Stories from Abroad

Chip maker Qualcomm is asking US trade authorities to ban imports of Apple products, including iPhones, that don’t use its processors. Qualcomm said it will formally request that the US International Trade Commission (ITC) temporarily ban the imports to “stop Apple’s unlawful and unfair use of Qualcomm’s technology.”

The company is accusing Apple of infringing on its patents. “Qualcomm’s inventions are at the heart of every iPhone and extend well beyond modem technologies or cellular standards,” Qualcomm general counsel Don Rosenberg said in a statement. “The patents we are asserting represent six important technologies, out of a portfolio of thousands, and each is vital to iPhone functions. Apple continues to use Qualcomm’s technology while refusing to pay for it.” The chip maker is also suing Apple to prevent it from selling any of products that have already been imported.

Billionaire Carlos Slim's America Movil argued on July 5 against rules brought in by an overhaul of the country's telecommunications industry, saying in a statement they were unfair and had led to a loss of its business rights. In the latest chapter in a fight that could shape the future of competition in the sector, the supreme court is considering whether to undo parts of an overhaul that tilted the playing field against Slim's long-dominant America Movil and led to steep drops in prices that Mexicans pay for cell phone service and internet access.

Slim's lawyers argued that unfair "asymmetrical" rules prohibit America Movil from charging other telephone carriers for connecting their calls made to customers on its network, but let those companies charge America Movil for connecting its calls to their customers. The so-called "zero tariff" applied to Slim's company has undermined the power of the sector's regulator IFT as well as the rights of America Movil units Telmex and Telcel under past concessions awarded to them by the government, the statement said. The company said it has been harmed by the elimination of its rights to "cost recovery, economic stability and financial balance" granted by the concessions.

President Donald Trump took his fight with the news media to the world stage on July 6, hammering CNN and his political enemies in the press as “fake news” at a press conference with Polish President Andrzej Duda in Warsaw. President Trump gave the first question of the press conference to Daily Mail editor David Martosko, a Trump ally who has been considered for various administration posts. That led CNN White House reporter Jim Acosta to allege a set-up. Martosko asked President Trump about the controversy that exploded around CNN July 5, when the network published a story claiming to know the identity of the man who created a video the President tweeted, which showed him tackling a wrestler with the CNN logo emblazoned over his face. President Trump didn’t miss a beat, saying that the network “has some pretty serious problems.” “They have been fake news for a long time,” President Trump said. “They’ve been covering me in a very dishonest way.”

At the press conference, President Trump also slammed NBC, noting that he once pulled big ratings for the network, which aired his program “The Apprentice." Then-NBC president Jeff Zucker now heads CNN. “NBC is equally as bad, despite the fact that I made them a fortune, they forgot about that,” President Trump said. “But I will say that CNN has really taken it too seriously and I think has hurt themselves very badly. Very, very badly. What we want to see in the United States is honest, beautiful, free, but honest press. We want fair press. We don’t want fake news, and by the way, not everybody is fake news. Bad thing. Very bad for our country.”

On the surface, the investigation was routine. Federal agents persuaded a judge to issue a warrant for a Microsoft e-mail account they suspected was used for drug trafficking. But US-based Microsoft kept the e-mails on a server in Ireland. Microsoft said that meant the e-mails were beyond the warrant’s reach. A federal appeals court agreed. Late in June, the Trump administration asked the Supreme Court to intervene. The case is among several legal clashes that Redmond (WA)-based Microsoft and other technology companies have had with the government over questions of digital privacy and authorities’ need for information to combat crime and extremism.

Privacy law experts say the companies have been more willing to push back against the government since the leak of classified information detailing America’s surveillance programs. Another issue highlighted in the appeal is the difficulty that judges face in trying to square decades-old laws with new technological developments. In the latest case, a suspected drug trafficker used Microsoft’s email service. In 2013, federal investigators obtained a warrant under a 1986 law for the e-mails themselves as well as identifying information about the user of the e-mail account. Microsoft turned over the information, but went to court to defend its decision not to hand over the e-mails from Ireland.

[Commentary] The tremor in Silicon Valley emerged from Brussels, not the San Andreas Fault. The European Union’s decision on Google’s search practices makes clear the absence of domestic regulation has opened the door for policies to be decided by foreign governments. It should be a worry – and a wake-up – for all the companies whose platforms drive internet services. The EU has leveled a record-breaking $2.7 billion fine against Google for its search practices. But that’s just money (albeit lots of money).

A more pervasive consequence is the EU mandate that Google alter the manner in which its search results are presented. Domestic internet programs might want to consider their own corporate interest in embracing domestic policy regulatory oversight. The decision of the EU is a wake-up call that perhaps having policies established by the US government isn’t such a bad idea after all.

[Tom Wheeler is a former Chairman to the Federal Communications Commission]

The European Union leveled a $2.7 billion fine against Google for allegedly illegally disadvantaging several European e-commerce sites by algorithmically favoring Google Shopping results over their own. The reasons for the fine are fairly tedious, even by the usual standards of EU bureaucratic action. The specific Google product at issue isn’t well-known or widely used and the specific companies involved aren’t well-known either. And while the cash stakes are nothing to sneer at, the amount of money involved is fairly trivial relative to Google’s overall scale.

Yet for all that, the ruling is arguably the most important development in business regulation on either side of the continent in this decade. The details of the case aren’t important, but the high-level view is. Europe has ruled that Google has monopoly power in the web search market and should be regulated as such. That’s a game-changer. The United States, so far, disagrees.

A key concern with the Licensed-shared access (LSA) approach currently being developed by European regulators is that leaving incumbents and secondary users to agree to bilateral arrangements may be insufficient to incentivise an optimal level of sharing. We propose an efficient auction mechanism to incentivise incumbent users to offer shared access to the spectrum they use. The mechanism consists of two stages. In the first stage, LSA licences are auctioned. In the second stage, the incumbent is provided with a choice of either granting access under an LSA agreement to the winner of the auction or not. If the incumbent accepts, its existing licence fee is reduced, whereas, if it rejects, its existing licence fee is increased. The change in the licence fee is such that a rational incumbent always opts to share when it is efficient to do so, i.e. when the cost of sharing is below the value to the secondary user. We also explore how this simple mechanism can be extended to situations in which there is more than one incumbent in a band. Our proposed approach involves package (combinatorial) bidding and linear reference prices.

[Commentary] The problem with regulating technology companies is that, faced with tough new rules, they can eventually innovate their way out, often by switching to newer, unregulated technologies. The risk of targeted regulation informed by little other than economic doctrines might even be fuelling a corporate quest for eternal disruption: instead of surrendering to the regulators, technology firms prefer to abandon their old business model. It’s through this lens that we should interpret the likely fallout from the €2.4bn fine imposed on Alphabet, Google’s parent company, by the European commission. It arrives after a lengthy, seven-year investigation into whether the company abused its dominance to promote its own online shopping service above search results. The commission’s case seems sound; the sad fate of small online retailers, unable to compete with Alphabet over the past decade, suggests as much.

However, one should not mistake the factual correctness of the commission’s case for an informed strategic vision: if it has a clue about effective ways to limit the power of data platforms, it’s not showing it. The reality is that even though advertising-powered search still accounts for the bulk of Alphabet’s earnings, the company’s real focus these days is on finding lucrative and creative uses for the troves of data that it has already extracted, processed and turned into artificial intelligence. Alphabet’s future revolves around information-intensive services, not around running matchmaking platforms for advertising.

[Evgeny Morozov is a visiting scholar at Stanford University and a Schwartz fellow at the New America Foundation.]

Apparently, As US officials investigated in January the FSB's alleged role in election cyber attacks, US technology firms were quietly lobbying the government to soften a ban on dealing with the Russian spy agency. New US sanctions put in place by former President Barack Obama last December - part of a broad suite of actions taken in response to Russia's alleged meddling in the 2016 presidential election - had made it a crime for American companies to have any business relationship with the FSB, or Federal Security Service.

US authorities had accused the FSB, along with the GRU, Russia's military intelligence agency, of orchestrating cyber attacks on the campaign of Democratic presidential candidate Hillary Clinton, a charge Moscow denies. But the sanctions also threatened to imperil the Russian sales operations of Western tech companies. Under a little-understood arrangement, the FSB doubles as a regulator charged with approving the import to Russia of almost all technology that contains encryption, which is used in both sophisticated hardware as well as products like cellphones and laptops. Worried about the sales impact, business industry groups, including the US-Russia Business Council and the American Chamber of Commerce in Russia, contacted US officials at the American embassy in Moscow and the Treasury, State and Commerce departments, according to five people with direct knowledge of the lobbying effort.

The European Union’s antitrust watchdog has handed down a string of big decisions in recent years against top US technology firms, in what might look to US companies and officials like a trend by Brussels to train investigations on large American companies.

EU officials deny any bias. “We don’t go against Google because it’s an American company but because it’s a company abusing its dominant position in our market.… If it were in Brazil, we wouldn’t care,” a senior EU official said, referring to the EU’s €2.42 billion ($2.71 billion) fine June 27 against Google for unfairly favoring its shopping ads in its search results. EU competition officials are, to a large extent, constrained by antitrust rules and legal precedents when making decisions against any companies, be they American, European or otherwise. But unlike Washington, where U.S. enforcers need to prove their cases before a judge, the EU’s competition directorate acts as prosecutor, judge and jury in competition cases—and only needs to convince itself. Experts say American tech companies are currently getting increased scrutiny because they happen to dominate the industry. This comes at a time when one of the top priorities for the European Commission, the bloc’s executive body, is to ensure the EU’s common market functions more efficiently online and across borders.