FTC Examining Past Acquisitions by Apple and Other Tech Companies in Ongoing Antitrust Investigation

The Federal Trade Commission today announced that it has issued Special Orders to Apple, Amazon, Facebook, Microsoft, Google and Google parent company Alphabet requiring them to report all prior acquisitions not previously reported.

In the United States, companies are required to report acquisitions over a certain value to the FTC under the Hart-Scott-Rodino (HSR) Act, while acquisitions under the value threshold do not need to be reported. The FTC is asking for details on all smaller acquisitions that it did not previously know about. The HSR threshold in 2020 is $94 million, but it is a number that is adjusted by the FTC each year and would have been lower in past years.

The FTC says that it wants the companies to provide information and documents on the "terms, scope, structure, and purpose of transactions" that took place from January 1, 2010 to December 31, 2019 and were not reported under the HSR Act. The FTC wants to learn whether large tech companies are making anticompetitive acquisitions of nascent or potential competitors in deals small enough to go unreported to antitrust agencies.
"Digital technology companies are a big part of the economy and our daily lives," said FTC Chairman Joe Simons. "This initiative will enable the Commission to take a closer look at acquisitions in this important sector, and also to evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition. This will help us continue to keep tech markets open and competitive, for the benefit of consumers."
Apple and other tech companies will also need to provide the FTC with documents on corporate acquisition strategies, voting and board appointment agreements, agreements to hire key personnel from other companies, and post-employment non-compete agreements. Each company will be asked to offer information on post-acquisition product development and pricing, including whether and how acquired assets were integrated and how acquired data has been treated.

Tech companies like Apple often make many acquisitions per year, and Apple in particular buys a lot of smaller companies. Apple does not provide details on purchase prices, though, so it is unclear how many acquisitions have previously not been reported to the FTC.

In the last few months, Apple has purchased Xnor.ai, Spectral Edge, and IKinema.

Tags: FTC, antitrust

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iPhone App Makers Questioned by U.S. Department of Justice in Apple Antitrust Probe

The United States Department of Justice is continuing with its antitrust investigation into Apple and has recently reached out to developers who create apps for Apple's iOS devices, reports Reuters.

Suren Ramasubbu, CEO of app development company Mobicip, was interviewed by a U.S. investigator in November and questioned about Mobicip's interactions with Apple. Mobicip makes parental control software that parents can use to monitor and control what their children are doing online, similar to Screen Time.

The app was temporarily removed last year for a failure to meet App Store requirements put in place by Apple, which is why its CEO was contacted. A "handful" of developers are said to have been in touch with the Justice Department.

Apple declined to comment on the news of the interview with Mobicip's CEO, but highlighted a statement on its website that says that Apple expects apps to adhere to a "high standard for privacy, security, and content."

Apple, along with Facebook, Google, and Amazon, is facing a government query into whether the way it operates stifles competition. Launched in July, the probe is examining information from industry participants to determine whether there are antitrust problems that need to be addressed, but when it kicked off, it had no specific aim.

Apple has been accused of anticompetitive business practices when it comes to the ‌App Store‌, as some developers and companies believe that Apple's own apps, features, and services have a significant advantage over third-party apps. Investigating claims from third-party companies who operate on the ‌App Store‌ appears to be the first part of the Department of Justice's investigation into Apple.

Screen Time, which was introduced in 2018 with iOS 12, has led to disputes with developers who make similar software. Screen Time offers parents built-in controls for limiting access to apps and monitoring app usage, a set of options previously handled by third-party apps.


When Screen Time came out, Ramasubbu was told by Apple that the Mobicip app violated ‌App Store‌ rules with features that had been allowed in the past. The app was eliminated from the ‌App Store‌ for approximately six months and has been available since October 2019, but Ramasubbu believes his business has shrunk in half.

According to Reuters, six other executives from companies that create parental control apps had a "comfortable" relationship with Apple until mid-2018 when Screen Time came out.

Apple said that it was cracking down on parental control apps because they were using Mobile Device Management (MDM) technology for device monitoring, which is not what MDM was designed for.

Multiple parental control app developers petitioned Apple to release a Screen Time API that would allow them to match the functionality provided by Screen Time, ultimately leading to Apple allowing parental control apps to once again use Mobile Device Management technology.

Apple has faced other accusations over its ‌App Store‌ apps, including complaints from Spotify that Apple Music has a distinct advantage because Spotify has to pay Apple a portion of its subscription fees. Spotify's complaints have led to an investigation of Apple's ‌App Store‌ policies by the European Commission.

Apple is also facing a lawsuit over its anticompetitive ‌App Store‌ business policies related to ‌App Store‌ fees taken for subscriptions, which has been allowed to proceed by the Supreme Court.

It's not clear how the Department of Justice's antitrust investigation will go, but it's clear the government is looking into Apple's ‌App Store‌ practices. Apple in September was asked to provide the U.S. House Judiciary Committee with details related to its policies for the ‌App Store‌, with a specific focus on parental control apps, search rankings, in-app purchase revenue split, in-app links to non-Apple payment systems, and more.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Political News forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.


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U.S. House Committee Asks Apple to Send Info About App Store Policies and More as Part of Antitrust Investigation

As part of a bipartisan investigation of competition in digital markets, the U.S. House Judiciary Committee today sent a letter to Apple CEO Tim Cook requesting that the company provide any documents and executive communications related to its various policies for the App Store, product repairs, and more.


The investigation seeks any internal documents or communication involving Apple executives, such as emails, for the following topics:
  • Apple's decision to remove from the App Store or to impose any restrictions on certain parental control apps, including Freedom, Kidslox, Mobicip, OurPact, and Qustodio
  • Apple's App Store algorithm for determining rankings in search results
  • Apple's policy related to the App Store's in-app purchase mechanism and its revenue split
  • Apple's policy regarding whether apps are permitted to include in-app links to non-Apple payment systems
  • Apple's policy regarding whether users can set non-Apple apps as default, such as web browsers and music, maps, and email apps
  • Apple's policy regarding whether to allow any third-party app store beyond the App Store on the iPhone
  • Apple's decision to "sherlock" any functionality from third-party apps, including any discussions about Clue, Duet Display, and SwiftKey
  • Apple's policy regarding whether third-party web browsers must use a specific rendering engine, such as WebKit
  • Apple's restrictions on third-party repairs
  • Apple's decision to offer discounted iPhone battery replacements throughout 2018, or the actual or projected effects of this decision, including any effect on iPhone sales
  • Apple's decision to introduce the Independent Repair Provider Program
  • Apple's agreement to sell products on Amazon and corresponding move to limit unauthorized resellers on Amazon
The Committee has requested that Apple respond no later than October 14, 2019 and also sent similar letters to Facebook, Amazon, and Google.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.


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Dutch Antitrust Watchdog to Investigate Whether Apple Gives Itself Preferential Treatment in App Store

The Netherlands Authority for Consumers and Markets, or ACM for short, today announced that it will investigate whether Apple abuses its position in the App Store by, for example, giving preferential treatment to its own apps.


ACM says the investigation will initially focus on Apple because the majority of anticompetitive allegations it has received from other companies and developers have been about the App Store. More specifically, the investigation will revolve around Dutch apps for "news media" available in the App Store.

ACM board member Henk Don:
To a large degree, app providers depend on Apple and Google for offering apps to users. In the market study, ACM has received indications from app providers, which seem to indicate that Apple abuses its position in the App Store. That is why ACM sees sufficient reason for launching a follow-up investigation, on the basis of competition law.
However, the antitrust watchdog stresses that Apple is innocent unless proven guilty, and also encourages developers to come forward if they experience similar problems with Google's Play Store.

ACM launched the investigation upon completion of its market study that explores the influence of app stores. For numerous apps, the watchdog found that no realistic alternatives to the App Store and Play Store exist, potentially giving Apple and Google the opportunity to set unfair conditions.
On the one hand, Apple and Google have an interest in offering many different apps from app providers in their app stores. On the other hand, however, Apple and Google are app providers in their own right, too. So their apps compete with those of other market participants. These competing interests may pose antitrust problems.
ACM cites unnamed developers who say they do not always have a fair chance against Apple's and Google's preinstalled apps on mobile devices, must use Apple's and Google's in-app purchase mechanisms for digital goods and services, have difficulties communicating with Apple and Google, and more.

Many of these issues are at the core of Spotify's recent complaint with the European Commission over Apple's App Store practices. Last month, the streaming music company accused Apple of "acting as both a player and referee to deliberately disadvantage other app developers" that it competes with.

The investigation's initial focus on Dutch news apps is a rather narrow one, especially considering that Apple News is not yet available in the Netherlands. But, the premise seems to be that Apple News is a preinstalled app while other news providers must go through the App Store and pay Apple's "tax."

As the ACM notes, apps have become an increasingly important part of daily life, so it will be interesting to see how these investigations play out and how they impact the future of the App Store and Play Store.

Apple didn't immediately respond to a request for comment from Bloomberg, which first reported the news.


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Kaspersky Lab Files Antitrust Complaint Against Apple Over App Store Policy

Cybersecurity firm Kaspersky Lab has filed an antitrust complaint against Apple with the Russian Federal Antimonopoly Service relating to the company's App Store distribution policy. The action comes less than a week after Spotify filed its own complaint against Apple with EU antitrust regulators over the tech giant's "unfair" App Store practices.


Kaspersky's complaint is specifically to do with Apple's removal of the Kaspersky Safe Kids app. In a blog post on the Kaspersky website, the firm says it received notice from Apple last year that the app, which had been in the App Store for three years, did not meet App Store guidelines owing to the use of configuration profiles.

Kaspersky was told by Apple that it would need to remove these profiles for the app to pass review and remain in the App Store, but the Russian firm had argued this action essentially crippled the app. "For us, that would mean removing two key features from Kaspersky Safe Kids: app control and Safari browser blocking."

The first allows parents to specify which apps kids can't run based on the App Store's age restrictions, while the second allows the hiding of all browsers on the device so that web pages can only be accessed in the Kaspersky Safe Kids app's built-in secure browser.

Kaspersky argues that the change in Apple's policy regarding parental control apps coincided with the release of iOS 12 and Apple's own Screen Time feature, which lets users monitor the amount of time they spend using certain apps and websites, and set time restrictions. Kaspersky calls it "essentially Apple's own app for parental control," and claims that's why Apple changed its tune on the firm's Safe Kids app and other apps like it.
From our point of view, Apple appears to be using its position as platform owner and supervisor of the sole channel for delivering apps to users of the platform to dictate terms and prevent other developers from operating on equal terms with it. As a result of the new rules, developers of parental control apps may lose some of their users and experience financial impact. Most important, however, it is the users who will suffer as they miss out on some critical security features. The market for parental control apps will head toward a monopoly and, consequently, stagnation.
Kaspersky says it wants to continue its "winning relationship with Apple," but on "a more equal footing," and hopes that its application to the Russian Federal Antimonopoly Service will "benefit the market at large" and require Apple to "provide competitive terms to third-party developers."

Kaspersky's dispute has parallels with the antitrust complaint brought against Apple by Spotify last week. The music streaming service filed the complaint with the European Commission, accusing the iPhone maker of enforcing App Store rules that "purposely limit choice and stifle innovation at the expense of the user experience" and "acting as both a player and referee to deliberately disadvantage other app developers."

Apple responded to the complaint two days later, labeling it "misleading rhetoric" and arguing that "Spotify wants all the benefits of a free app without being free." A day later, Spotify fired back, claiming "every monopolist will suggest they have done nothing wrong" and that, consequently, Apple's response was "entirely in line" with its expectations.


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Qualcomm Facing Off With FTC in Antitrust Trial That Kicks Off Today

With the intense ongoing legal battle between Qualcomm and Apple, it's easy to forget that Qualcomm is also facing an FTC antitrust lawsuit for using anticompetitive tactics to remain the main supplier for baseband processors for smartphones.

The FTC hasn't forgotten, though, and FTC lawyers are in a Northern California courtroom before well-known judge Lucy Koh, who also presided over the Apple-Samsung legal fight.


Lawyers for Qualcomm, the FTC, Apple, and other manufacturers have gathered as the trial commences, with the FTC set to argue that Qualcomm refused to provide chips to OEMs without a patent license, refused to license its technology to rivals, and set exclusive deals with Apple.

Manufacturers like Huawei and Lenovo will testify that Qualcomm threatened to disrupt their chip supply during licensing negotiations, forcing them into signing deals.

The FTC first filed a complaint against Qualcomm in January 2017, which was actually the catalyst for Apple's own lawsuit against the company just a few weeks later.

In that complaint, the FTC said that Qualcomm uses its position and its portfolio of patents to impose anticompetitive supply and licensing terms on cell phone manufacturers, impacting its competitors.

Part of the complaint addressed a deal with Apple in which Qualcomm required Apple to exclusively use its modems from 2011 to 2016 in exchange for lower patent royalties. Qualcomm is also accused of refusing to license its standard-essential (FRAND) patents to competing suppliers and implementing a no license, no chips policy to drive up royalty payments beyond what's fair.

Qualcomm attempted to get the FTC's lawsuit against it dismissed, but in June, Judge Koh ruled that the lawsuit would proceed on the basis that the FTC adequately demonstrated that anticompetitive tactics were being used by Qualcomm.

In its defense, Qualcomm has claimed the FTC is using a "flawed legal theory" and has misconceptions about the mobile technology industry. "We look forward to defending our business in federal court, where we are confident we will prevail on the merits," Qualcomm said in a statement in January 2017.

As the FTC trial begins, Apple and Qualcomm's legal battle has also been escalating. As of today, Apple has pulled the iPhone 7 and the iPhone 8 in Germany after Qualcomm won a preliminary injunction in the country.

Qualcomm also won an import ban on older iPhone models in China, which Apple sidestepped through a software update that addressed functionality said to infringe on Qualcomm patents.


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Amazon Sending New Round of Credits to E-Book Buyers as Part of Apple Price Fixing Settlement

Customers who purchased a Kindle e-book between April 1, 2010 and May 21, 2012 may be receiving a credit from Amazon this morning as the retailer continues distributing funds from an antitrust lawsuit levied against Apple back in 2013 by the United States Justice Department.

Emails were sent out to eligible customers in the United States this morning, and Amazon has also set up a website that will list available credits for those who are eligible for a refund.

Apple, along with five other publishers including HarperCollins, Simon and Schuster, Hachette Book Group, Macmillan, and Penguin, was found guilty of conspiring to inflate the prices of e-books to weaken Amazon's dominant position in the market. While the five publishers settled, Apple held out and appealed several times, but was ultimately ordered to pay a total of $450 million.

Apple maintained its innocence throughout the initial trial and appeals, and has argued that its deals with publishers introduced competition to a market that was largely controlled by Amazon. The United States Justice Department did not see it that way, though, as Apple's efforts ultimately raised prices for consumers.


Several rounds of refunds have already been distributed as a result of the lawsuit. In 2014, customers received refunds funded by publishers, and in 2016, refunds totaling $400 million, or the bulk of the money paid by Apple, were sent out. This new round of refunds has also been funded by Apple's settlement and comes from $20 million that was earmarked to pay states that were involved in the lawsuit.

Credits sent out today will last for six months and will need to be spent by April 20, 2018.

Update: Customers are also receiving notices about available Apple credits that are also being distributed today. Credits are being added to Apple accounts automatically and can be used in iBooks, iTunes, and the App Store.


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