November 2011

And Then There Were Three: Universal Will Buy EMI

EMI, until now one of the four remaining major labels, is being broken up and sold off by the megabank Citigroup. After an auction that took almost nine months, French media company Vivendi, which owns Universal Music Group, will buy EMI's recorded music division for 1.2 billion pounds (about $1.9 billion) and Sony Corp. will pick up the publishing arm for $2.2 billion.

Until the sale, EMI was the oldest extant major, and the last to operate independent of a parent conglomerate. Founded in 1931, its recording catalog includes music by The Beatles, Pink Floyd and Frank Sinatra and its publishing portfolio is one of the most valuable in the world. Capitol, Virgin, Blue Note and Parlophone are a few of the labels under the EMI umbrella. EMI Classics has long been one of the cornerstones of the classical industry.

Apple Takes iTunes to Other Kinds of Payments

Apple introduced a new feature for the iPhone in its Apple Store app. The feature, called EasyPay, allows people to take a picture of the bar code of a product with the phone’s camera and then buy the product on the spot, using their iTunes account.

Previously, the app could be used to research products and order them, but the products had to be picked up from an employee in the store. For now, use of iTunes as a traveling wallet is modest; you can use it to buy the cheaper accessories in an Apple store. The phone’s location tracker has to be on, too, so Apple can verify that you are in one of its stores. The effectiveness of the product is impressive, however.

Facebook Retreats on Privacy

Facebook is close to a settlement with the U.S. government over charges that it misled users about its use of their personal information, the latest sign of widening public concern over privacy in the digital age.

According to people familiar with the talks, the settlement would require Facebook to obtain users' consent before making "material retroactive changes" to its privacy policies. That means that Facebook must get consent to share data in a way that is different from how the user originally agreed the data could be used. The pact—which awaits only final approval from the Federal Trade Commission—has the potential to reverberate widely. Myriad online services and companies are developing sophisticated tools for observing people's behavior online and profiting from the personal information they provide. In recent months, the FTC has been signaling that privacy is on the top of its enforcement agenda. The settlement stems from changes Facebook made to its privacy settings in December 2009 to make aspects of users' profiles—such as name, picture, city, gender, and friends list—public by default. At the time, Facebook founder Mark Zuckerberg described the changes as a "simpler model for privacy control." Users complained and several privacy advocates, led by the Electronic Privacy Information Center, filed a complaint with the FTC, alleging the changes were unfair and deceptive. Under the terms being discussed, the agreement would require Facebook to submit to independent privacy audits for 20 years

Privacy by default: a look at Facebook’s settings

Facebook is, at its heart, a tool for sharing. But it has made several changes to how news is shared over the network introducing levels of sharing by individual posts.

That means users have more control over who can read what they post, but they also have to work with more menus and options on a regular basis. The changes have been confusing for many who use the site. Electronic Privacy Information Center Executive Director Mark Rotenberg said the group disagrees with about how Facebook tweaks its privacy settings — particularly regarding what information it shares by default — and pointed to the graphic below, created by Matt McKeon, to demonstrate how much information is available to the general public by default.

Reps Markey and Barton concerned Facebook patent application means they're tracking users

Reps Edward Markey (D-MA) and Joe Barton (R-Texas) wrote to Facebook founder Mark Zuckerberg asking him to explain a February patent application they claim raises concerns about Facebook tracking users on other websites. “Facebook’s patent application raises serious questions about whether the company plans to track users now or in the future,” Rep Markey said. The letter references a report from The Hill last month in which a Facebook spokesman asserted that the firm "does not track people over the Internet." The pair has written to Facebook several times this year over privacy concerns and have suggested the Federal Trade Commission probe the firm. The lawmakers quote experts that claim the patent application contemplates tracking users on websites aside from Facebook and sending them targeted advertisements based on the information gleaned from such tracking.

ACLU urges wireless carriers to stop tracking customers' location

The American Civil Liberties Union is urging the major wireless carriers to stop storing data about their customers' location.

The four national wireless carriers -- Verizon, AT&T, Sprint and T-Mobile -- all keep records of which cellphone towers a phone uses for at least a year, according to a document released by the ACLU in September. This information could be used to determine a person's location. "But just because your network has access to these sensitive details does not mean that you should be collecting and storing this information," the ACLU wrote in a letter to the heads of the major wireless companies. The document on cellphone data, which the ACLU obtained through a Freedom of Information Act request from the Justice Department, also showed that the carriers retain data on phone calls and text messages. The Justice Department compiled the document to help police officers obtain evidence. "Customers are already paying money for their mobile service; they should not be paying with their personal information too," the ACLU wrote.

Former FCC Chairs Slam Commission's 'Victorian Crusade'

Former Federal Communications Commission Chairmen Mark Fowler (Reagan) and Newt Minow (Kennedy) are voicing their opposition to the FCC’s indecency enforcement regime.

In an amicus brief to the Supreme Court they argue that recent FCC indecency decisions were unconstitutionally vague and chilling. "[T]he Commission's arbitrary and excessive enforcement policies have exceeded anything contemplated by the Court in Pacifica and should be struck down," the former chairmen wrote, joined by other former commissioners and FCC officials. "In pursuit of a policy of protecting children against exposure to offensive language," they said, "the Commission has embarked on an enforcement program that has all the earmarks of a Victorian crusade. To effectuate its new clean-up-the airwaves policy, the Commission has radically expanded the definition of indecency beyond its original conception; magnified the penalties for even minor, ephemeral images or objectionable language; and targeted respected television programs, movies, and even non-commercial documentaries."

In a separate brief, the National Association of Broadcasters says the FCC's indecency policy is void for vagueness, chills protected speech and that the commission's authority to regulate content is limited, but it is not taking aim at the underpinnings of indecency regulations or broader content regulations.

AT&T, US argue over witnesses in antitrust trial

AT&T complained that the Justice Department was too slow in telling who its witnesses would be as the government seeks to block the telecommunications giant's acquisition of rival T-Mobile USA.

The government, in a court filing, proposed giving AT&T an initial list of up to 15 witnesses on November 18 and additional lists in December and January. The trial begins on February 13. This did not please AT&T, which noted that the court had initially urged witness lists be exchanged "at the earliest possible time." "More than six weeks after the court's order, defendants are still no closer to receiving a witness list. Yet plaintiffs seek to push the date back still further," AT&T said in its filing. Instead, AT&T suggested Special Master Richard Levie consider giving each side a specific amount of time during the trial to be used as each side wishes. "Plaintiff's (the government) case is likely to focus on the few competitors that plaintiffs claim matter in the market. Defendants' (AT&T) case will broaden that focus to show the much broader array of market participants competing fiercely for customers," AT&T said. The government, for its part, argued that AT&T's desire for a quick trial would be undermined by its failure to cap its witness list.

AT&T/T-Mobile Merger Job Claims Fuel Bitter Debate Over Antitrust Suits

The steady drumbeat of advertisements by AT&T claiming huge job growth if the merger with T-Mobile is allowed to go through is impossible to escape in Washington.

The ads appear daily in everything from newspapers to bus signs to broadcast commercials. Each time, the claim is the same -- if AT&T is allowed to acquire T-Mobile, it will result in 96,000 new jobs, plus 5,000 jobs brought back to the U.S. from overseas. The ad seems to imply that AT&T will help spur job growth in the struggling U.S. economy to an extent that even the government can’t manage. Of course, if you read the fine print that accompanies these ads, you’ll see that most of those numbers are highly speculative, but the ads trumpet them nonetheless.

Now, an economic study, sponsored by mobile competitor Sprint but carried out by David Neumark, professor of economics at the University of California, Irvine, suggests otherwise. The study says that contrary to its claims, AT&T’s merger with T-Mobile will almost certainly result in the loss of thousands of jobs as redundancies are eliminated, staff streamlined and costs reduced. The Neumark study claims that previous AT&T mergers have resulted in significant job losses and that in the period leading up to the merger, AT&T was already shedding U.S. jobs. The study also noted that during the same period T-Mobile was adding jobs, a trend the study indicated would be reversed after the merger.

T-Mobile USA Boosts Customers as Takeover by AT&T Drags On

T-Mobile USA, the fourth-largest US wireless company, added customers for the first time in a year and reported profit that beat estimates as its German owner fights to complete the proposed sale of the unit to AT&T.

Losses of contract subscribers slowed, and gains for lower-priced pay-as- you-go plans led to a net addition of 126,000 customers from the previous quarter. Deutsche Telekom AG and AT&T are battling a lawsuit over the $39 billion takeover by the U.S. Justice Department, which says it would cut competition. While T-Mobile’s third-quarter results may aid the government’s case by showing the carrier is still a strong rival to AT&T, Sprint Nextel Corp. and Verizon Wireless, the arrival of Apple Inc.’s iPhone 4S at the three biggest carriers in October might tilt the playing field this quarter. The carrier reported 33.7 million customers at the end of September, compared with 33.69 million three months earlier. The subscriber total fell from 33.8 million a year earlier.

Benton

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