Yahoo Chairman Roy Bostock fired back at Carl Icahn Wednesday evening, accusing the investor of having no comprehension of the facts and no plan for the company besides selling it to Microsoft.
"Your letter seriously misrepresents and manipulates the facts regarding the recent events pertaining to Microsoft and Yahoo," Bostock said in a letter to Icahn. "Conspicuously absent from your letter is any credible plan for Yahoo other than a repetition of your insistence that the company should sell itself to Microsoft."
Bostock's letter came in response to one earlier in the day from Icahn, who accused Yahoo CEO of trying to sabotage Microsoft's acquisition attempt and suggested the company rescind a severance plan detailed in a shareholder lawsuit Yahoo failed to keep under seal.
The severance plan in effect would raise an acquisition price. The severance plan was indeed a major sticking point in the Microsoft-Yahoo negotiations, a source familiar with the situation said.
Here's the full text of Bostock's letter:
Dear Carl:
We are in receipt of your letter of June 4th and take issue with its content.
Your letter seriously misrepresents and manipulates the facts regarding the recent events pertaining to Microsoft and Yahoo!. You rely on, as "facts," a series of unsubstantiated allegations from a complaint filed in a Delaware court which grossly misstate the very clear record and position established by the Yahoo! Board. Let me elaborate:
You make reference to our employee retention plan but you significantly mischaracterize its purpose and its effect. In fact, you refer to it as a "Poison Pill" which could not be further from the truth. To set the record straight, the employee retention program is designed to protect the Company's assets and value during a time of uncertainty. The claim that the plan gives each of Yahoo!'s employees "the right to quit his or her job and pocket generous termination benefits at any time during the two years following a takeover..." is just plain wrong. In fact, our plan has a "double trigger" which means that in order for an employee to be eligible for benefits under our plan, there would need to be a change of control AND the employee would need to be terminated "Without Cause" or resign for "Good Reason." That means that in contrast to your assertions, an employee who simply quits his or her job would receive nothing under our plan.
The retention plan is intended to help us preserve and enhance shareholder value by allowing Yahoo! to continue to attract and retain the industry's best talent, and to allow employees to stay focused on implementing Yahoo!'s business strategy. In fact, the plan was adopted in order to protect the value of Yahoo! in anticipation of a possible acquisition by Microsoft which would have resulted in a lengthy regulatory review and a significant period of uncertainty for our employees. In adopting this plan, we believe Yahoo! did the right thing for its employees and its shareholders alike.
This plan was fully disclosed at the time of its adoption and should be no surprise to anyone at this point. It was disseminated to employees, publicly filed and extensively covered by the media. Significantly, as you note, Microsoft had indicated that it was prepared to spend $1.5 billion on retention incentives indicating that they too recognized that the retention of Yahoo! employees would have been critical if there had been an acquisition.
Finally, you significantly misrepresent the events of the recent past. Notably, you accuse us of turning down a $40 per share offer and "sabotaging" a $33 per share offer. Again, this is patently untrue. Yahoo!'s Board of Directors has at all times been focused on maximizing shareholder value. As has been well documented, Yahoo! has engaged in thorough discussions with Microsoft over a series of months culminating in Microsoft's decision to walk away from a potential acquisition of Yahoo!. Throughout this process, which has included an exploration of multiple strategic alternatives with multiple parties, the Board has repeatedly stated that it is open to any transaction, including a sale to Microsoft, as long as it is in the best interests of shareholders.
You seem to be under the impression that somehow Microsoft will come back to the negotiating table for a full acquisition of Yahoo!. This is puzzling as I know you are aware that we have reached out to Microsoft proactively and met with them many times in the last several weeks. During this period, their message to us and to the markets has been and remains that they are not interested in pursuing a full acquisition of Yahoo!.
Conspicuously absent from your letter is any credible plan for Yahoo! other than a repetition of your insistence that the Company should sell itself to Microsoft. Indeed, your stated view that "the only way to salvage Yahoo! in the long if not short run is to merge with Microsoft" demonstrates that you have no other plan and causes one to wonder what exactly would happen to our Company if you and your nominees were to take control of Yahoo!.
Sincerely,
Roy Bostock Chairman of the Board
The FBI has backed down on a secret request for information about a user of the Internet Archive digital library, thanks to a legal challenge from two prominent advocacy groups.
The case, which was brought by the Electronic Frontier Foundation and the American Civil Liberties Union on behalf of the archive, dates to last year but only became public on Wednesday. That's because the type of request involved, known as a national security letter (NSL), is accompanied by a gag order that forbids the recipient from disclosing its existence or discussing it with anyone except his attorneys, who are also gagged. As a result of a settlement, the FBI agreed to withdraw the national security letter and to lift the gag order.
Internet Archive founder and digital librarian Brewster Kahle
(Credit: Internet Archive)The 2001 Patriot Act and its subsequent reauthorization dramatically expanded the FBI's ability to use NSLs, which do not require a court order and are supposed to be used only in investigations related to terrorism. Investigators are able to use the tactic to obtain customer records and logs from Internet service providers, telephone companies, financial institutions, but Congress in 2006 imposed limits on the FBI's ability to use NSLs on libraries. The EFF said this is the first known case to challenge an NSL served upon a library since those legal changes took effect.
The situation with the Internet Archive began last November, when the FBI served founder Brewster Kahle with an NSL (PDF) seeking an unspecified individual's name, address, and "any electronic communication transactional records" (i.e., not the content of communications, but logs of activity) pertaining to the user. Kahle, who is an EFF board member, believed the request was overbroad and decided to challenge the query in court, handing over only publicly available documents in the mean time.
"The free flow of information is at the heart of every library's work," Kahle said in a statement Wednesday. "That's why Congress passed a law limiting the FBI's power to issue NSLs to America's libraries. While it's never easy standing up to the government--particularly when I was barred from discussing it with anyone--I knew I had to challenge something that was clearly wrong."
The Internet Archive, founded in 1996, is a repository for archived Web sites, public domain books, concert recordings, and films, among other things. It has about half a million registered patrons and, according to the EFF, does not collect IP addresses of those who submit items to the collections or of those who read, view, or listen to its collections.
The Bush administration is hardly a stranger to lawsuits targeting its use of NSLs, and its challengers have met with some success in recent years. Last fall, for instance, a federal judge ruled the surreptitious requests for information were unconstitutional. A federal appeals court is expected to hear the government's appeal next month, the EFF said.
In addition, the FBI has taken heat two years in a row from the Department of Justice's inspector general--and, by extension, members of Congress--for misusing its NSL powers, including making attempts to seek and get information that would otherwise require a court order. The FBI says it has since instituted more internal checks on the process.
The police agency on Wednesday was quick to defend its actions in the Internet Archive case and the NSL approach more broadly. Here's a snippet from a statement released by spokesman John Miller:
"The information requested in the National Security Letter was relevant to an ongoing, authorized national security investigation. National Security Letters remain indispensable tools for national security investigations and permit the FBI to gather the basic building blocks for our counterterrorism and counterintelligence investigations. Internet Archive voluntarily provided publicly available information to the FBI, and identified for the FBI that information it possessed which was not publicly available. Internet Archive's refusal to disclose this information formed the basis of its civil suit, which the parties have now resolved through settlement."
Attorneys for Kahle said they considered the settlement a great victory. But they again voiced concern that untold numbers of improper NSLs have gone unchallenged because of their secretive nature.
"It appears that every time a national security letter recipient has challenged an NSL in court and forced the government to justify it, the government has ultimately withdrawn its demand for records," Melissa Goodman, an ACLU staff attorney who worked on the case, said in a statement. "In the absence of much needed judicial oversight--and with recipients silenced and the public in the dark--there is nothing to stop the FBI from abusing its NSL power."
The Bush administration plans to fight a recent court decision that threatens to curb its powers to obtain logs of Americans' Internet activities without court approval.
As expected, the U.S. Department of Justice on Monday filed a notice that it plans to appeal a September federal court ruling that declared the surveillance tactic, known as a national security letter, to be unconstitutional. The government's filing was one paragraph long and came with no additional comment, according to the Associated Press.
The power to use national security letters has been around for a few decades, but it was effectively expanded by the controversial Patriot Act after the September 11 terrorist attacks. The law allows FBI agents to send Internet service providers secret demands for logs of things like e-mail correspondence and search queries, without obtaining a judge's approval in advance. That authority, which can also be used to obtain bank and telephone records, is only supposed to be used for investigations related to terrorism.
The letters are typically accompanied by gag orders restricting the recipient's ability to disclose their contents. In the case at hand, U.S. District Judge Victor Marrero in New York ruled those gag orders aren't "sufficiently narrowly tailored" and therefore trample on the First Amendment.
Unlawful use of national security letter powers by the FBI has already been documented by internal auditors. Earlier this year, the Justice Department inspector general issued a report documenting "serious misuse" of the technique, drawing congressional ire but no concrete penalties, since unlawful of national security letters isn't technically a felony.
The American Civil Liberties Union filed the lawsuit challenging the national security letters on behalf of an anonymous Internet service provider. The president of that unnamed company spoke out against the gag order provision in a statement released by the ACLU on Monday.
"Perhaps the most harmful consequence of the gag provisions is that they make it difficult or impossible for people like me--people who have firsthand experience with the NSL statute--to discuss their specific concerns with the public, the press, and Congress," the "John Doe" plaintiff said in a statement. "This seems to be counterintuitive to everything I assumed about this country's commitment to free speech and the value of political discourse."
Jameel Jaffer, director of the ACLU's National Security Project, said he was confident the appellate court would back the lower court's conclusions.
Dear RIAA,
As the watchdog for the so-called "recording industry," I expect you to preserve and protect the viability and future growth of the recording industry. In fact, I don't even have a problem with you doing that. But sad as it as, your tactics have come under attack by those on both sides of the "piracy" fence imploring you to find something better to do with your time. Isn't it time you listen to your critics and realize that your tactics are making you one of the most hated organizations in the world?
Now, I'm sure you've heard this before and you have actually come to expect a technology pundit to criticize you for being the bully that will eventually get punched in the nose. In fact, I'm sure some of you will try to laugh this letter off as another naive attempt to bring an end to your scare tactics. But what you may not realize is you can only bully for so long and you can only push us as long as we want you to. Because eventually, my friends, we will push back--harder.
... Read moreDon Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
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