January 2013

Apple, Android combine for almost 90% of U.S. smartphone market

The latest smartphone figures show Apple and Android phones have taken nearly complete control of the U.S. smartphone market, with almost 90% combined market share.

A report by comScore shows that as of November, Apple and Android devices accounted for a combined 88.7% share of the U.S. smartphone market. Individually, the Google-owned Android operating system leads the way with 53.7% of the market, up 1.1% from August. Apple, meanwhile, accounted for 35%, which was a 1.4% increase from August. Left in the dust were Research In Motion and Microsoft, whose operating systems accounted for 7.3% and 3% of the market, respectively. Samsung was the leading manufacturer of cellphones, with 26.9% of the market -- up 1.2% from August. Apple came in second with 18.5% of the market, up 1.4%. Not far behind Apple was LG, which held on to 17.5% of the cellphone market but was down 0.7% from the previous period. Also down for the period were Motorola and HTC, which saw their shares fall 0.8% and 0.4%, respectively. Motorola had a 10.4% cellphone market share while HTC's slice of the pie fell to 5.9%.

FCC Sets Comment Deadlines for Connect America Reforms

The Federal Communications Commission announced that Jan. 28 and Feb. 11 will be the comment and reply comment deadlines for its proposal to modify phase I of its Connect America Universal Service Fund reform.

In November, the FCC proposed changing the rules on its first phase of the Connect America Fund to make it more attractive to the price cap telcos it wants to build out broadband to hard-to-serve, primarily rural, areas. The FCC, which is migrating phone subsidies in the Universal Service Fund from telecom to broadband, announced in July that $115 million would be invested by companies in 37 states. But that leaves most of the money -- $185 million -- in the first round of funding unallocated.

Arts Organizations and Digital Technologies

A survey of a wide-ranging mix of U.S.-based arts organizations shows that the internet, social media, and mobile connectivity now permeate their operations and have changed the way they stage performances, mount and showcase their exhibits, engage their audiences, sell tickets, and raise funds. These organizations are even finding that technology has changed the very definition of art: 77% of respondents agree with the statement that the internet has “played a major role in broadening the boundaries of what is considered art.”

“For most of these organizations, technology suffuses their operations and their engagement activities with their communities,” noted Kristen Purcell, research director at the Pew Research Center’s Internet & American Life Project, and a co-author of the report. “They are using the technologies to expand their offerings, grow and diversify their audiences, and bring technology users into the act of creating art itself.”

Tied to this embrace of technology is a widespread sense among arts group leaders that digital technologies are critical to the spread of the arts:

81% of the organizations in this survey say the internet and digital technologies are “very important” for promoting the arts
78% say these technologies are “very important” for increasing audience engagement
50% “strongly agree” with the statement that the internet “has increased engagement in the arts by providing a public platform through which more people can share their work”
65% say digital technologies are “very important” for fundraising
A majority of these organizations also agree that the internet is “very important” in increasing organizational efficiency (63%), and for their engaging in arts advocacy (55%)

Inquiry Into Tech Giants’ Tax Strategies Nears End

Congressional investigators are wrapping up an inquiry into the accounting practices of Apple and other technology companies that allocate revenue and intellectual property offshore to lower the taxes they pay in the United States.

The Senate Permanent Subcommittee on Investigations inquiry now drawing to a close began more than a year ago and involves at least a half dozen technology companies, according to people with firsthand knowledge of it, who declined to be identified. Those people said the subcommittee had subpoenaed or otherwise asked the companies to explain methods they used to avoid domestic taxes. They said Apple had become a focus of the inquiry and was cooperating with the subcommittee, which is expected to issue wide-ranging recommendations that are likely to play a significant role in Congressional tax code negotiations. It is unclear how broadly Senate investigators are looking into the technology industry, if any laws are thought to have been broken and how many companies are involved. The subcommittee is also known to be looking at Google, Hewlett-Packard, Microsoft and firms in such fields as biotechnology.

What Happens Now on Standards-Essential Patents?

While the Federal Trade Commission this week mostly let Google off the hook on search competition, it did get the company to sign a binding consent order over how it uses standards-essential patents. Standard-essential patents — which cover basic technology shared in an industry — have become a key issue as smartphone competitors fight over intellectual property. Having been lumped into the long-running FTC antitrust investigation of Google over the past couple of months, patents weren’t originally an issue, but they emerged as an area where regulators could find fault and make a deal. So what does this mean for the larger standards-essential patent fights?

A few things — with a mix of winners and losers.

The FTC is now on record saying that Google acted unfairly. That’s big.
Google doesn’t have to drop its existing appeals of SEP cases, according to clarifying comments by FTC spokesman Peter Kaplan. However, Google can’t obtain or enforce any SEP exclusion orders or injunctions.
Google’s agreement with the FTC is binding. But it is not necessarily as strong as what Apple and Microsoft already committed to voluntarily when the Department of Justice and other agencies in Europe were looking into the matter. They both said that they won’t seek injunctive relief based on SEPs, ever.

Administration's Tough Talk Belies Cautious Approach on Antitrust

Taking over his agency four years ago, Jon Leibowitz was at the head of a group of Obama appointees seeking a tougher line on antitrust violations. But the action by the Federal Trade Commission against Google is the latest example of how enforcement has generally remained cautious and within the mainstream of antitrust law.

The administration has caused some pain for large corporations including AT&T, which abandoned its bid for rival cellphone provider T-Mobile USA after a Justice Department lawsuit. That case and others like it, though, relied on time-honored antitrust principles about avoiding excess concentration in an industry. "Being aggressive on antitrust enforcement is a lot harder in practice than it looks," said David Wales, a former antitrust regulator now at the law firm Jones Day, in part because regulators must ultimately win their cases in courts that have proved skeptical of expansive interpretations of antitrust law. The FTC was once eager for the Google probe, successfully pushing for jurisdiction over the Justice Department, with which it shares antitrust enforcement duties. As the investigation picked up steam, the agency enlisted high-profile corporate litigator Beth Wilkinson to help lead the effort. But even with three Obama nominees on the five-member commission, the FTC ultimately decided against moving ahead with a case.

Google Pushed Hard Behind the Scenes to Convince Regulators

For 19 months, Google pressed its case with antitrust regulators investigating the company. Working relentlessly behind the scenes, executives made frequent flights to Washington, laying out their legal arguments and shrewdly applying lessons learned from Microsoft’s bruising antitrust battle in the 1990s. After regulators had pored over nine million documents, listened to complaints from disgruntled competitors and took sworn testimony from Google executives, the government concluded that the law was on Google’s side. At the end of the day, they said, consumers had been largely unharmed. That is why one of the biggest antitrust investigations of an American company in years ended with a slap on the wrist, when the Federal Trade Commission closed its investigation of Google’s search practices without bringing a complaint. Google voluntarily made two minor concessions.

Hill Weighs In On Google Settlement

Members of the 113th Congress, which held its first session Jan 3, weighed in on the Federal Trade Commission's Google decision, but with signals from at least one congressman that would not be the end of the story.

Reps Anna Eshoo (D-CA) and Zoe Lofgren (D-CA), a pair of House members representing high-tech constituents in Northern California including Google, praised the FTC's conclusion that Google's search algorithms were primarily meant to improve the customer experience and not favor its content for anticompetitive purposes. The FTC also required Google to make essential patents it acquired from Motorola available to competitors on reasonable terms. Sen. Mike Lee (R-Utah) was less effusive. He is ranking member of the Senate Antitrust Subcommittee. "Along with the FTC, our Subcommittee will seek to make certain that Google abides by these commonsense commitments. Although these voluntary actions represent an important step in the right direction, today's agreement does not address all the concerns about anticompetitive conduct raised at our Subcommittee hearing. We will continue to work with antitrust authorities to help ensure robust competition in the Internet search arena so that consumer welfare is maximized."

The Case Against Google Was Always Weak

[Commentary] Now that the Federal Trade Commission has completed a settlement with Google, the search company's competitors who precipitated the FTC's investigation are crying foul that their shameless attempt at rent-seeking fell short. Unable to out-innovate and out-compete, rivals of Google such as Microsoft formed FairSearch, a lobbying group that first demanded the FTC look into Google and then tried to influence the agency throughout its nearly two-year-long investigation. Now that a settlement has been announced—which preserves competition and protects consumers but is short of the "death penalty" that Google's detractors had demanded—FairSearch is threatening to take its case to the Justice Department for a second round. As a former FTC chairman, I don't believe that we should give any credence to these complaints. The agency spent countless hours and resources prying into every aspect of Google's business, with the company's competitors urging them on every step of the way. I know that if the FTC had found a sustainable antitrust violation, the commission would absolutely have pursued it after investing so much effort. But the FTC is not going to bring a case it cannot win and in the process squander resources it might have used to protect competition and consumers—and all the while risk eroding its enforcement power for years to come.

Google Escapes the Feds

[Commentary] In the major miracles department, the Federal Trade Commission has ended its long antitrust investigation of Google with a display of regulatory restraint. Google did agree to let websites opt out of being featured in Google's specialized search results, and to make it easier for companies to advertise on Google and Microsoft's Bing search engine simultaneously. It also agreed to do more to license its patents on "fair and reasonable" terms. These concessions may help the FTC justify its 18-month probe, but they amount to the antitrust version of a parking ticket. As wastes of taxpayer money go, this is one of the better outcomes.

Benton

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