 2011 by Leave a Comment

BERLIN — Reviving arguments that have dogged Microsoft in Europe for nearly two decades, an Italian software maker is asking European officials to block Microsoft’s $8.5 billion purchase of Skype, the Internet phone service, unless it is removed from Microsoft’s ubiquitous Windows Office platform.

In the past, the European Commission has been sympathetic to complaints about Microsoft’s strategy of “bundling” popular applications with Windows, eventually requiring the software maker to make concessions on its media player and Internet browser.

But legal experts were split over whether the latest complaint, filed Sept. 20 by Messagenet, a company based in Milan that is a rival to Skype Internet’s phone service, would complicate or prevent European approval of the takeover, which would be the largest in Microsoft’s history and the largest takeover in the technology sector this year.

“These types of complaints from competitors are to be expected,” said Denis Waelbroeck, an antitrust lawyer at Ashurts in Brussels. “I would expect that the commission will look at this seriously, but I think that in the end, the officials will reach their own independent decision. This doesn’t mean the complaint will be upheld.”

Joaquín Almunia, the E.U. competition commissioner, plans to make his decision on the acquisition public on Oct. 7. A spokeswoman for Mr. Almunia, Amelia Torres, on Wednesday declined to comment on Messagenet’s complaint. In general, she said the commission considered all submissions from competitors in antitrust cases.

Mr. Almunia, a Spanish economist, had been competition commissioner for less than two months when his office approved Microsoft’s takeover of Yahoo’s search business in February 2010. A Brussels antitrust lawyer, who did not want to be identified for fear of alienating a potential client in Microsoft, said the Italian complaint could scupper the deal.

“I would certainly say this kind of complaint, if it raises new issues that the commission has not previously considered, may derail the deal or, at least delay approval,” the lawyer said. Mr. Almunia could be persuaded to extend his present review into a more exhaustive second phase, which could take months or even years.

Or, the lawyer said, Microsoft could seek to delay an immediate decision and buy time by requesting an extension to prepare an answer to the complaint. Jesse Verstraete, a spokesman for Microsoft in Brussels, said the company declined to comment on the allegations in the complaint from Messagenet.

“The proposed acquisition is still undergoing regulatory review and we are working closely with the agencies,” Mr. Verstraete said. “Until all regulatory approvals are obtained, it is business as usual at Microsoft and at Skype.”

Besides asking Microsoft to “unbundle” Skype from Windows, Messagenet is urging European competition authorities to require Microsoft to effectively open Skype’s Internet phone network, which had 124 million regular users in June, to the services of rivals. Messagenet is asking the commission to do this by requiring Microsoft to disclose the confidential computer coding that would enable rival services to connect calls to Skype users.

Skype’s communication software does not operate with rival services. In May, after Microsoft announced its plans to buy Skype, the managing director of Messagenet, Andrea M. Galli, said he had written to Skype requesting the secret coding that would let the services interconnect, according to a copy of the complaint that Messagenet filed with the commission, and which was seen by the International Herald Tribune.

Mr. Galli said Skype never responded to the request.

Less than three weeks later, Skype ended its partnership with Digium, a company based in Huntsville, Alabama, whose software had enabled users of an open-source Internet phone service, Asterisk, to call and be called by Skype users.

At that time, a Digium product manager, Rod Montgomery, lamented in a company blog that Skype for Asterisk, the Digium software, had been a “strong and steady seller.”

Article source: http://feeds.nytimes.com/click.phdo?i=7eaae182a97ad3676dba0e02a1060740

Filed Under: Business News Tagged With: , ,

Stocks & Bonds: Stocks Close Flat as Investors Parse Quarterly Results

August 18, 2011 by Leave a Comment

The markets opened higher but then sank. While crucial sectors like energy and financial stocks recovered on Wednesday, after leading the overall market decline on Tuesday, technology shares were dragged lower as Dell dropped more than 10 percent.

On Tuesday, Dell said that a weaker economy had lowered demand, flattening its sales in the quarter that ended July 29, and that it had pared low-margin products. Its net income rose 63 percent in the quarter, but it lowered its revenue forecast for the rest of the year.

The technology sector was down about 1 percent at the market close. The consumer discretionary index dipped 0.38 percent. Abercrombie Fitch, the retailer, was down more than 8 percent and led the list of leading decliners among the 10 most actively traded shares during most of the session. In reporting its results, Mike Jeffries, the chief executive, said the company faced greater uncertainty this year.

“Costing pressures will be greater in the second half of the year, and macroeconomic uncertainty has increased,” Mr. Jeffries said. “However, our strong top-line momentum and overall performance for the past several quarters give us confidence that we are well positioned to navigate through this environment.”

A range of stocks gained on Wednesday, including those in telecommunications, utilities and consumer staples. Investors took guidance on the economy and consumer spending from results.

Seasonal factors appeared to help Target, which logged a higher profit aided by school-related sales. Its shares rose more than 2 percent. Staples closed slightly lower and raised its outlook, and earnings exceeded expectations.

But the technology sector, after the Dell results, “cast a pall over consumer spending and business spending,” said Mark D. Luschini, the chief investment strategist at Janney Montgomery Scott in Philadelphia. “Everybody is looking for any kind of signal or litmus test as to which way this is going to break.”

If consumers pull back because of political, economic or equity-related uncertainties, he said, that leaves little “horsepower to drive our economic activity,” increasing “the risk of a recession.”

Over all, the declines in the equities market were slight — less than 1 percent in each of the three main indexes — but a reversal from the trend in early trading.

The market is recovering from volatility last week, and fell on Tuesday in the aftermath of a meeting between leaders of the euro zone’s two largest economies, France and Germany.

While many say the equities markets will remain unsteady for some time, bargain-hunters are benefiting from the recent lows.

“I think that the market is still reacting to a pretty oversold condition technically,” said Tom Samuels, of Palantir Capital Management. He said that through early September it might continue to be “a little bullish.” At the close, the Standard Poor’s 500-stock index was up 0.09 percent at 1,193.89. The Dow Jones industrial average was up 0.04 percent at 11,410.21 and the Nasdaq was down 0.47 percent to 2,511.48. The price on the 10-year Treasury note rose 16/32 to 99 20/32, and the yield fell to 2.17 percent, compared to 2.23 percent Tuesday.

On Wednesday, there appeared to be an early rally leading the riskier side of the market, and some strength in the commodity sector after a relatively benign reading in an important indicator of producer prices, Mr. Samuels noted.

The broadest indicator of wholesale prices edged up 0.2 percent in July, according to the Labor Department. Not counting food and energy, the indicator, the Producer Price Index, was up 0.4 percent, the most rapid increase in six months.

Article source: http://feeds.nytimes.com/click.phdo?i=f61e945899b2b0c0a444cc3e841d0a98

Filed Under: Economy News Tagged With: , ,