Google’s proposed purchase of mobile advertising platform AdMob now faces political heat.
Sen. Herb Kohl (D-Wis.) wrote a letter Tuesday to his former staff counsel, Federal Trade Commission Chairman Jon Leibowitz, urging the agency to “carefully” review the merger, which would combine Google’s growing presence in mobile advertising with the largest company that places ads on smart phones.
Leibowitz worked for Kohl from 1989-2000, including a stint as the Democratic staff director on the Senate Judiciary Committee’s antitrust subcommittee when Kohl was the ranking Democrat on the panel. Kohl now chairs that subcommittee.
“Without reaching any conclusion as to whether the Google/AdMob transaction would create such dominance or would cause any substantial harm to competition, I believe it is essential that the FTC scrutinize this deal very closely,” Kohl wrote.
Critics of the deal have complained Google could use its muscle in the online search market to become the dominant player in mobile advertising.
Google has responded that the market has a dozen players, is still developing and is too new for the deal to raise major regulatory issues.
“While we’re continuing to work with the FTC, there is overwhelming evidence that mobile advertising will remain competitive after this deal closes,” Google spokesman Adam Kovacevich said in a statement. “Mobile app advertising is less than two years old, there are more than a dozen mobile ad networks, app developers and advertisers routinely use multiple networks”.
Apple, he pointed out, is also getting into mobile advertising.
The FTC has reportedly asked some parties to sign sworn statements, indicating it has some concerns about the deal.
The review is important, Kohl said, because of the role mobile phones will play in the future. ”Smart phones are a uniquely powerful method for advertisers to reach consumers, because most consumers with smart phones carry them most of the day, and frequently use them to access and search the Internet,” Kohl said.
More Internet searches will be conducted on a smart phone than on the computer in the next five to 10 years, and the smart phone will become a dominant advertising medium, Kohl said, citing industry experts.
“Allowing any one firm to dominate this market could result in higher prices for mobile advertising on the Internet and with respect to smart phone applications, and also could result in lower revenues realized by applications developers,” Kohl said.
Kohl, who chairs the Senate Judiciary Committee’s antitrust subcommittee, also asked the FTC to assess the privacy concerns raised by combining the vast data troves of both companies. “The FTC should assure itself that the deal, if approved, will have sufficient safeguards to protect consumers’ privacy,” Kohl said.
While the agency also handles privacy issues as a function of its consumer protection mandate, it does not usually take privacy into account when reviewing a merger.
Kohl raised similar concerns about Google’s 2007 purchase of online ad platform DoubleClick. The FTC approved that deal without conditions.
Updated at 3:15 to include comment from Google.
A Senate panel voted Thursday to approve a bill that would make it illegal for manufacturers to set a minimum resale price for their products.
The legislation, commonly known as the Leegin bill, would overturn a 2007 Supreme Court decision that held that manufacturers could set price floors below which retailers cannot sell their products.
The high court ruling in Leegin Creative Leather Products v. PSKS reversed a 1911 decision that said such price agreements between manufacturers and retailers violated antitrust laws.
The Senate bill, sponsored by antitrust subcommittee chairman Herb Kohl (D-Wis.) was approved by the committee by a voice vote. But the vote does not necessarily mean smooth sailing for the measure: Jon Kyl (R-Ariz.) said he opposed the legislation. And the committee’s ranking Republican, Jeff Sessions of Alabama, said he has not yet reached a decision on whether to support the bill.
But Democrats praised the legislation as a win for consumers.
“I think this is an important jump. It’s pro-consumer. It restores the law to the way it’s been for decades,” said Dianne Feinstein (D-Calif.).
In a statement at the bill’s introduction last year, Kohl said the Supreme Court decision would lead to higher prices paid by consumers and would hurt the ability of discount retail stores to compete.
The House Judiciary Committee approved a similar bill in January.
Reporting by Andrew Ramonas.
Sen. Herb Kohl, D-Wis., sent a letter to NBC chief executive Jeff Zucker Friday asking why the network required viewers to prove they subscribed to a paid television service in order to access some Olympics coverage online.
Sen. Herb Kohl, D-Wis. (gov)
Requiring proof appears to limit competition and leaves some fans “in the dark with no way to view the sporting events that they look forward to every four years at the Winter Olympics,” Kohl wrote.
Why didn’t NBC charge online viewers directly? asked Kohl, who chairs the Senate’s antitrust subcommittee.
NBC spokesman John McKay said in an email to Main Justice that 1,100 videos, including all medal-winning performances, were available to watch for free on the network’s website. Other long-form programming was part of a subscription package, he said, in order to support the nearly $1 billion investment NBC made in the games.
The Associated Press reported earlier this month that cable and satellite companies asked for the registration in exchange for helping NBC defray some of the costs of broadcasting the Olympics.
Kohl asked for details about the policy, including whether the subscriber wall included content that had been part of a free NBC broadcast. He also asked if cable or satellite companies had paid NBC to support the NBC Olympics Web site and whether that influenced which subscription services were eligible to grant access to the site.
Access to video over the internet has been under the spotlight on Capitol Hill during hearings this month on Comcast Corp.’s proposal to take a majority stake in NBC Universal.
Consumer groups have accused the cable industry of trying to divide the market for online television by tying Web video access to existing cable subscriptions. Lawmakers in both chambers expressed concerns that the Comcast-NBC deal might limit access to television over the internet and extracted promises from Comcast chief Brian Roberts to continue to provide content to rival online video distributors.
In his letter, Kohl asked whether the Olympics policy might foreshadow future limits on watching television online. “We wonder if this policy is a harbinger of things to come should this merger be consummated, and whether requiring a pay TV subscription to access NBC internet content will [be] a standard policy in the future after this merger is completed.” Kohl said.
“It is our view that video over the internet has the potential to become a significant competitive alternative to traditional pay TV subscriptions,” Kohl wrote, “and it appears policies such as the one described in this letter may have the effect of limiting the prospect of such competition.”
Updated at 5:15 p.m. to include comment from NBC.
The White House included in the new health care plan it unveiled today a proposal that the Federal Trade Commission has long championed: a ban on payments from brand-name drug manufacturers to keep competing drugs off the market.
Pharmaceutical companies sometimes pay rivals who make generic versions of their drugs to keep those cheaper versions off the market for months or even years longer than they would otherwise — pay-for-delay, it has been called. The FTC has long argued that such payments violate competition laws, but courts have had mixed reactions.
Last July, the Justice Department’s Antitrust Division reversed the previous administration’s stance and sided with the FTC on the issue.
FTC Chairman Jon Leibowitz, who has aggressively championed the cause, said he was “delighted” the provision was included in the latest White House health proposal. “When drug companies agree not to compete, consumers lose,” he said in a statement. “Ending pay-for-delay settlements will help control drug costs.”
In a recent study, the FTC found that the payments protect “at least” $20 billion in pharmaceutical sales, and would cost American consumers around $35 billion over the next 10 years.
Today President Obama proposed that such payments should be illegal unless the pharmaceutical companies can show with “clear and convincing evidence” that the deal has pro-competitive benefits that outweigh its negative effects.
A similar provision was included in the House version of the health care overhaul package last year. In the Senate, the chairman of the Senate Judiciary panel’s Antitrust Subcommittee, Democrat Herbert Kohl of Wisconsin, introduced legislation that would ban the payments. It was not included in the final version of the health bill the Senate passed, but the stand-alone bill is still on the Senate floor calendar.
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In dual hearings today on Capitol Hill, lawmakers expressed some concern about the proposed merger between Comcast Corporation and NBC Universal, arguing that the deal, unless the two parties agree to make some changes, could hurt competition and raise prices for consumers.
Chief executives from both companies appeared before a House Energy and Commerce panel in the morning and a Senate Judiciary subcommittee in the afternoon, responding to questions that grew tougher as the day wore on.
Sen. Al Franken (D-Minn.) said his former bosses at NBC couldn't be trusted. (photo by Ryan J. Reilly / Main Justice)
The most dramatic point of the afternoon hearing in the Senate — as dramatic as a Congressional antitrust panel can get — was when Sen. Al Franken (D-Minn.), who was a star on NBC’s Saturday Night Live for many years, said his former bosses at NBC couldn’t be trusted to keep their word.
In order to win public and regulatory approval of the joint venture when it was announced in early December, Comcast outlined a set of public commitments that, it said, would ameliorate any anti-competitive concerns the deal might raise. The combined firm might not take those commitments literally, Franken said, based on his prior experience with the network.
“It’s really hard to trust you guys, from my point of view,” Franken said, describing instances in which NBC would demand to take a stake in an independent producer’s show in order to run it, after previously pledging not to do that.
NBC’s Jeff Zucker did not respond directly to the allegations, simply noting that it was a long time ago.
The deal, which would give Comcast a 51 percent stake in NBC, would bring together one of the largest cable providers with one of the top media companies. Because the transaction would combine both the programming and the pipes that move that programming into homes, it has the potential to reshape the media landscape.
Comcast chief Brian Roberts, laid out a case similar to the one the company made in its public interest filing to the FCC last week. The transaction posed few so-called horizontal concerns, he said, because the combined firm would still rank only fourth in terms of national cable revenue. And the vertical concerns were overblown, he said, because neither company had enough market share to muscle out rivals.
NBC President Jeff Zucker (photo by Ryan J. Reilly / Main Justice).
Lawmakers in both houses expressed concerns the deal might pose on the future of television online, and extracted promises from Roberts to provide content to rival online video distributors.
Zucker said the deal was good for NBC because the combined firm would invest in and expand NBC programming, and provide technological expertise to find a sustainable business model for media in the new digital age.
House members took a more sympathetic view of the transaction, urging the Justice Department and the Federal Communications Commission to conduct quick reviews of the deal, and raising localized concerns about network affiliates in their districts, the interests of minority programmers, and intellectual property issues about online content.
“I’m not saying they shouldn’t impose conditions, but the companies deserve an answer in a timely manner” said Rep. Rick Boucher (D-Va.), who chairs the House Energy and Commerce Subcommittee on Communications, Technology and the Internet.
Senators, by contrast, took a tougher line. “Should the agencies decide to allow this merger,” said Sen. Herb Kohl (D-Wis.) who chairs the Judiciary panel’s Antitrust subcommittee, “we believe it is essential they insist on strong conditions to protect consumers.”
The panel’s ranking Republican, Orrin Hatch of Utah, also said that the deal could result in “a significant foreclosure of competition,” he said. And, Hatch warned, there was a possibility that Comcast could “use NBC’s content as a weapon” against rivals.
Critics of the deal, including media watchdog groups and smaller cable providers who were both represented at the hearing, argue that the combined firm would have an incentive to raise NBC prices or cut off access to “must have” NBC programming to rivals.
“When your competitor also is a major vendor, supplying video content essential or important for any competitive provider to access, problems currently arise,” said Colleen Abdoulah, president of a small cable provider called WOW! at the morning hearing. ”Comcast will have so much power that it can create its own economic reality and make one plus one equal five.”
Critics also expressed concern about the access independent programmers might have to Comcast distribution. ”Cable networks are not coming forward because they are afraid of retaliation,” said Andrew Jay Schwartzman, president of the Media Access Project, at the afternoon session.
The Justice Department is reviewing the deal for antitrust concerns, and The Federal Communications Commission, which needs to approve a license transfer for the transaction to go through, will determine if it is in the public interest.
While lawmakers play no direct role in the review process, their views can have some impact on regulators. If Congress takes a tough line on a merger, observers say, it can provide some political cover for Justice or the FCC to do so as well.
Two more congressional panels — Senate Commerce and House Judiciary — will likely hold hearings on the deal, and the review could take up to one year.
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Senators took a tough line this afternoon on the proposed merger between Comcast Corporation and NBC Universal in opening statements at a hearing on implications of the proposed merger this afternoon, before recessing for several floor votes.
The hearing, before the Senate Judiciary Committee’s Antitrust, Competition Policy and Consumer Rights Subcommittee, was the second on Capitol Hill today. This morning, a House Energy and Commerce subcommittee also heard about the proposal.
In December, Comcast announced it would buy NBC from its current parent, General Electric. The deal, which would combine one of the largest cable providers with one of the largest content companies, has the potential to reshape the media industry. Consumer groups and smaller cable and content companies have raised concerns about the deal. Approval of the deal is in the hands of Executive Branch regulators.
The Senate subcommittee’s chairman, Herb Kohl (D-Wis.), said the deal raised serious concerns. “Should the agencies decide to allow this merger,” Kohl said in an initial statement, “we believe it is essential they insist on strong conditions to protect consumers.” ”
The subcommittee’s ranking Republican, Orrin Hatch of Utah, also said that the deal could harm consumers. A merger between a leading video distributor and a leading content provider could result in “a significant foreclosure of competition,” he said. And, Hatch warned, there was a possibility that Comcast could “use NBC’s content as a weapon” against rivals.
In his remarks, Kohl outlined four areas of concern: Comcast would be able to deny or raise the price of “must have” NBC programming for rivals; Comcast could move NBC’s free programming to cable channels; the merger could make it more difficult for independent programmers to get onto Comcast distribution; and whether the union of the two giants could hurt the still nascent market for online video.
The public commitments Comcast outlined in announcing the merger, Kohl said, only provided a “starting point” to any discussions.
Sen. Al Franken (D-Minn.), who previously worked for NBC, said he did not trust the company’s word based on his previous career. If an independent producer wants NBC to carry his show, Franken said, it is routine practice for the network to demand part-ownership of the show. That was “completely contrary to what the networks said they would do” in prior negotiations, he said.
The tough line from both sides of the aisle contrasted this morning’s hearing on the House side of the Capitol complex, where lawmakers largely raised localized concerns about network affiliates in their districts, and concerns about net neutrality issues.
Lawmakers split along largely partisan lines, with Democrats urging caution and Republicans arguing that the deal does not raise serious antitrust concerns.
The transaction, “if approved, could trigger dramatic changes in the way consumers access video programming, the way independent programmers distribute their works, and in the way all video distributors compete for customers,” said Rep. Henry Waxman (D-Calif.), who chairs the full Energy and Commerce Committee, in his initial remarks.
The proposed joint venture raised “legitimate concerns” about the leverage the combined firm might be able to exercise over competitors and consumers, said Rep. John Dingell (D-Mich.)
But Republicans on the panel urged regulators at the Justice Department and the Federal Communications Commission, who have to sign off on the deal, to conduct a speedy review. “There is little to suggest” that the combination “would seriously threaten competition in the media industry” said Rep. Cliff Stearns (R-Fla.), who is the ranking member of the Communications, Technology and the Internet Subcommittee.
The opening statements seemed to suggest most legislators were interested in what kinds of conditions might be imposed on the deal, rather than whether the deal should be blocked outright. The hearing should explore “whether there is the potential for consumer harm, and whether the merger should be conditioned,” said Rep. Rick Boucher (D-Va.) who chairs the subcommittee.
In his remarks, Waxman also said that, while the transaction did raise questions about its impact on independent producers and the future of online television, the deal could also benefit consumers.
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The Senate antitrust subcommittee will hold a hearing on the proposed Comcast-NBC merger on February 4, the subcommittee’s chairman, Sen. Herb Kohl (D-Wisc.), announced today.
Brian Roberts, the Chairman and CEO of Comcast, and Jeff Zucker, the President and CEO of NBC Universal, are both scheduled to testify.
Here is the text of the release:
Antitrust Panel will Examine Deal’s Consequences for Competition and Consumers
U.S. Senator Herb Kohl, chairman of the Senate Antitrust, Competition Policy and Consumer Rights subcommittee, today announced that he will hold a hearing into the proposed merger of communication industry giants Comcast and NBC Universal.
“The Comcast/NBC Universal Merger: What Does the Future Hold for Competition and Consumers?” will examine the deal’s consequences in the realm of broadcast television, cable services and Internet delivery of programming, and its impact on consumer choices for these services
Brian Roberts, the Chairman and CEO of Comcast, and Jeff Zucker, the President and CEO of NBC Universal, are scheduled to testify. The subcommittee will also call witnesses on behalf of their competitors and consumer advocates.
Comcast is the nation’s largest cable company, with almost 24 million subscribers; its acquisition of NBC Universal will add programming and media to its control, raising concerns about whether the deal will give the new entity an unfair advantage in the marketplace at the expense of consumers.
______________________________________________________________________________
WHEN: Thursday, February 4th, at 2:30 pm
WHAT: Senate Antitrust, Competition Policy and Consumer Rights
Subcommittee hearing: “The Comcast/NBC Universal Mergers:
What Does the Future Hold for Competition and Consumers?”
WHERE: Dirksen Senate Office Building, Room 226
Washington, DC
The Justice Department has closed an investigation into whether cell phone companies colluded in setting text-message rates, the Wall Street Journal reported today.
AT&T, Verizon, Sprint and T-Mobile were told that the government has no plans to take action, the WSJ said.
Last year, antitrust subcommittee chair Sen. Herb Kohl (D-Wisc.) held a hearing on the rise of text messaging prices.
The four companies increased their text messaging prices from 10 to 15 cents, and then from 15 to 20 cents, within weeks of each other, according to a press release at the time.
“The lockstep price increases occurred despite the fact that the cost to the phone companies to carry text messages is minimal, estimated to be less than a penny per message, and has not increased,” the statement said.
Attorney General Eric Holder this morning defended his decision to try 9/11 “mastermind” Khalid Shaikh Mohammed (often simply referred to by his initials, KSM) and four other suspected terrorists at a New York City federal court. He was testifying before the Senate Judiciary Committee.
Eric Holder (DOJ)
Holder announced Friday that he would have federal attorneys from the Southern District of New York and the Eastern District of Virginia prosecute the alleged terrorists in New York and not in a military court. He also said he would have five other suspected terrorists tried before military commissions.
“We are at war, and we will use every instrument of national power — civilian, military, law enforcement, intelligence, diplomatic and others — to win,” Holder said in his prepared opening statement before the Senate panel. “We need not cower in the face of this enemy. Our institutions are strong, our infrastructure is sturdy, our resolve is firm and our people are ready.”
The panel’s ranking Republican, Jeff Sessions of Alabama, said at the hearing that all suspected terrorists should be tried in military courts.
“I believe this decision is dangerous,” Sessions said in his opening statement. “I believe it is misguided. I believe it is unnecessary.”
Holder said his decision was a “tough call” and knew “reasonable people” would disagree with his judgment.
“As I said on Friday, I knew this decision would be controversial,” Holder said.
The Attorney General said terrorists have been “safely and securely” prosecuted in federal courts, and that classified material would be protected. Holder said that KSM would have “no more of a platform to spew his hateful ideology in federal court than he would have in military commissions.”
Holder added that there is “nothing common” about how the government will treat the suspected terrorists and said the Justice Department is not reverting to a “pre-9/11 mentality.” The Attorney General said he will advise the prosecutors to seek the death penalty.
“It is time, it is past time, to act,” Holder said. “By bringing prosecutions in both our courts and military commissions, by seeking the death penalty, by holding these terrorists responsible for their actions, we are finally taking ultimate steps toward justice. That is why I made this decision.”
The Attorney General drew chuckles from the audience when he responded to a question from Sen. Herb Kohl (D-Wis.) about what the Justice Department would do if the suspected terrorists tried in federal court weren’t convicted.
“Failure is not an option,” Holder said. “These are cases that have to be won.” He later clarified his remarks and said the suspected terrorists would not be set free if they weren’t convicted.
Panel Chairman Patrick Leahy (D-Vt.) said he has “great confidence” in the ability of civilian courts to handle the terrorism cases.
“War crimes, crimes of terror, and murder can successfully be prosecuted in our federal courts, as we have demonstrated time and again,” Leahy said in his opening statement. “America’s response to these acts is not to cower in fear, but to show the world that we are strong, resilient and determined.”
This post has been updated from an earlier version.
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The Antitrust Division and the Department of Agriculture are moving ahead with workshops around the country on competition issues facing the agriculture industry.
The schedule, released today, includes hearings in 2010 in Iowa, Alabama, Colorado, Wisconsin, and Washington, D.C., and will explore issues in poultry, dairy, livestock and other topics in agriculture.
In August, Attorney General Eric Holder and Agriculture Secretary Tom Vilsack announced plans to host conversations between farmers, ranchers, consumer groups, packers and processors to guide “legal and economic analyses of these issues.”
Antitrust Policy Deputy Philip Weiser followed up with a speech in St. Louis, Mo., outlining the Division’s interest in concentration in the seed industry, and in the dairy and livestock markets.
(St. Louis is also home to Monsanto, the seed giant that disclosed last month the Justice Department was investigating licensing practices that rival seed makers claimed were anti-competitive.)
In September, Antitrust chief Christine Varney traveled to Vermont with Judiciary Committee Chairman Sen. Patrick Leahy (D-Vt.) for a hearing on competition issues in the dairy industry, where she called for “a careful review” of vertical integration in the industry.
In an unrelated hearing on Capitol Hill, Sen. Herb Kohl (D-Wisc.) also extracted a promise from Varney that she would also visit Wisconsin’s dairy farmers.
The hearings could prompt antitrust regulators to examine mergers that previously passed scrutiny, change the way milk is priced, address contracting practices in livestock, force changes in seed licensing terms, or smooth out differences between the USDA and the Justice Department, experts say.
Or, others say, the result could just be another report.
Farmers are a potent political constituency. They have long complained about being squeezed between the high prices they pay for seeds, fertilizer and other materials, and the low prices they receive for their crops, cattle, poultry and milk.
As farming has become more industrialized, large agri-processing companies have become more powerful. ”Farmers, ranchers, and dairymen have fewer and fewer places to sell their products,” says Peter Carstensen, who teaches antitrust law at the University of Wisconsin Law School and studies competition issues in agriculture. ”It’s a failure of merger enforcement over 15 or 20 years, and not just the Bush administration.”
Others raise questions of transparency in pricing. In the poultry industry, for example, farmers raise birds owned by poultry processors, according to Michael Stumo, an antitrust lawyer who focuses on agriculture, and are paid through an obscure ranking system that some deem unfair. “I think it’s more likely [USDA] will start looking at proposing new regulations to improve the competitive aspects,” he said.
The public hearing format isn’t entirely new for the Antitrust Division. During the Clinton years, then-Antitrust official Joel Klein held town hall meetings and appointed a special counsel for agriculture within the antitrust division.
But the publicity surrounding the current hearings has caused some antitrust lawyers to wonder privately whether the Division has set expectations too high that it will bring a case, and whether the hearings will lead to anything beyond letting farmers air grievances.
Even as political theater, some observers say, the strategy is already starting to pay off with increased public interest in issues that effect farmers. Top editorial boards are also weighing in more frequently on competition issues generally. “There were three New York Times editorials in 10 days,” Carstensen said “That’s unheard of.”
The strategy is “useful to neutralize political opposition or build support for litigation in these areas,” he said.
This post has been updated
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