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Posts Tagged ‘settlement’

Antitrust lawyer and Open Book Alliance leader Gary Reback has been called the “antitrust champion” and the “protector of the marketplace” by the National Law Journal, and has been at the forefront of many of the most important antitrust cases of the last three decades. He is one of the most vocal opponents of the Google Books settlement. I interviewed Reback a few months ago, and Google Books was one of the topics we discussed. In the column below, Reback discusses Google Books and its ties to Google search.

This Thursday leaders of the international publishing industry will watch with bated breath as a federal judge in New York hears arguments over whether to approve the Google Book Settlement.

More a complicated joint venture among Google and five big New York publishers than the resolution of pending litigation, the proposed settlement once promised unprecedented access to millions of out-of-print books through digital sales to consumers and online research subscriptions for libraries. But with the passage of time and the ability to examine the deal more closely, the promises proved illusory. The big publishers, as it turns out, have reserved the right to negotiate secret deals with Google for the books they claim through the settlement (pdf).

Meanwhile, torrents of outrage rained down on the New York court – from authors whose ownership rights will be appropriated through the settlement’s procedures, from librarians fearful of price exploitation by Google, from privacy advocates worried that Google will monitor the reading habits of library patrons, from libertarians incensed over the use of a legal procedure to effect the widespread appropriation of property, from digital booksellers concerned about Google’s unfair advantage in the marketplace.

Actually, those in the tech community should be watching the settlement proceedings more closely than anyone else. We have the most to lose if the deal is approved in its present form because, at bottom, the Google Book Settlement is not really about books. It’s really about search, the most important technology in the new economy.

According to the Department of Justice, Google dominates the market for search advertising and search syndication on the Web, with greater than a 70% share in both markets. These markets are difficult to enter because of powerful network effects and scale characteristics. Recent entry has been all but futile; indeed, the company with the second largest share, Yahoo, is leaving the market.

The search markets are special and different – even from other web markets. Google’s dominant share in these markets means that substantial numbers of web-based enterprises secure much of their business through “referrals” from Google’s search engine or advertisements placed by Google’s ad platform. The dominant market share makes Google the arbiter of each web business (books or medical supplies, as examples). In each case, Google decides which company succeeds and which company fails by its placement in search results and ad listings on the Google site.

The industry’s fear of Google has grown exponentially, right along with the company’s influence on web commerce. Not six months ago a prominent executive from a top web site – who withheld his name for fear of retribution – made an astounding proposal in a TechCrunch post. Noting from his own experience the potential for abuse inherent in Google’s power, the executive called for government regulation of the search markets to prevent manipulation of search results and ad listings.

The last six months have confirmed the anonymous executive’s worst fears. Once upon a time, Google claimed it employed neutral, mathematically-based algorithms to prioritize search in ad listings. But last November Google admitted to the Washington Post that only search results from Google’s content competitors are listed according to neutral algorithms. Search results from Google’s own properties, like maps, news and books, are now listed first, the algorithm notwithstanding. Even more recently Google admitted that it changes the rank ordering of paid search ads to prioritize its own company messages.

Whatever the advisability of government regulation, few would dispute that we need more and better competition in search to curb Google’s power. But Google is doing its best to keep that from ever happening. That’s where the Book Settlement comes in. Google intends to use the settlement to disadvantage its competitors and to bolster its own position in search.

Google announced its project to scan and digitize books in December 2004. Both commercial and not-for-profit entities started scanning books before Google did. Several other rivals started scanning books shortly after Google announced its project. All of these competitors scanned (pdf) only books in the public domain or for which they secured the rightsholder’s permission. Google, on the other hand, scanned all books in the collections of some of the nation’s leading research libraries, including those still under copyright, without securing permission from the rightsholders.

In the fall of 2005, five New York publishers along with the Authors Guild sued Google for copyright infringement. After three years of secret negotiations, and without taking a single deposition in the case, the parties announced a settlement on October 28, 2008. Through a legal ploy known as a “class certification” (which must be approved by the court), the plaintiffs who brought the suit now claim to speak for all holders of U.S. copyrights. Their proposed settlement gives Google (among other things) the right, in response to search queries, to display lengthy textual excerpts from just about every out-of-print book with a U.S. copyright (unless the rightsholder affirmatively objects) – tens of millions of books, in all.

Very recent results from scientific studies of web searching explain why Google has spent enormous amounts of money to acquire the digital rights to vast numbers of old, dusty books. Most search queries are directed to popular subjects – shopping, travel, medical information, etc. Some queries, though, are directed to more obscure subject matter. These are known as “rare,” “obscure,” “esoteric,” or, sometimes, “tail” queries, in reference to the “tailing off” portion of a graph showing the frequency distribution of a population (search queries, in this case) exhibiting the Pareto principle, known to everyone who sells products as the 80-20 rule. Most queries are directed to a few (relatively speaking) popular subjects and therefore show up in the “fat” part of the frequency curve. The frequency of increasingly obscure queries “tails off” asymptotically, providing a “long tail” to the right of the “fat” part of the curve.

For a time, computer scientists thought that most obscure queries were generated by only a few users (again, speaking relatively), and, hence, search engines could ignore obscure tail queries and still serve the great bulk of the user population. But research has shown that just about everyone makes a rare query from time to time. And, people decide which engine to use for their everyday search needs based on the engine’s ability to satisfy these rare queries, just as one would expect in a world that values “one-stop shopping.” Stated more formally, satisfying demand in the tail increases consumption in the “head” or fat part of the distribution curve.

Google will get an enormous advantage over its search competitors if it can support (i.e., respond satisfactorily to) tail queries that its competitors cannot. Scientific research shows that supporting tail queries produces a disproportionately large increase in overall user satisfaction – i.e., disproportionately increases the size of the user population highly satisfied with the engine’s performance. In fact, according to the most recent study, satisfying an additional 1% tail queries increases overall user satisfaction with the engine more than 5% — this, in a market in which companies battle fiercely to wrest even a tenth of a point in market share away from Google’s control.

Digital rights to virtually all out-of-print books will provide Google with a decisive advantage in responding to tail queries. Google created its book database by scanning the collections of the nation’s leading research libraries. These libraries consist largely of academic works on a wide variety of obscure subjects. The books contain information relevant to all kinds of rare queries. Much of the older information in the books might not be available from other sources, at least on the public web. Whatever the publication value of these books, they provide an enormous advantage in search. Indeed, presentations by Google within the last couple of months confirm that the company expects to use text from digital books to satisfy many of its users’ tail queries. If Google can stretch its advantage even further and deny its search rivals the ability to integrate the same corpus of books, Google’s lead in search will become insurmountable.

The proposed settlement does just that, leaving Google’s search competitors out in the cold. The settlement provides no means at all for competitors to get rights to so-called “orphan works” – in-copyright books whose rightsholders cannot be located. According to the parties’ court filings made just last week, ownership has been claimed for only about one million books out of the more than 12 million books scanned and the 170 million unique works identified by Google, leaving the company with exclusive digital rights to well over 90% of U.S. books. In addition, the settlement sets up procedures that make it easy for Google to clear rights to all other out-of-print works where rightsholders can be located, but leaves rivals without a mechanism to easily resolve disputes over ownership and copyright status that preclude competitive distribution. If approved in its current form, then, the settlement will solidify Google’s hold on the search market by giving the company exclusive rights to millions upon millions of books.

Under some circumstances, Google might be entitled to a competitive advantage that it secured through superior foresight. But, that’s not what happened here. The publisher plaintiffs demanded that Google’s competitors respect claims of copyright in their scanning, even as they secretly negotiated (pdf) with Google to give that company the settlement deal the plaintiffs never offered to Google’s competitors. The Department of Justice made the point most clearly in its brief. Google’s search dominance, DoJ said, may be further entrenched by its “exclusive access to content” through the settlement.

This outcome has not been achieved by a technological advance in search or by operation of normal market forces; rather, it is the direct product of scanning millions of books without the copyright holders’ consent and then using [class action procedures] to achieve results not otherwise obtainable in the market.

Permitting a company to solidify its dominance over all of web commerce through controversial legal stratagems rather than open market competition invites economic disaster. Likely, the judge will see Google’s ploy in that light, just as the Justice Department did. If not, government regulation might well be our only recourse.

Katie Geminder, MySpace’s SVP of User Experience and Design who was brought on board last summer, is leaving the company at the end of the week. Her departure doesn’t come as a big surprise — Geminder was invited to join the company by recently ousted CEO Owen Van Natta, who had previously worked with her at Amazon and Facebook. While at MySpace Geminder has been reporting to Chief Product Officer Jason Hirschhorn (who was promoted to co-President after Van Natta’s firing).

MySpace confirmed on background that Geminder is transitioning out of her role with the company, and that VP Product Mike Macadaan will be leading the user experience and design teams going forward. Hopefully they’ll be making major changes soon, because MySpace badly needs them (a recent parody video hints that a redesign is under way).

Geminder and Van Natta have had a long working history: they met at Amazon, where Geminder worked from 1999-2005. She then moved to Apple where she worked on the company’s online store. She rejoined Van Natta at Facebook in 2006 as the social network’s Director of User Experience and Design.  After leaving Facebook, she followed Van Natta over to Project Playlist during his short-lived run there as CEO, and then made the jump to MySpace after he got the CEO job at the struggling social network.

We’ll probably be hearing about more departures at MySpace as employees react to (yet another) executive change. Last week, stream architect Monica Keller left the company to join Facebook.

Whoever says the legal system in this country is broken, well, you’re right. Comcast was caught tampering with its customers’ packets two years ago.

Read more:
Comcast settles bandwidth throttling lawsuit for $16 million. That’s 4 hours of revenue.

This is just cool. The pic is of a camera blast shield that’s used to capture those spectacular but deadly explosion videos.

Go here to see the original: 
The camera blast shield is a one tough cookie

The EU said this morning that it is dropping antitrust charges against Microsoft after the software giant agreed to give Windows OS users a choice of up to 12 other Web browsers, including Mozilla Firefox, Google Chrome, Apple’s Safari and Opera.

Under the terms of the settlement agreement, Microsoft will need to implement a ballot screen that lets users in Europe replace Internet Explorer with another browser, starting March 2010. The deal also means computer manufacturers will now be able to ship PCs in Europe that do not come pre-installed with IE.

If it honors the agreement, Microsoft will avoid further EU fines. Microsoft has already paid €1.68 billion ($2.44 billion) in fines over EU antitrust actions in the past 10 years.

The company did get a warning, though: Microsoft can be fined up to 10 percent of yearly global turnover – without regulators having to prove their case – if the company fails to stick to its legally-binding commitment for the next five years. This commitment will be checked by regulators every other six months, the EU said. The European Union is also able to review the entire deal at the end of 2011.

European Union Competition Commissioner Neelie Kroes in a statement said millions of European consumers will benefit from this decision by gaining “free browser choice”, and that it will also spur browser makers “to innovate and offer people better browsers in the future”.

In December 2007, Opera Software urged the European Commission to investigate Microsoft’s abuse of its dominant market position and the company’s bundling of Internet Explorer with its still dominant Windows operating system. After a two-year investigation, in January 2009, the EU charged Microsoft with monopoly abuse. The anti-trust suit was later joined by Google and Mozilla.

Opera Software was quick to release a statement following the announcement of the settlement. Jon von Tetzchner, Opera’s CEO:

“This is a victory for the future of the Web. This decision is also a celebration of open Web standards, as these shared guidelines are the necessary ingredients for innovation on the Web. Opera has long been at the forefront of Web standards, which ensures that people have equal access to the Web anytime, anywhere and on any device. We see the outcome of the EU’s investigation as a testament to our mission.”

The European Union estimates that some 100 million computers will likely display the screen by mid-March 2010, and around 30 million new computers will show it over the next five years.

(Image via Komonews)

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Google is really serious about using offline media to push its Web browser. After running ads for Google Chrome in the UK, it has today started a similar campaign in The Netherlands, too. Like in the UK, we’re getting reports on billboards appearing all over the country in combination with digital advertising appearing on Facebook and other sites.

Also like in the UK, Google is distributing its message through Metro, a free daily that can be picked up in many public places all over the country. You can access the online version of the newspaper right here, and you’ll see the ad when you click through to the Issuu-powered digital edition.

More Psystar news for you. We now know that the Florida-based company will have to pay Apple $2.68 million in damages over its little Hackintosh business. (That’s a partial settlement, not court-mandated or anything.) Go ahead and go to its Web site : everything is out of stock! Of course, Psystar said it will appeal the decision handed to it that said it violated the DMCA when it installed Mac OS X on PCs.

Read the original post:
Psystar settles with Apple to the tune of $2.7 million (but won’t pay up just yet)

eBay has just announced that it has completed the sale of Skype, valuing the company at $2.75 billion. The investor consortium who is the buying party and will control an approximately 70 percent stake is a group led by Silver Lake Partners and includes Joltid (i.e. the company founded by Skype’s original founders) and “certain affiliated parties”, the Canada Pension Plan Investment Board and VC firm Andreessen Horowitz.

As previously announced, eBay received approximately $1.9 billion in cash and a note from the buyer in the principal amount of $125 million. The company also retained an approximately 30 percent equity investment in Skype.

The company also purchased senior debt securities with a face value of $50 million as part of a Skype debt financing.

The news of the completion of the sale of the successful Internet communication company comes two weeks after Skype founders Niklas Zennström and Janus Friis announced that they had reached a settlement with eBay in return for a 14% stake and board seats, clearing the way for the deal to close after some very public legal quarrels.

As you may remember, Andreessen Horowitz partner Marc Andreessen swiftly deemed Skype one of the most important companies on the Internet after the settlement was reached and announced (and made quite a strong case for it).

TechCrunch was first to report the imminent sale of Skype to the investor group back in August 2009 and shortly after confirmed that the deal would value the company at $2.75 billion. As a reminder and just for reference, eBay bought Skype in 2005 for $2.6 billion, although eBay has since written Skype down to $1.7 billion.

You won’t hear me say it was the smartest acquisition eBay ever made – not buying the actual core IP was downright idiotic – but they did kinda ok with it in hindsight. Let’s not forget eBay still owns a little less than one third of the new Skype either.

In the words of Skype CEO Josh Silverman: say hello to the future.

How much bigger can Skype get on its own two feet?

(Thanks to @YarinHochman for the tip)

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Today Intel agreed to pay rival chipmaker AMD $1.25 billion to settle a raft of ongoing litigation going back decades. AMD accused Intel of anti-competitive practices, which sparked an antitrust investigation. By settling now with AMD, Intel avoids paying out billions more down the line and being branded a monopolist by the government for abusing its 80 percent PC-chip market share.

The size of the settlement is as close to an admission of guilt we’ll ever hear from Intel. It still maintains its innocence, as any prudent corporation would, but you don’t pay out $1.25 billion just to avoid the hassle of a trial. And while $1.25 billion is an enormous sum which will help shore up AMD’s balance sheet, it amounts to only 10 percent of Intel’s $12.9 billion in cash and short term investments.

Just to put the size of the settlement in context, last year Intel’s revenues were $38 billion. Last quarter alone, it was making roughly $104 million a day. At that rate, Intel brings in $1.25 billion every 12 days. It can absorb the settlement pretty easily.

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This morning, Google is making a slight update to Wave to help users unclog their inbox from public waves. Previously, you could see public waves in your inbox, which was fairly annoying. Now for a wave to appear in your inbox, you need to “follow” the wave.

When someone adds you directly to a wave, or if you contribute to a wave, you will automatically be following that wave. But when you see a public wave that you would like to get updates on and monitor the conversation, you can chose to follow it by hitting the follow button in the wave panel toolbar. You can also archive waves, which will removes waves from your inbox. When there is an update to an archived wave, it will appear in your inbox again. And you can switch between following and unfollowing a wave as much and as often as you like.

Google says the “unfollow” feature replaces the mute command. You can still find waves that you are not following by searching for them or if you have organized them into saved searches or folders. The feature certainly gives your more control over your inbox, which is always a good thing. Google needs to continue adding more intuitive features to help users better understand the innovative, but confusing communications product.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0