7/06/2009

Anti-trust enforcement is going after everything

Airlines upset that DOJ won't let them work together on sharing passenger miles.

Nine airlines in the global Star Alliance and aspiring member Continental Airlines Inc. on Monday criticized the Justice Department's objections to their plans to cooperate more closely on international routes, fares and capacity.

The airlines' application for antitrust immunity for such cooperation was provisionally granted in April by the Department of Transportation, which has sole authority over such pacts. But on June 26, the Justice Department weighed in with a belated broadside against the airlines' plans. Justice said the cooperation would lead to higher fares, hinder competition and hurt consumers. . . . .


Now they are looking into AT&T's deal with Apple on the iPhone.

The Department of Justice has begun an initial review to determine whether large U.S. telecom companies such as AT&T Inc. and Verizon Communications Inc. have abused the market power they've amassed in recent years, according to people familiar with the matter.

The review of potential anti-competitive practices is in its very early stages, and it isn't a formal investigation of any specific company at this point, the people said. It isn't clear whether the agency intends to launch an official inquiry. . . . .


More on the iPhone related investigation see here. Some critics of the investigation can be seen here.

Let me get this straight. DOJ is upset with the airlines because they all miles to be shared (thus preventing some type of "lock in"), but they are upset that a model telephone is available for only one carrier.

Additional examples:

Airlines

The Department of Transportation gave final approval for Continental Airlines Inc. to enter a cooperative agreement with nine other airlines for international routes, largely brushing aside concerns from the Justice Department.

The DOT order came two weeks after the Justice Department blasted the plan as harmful to consumers and competition. The order gave the Star Alliance airlines nearly everything they wanted and imposed only modest concessions.


UPDATE: Making investments riskier.

As if investors needed more to worry about. The outlook for corporate profits already is clouded by an uncertain economy, and markets remain skittish. Now there is a burst of antitrust activism.

The Justice Department is conducting a review of the telecom industry. Last week, it toughened its line on payments paid by drug makers to avoid defending patents in court. It also convinced the Department of Transportation to put restrictions on a route-sharing pact between Continental Airlines and the Star Alliance. . . .


UPDATE 2: Something to put these concerns into perspective.

Yesterday Apple (AAPL) finally made good on threats and blocked the ability of Palm Pre owners to synch their devices with Apple's iTunes software. And that's just fine.

Expectations that Apple should open up its software to let other devices use it are unreasonable. Yes, in a perfect world of perfect interoperability, all devices should play nice with each other. But we don't live in that world and most of the technology companies I know of don't either. So why should Apple?

Here's Apple's statement: "iTunes 8.2.1 is a free software update that provides a number of important bug fixes. It also disables devices falsely pretending to be iPods, including the Palm Pre. As we've said before, newer versions of Apple's iTunes software may no longer provide synching functionality with unsupported media players," said Apple spokesperson Natalie Kerris. Translation? Yes, we blocked Pre synching. Are you surprised?

Apparently, the masses were shocked, shocked! As reports filtered out over the internet that Apple had blocked Palm Pre owners from synching to iTunes, howls of outrage filled the blogosphere. Pre owners screamed bloody murder. The free information crowd went crazy. "Apple's iPhone and iPod Monopolies Must Go!" thundered one headline. It was as if there were no other options to Apple in music-playing and smartphones.
Naturally, no one seemed to be protesting that iPhone owners couldn't synch their devices with Windows-based music-playing devices or that Pre owners couldn't synch their devices with Blackberry software systems.

In a nutshell, it sure looks like Apple is being held to an extremely unreasonable standard. You can't play Wii games on an Xbox 360. But I have yet to hear complaints that video game packages are not compatible. The principle is the same. Makers of proprietary hardware devices allow software from competitors to run on those devices at their discretion. Period. If Apple doesn't want to support Palm, that's its prerogative.

This issue is not only confined to the technology sector. Honda doesn't feel compelled to support Toyota owners who would like to use Honda's superior airbag control systems, for example. . . . .


UPDATE 3: Verizon responds to this political pressure and says that it will limit new exclusive handset deals to six months

Applies to carriers with less than 500,000 customers

* Could also apply to other "small" carriers

* Offer open to Cellular South, not U.S. Cellular (Adds analyst, consumer group comment)

By Diane Bartz and Sinead Carew

WASHINGTON/NEW YORK, July 17 (Reuters) - Verizon Wireless is dialing back on its exclusivity agreements with handset makers after pressure from U.S. lawmakers and smaller carriers.

The biggest U.S. mobile service said on Friday it will limit exclusivity periods with cellphone makers to six months and then allow the country's smallest wireless service providers to sell the devices.

The move comes after reports that the U.S. Department of Justice was taking a preliminary look into whether U.S. operators had violated antitrust laws by obtaining exclusive deals to sell specific phones.

Exclusivity deals are common among the biggest U.S. carriers but have recently faced strong opposition from small, rural carriers, which say they lack the clout to make deals to carry the most popular advanced phones.

The iPhone has drawn such deals into the spotlight because AT&T Inc (T.N), the second biggest U.S. wireless service, has had exclusive U.S. rights with Apple Inc (AAPL.O) since 2007. . . .

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1 Comments:

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7/09/2009 2:01 AM  

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