The deal was accepted by the EU without conditions after a six-month antitrust probe. The deal is worth $4.5 billion and is expected to be finalized in June, according to a statement from TomTom. Both companies are based in the Netherlands.
For TomTom and Tele Atlas, this was "the best possible outcome allowing the new combination to go ahead with the full execution of its strategy," the companies said in a joint announcement.
The decision came a week ahead of a May 21 deadline, suggesting that even bigger deal under scrutiny by the EU will go through. Nokia, the Finnish mobile handset manufacturer, wants to buy the world's largest company in digital mapping technology, Chicago-based Navteq for $8.1 billion. The deadline for that review is August 8.
Both deals were accepted by the U.S. antitrust regulators last year without further investigation and the fact that the EU took a closer look surprised many industry experts. But as the potential for location-based services is growing, the commission wanted to make sure that these two deals--creating a virtual duopoly in digital mapping--would not hinder competition.
"I am now satisfied that the innovation and competition we have seen in satellite-navigation devices until now will continue after this merger," Neelie Kroes, EU Commissioner for Competition in Brussels, said in a statement Wednesday.
Navteq and Tele Atlas produce digital maps and software for navigation systems in cars and portable navigation devices such as Garmin or mobile phones. They also provide the data for Internet maps on sites like Google Maps.
Nokia argues concerns of the regulators that its acquisition will restrict the access for others to digital maps as unfounded.
"Why would Nokia pay the amount of money we are paying for having a very good base of customers and then try to aggrieve those customers?", Michael Halbherr, vice president of Context Based Services at Nokia said in an interview earlier this week with CNET News.com.
Nokia executives believe the Navteq-deal is related to the decision on Tele Atlas. Both companies have refused to accept demands from the regulators that they should guarantee that digital maps will be available for everyone. "I think that the Tele Atlas deal is not being reviewed in isolation. The European Commission has had enough time with both deals to basically form a complete thinking about the industry," said Michael Halbherr.
For Nokia, location based services is very much a promise of the future. The company expects to ship 35 million GPS-enabled phones this year.
From a European industry point of view, these deals consolidate world dominance of location based services in the home base. Navteq is the world's largest maker of maps used for car navigation, while Tele Atlas is No. 2.
In the U.S. the development is seen as positive. At ESRI, a company that sells software for geographic information systems, founder and Chief Executive Jack Dangermond welcomes more concerted efforts.
"The world needs utility companies that create and manage geospatial data," he said. "And these are companies that have fought their way to the top and they're very good: they serve their data and sell their data to our users in the private domain."
One company that has teamed up with ESRI is Google Maps, which now use digital maps from both Navteq and Tele Atlas. John Hanke, head of Google Maps and Google Earth, said that there is a vast amount of geodata locked up in different government agencies that should be made publicly available.
"I don't think it will happen anywhere in the near future. It's hard to share that data, to export it, but they should open up their servers as its public information," Hanke said during a break at the Where 2.0 conference in Burlingame, Calif.
Dangermond agrees. There will be no shortage of data despite concentration in a few hands.
"There are others, like Openstreetmap, emerging startups that I think also will participate in a smaller scale and then also individual agencies like cities. They all create and maintain their own data. It will remain an open and competitive environment I think."
He said he doesn't see a duopoly problem.
"There will be open competition and both of them are sincerely interested in the geo market. By having two competitors they're fighting against each other and keeping the prices low. If there was only one, then I might have a different opinion, but I think with two it's a healthy market. And it doesn't prohibit other people from getting in."
"They are doing the world a great service by taking on the responsibility of building these infrastructure layers."
He also said he feels the companies should be compensated.
"Well, free, they have to pay for all their investments. I suppose they are spending hundreds of millions of dollars a year just to create and maintain these infrastructures. So this kind of investment needs to be capitalized and get returns. But they both are good citizens in the GIS world at this point."
Microsoft announced Friday it's appealing the $1.39 billion fine the European Commission imposed for failure to comply with its historic 2004 antitrust order against the Redmond giant.
Microsoft filed an application with the Court of First Instance in Luxembourg, seeking to annul the Commission's decision from late February, in which it imposed a fine of 899 million Euros, or $1.39 billion, against Microsoft.
"We are filing this appeal in a constructive effort to seek clarity from the court. We will not be saying anything further," Microsoft said in a statement.
When the Commission imposed the fine, it was specifically designed to address sanctions over the pricing structure Microsoft had set for licensing of its interoperability protocols and patents.
The pricing issue was the last of three parts of the Commission's March 2004 order, which called for the software giant to provide accurate and complete interoperability information to rivals. The purpose was to allow rivals' software to work with the Windows operating system and to provide that license information under "reasonable and nondiscriminatory" terms."
Two years ago, the Commission hit Microsoft with a fine of 280.5 million euros, or $434 million, for failing to comply with the other two parts of its sanctions related to providing complete and accurate interoperability protocol information to rivals. Microsoft initially appealed that 2006 fine, but withdrew it last fall.
Microsoft sought to overturn the Commission's March 2004 order, but last fall the Court of First Instance upheld the Commission's order, which found the software giant had abused its market dominance in the operating system market.
The European Commission said it remains steadfast in its decision to issue its historic fine against the software giant.
"The Commission is confident that the decision to impose the fine is legally sound," said Jonathan Todd, a spokesman for the European Commission.
The fine levied in February marked the largest penalty the Commission had ever imposed on a single company. To date, the Commission has imposed roughly $2.6 billion in its long-running antitrust dispute with Microsoft.
That figure also includes the original fine of 497 million euros, or $769 million, that the Commission imposed in 2004, when it first issued its order against the software giant.
In a move that seems destined to invite tension with major American search engines, a European Commission advisory body has suggested that those companies delete data collected about their users after six months--a far cry from what most companies currently do.
The recommendation arrived in a 29-page "opinion" (PDF) published Friday by a European Commission body known as the Article 29 Working Party. Backed by privacy groups, it has been pressuring Internet companies on the search data front for months. The report focused on advertising-supported search engines, as opposed to search functions embedded in Web sites.
The Working Party's suggestions don't officially have the force of law yet, but they are expected to be adopted by the EC. The EC already adopted a broader set of data protection laws a decade ago, but this report was meant to address specifically how search engines, including those headquartered outside its borders, fit into that setup.
Privacy in search engines is critical because "an individual's search history contains a footprint of that person's interests, relations, and intentions," which can then be mined by businesses and national security operatives alike, the working party wrote.
The Working Party covered a broad swath of issues, saying it expects search engines, among other things, to:
• Use personal data--ranging from search query histories to IP addresses and unique cookie identifiers--only for "legitimate purposes"
• Destroy and anonymize that data when it's no longer legitimately useful
• Inform users about data collection and storage practices
• Set cookies to have a lifetime "no longer than demonstrably necessary"
• Dissociate a user's IP address or other identifier from his or her stored search queries
• Allow users to see whatever "personal data" is being stored about them, whether it be their past search queries or other data "revealing their behavior or origin"
• Respect Web site operators' desires to opt out of having their properties crawled, indexed, and cached through use of mechanisms like the robots.txt file or the Noindex/NoArchive tags
• Do more to prevent personally identifiable information--such as Social Security numbers, credit card numbers, telephone numbers, and e-mail addresses--from creeping into search results
Search engines, for their part, have said they need to keep logs of a certain amount of user information in order to improve the quality of search results, keep their services secure from attacks, tailor advertising to their audiences, and help law enforcement officials investigate crimes. But the Working Party cast doubt on several of those reasons, saying they aren't well-defined enough to justify vast data collection.
Electronic Privacy Information Center Director Marc Rotenberg deemed the working party's findings "a big deal." They're potentially significant for widely used American search engines with European presences on at least a couple of levels.
First, the data retention period suggested by the European group is far shorter than that adopted in privacy policy updates by the big five American search engines--Google, Yahoo, Microsoft, AOL, and Ask.com--last summer. To be sure, the six-month limit isn't set in stone, as the Working Party says it is willing to entertain pleas that a longer period "is strictly necessary for the service." Still, the recommendations may put some search engine providers in a tough spot.
After all, a CNET News.com survey last year suggested Ask.com made the most privacy-protective changes, deleting data about its users within hours. AOL said it deleted data after 13 months, Microsoft said it deleted data after 18 months. In an arguably less privacy-protective step, Yahoo and Google said they "partially anonymized" data after 13 and 18 months, respectively. Many of those providers said they held onto search queries indefinitely.
Second, the EC report declared that IP addresses should be considered personally identifiable information whose storage must be curbed. That proclamation clashes with what Google has long argued--that because the IP addresses Internet subscribers are assigned can change frequently, they can't necessarily be matched up to a particular person, especially by a service like Google that doesn't hand them out (an Internet service provider, the company admits, may present a different situation).
Google, for its part, responded to the Working Party's report with a defense of its existing practices. Without directly referencing the working party, Global Privacy Counsel Peter Fleischer lamented that the value of personal data in improving consumers' Web surfing experiences "is unfortunately sometimes lacking in discussions about online privacy."
Yahoo and Microsoft representatives said they were committed to promoting user privacy and still reviewing the European Commission's report.
Tough-as-nails , the European Union's head antitrust cop, issued a stern warning to any company planning to blow off the regulatory agency and European antitrust laws.
Neelie Kroes
(Credit: European Community)"If you flee the rules, you will be caught. And it will cost you dearly," warned Kroes during in press conference Wednesday, following the European Commission's announcement it was slapping a $1.35 billion fine on Microsoft for failure to comply with earlier March 2004 antitrust sanctions.
Kroes further noted: "Talk is cheap. Flee the rules and it will be expensive. We don't want talk and promises. We want compliance (with regulations)."
For Microsoft, its fine was calculated based on the 488 days it was out of compliance, Kroes said. And while Kroes characterized the fine as "substantial," she noted it represented 60 percent of the total assessment the Commission could have levied on Microsoft.
Meanwhile, readers who participated in a News.com poll were roughly split 60-40 on whether the Commission's fine was too low, or too high, respectively.
Kroes, however, maintained the size of the fine was reasonable, given the length of time that Microsoft was out of compliance with the historic March 2004 order and number of people, companies and government agencies affected.
"Microsoft continued to stifle innovation by charging other companies prohibitive royalty rates for the essential information they needed to offer software products to computer users around the world," Kroes said. "The high rates made the rendering of (interoperability) information pointless."
To comply with the March 2004 order, Microsoft was supposed to offer rivals complete and accurate interoperability information so that their products would work with Microsoft's dominant operating system, as well as offer the information at a reasonable price.
Any company looking to avoid a clash with Kroes needs to keep one thing in mind. Says the woman herself: "Our approach is to ensure companies and people have a right to choose...then the markets will deliver so much more."
AUDIO
EU antitrust chief on Microsoft
Neelie Kroes describes Microsoft's pricing structure as 'unreasonable.'
Download mp3 (429KB)
Antitrust chief talks tough
Kroes discusses the European Commission's approach to illegal behavior.
Download mp3 (466KB)
It's tough to please the European Commission on matters of antitrust. But then, Microsoft hasn't tried very hard.
The Commission just hit Microsoft with a $1.35 billion fine for being "unreasonable" over its proposed patent fee structure:
"Microsoft was the first company in fifty years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision," said European Competition Commissioner Neelie Kroes. "I hope that today's decision closes a dark chapter in Microsoft's record of noncompliance with the Commission's March 2004 decision and that the principles confirmed by the Court of First Instance ruling of September 2007 will govern Microsoft's future conduct."
News.com Poll
Now, why would she think that? The Commission has dinged Microsoft before with fines, to no effect. Clearly, it is using the wrong tools or perhaps has the wrong argument. The ironic thing is that Microsoft could reduce its patent fees from its initial 3.87 percent to 0 percent, and it wouldn't affect its business one iota.
... Read more
European regulators announced Monday they have struck an agreement with Microsoft that will bring the company into compliance with the European Commission's 2004 ruling on the company's anticompetitive practices.
The agreement identifies three changes in Microsoft business practices that will bring the firm into compliance: competing software developers will be able to access and use Microsoft's interoperability information; royalties for use of the interoperability information will be reduced to a nominal payment of 10,000 euros ($14,348); and royalties for a worldwide license for use of its product, including patents, will be reduced to 0.4 percent from 5.95 percent.
Microsoft has been under increased pressure to come to reach an agreement with the Commission since September, when a European court ruled in the regulators' favor on key issues in their case against the company.
For more information on Monday's news, see "Microsoft finally yields to EU order."
The European Union's Court of First Instance handed Microsoft a major defeat on Monday, slapping down the software maker's appeal in three significant areas of the historic antitrust case brought by the European Commission.
In the closely watched case, which has dragged on since March 2004, the Luxembourg-based court upheld the Commission's findings that Microsoft abused its dominant position in the market.
The highlights:
Interoperability. The court agreed with the Commission that Microsoft was stifling competition by withholding certain technical specifications, or protocols, from rivals. The court also agreed that the Commission wanted Microsoft to share only the system protocols, and not its source code. After all, not everyone wants to be "like" Microsoft.
"The court rejects Microsoft's claims that the degree of interoperability required by the Commission is intended in reality to enable competing work group server operating systems to function in every respect like a Windows system and, accordingly, to enable Microsoft's competitors to clone or reproduce its products," the Court of First Instance stated in its decision.
... Read more
Intel's legal team will be very busy for the next 10 weeks.
That's how long the world's largest chipmaker has to come up with an explanation for business practices that the European Commission has declared "abuse of a dominant market position." The Directorate-General for Competition on Thursday sent Intel a "statement of objections," which sounds like a polite way of doing business but is quite serious.
The EC cited three examples of objectionable conduct after it investigated Intel's practices and the European PC market at the request of AMD. First, it said Intel offers "substantial rebates" in order to get PC companies to use Intel's chips, and not AMD's, in its products. It expanded that charge to include payments allegedly made by Intel to delay or scuttle the launch of AMD-based PCs in Europe. And it also said that Intel has sold server processors below cost in order to hamper AMD's business.
"These three types of conduct are aimed at excluding AMD, Intel's main rival, from the market. Each of them is provisionally considered to constitute an abuse of a dominant position in its own right. However, the Commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy," the EC said in a press release Friday.
Now Intel has to prove that it either didn't do those things, or that the EC is misinterpreting Intel's business practices, said Bruce Sewell, Intel's general counsel and a senior vice president at the company. Intel does provide rebates to customers, but it argues that the rebate program doesn't run afoul of any fair competition laws. The company also thinks that its costs may not have been calculated correctly in this particular assesment.
But the burden is now on Intel to come up with a satisfactory explanation for its behavior. It will be interesting to see if AMD is able to use any decision against Intel in Europe as part of its antitrust case winding its way through a court in the lovely state of Delaware.
It's not clear that AMD would be allowed to present the results of a European decision in a U.S. courtroom, but it will presumably do its best to do so should the EC find against Intel. Intel has already suffered a legal blow in Japan, and if a similar result is found in Europe, it could be hard to prevent a U.S. court or the Department of Justice from taking a very close look at Intel's conduct here.
Intel has 10 weeks to submit a formal response in writing, and then the EC will either agree with Intel and remove the objections, ask for more information, or find against Intel and levy fines and sanctions. Stay tuned.
- prev
- 1
- next
