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Google Faces Antitrust Lawsuit From US Justice Department, Could Lead to Company Breakup

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By Reuters | Updated: 21 October 2020

The US sued Google on Tuesday, accusing the $1 trillion (roughly R. 73,40,500 crores) company of illegally using its market muscle to hobble rivals in the biggest challenge to the power and influence of Big Tech in decades.

The Justice Department lawsuit could lead to the break-up of an iconic company that has become all but synonymous with the internet and assumed a central role in the day-to-day lives of billions of people around the globe.

Such an outcome is far from assured, however, and the case is likely to take years to resolve.

The lawsuit marks the first time the US has cracked down on a major tech company since it sued Microsoft for anti-competitive practices in 1998. A settlement left the company intact, though the government’s prior foray into Big Tech anti-trust, the 1974 case against AT&T, led to the breakup of the Bell System.

The federal government’s complaint against Alphabet, which alleges that Google acted unlawfully to maintain its position in search and search advertising on the Internet, was joined by 11 states. “Absent a court order, Google will continue executing its anticompetitive strategy, crippling the competitive process, reducing consumer choice, and stifling innovation,” the lawsuit states.

The government said Google has nearly 90 percent of all general search engine queries in the United States and almost 95 percent of searches on mobile.

Attorney General Bill Barr said his investigators had found Google does not compete on the quality of its search results but instead bought its success through payments to mobile phone makers and others.

“The end result is that no one can feasibly challenge Google’s dominance in search and search advertising,” Barr said.

When asked on a conference call if the department was seeking a breakup or another remedy, Ryan Shores, a Justice Department official, said, “Nothing is off the table, but a question of remedies is best addressed by the court after it’s had a chance to hear all the evidence.”

In its complaint, the Justice Department said that Americans were hurt by Google’s actions. In its “request for relief,” it said it was seeking “structural relief as needed to cure any anti-competitive harm.” “Structural relief” in antitrust matters generally means the sale of an asset.

“Ultimately it is consumers and advertisers that suffer from less choice, less innovation and less competitive advertising prices,” the lawsuit states. “So we are asking the court to break Google’s grip on search distribution so the competition and innovation can take hold.”

Google called the lawsuit “deeply flawed,” adding that people “use Google because they choose to, not because they’re forced to or because they can’t find alternatives.”

Investors seemed to shrug off news of the lawsuit, sending shares Alphabet up 1.9 percent to $1,563.51 (roughly Rs. 1,14,700) on Tuesday afternoon.

“It’s like locking the proverbial door after the horse has bolted,” said Neil Campling, head of tech media and telecom research at Mirabaud Securities in London, who added Google has already invested billions of dollars in infrastructure, technologies and talent. “You can’t simply unwind a decade of significant progress.”
Political element

Tuesday’s federal lawsuit marks a rare moment of agreement between the Trump administration and progressive Democrats. US Senator Elizabeth Warren tweeted on September 10, using the hash tag #BreakUpBigTech, that she wanted “swift, aggressive action.”

Still, coming just days before the US presidential election, the filing’s timing could be seen as a political gesture since it fulfills a promise made by President Donald Trump to his supporters to hold certain companies to account for allegedly stifling conservative voices.

Republicans often complain that social media companies including Google take action to reduce the spread of conservative viewpoints on their platforms. Lawmakers have sought, without explaining how, to use antitrust laws to compel Big Tech to stop these alleged limitations.

The complaint pointed to the billions of dollars that Google pays to smartphone makers such as Apple, Samsung and others to make Google’s search engine the default on their devices.

This means that rival search engines never get the scale they need to improve their algorithms, and grow, the complaint said.

“General search services, search advertising, and general search text advertising require complex algorithms that are constantly learning which organic results and ads best respond to user queries,” the government said in its complaint. “By using distribution agreements to lock up scale for itself and deny it to others, Google unlawfully maintains its monopolies.”

Google has been successful at protecting its profit derived from the Android mobile operating system, which is officially open source but companies that change it are barred from lucrative revenue-sharing agreements.

Justice Department investigators found an internal Google analysis of restrictive agreements determined that just 1 percent of Google’s worldwide Android search revenue was at risk of being lost to competitors.

“This analysis noted that the growth in Google’s search advertising revenue from Android distribution was ‘driven by increased platform protection efforts and agreements,'” the complaint found.
Other challenges

The 11 states that joined the lawsuit all have Republican attorneys general.

More lawsuits could be in the offing since probes by state attorneys general into Google’s broader businesses are under way, as well as an investigation of its broader digital advertising businesses. Attorneys general led by Texas are expected to file a separate lawsuit focused on digital advertising as soon as November, while a group led by Colorado is contemplating a more expansive lawsuit against Google.

The lawsuit comes more than a year after the Justice Department and Federal Trade Commission began antitrust investigations into four big tech companies: Amazon, Apple, Facebook and Google.

Seven years ago, the FTC settled an antitrust probe into Google over alleged bias in its search function to favor its products, among other issues. The settlement came over the objections of some FTC staff attorneys.

Google has faced similar legal challenges overseas.

The European Union fined Google $1.7 billion (roughly Rs. 12,478 crores) in 2019 for stopping websites from using Google’s rivals to find advertisers, $2.6 billion (roughly Rs. 19,090 crores) in 2017 for favoring its own shopping business in search, and $4.9 billion (roughly Rs. 35,977 crores) in 2018 for blocking rivals on its wireless Android operating system.

© Thomson Reuters 2020

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Amazon, Blackberry Team Up to Create Cloud-Based Vehicle Software Platform IVY

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By Agence France-Presse | Updated: 2 December 2020

BlackBerry and Amazon on Tuesday announced an alliance to create a cloud computing platform that cars could link to for services and insights based on data from vehicles and users..

Word of plans for an Intelligent Vehicle Data Platform called IVY synching cars wirelessly to computing power at Amazon Web Services caused shares in Canada-based company to rev more than 50 percent to nearly nine dollars.

“BlackBerry and AWS share a common vision to provide automakers and developers with better insights so that they can deliver new services to consumers,” BlackBerry chief executive John Chen said in a joint release.

IVY is intended to be a cloud-connected software platform that could be used by any car maker to analyze sensor data in real-time and give drivers useful information.

Modern cars and trucks are built with thousands of parts from an array of suppliers, typically with proprietary hardware and software involved, the companies noted.

The vision is for the platform to quickly make sense of all that data for drivers, while also serving as a platform for additional apps or services from developers.

Car makers have “almost zero software skills,” and IVY promises to be a secure, cost-effective platform for them to tap into cloud computing power, Global Equities Research analyst Trip Chowdhry said in a note to investors.

The jointly operated software will run on car or truck systems, but will be managed remotely from the cloud, according to Amazon.

Examples of potential capabilities included IVY spotting dangerous road conditions such as ice or heavy traffic and prompt drivers to take safety measures.

Drivers of electric vehicles could share battery information with charging networks to reserve charging slots along routes, and parents could get sensor data regarding their teen-agers’ driving, the companies said,

“AWS and BlackBerry are making it possible for any automaker to continuously reinvent the customer experience and transform vehicles from fixed pieces of technology into systems that can grow and adapt with a user’s needs and preferences,” said AWS chief executive Andy Jassy.

BlackBerry has shifted gears to concentrate on software and services since being dethroned in the mobile phone market more than a decade ago by touchscreen phones powered by Apple or Android software.

The BlackBerry keyboard is to live on in a new 5G smartphone planned for release next year from Texas-based OnwardMobility.

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Amazon Web Services Taps Own Arm-Based Chips for New Supercomputing Offering

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By Reuters | Updated: 2 December 2020

Amazon’s cloud unit on Tuesday offered a new supercomputing service based on its self-designed processors, a further sign of how chips based on Arm’s technology are encroaching on Intel and Advanced Micro Devices turf.

Amazon Web Services, or AWS, sells its computing services based on the customer’s choice of an underlying central processor chip. Software developers have traditionally chosen between Intel or AMD products, but since 2018 Amazon has also offered its own Graviton chips designed with technology from Arm, which is in the midst of a $40 billion (roughly Rs. 2,93,600 crores) takeover by Nvidia.

Arm-based chips have long powered mobile phones because they can operate on very low power levels, but they are increasingly used in data centers where their power efficiency helps control costs. The world’s fastest computing system, the Fugaku supercomputer in Japan, is based on Arm chips.

Supercomputing helps with tasks such as weather forecasting, medical research and modeling aerodynamics for cars without a wind tunnel. But systems remain expensive and mostly operated by governments and research centers.

AWS is hoping to slash costs, saying the new service will get 40 percent better price-to-performance than its similar offerings from AMD and Intel. AWS’s own technology will quickly pass data through multiple Graviton processors, a key supercomputing process in which many chips act as a hive mind to tackle a large task. AWS will rent the service out so that researchers need not build or manage a system.

Supercomputing “is no longer this thing that only governments do,” Dave Brown, vice president of Elastic Compute Cloud at AWS, said in an interview. “You can decrease the cost – you don’t need a supercomputer any more. You can spin them up in the cloud and then spin them down.”

© Thomson Reuters 2020

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Facebook-Backed Digital Coin Libra Renamed Diem to Gain Regulatory Approval

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By Reuters | Updated: 2 December 2020 09:57 IST

Facebook-backed cryptocurrency Libra has been rebranded “Diem” in a renewed effort to gain regulatory approval by stressing the project’s independence.

Plans for Libra, first floated by Facebook last year, were slimmed-down in April after regulators and central banks raised concerns it could upend financial stability, erode control over monetary policy and threaten privacy.

Tuesday’s name switch is part of a move to emphasise a simpler, revamped structure, Stuart Levey, CEO of the Geneva-based Diem Association behind the planned digital coin, said.

“The original name was tied to an early iteration of the project that received a difficult reception from regulators. We have dramatically changed that proposition,” Levey told Reuters.

Diem, which means “day” in Latin, now aims to initially launch a single dollar-backed digital coin, he added.

He declined to comment on timing for the launch, which the Financial Times reported last week could be as early as January, saying only that it would only go ahead after approval by the Swiss markets watchdog.

Facebook, which changed the name of its payments unit Calibra to Novi Financial in May, remains one of 27 members of the Diem Association, formerly the Libra Association. Novi’s head, David Marcus, is one of Diem’s five board members.

“They are a critically-important member of the association,” said Levey of Facebook’s continuing involvement.

“We are not trying to cut all ties, by any stretch. It (the name change) is to signify that the association is operating autonomously and independently,” he added.

Diem aims to set itself apart from others by its focus on aspects of concern to regulators and western governments, including sanction controls and financial crime, Levey said.

The project has said it would develop policies on anti-money laundering, terrorist financing and sanctions compliance and has ditched earlier plans to allow anyone to join its network.

© Thomson Reuters 2020

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Amazon Says Sellers Saw 60 Percent More Sales Than Last Year From Black Friday Through Cyber Monday

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By Reuters | Updated: 1 December 2020

Amazon said on Tuesday independent businesses selling on its platform crossed $4.8 billion (roughly Rs. 35,400 crores) in worldwide sales from Black Friday through Cyber Monday, an increase of more than 60% from a year earlier.

In its first indication of performance for the year’s peak online shopping days, Amazon said more than 71,000 small- and medium-sized businesses worldwide had surpassed $100,000 (roughly Rs. 74,000) in sales this holiday season to date.

The Seattle-based company did not, however, give a breakdown of US sales, or its own numbers for the weekend, nor for either of the two big shopping days, saying only that the holiday season overall had been its biggest ever.

Latest industry estimates overnight showed Cyber Monday on course to be the biggest online shopping day ever for the United States, garnering up to $11.4 billion (roughly Rs. 84,000 crores) as the COVID-19 pandemic prompted consumers to stay at home and turn to the internet for their holiday shopping needs.

The robust performance comes despite nearly two months of offers since Amazon held its Prime Day sales event in October, with retailers seeking to recoup business lost during this year’s coronavirus-driven closures of malls and stores.

Estimates from Adobe Analytics showed this year’s conclusion to Thanksgiving weekend sales would come in between $10.8 billion (roughly Rs. 80,000 crores) and $11.4 billion (roughly Rs. 84,000 crores).

While that was down from an earlier estimate of as much as $12.7 billion (roughly Rs. 93,500 crores), it still easily surpasses this year’s Black Friday figure of $9 billion (roughly Rs. 66,300 crores), the strongest online sales result for the day ever, as well as last year’s Cyber Monday total of $9.4 billion (roughly Rs. 69,400 crores).

© Thomson Reuters 2020

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Amazon Brings macOS to Cloud in a Boost to Apple App Developers

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By Reuters | Updated: 1 December 2020

Amazon will run Apple’s macOS on its cloud service for the first time, allowing app developers for Apple’s devices to access the operating system on demand, the company’s cloud unit Amazon Web Services said on Monday.

The service, called Amazon Elastic Compute Cloud (EC2) Mac instances, runs on Mac mini computers and will support developers creating apps for iPhone, iPad, Mac, Apple Watch, Apple TV, and Safari, the cloud unit said.

Amazon previously offered the EC2 instances service for Windows and Linux.

Amazon Web Services (AWS) said it will use the version of Mac mini computers with Intel’s eighth-generation 3.2GHz Core i7 processors for EC2 Mac instances.

AWS recently faced a widespread outage last week, affecting users ranging from websites to software providers. The company said that it also affected the ability to post updates to its service health dashboard.

“Kinesis has been experiencing increased error rates this morning in our US-East-1 Region that’s impacted some other AWS services. We are working toward resolution,” an AWS spokesperson said in a statement. Amazon Kinesis, a part of its cloud offerings, collects, processes, and analyses real-time data and offers insights.

Video-streaming device maker Roku, Adobe’s Spark platform, video-hosting website Flickr and the Baltimore Sun newspaper were among those hit by the outage, according to their posts on Twitter.

© Thomson Reuters 2020

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FCC Chairman Ajit Pai Plans to Step Down January 20

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By Reuters | Updated: 1 December 2020

Federal Communications Commission (FCC) Chairman Ajit Pai, who oversaw the repeal of landmark US net neutrality rules and a series of key spectrum auctions to address growing wireless needs, said Monday he plans to leave the commission on Jan. 20.

Pai’s departure will come the same day President-elect Joe Biden is sworn into office. Under Pai, the FCC voted 3-2 in 2017 to repeal the Obama administration’s 2015 net neutrality rules barring Internet service providers (ISPs) from blocking or slowing internet content or offering paid “fast lanes.”

The FCC voted in October to maintain the repeal. “It is patently obvious to all but the most devoted members of the net neutrality cult that the case against the (net neutrality repeal) was a sham,” Pai said in October.

Democrats are likely to attempt to reinstate the 2015 rules when they take control of the FCC and argue they are crucial to maintaining an open internet.

Pai, who was tapped by President Donald Trump to lead the agency in January 2017, had said the FCC needed to take a “weed whacker” to unneeded rules. He oversaw the repeal of numerous prior regulations.

Trump has pressed the FCC to adopt new rules to limit the legal protections of social media companies like Twitter.

Pai said in October his agency would move forward to set new rules to clarify the meaning of a key legal protection for social media companies but took no formal action.

The Senate Commerce Committee on Wednesday is set to vote on the nomination of Nathan Simington, a senior administration official, to a seat on the FCC after Trump withdrew the nomination of FCC Commissioner Mike O’Rielly for another term after he made statements questioning the FCC’s authority to move ahead with new social media regulations.

In October 2017, Pai rejected Trump’s tweet the FCC could challenge the licence of Comcast ‘s NBC over stories Trump asserted were not true.

Pai convinced hundreds of Internet providers to agree for months not to cancel service for customers impacted by the coronavirus pandemic.

Pai also backed the $26 billion (roughly Rs. 1,91,300 crores) tie-up of Sprint and T-Mobile US after the companies agreed to deploy a next generation 5G network.

© Thomson Reuters 2020

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