Updated at 7:40 a.m. PDT Wednesday with comments from a former Department of Justice antitrust attorney, and a Department of Justice spokeswoman.
The U.S. Department of Justice plans to gather information from third parties in a probe of the advertising deal struck last month between Google and Yahoo, according to sources familiar with these types of investigations.
Within the next week, the Justice Department is expected to issue civil investigative demands (CIDs) that seek documents from the third parties, said one source, noting the information requested could range from a general request on the competitive landscape to very specific requests involving Yahoo and Google.
Third parties that are expected to receive the CIDs include competitors, customers such as major advertisers, and potential partners, the source added.
Representatives for Yahoo and Google did not immediately return requests for comment. But the Justice Department made a brief statement.
"We're looking at the proposed transaction. We're conducting a civil investigation," spokeswoman Gina Talamona said, declining to offer details about the process or how long it would take.
Yahoo announced the nonexclusive partnership in June under which rival Google would supply it with some search ads, a move that could increase Yahoo search revenue but that also gives Google even more power in the market. Yahoo expects the 10-year deal to raise revenue by $800 million in its first year and to provide an extra $250 million to $450 million in incremental operating cash flow.
The partnership idea came to light during Microsoft's attempt to acquire Yahoo, which put more pressure on the Internet company to improve its financial results.
Faced with that financial challenge and a desire to push the Google ad deal through, Yahoo proposed to regulators that it subject the search advertising deal to a review process similar to one used for major mergers under the Hart-Scott-Rodino Act, said a source familiar with Yahoo.
Under the proposal, which was made to regulators when Microsoft still had a buyout offer on the table for Yahoo, the Internet search pioneer said it would give the Justice Department three and half months to review the deal before it implements the search advertising partnership.
After Microsoft's offer to acquire all of Yahoo was withdrawn, Yahoo could not tell the Justice Department it would not honor its earlier proposal, said the source familiar with the Internet company. The Justice Department and Yahoo later signed a memorandum of understanding that would give regulators time to review documents and interview executives and board members.
"This has been a formal investigation since day one, given its high-profile. There was never the option to have an informal investigation done," said the source, noting a formal investigation entails the Justice Department staff receiving the blessing from a superior like the assistant attorney general in the antitrust division. "And it would be negligent not to issue CIDs to third parties, when conducting a formal investigation."
Only general document requests made so far
The Justice Department has made very general document requests of Yahoo, noted the source. Such requests range from the paperwork and correspondence of executives and board members that address how a transaction or agreement would affect competition to documents on the search market and competitors. And while the document requests are currently general in nature, Yahoo will likely see more specific type of requests in the next 30 to 40 days, added the source.
To date, the Justice Department has not yet interviewed Yahoo executives or board members, but such requests are expected to be made between now and the first week in August, the source noted.
If the Yahoo-Google investigation moves at a pace similar to that of other antitrust cases, the Justice Department may get down to specific issues it wants to address within four to five weeks after Labor Day.
"When the DOJ says, 'We have concerns about...,' it usually means the field has been narrowed," said the source.
One former Justice Department antitrust attorney said the regulators will likely focus on one of two issues, or both--whether Yahoo will have an incentive not to compete as hard as it previously did against Google and whether there is a coordination of competition.
In an effort to dispel antitrust concerns surrounding the deal, Yahoo CEO Jerry Yang went to Capitol Hill in June and met with Sen. Herb Kohl (D-Wis.), who chairs the Senate Antitrust Subcommittee.
Kohl had previously expressed concerns that the deal between two technology search rivals could affect competition and have ramifications for advertisers and consumers. He said at the time that the antitrust subcommittee would investigate the competitive and privacy implications of the deal.
A congressional investigation, however, is separate from a Justice Department investigation.
In this particular case, which is not a merger of two companies, the Justice Department can't force Yahoo and Google to comply with its wishes in order to receive clearance on the deal. Instead, the regulators can either file a lawsuit before, during, or after Yahoo and Google begin their search advertising partnership.
In April, a limited two-week search ad deal was declared a success by Google and Yahoo, but even the limited partnership raised antitrust hackles at Microsoft. Microsoft brought up antitrust concerns when the search ad test began, saying the move would reinforce Google's dominance in the search ad business.
Google countered that search ads are only a narrow part of the online ad market and that Yahoo is the strongest company when it comes to the graphical "display" ads.
Google's share of the U.S. search market reached 68.29 percent in May, according to Hitwise's most recent numbers. Yahoo's share of the market declined to 19.95 percent from 20.28 percent at the same time.
The Washington Post first reported news of the CIDs on its Web site Tuesday evening, citing sources close to the inquiry.
CNET News.com's Dawn Kawamoto and Stephen Shankland contributed to this report.
Walt Disney's music label is expanding the Web presence of popular shows, such as Hannah Montana
(Credit: Walt Disney Records)LOS ANGELES--Only the mouse appears to thrive in a music sector pulverized by digital technology.
As the top four recording companies continue to see CD sales shrink and as they scurry to find profitable business models in the digital age, Walt Disney Records has grown 40 percent from last year according to Matt Fitz-Henry, the label's director of New Media.
Fitz-Henry, who spoke at a panel session at the iHollywood Conference on Monday, said that it's no secret how the company has found success in such a gloomy environment.
"What everybody in the music business is now talking about is the 360-deal," Fitz-Henry said. "The Disney company has been doing that for 50 years."
A 360 deal is the practice of promoting an artist across different entertainment genres and platforms, including the Web.
For example, Walt Disney Records oversees much of the work of Miley Ray Cyrus, of Hannah Montana fame.
Besides the TV show, Cyrus has released CDs, draws huge crowds of screaming young girls to her concerts and is scheduled to appear in Hannah Montana: The Movie. According to a story in Adweek, one of her two Web sites drew more than 280,000 unique visitors in April.
Another important ingredient is partnering with acts that appeal to children or tween-agers, a group that isn't likely to pirate the content. Some of the other properties on the label include franchises such as High School Musical and Camp Rock featuring the The Jonas Brothers.
According to Nielsen Soundscan, High School Musical 2 was the seventh largest selling digital album of 2007.
"The Internet is not only an important piece of our business, it's relevance continues to expand," Fitz-Henry said. Disney is focusing now on promoting acts in mobile by creating widgets that include audio, video, tour dates, Webisodes and photos.
Rural cell phone carriers want to put an end to exclusive deals between carriers and handset makers.
On Tuesday, the Rural Cellular Association, a group of more than 80 small and rural wireless providers, filed a petition with the Federal Communications Commission to investigate and adopt rules that would prohibit exclusivity arrangements between wireless carriers and cell phone manufacturers. In its petition the group said that these arrangements were unfair and stifled customer choice. The group also believes these deals decrease competition and violate the 1996 Telecommunications Act.
(Credit:
Apple)
The most prominent example of such a deal is the Apple iPhone. AT&T has the exclusive right to sell the iPhone, which was introduced first in the U.S. market in June. Neither Apple nor AT&T has publicly said how long the exclusivity arrangement will last, but it's been reported to be at least five years. Verizon Wireless also has an exclusive deal to sell the LG Voyager, another popular smartphone.
The RCA says that some people living in rural areas can't subscribe to service from a big carrier like AT&T or Verizon and are therefore locked out of getting these cool phones.
"It is important that all Americans have equal access to the latest technology, including wireless devices, regardless of where they live or which carrier provides the service," David Nace, counsel to RCA, said in a statement. "RCA is standing up for consumers' rights and putting an end to exclusivity arrangements that create another 'digital divide' between urban and rural America."
That said, RCA isn't just looking out for consumers. The truth is that smaller rural carriers are hardly ever offered exclusive handset deals because they have far fewer subscribers than the big four: AT&T, Verizon Wireless, Sprint Nextel, and T-Mobile. And this makes it hard for them to compete.
But getting rid of exclusive deals won't be easy. These deals are an integral part of the U.S. wireless industry that helps both manufacturers and mobile operators make a lot of money. Manufacturers shop hot new handsets around to different operators searching for the carrier that will pay the most for exclusivity. Mobile operators benefit because having access to the hottest, new handset can draw new customers and keep existing customers who might have looked elsewhere.
So unless the FCC or Congress steps in, exclusive deals for hot handsets won't likely go away anytime soon. That said, some operators, such as Verizon Wireless, are moving toward open networks. And as networks become more open, handsets from one carrier could be used on a network of another carrier. If that happens, the days of exclusive deals could really be over.
MySQL, the open-source database maker that Sun Microsystems bought earlier this year, recently closed a $10 million deal, according to Sun CEO Jonathan Schwartz.
Schwartz noted the deal Saturday in a Twitter Q&A related to the Web 2.0 Expo.
A $10 million deal...that's big, even by Oracle standards. It's the sort of deal that big companies do with other big companies. Here's what Schwartz said:
...(T)he MySQL team just closed the single largest deal in the history of MySQL, a $10m deal to a global technology company. I'm pleased as punch with the progress we're making there, and we're deluged with inquiries from traditional enterprises (vs. Web 2.0 companies) wanting to know how to get enterprise support for a product they've used in development, but have, until now, not felt comfortable putting into commercial deployment. Now they feel comfortable deploying it - and we're right there with them to help make it happen.
All I can say is "Wow, wish I'd have got the commission check for that one!" A $1 million deal takes time but is doable. A $10 million deal? That is truly impressive, no matter where you work. (Congratulations to Mark Burton, Kerry Ancheta, and others who were likely involved.)
P.S. I'm guessing the deal was made with Cisco Systems, Google, or Yahoo.
Correction: I originally posted that Qtrax uses MusicIP. According to a PR representative from that company, Qtrax has no deal with MusicIP--the companies have talked, but no deal has been signed. Apologies for not double-checking all my facts.
I was finally able to get the Qtrax 0.2 beta client, and it's clearly based on Songbird.
The ads work, the downloads don't.
(Credit: Screenshot)Songbird defies easy summarization: it's an open-source project, based on the Mozilla platform, that intends to ease the creation of digital media apps. The basic app is a straightforward music library organizer and player (some of Songbird's founders worked on Winamp), and Songbird offers resources for developers to create customized versions of this basic player (think APIs, documentation, sample code, a loose license, and so on). It's an intriguing project, but I hadn't seen any compelling reason to download it.
The experience is akin to using a skinned version of Firefox: the "browser" appears in the middle of the screen, and defaults to a Qtrax page that offers featured artists, such as Foo Fighters and Amy Winehouse. Surrounding this screen are various other UI elements, including the all-important advertisements. From the home page, you can register via a link on the upper right-hand side of the page (see screenshot), and once you've confirmed your registration via e-mail, you're ready to use Qtrax's search engine to find songs. These songs aren't stored in any Qtrax database.
Qtrax found my test case, UFO's "Love to Love"--about 10 different versions, in fact--but the download button gave me an disappointing but not surprising message that downloads are coming soon. Apparently until the licensing deals are worked out, there's no there there.
To register with Qtrax, download the client, follow a download link from the front page, and follow the "Register" link from the upper-right hand corner. But once you've done that, you'll still be waiting for downloads to be enabled.
(Credit: Screenshot)
Some sellers are pricing this hard drive at over $100. Just yesterday, I bought one from another seller for $80. Now it's reduced to $50. Ain't that always how it goes? Don't miss out on this handy solution for your non-portable data storage needs.
WD 80GB HD
(Credit: CNET Networks)What: Western Digital MyBook 80GB USB 2.0 external hard drive
How much:$49.99
Shipping: Free
Where: Buy.com (via Dealnews)
When: Through unknown date
Click here for CNET product review.
4GB Zune
(Credit: CNET Networks)OfficeMax, BuyDig, and other sellers are offering Microsoft's MP3 player at around a 30 percent discount this week. It's the size of a cigarette lighter, it's easy to use, and it's particularly well-priced at the moment. The bottom line on this item, from CNET Reviews' analysis: "While the full-size Zune is a better value, the solid-state flash memory used in the 4GB and 8GB versions make them better suited for physically active (or clumsy) users."
What: 4GB Microsoft Zune MP3 player
How much: $149.99
Shipping: Varies
Where: BuyDig
When: Through December 8
Click here for CNET's product review.
Magellan Maestro 3100 GPS
(Credit: CNET Networks)Santa himself uses a bit more advanced version, but this should get you over the river and through the woods to Grandma's house with no problem. The Maestro 3100 is a basic portable GPS system, offered today at a 50 percent price reduction--and free shipping--at BuyDig. This unit's sleek simplicity is one of its best assets, since you'll do all your interface on the touch screen, never getting distracted from the road by trying to figure out which of several buttons to push. The 3.5-inch screen, though not the largest on the market, is crisp, bright, and easy to read.
What: Magellan Maestro 3100 portable GPS system
How much: $159.99
Shipping: Free
Where: BuyDig
When: Through unknown date
Click here for product review.
Sony DSCT20 Cyber-shot camera
(Credit: CNET Networks)With the holidays, as they say, "upon us," you might want to take a bunch of pictures. They're useful for reminding yourself how grandpa looks passed out on the lounger post-turkey, staying in touch with family, and proving that you have friends documenting good times.
If you want an easy point-and-shooter, this might be a good way to go. It's an ultracompact camera with great reviews and a nice discount. Offered elsewhere at $300, it's available at Butterfly Photo for $220.
What: Sony DSC-T20 Cyber-shot digital camera
How much: $219
Shipping: Free
Where: Butterfly Photo
When: Through unknown date
Click here for CNET's product review.
Logitech wireless receiver
(Credit: CNET Networks)This digital receiver transmits a signal from your PC to the receiver component, then pipes your playlist or streaming radio through your home (or office) audio system. It was one of the first on the market to use Bluetooth.
You can now have the highly rated computer-based wireless system for around a two-thirds discount. Originally listed by most sellers at $150 or so, Buy.com's offering it now for $40, with free shipping.
What: Logitech wireless music system for PC
How much: $39.99
Shipping: Free
Where: Buy.com (via Dealhack)
When: Through unknown date
Click here for CNET's product review.
