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Antitrust
European Court's Microsoft Ruling Riles U.S. Officials
by Winter Casey
The European Union Court of First Instance's ruling against Microsoft on Monday prompted a quick backlash from some U.S. lawmakers and the Bush administration, with one House subcommittee chairman already planning a hearing on it.
The office of Florida Democrat Robert Wexler, who chairs the House Foreign Affairs Europe Subcommittee, said he plans to hold a hearing on the "troubling decision" and "the European Union's use of antitrust laws as a new form of protectionism."
The ruling "sets a dangerous precedent and will have a dramatic impact on U.S.-EU economic relations," Wexler said in a release.
According to the European Commission, the court ruled that Microsoft had abused its dominant position in the computer market by, among other things, refusing to disclose to competitors information about how its products could work with the technology of other companies.
A Microsoft spokesman said the company has paid $956 million in fines levied by the commission but now will have to pay 80 percent of the commission's litigation costs, as well as the litigation costs of the commission's interveners.
Commission President Jose Manuel Barroso and Competition Commissioner Neelie Kroes, as well as Eleanor Fox, a professor at the New York University law school, said the decision confirms the commission's previous interpretation of competition policy.
"This policy protects the European consumer interest and ensures fair competition between businesses in the internal market," Barroso said in a statement. "That decision set an important precedent in terms of the obligations of dominant companies to allow competition, in particular in high-tech industries," Kroes added in a separate statement.
Fox said the decision provides a clearer path for the regulatory body to follow in terms of how it will handle antitrust and what constitutes the abusive dominance of a firm. It appears that the commission is taking a much harder line than the United States, Fox said. She added that the decision supports innovation and technology.
The perceived harder line is what worries U.S. officials. Thomas Barnett, assistant attorney general for the Justice Department's antitrust division, said "the standard applied to unilateral conduct by the [European court], rather than helping consumers, may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition."
Democratic Rep. Jay Inslee, whose Washington district is home to Microsoft, said "we cannot have other governments and regions of the world using antitrust laws to disadvantage American technologies." Rep. Dave Reichert, also from Washington, decried the ruling as "unjust" and said it sends the message that "Europe is closed for business to those companies who invest the capital and resources necessary to lead a market."
But Ken Wasch, president of the Software and Information Industry Association, called the decision "a victory for innovators and consumers everywhere." And the European Committee for Interoperable Systems said the "landmark judgment sets a clear standard for Microsoft's future conduct, and empowers the European Commission to impose it in the European market when necessary."
Microsoft could appeal to the European Court of Justice within 10 weeks.
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White House
Bush Nominates Ex-Judge Mukasey To Head Justice
by Andrew Noyes
President Bush on Monday nominated retired federal judge Michael Mukasey to serve as the nation's next attorney general. The decision ended speculation about who would be tapped to succeed Alberto Gonzales, whose embattled tenure concluded Monday.
Many stakeholders on and off of Capitol Hill were scrambling to review Mukasey's record and could not offer comment by deadline. The White House, however, released a lengthy fact sheet about his position on various issues.
The document referenced a 2004 column where Mukasey lauded the anti-terrorism law known as the USA PATRIOT Act and urged opponents to avoid "recreational" criticisms. The 2001 statute was renewed on Gonzales' watch.
Mukasey, an 18-year veteran of a U.S. district court in New York, presided over the 1995 trial of a gang accused of plotting terrorist attacks in Manhattan. He also issued the first ruling on a challenge by Jose Padilla to his detention as an "enemy combatant."
George Washington University law professor Jonathan Turley said Mukasey has a conservative reputation on national security matters, and tended to side with the government when its lawyers asked for sealed records and ex parte communications and asserted claims of presidential power. But he might be less inclined "to adopt the extreme, 'no judicial review' approach" that the Bush administration has taken with respect to the Foreign Intelligence Surveillance Act, Turley said.
Center for Democracy and Technology President Leslie Harris said Mukasey should be asked whether he promises to provide detailed accounts of surveillance conducted without warrants and whether he can assure lawmakers that he will not sidestep FISA.
Senate Majority Leader Harry Reid, D-Nev., said he was happy that Bush chose not to "replace Alberto Gonzales with another partisan administration insider." The name of former U.S. Solicitor General Theodore Olson had been floated to Democrats' chagrin.
Mukasey has strong credentials and a reputation for independence, Reid said. "A man who spent 18 years on the federal bench surely understands the importance of checks and balances and knows how to say no to the president when he oversteps the Constitution."
In a statement, Reid also cautioned against a rush to judgment, noting that the Senate Judiciary Committee must carefully examine Mukasey's views on an array of legal challenges. Vermont Democrat Patrick Leahy, who chairs the panel, did not make a statement by deadline.
Ranking Republican Arlen Specter of Pennsylvania said at a briefing that the nominee "comes with some recommendations from a wide variety of groups."
House Judiciary Committee Chairman John Conyers, D-Mich., did not issue a statement by press time but ranking Republican Lamar Smith of Texas called Mukasey "an ideal candidate." He brings "a wealth of knowledge," particularly with respect to national security law, Smith said, urging senators to swiftly confirm him.
House Intelligence Committee Chairman Silvestre Reyes, D-Texas, said one of Mukasey's first tasks would be repairing the relationship between the Justice Department and Congress, and one way to do that "is by turning over the documents we have long sought relating to the NSA surveillance program."
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Executive Branch
Push To Store Data Is Seen As A Stain On Gonzales
by Andrew Noyes
Alberto Gonzales' tenure as the Bush administration's top lawyer was plagued with controversy, but the attorney general's ill-fated plan to collect user data from Internet service providers is something that still riles high-tech policy watchers.
Gonzales, whose last day was Monday, routinely lobbied Congress to push for a uniform data-retention policy for the industry, which he said would benefit federal investigations into child pornography and sexual exploitation. The plan outraged civil libertarians.
The Department of Justice met repeatedly with Internet executives and privacy advocates in an attempt to draft guidelines for preserving Internet data. The meetings, which included America Online, Comcast, Google and others, were unsuccessful.
On several occasions, Gonzales and his team pitched a yearlong retention program and adjusted its expectations of what information they wanted to collect. At one point, FBI Director Robert Mueller proposed a two-year preservation term.
Jim Harper, director of information policy studies at the Cato Institute, said the effort was symbolic of Gonzales' "willingness to indulge nearly any expansion of surveillance power." This was "a clueless effort" to outsource law enforcement spying "when government investigators dropped the ball," he said.
After the terrorist attacks on Sept. 11, 2001, the administration "lost perspective on what the federal government and DOJ are supposed to do," Harper said. "Security is important, but we have a lot of values in this country that are important and they include privacy and civil liberties."
The child-protection argument that was used to justify the initiative exaggerated the potential role of Internet companies, he said. "You don't do surveillance of every American's Internet travels to get at the tiny margin of sickos that are pursuing children."
Gonzales and his team "had almost no understanding of the costs and security problems they would create by requiring all this data to be held by ISPs," Harper added. "The creation of such a database is the creation of a security risk and innocent Americans' information would be warehoused and thus available for hacking."
Marv Johnson, legislative counsel for the American Civil Liberties Union, said the proposal "not only endangers privacy, it endangers security, and I have yet to see why the current structure doesn't work."
Internet firms already can report abuse of their networks, including illegal content, Johnson said. Bolstering law enforcement resources and educational outreach -- not deputizing Web companies -- will help solve the problem, he said.
Even with Gonzales gone, the debate may continue, Harper said. "Assume that data retention is on the DOJ Christmas wish list. It will sit there until the stars line up and it will be part of the package they send over to Congress" when the administration thinks the timing is right, he said.
In the 109th Congress, former House Judiciary Committee Chairman James Sensenbrenner, R-Wis., considered sponsoring a data-retention bill, and so did Colorado Democrat Diana DeGette. No such bill has been introduced in the current session.
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Executive Branch
Quiet End To Technology Administration Lamented
by Heather Greenfield
A provision in the competitiveness legislation that President Bush signed in August deletes the Commerce Department agency charged with bringing U.S. innovation from laboratories to the marketplace.
The law does not specifically outline the closing of the Technology Administration as of Sept. 30, so it passed under the radar of many people who closely follow competitiveness issues. Clues can be found in language transferring some issues from the undersecretary leading TA back to the Commerce secretary, and in a section creating the President's Council on Competitiveness, which was mentioned in the president's budget as a replacement to TA.
Since the 1980s, TA has served as one-stop shopping for tech companies dealing with federal agencies on competitiveness issues. The first assistant secretary was Deborah Wince-Smith, who served from 1989-1993. She helped shape the department into the place to understand emerging trends, implications for the high-tech industry and how to make the most of them.
Wince-Smith, who now leads the Council on Competitiveness, said the issues of competing with Japan when she led the agency exist today, but now the competition is from countries like China or India. "I'm very sorry to see the Technology Administration being phased out," she said. "I think it's a mistake."
Phil Bond, the CEO of the Information Technology Association of America, and Kelly Carnes, CEO of TechVision 21, previously headed TA and lobbied to save it. In a letter to the Senate Commerce Committee in January, they said it does not make sense to cut funding in this area as other countries gain competitive ground.
Commerce Undersecretary Robert Cresanti, who now leads TA, said there was a perception that TA's mission overlapped into other programs. He took the job leading the embattled institution in March 2006 when the agency already been targeted for elimination.
Still, he set to work launching a study on barriers to nanotechnology innovation, encouraging Europe not to regulate radio-frequency identification technology beyond existing privacy laws, advocating businesses to pay more attention to security as a resiliency issue, and serving on the president's identity-theft task force.
Cresanti calls it "an interesting and exciting time" and hopes to publish a joint study with the Patent and Trademark Office before he leaves TA at the end of September. The study will map patent activity geographically in particular fields as an indicator of the next technology boom.
Cresanti knew the TA's days were likely numbered but did not anticipate how quickly the president would sign the legislation closing the office and creating the council.
"They made the best decision they could with the budget constraints," Cresanti said in an interview with Technology Daily. "We got a lot of really great work done. I'm hopeful it will be a legacy for the folks that take over afterward."
He will spend the next few weeks transferring projects to other sections of the Commerce Department and doing all he can to make the council "the best it can be."
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Intellectual Property
Anti-Piracy Tools May Push Consumers To 'Dark Net'
by Liza Porteus, for Technology Daily
NEW YORK -- If digital-rights management technology is here to stay, industry needs to find a way to effectively deploy it in a way that does not frustrate consumers and send them to the "dark Net" for interactive, user-friendly content, industry officials said here Monday.
"I don't think there's any debate as to whether digital-rights technologies should exist; the only rational debate is how they should be deployed and particularly whether government should make the decision how or when [they] should be deployed," Fritz Attaway, executive vice president and senior policy adviser for the Motion Picture Association of America, said during a Digital Rights Strategies conference.
DRM technology blocks or limits content that consumers can copy in an effort to prevent piracy. It usually limits the number of devices that can play content. But consumers wanting more content for less money -- sometimes free -- have plenty of places on the Internet to get it illegally. Industry calls that the "dark Net."
The challenge for industry is to find ways to easily offer consumers the content they want for a price so they do not steal it.
"We definitely see a huge risk of bad consumer experience from the lack of ability to move content across different devices," said Jim Helman, the chief technology officer of MovieLabs, which was established by the six major movie studios to study digital content usage and technologies. DRM is "a necessary function of the ecosystem, and it's incumbent for the rights-holders to figure out something that will be workable with consumers."
Apple Inc., for example, controls music on its iTunes network because its DRM technology, FairPlay, only allows iTunes songs to play Apple's iPod devices. Plus FairPlay often won't allow songs downloaded from other sites to play on iPods.
Economist Michael Einhorn said Apple should have an open standard that will play competitors' content, particularly because the average iPod holder has only purchased 22 songs from iTunes, and Apple makes more money from iPod sales.
"It's nonsensical," he said. "Apple is afraid of losing its information over to another competitor."
Scott Smyers, vice president of network and systems architecture at Sony, said there is no killer DRM application in home media networks right now, but iTunes comes close. The problem, he said, is that Apple is working in a vertical "silo" that excludes many consumers.
"No one other than Apple can compete in the market," Smyers said. "It's destined to fail or substantially change."
Michael Petricone, senior vice president of government affairs at the Consumer Electronics Association, is skeptical of DRM because it limits consumers and cannot stop piracy.
Petricone and David Sohn, senior policy counsel for the Center for Democracy and Technology, said consumer education about DRM and how it can be used to access content are key.
"For some reason, I don't hear consumers out there screaming, 'Please, please give us more DRM,'" Petricone said. "If consumers are frustrated, there's another place they can go and it's a place we don't like."
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Security
Grants For Radiation Detectors Go To Southeast States
by Chris Strohm
The Homeland Security Department has announced final grant allocations to help Southeastern states deploy equipment along major interstates to detect illicit radiological or nuclear materials.
The department's Domestic Nuclear Detection Office on Friday awarded $3.7 million to Alabama, Florida, Mississippi, North Carolina and the District of Columbia as part of the Southeast transportation corridor test program.
"The objective of this pilot is to enhance the capability to detect the movement of radioactive materials in commercial highway transportation," House Homeland Security Committee Chairman Bennie Thompson, D-Miss., said in announcing grant allocations for his state.
About $3.2 million was given to Georgia, Kentucky, South Carolina, Tennessee and Virginia in fiscal 2006.
"The Southeast corridor carries some of the largest concentrations of truck traffic throughout the United States," said Vayl Oxford, director of the detection office. "Through the deployment of new technology and integrated training, we are able to enhance our overall capabilities in a collaborative effort with our partners at the state and local level."
Funds provided under the program support the deployment of fixed, handheld and mobile radiation-detection equipment at interstate weigh stations. The office also provides training for state and local officials on how to operate the equipment, resolve alarms and share information.
When he announced the program last year, Oxford told lawmakers that a primary objective is to give state and local officials the technical expertise to resolve alarms.
"As part of this operational support activity, the [office] is leading an effort to develop a comprehensive U.S. government process for alarm resolution that brings our procedures in line with the drastically altered security environment that we now face," Oxford said in testimony to the Senate Judiciary Committee. The process "represents the first restructuring of the federal alarm resolution and response protocols in over a decade."
The test program is part of the office's effort to develop a regional architecture for threat detection and interdiction.
The office has launched another program, for example, that seeks to develop a ring of detection equipment to protect the New York City region from illicit radiological and nuclear materials. Under the Securing the Cities project, local law enforcers in and around New York are working to install a network of stationary and mobile detection devices on highways, sea lanes, bridges and tunnels throughout the city, Long Island, the lower Hudson Valley and New Jersey, according to Sen. Frank Lautenberg, D-N.J.
Lautenberg, along with fellow Democratic Sens. Hillary Clinton and Charles Schumer of New York and Robert Menendez of New Jersey, led an effort in late July to include $40 million for the program in the Senate's version of the fiscal 2008 security appropriations bill. The House version of the bill would provide less funding.
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Antitrust
Foes Of Google, DoubleClick Merger Continue Fight
by Winter Casey
Privacy and antitrust concerns related to Google's proposed $3.1 billion bid for the DoubleClick online advertising firm are getting considerable traction on Capitol Hill, a privacy advocate said Monday during a National Press Club briefing.
The Senate Judiciary Committee likely will be giving the proposed merger a closer look this fall, said Amina Fazlullah, a media reform advocate and staff attorney with the U.S. Public Interest Research Group. A House Judiciary committee aide said that panel also plans to examine the concerns raised by the merger.
During the event, Melissa Ngo, senior counsel for the Electronic Privacy Information Center, announced that the center filed additional materials Monday with the FTC concerning its opposition to the proposed merger. The EPIC holds that as more is learned about Google's lack of privacy safeguards and business practices, the merger is receiving more scrutiny from government officials, consumers and antitrust experts.
EPIC's filing states that it "is now clear that Google and DoubleClick are competitors, as they both sell display advertising in the online advertising marketplace," and that "the merger could be blocked simply on antitrust grounds."
EPIC argues that the merger would allow the companies to "construct extremely intimate portraits of its users' behavior." The group warns that if the FTC fails to intervene in the proposed merger, it will have "profound consequences on the future of the Internet."
Adam Kovacevich, a spokesman for Google responded that "EPIC and other critics have so far failed to identify any practice that does not comply with accepted privacy standards, and their complaints are unsupported by the facts and the law."
"We have engaged with numerous privacy and consumer advocates to discuss and explain our acquisition of DoubleClick, but unfortunately EPIC has refused every offer we have made to meet with them," Kovacevich said.
The FTC is planning a town-hall meeting for Nov.1-2 to examine issues surrounding online behavioral advertising, according to a Monday Google blog post.
Also on Monday, the Canadian Internet Policy and Public Interest Clinic requested that the Canadian privacy commissioner initiate an audit of the Google, DoubleClick plan.
Ngo said that if the FTC does not block the merger, it should impose restrictions on Google. Fazlullah said it is critical that any potential mergers have strict controls as to how they deal with information, and such standards would even out the marketplace for online advertisers.
According to a presentation by Jeff Chester, executive director of the Center for Digital Democracy, "we have recently witnessed a disturbing procession of interactive advertising industry takeovers, where the same giants have swallowed up leading firms in the behavior targeting, mobile marketing, and online and auction sectors."
"I suggest to you that we are seeing the emergence of a new media monopoly that should concern all of us," Chester said.
A previous Google blog post by the company's policy counsel, however, noted "a series of almost back-to-back acquisitions that demonstrates how many choices advertisers, Web site publishers, and consumers really have."
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E-Government
Archives Eyes Partnerships For Digital Preservation
by Aliya Sternstein
In seeking public comment on a 9-year draft plan to digitize historic holdings, the National Archives and Records Administration is attempting to safeguard the public's right to freely access materials while also letting the private sector sell value-added services, some observers say.
Virtually all of the republic's 10 billion pieces of paper, nearly 35 million still pictures and most other collections are not in electronic formats. The artifacts include presidential diaries. Last week, the archives released a strategy for seeking private assistance in digitizing frequently requested materials and supplying online, searchable descriptions of all holdings.
In fiscal 2006, the agency began working with companies to digitize some materials. For instance, the archives partnered with Google to make 100 moving image titles available through Google Video and through a central inventory on the archives' Web site. The archives also has announced a partnership with EMC to digitize the entire President John F. Kennedy collection.
John Wonderlich, a Sunlight Foundation program director, said, "One of the most positive things about [the plan] is that they are soliciting public comment and taking it seriously," he said, adding that the government will need the private sector's money in meeting its goals.
The archives' strategic plan proclaims that by 2012, 1 percent of its holdings will be available online. The figure includes both electronic records and non-electronic records that have been digitized by the archives or partners.
The new digital plan states that "partners may develop and charge for value-added features, but access to the digital copies ultimately should be readily accessible and free."
Wonderlich said there will always be concerns about allowing the private sector to help in exchange for the right to sell value-added services, like detailed searching. But he added that the proposal seems like "a well-conceived balance of public and private interests."
Jeanne Young, a private consultant and former archivist at the Federal Reserve Board, said the plan represents the archives' response to public demands "in a more transparent manner than in the past."
Patrice McDermott, executive director of OpenTheGovernment.org, said, "This is a good first step for NARA since they have apparently entered into more agreements than we knew about." But some of the language in the plan troubles her.
McDermott said that NARA's "definition of non-exclusive" agreements with partners means that "multiple digitizing partners" can digitize "different sets of materials" but "not necessarily" -- which means probably not -- "the same materials." She said: "This does put it exclusively in the hands of one partner. Where this is a private-sector partner who is exercising control over it for varied numbers of years ... this is a concern."
She also noted that the document contains operating principles -- not policies -- for crafting agreements with partners. McDermott said the archives, which is in a leadership position, should be establishing policy, "not just setting out principles that they may honor and they may not."
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Today's Feature:
Issue of the Week
The U.S. government has boosted its ability to review and regulate foreign entities looking to invest in U.S. industries by directing more attention to the security implications of foreign investments, especially those made by government funds.
Every Monday, read the Issue of the Week by the Technology Daily staff.
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E-briefs
Telecom: Consumers Union and the Consumer Federation of America on Monday endorsed Senate legislation designed to simplify cellular telephone bills, boost disclosure about wireless coverage and reduce penalties for early termination of contracts. The bill was introduced by Democrats Amy Klobuchar of Minnesota and John (Jay) Rockefeller of West Virginia in early September. "The wireless industry will blow a lot of hot air trying to convince you that they're so competitive, they don't need oversight," Mark Cooper, CFA's research director, said in a statement. "One quick glance at their anti-consumer practices demonstrates otherwise." Chris Murray, senior counsel at Consumers Union, said most wireless carriers advertise low rates that are later padded with "mysterious" fees. "If this legislation is passed, it would go a long way toward eliminating those shenanigans." The wireless industry considers the bill unnecessary, arguing that the competitive marketplace adequately addresses consumer concerns.
Health: At a Capitol Hill briefing on Monday, a coalition of doctors, patients and employers called for immediate passage of legislation that would establish standards for health information technology. Former Sen. John Breaux, D-La., and former Rep. Nancy Johnson, R-Conn., the co-chairs of Health IT Now, gathered representatives from the National Alliance on Mental Illness, National Retail Federation and other associations to ask Congress to spur the adoption of health IT this year. "Health IT involves no more than implementing the kind of electronic information systems already used in many business sectors and putting it to work in health care," Breaux said. The group backs legislation that would provide financial incentives for practitioners, communities, states and other entities to build health information exchanges. And it wants the federal government to take the lead in resolving policy issues between federal and state laws on privacy and professional licensure.
Antitrust: Samsung Electronics on Monday joined competitors in the consumer electronics memory-chip industry under a growing cloud of private litigation and U.S. and Canadian government investigations. AP reports that the company announced that it would cooperate with a U.S. government probe into possible anticompetitive practices in the NAND flash-memory chip market. But it would not say whether the subsidiary Samsung Semiconductor is a subject of the probe or has been subpoenaed by the Justice Department. SanDisk of the United States said Friday that it and Chief Executive Eli Harari had received grand-jury subpoenas in a Justice Department investigation into possible antitrust violations in the NAND industry.
Civil Liberties: The American Civil Liberties Union on Monday unveiled a Web-based "Surveillance Society Clock" to symbolize its belief that the nation is fast approaching a "genuine surveillance society." The clock is set at six minutes before the "midnight" of a dark end to privacy, the group said. The ticker was inspired by the "Doomsday Clock" created in 1947 by the Bulletin of the Atomic Scientists to warn about the potential for nuclear war. The ACLU clock's launch coincided with the release of a new report summarizing the state of American privacy and providing an update on how technology, law and government are working together to create a surveillance society. "We are rapidly moving toward a future where our every move, our every transaction, our every communication, is tracked and may be used against us," ACLU Technology and Liberty Project Director Barry Steinhardt said.
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