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Google’s ‘Free’ Business Model Put to Test in US Antitrust Suit

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By Agence France-Presse | Updated: 22 October 2020

Google’s long-running business model based on free services and advertising will be put to the test in the landmark antitrust lawsuit filed this week by the US Justice Department.

But the government is likely to face challenges proving monopoly allegations against the tech firm which grew into one of the world’s most successful companies by leveraging its powerful search engine for a network of services such as maps, email, shopping and travel that feed its data-driven digital advertising.

Legal experts point to the fact that it may be difficult to show Google’s conduct was illegal under the longstanding “consumer welfare” standard in monopoly cases because its services are largely free.

Avery Gardiner, a former US antitrust enforcement lawyer who researches competition for the Center for Democracy & Technology, said the government appears to be skirting the question of whether Google benefits consumers by offering free services.

The lawsuit “basically ignores price and focuses on quality and innovation,” she said.

While not entirely a new strategy, “the antitrust agencies in the past have been reluctant to move forward without evidence of price effects,” Gardiner added.

Data provided by the Justice Department showed Google controls 88 percent of US search queries, with the share in the mobile market at 94 percent, and argued that Google reinforces it monopoly with its “exclusionary” deals.

With a market value over $1 trillion (roughly Rs. 73,72,250 crores), Google generated $161 billion (roughly Rs. 11,86,892 crores) in revenue last year, the bulk of which comes from digital advertising including messages linked to people’s search queries.
‘Not truly free’

Christopher Sagers, a Cleveland State University law professor, said Google’s use of free services is unlikely to be a serious hurdle for the government.

Sagers said that Google’s search “is arguably not truly free, since every search can be conceived as a transaction in which the consumer gives their attention to advertisements in exchange for search results.”

A key element of the case will be Internet advertising which “is a product that Google definitely does not give away for free,” Sagers said.

Maurice Stucke, a University of Tennessee law professor specialising in antitrust, said the case appears based not on prices but “the harm to privacy, data protection and the use of consumer data.”

This takes a broader view of antitrust by examining the competitive harms to the marketplace and not just prices to consumers, Stucke said.

He said government lawyers have evoked the Microsoft case from two decades earlier which, despite the failure to break up the company, resulted in a more open technology landscape.

“The perception is that the Microsoft case unleashed significant innovation, because competitors no longer operated in the shadow of Microsoft,” Stucke said.

The case joined by 11 states, all of which have Republican attorneys general, could take years to play out and comes against a backdrop of a fierce political backlash against Big Tech giants which have extended their dominance in recent years.

The Justice Department argues that Google has cemented its monopoly position using deals with device makers to ensure its apps and services are prominently displayed, and sometimes can’t be deleted.

Any settlement, whether imposed by the court or agreed to by Google, could involve changes to business practices or “a structural” remedy, the code word for a breakup of the California titan.
Finding alternatives

Google called the lawsuit “deeply flawed.”

“People use Google because they choose to, not because they’re forced to or because they can’t find alternatives,” Google general counsel Kent Walker said in a blog post.

Asheesh Agarwal of the activist think tank TechFreedom said it would be wrong to use the Microsoft case as a precedent for the Google probe.

“Today, consumers can easily use a variety of other sites and apps to search generally and especially to search for specific goods and services,” said Agarwal. “This isn’t the 1990s, when consumers had to go to the store and pay $100 (roughly Rs. 7,300) to try an alternative to Microsoft Office.”

Independent technology analyst Richard Windsor said the case against Google appears strong but that “the most likely remedy is not a break-up of the company but measures that enforce fairer competition.”

This could include allowing non-Google services and apps more prominence on the Google Play Store.

“To be fair to Google, its digital ecosystem services are the best available in many categories,” Windsor said in a blog post. “However, Google forces handset makers to put them front and center on their devices and to set them by default.”

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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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