Apple reportedly plans to use Intel 5G modem in 2020, but will it be any good?

Apple has boxed itself into a corner by going to war with Qualcomm, so a lot rides on the competitiveness of Intel’s 5G modem.

Fast Company has reported that Apple intends to use the Intel 8161 5G modem in its 2020 iPhones as part of its already-known strategy of switching to Intel as its sole provider of modems. This move seems to be largely driven by Apple’s dispute with Qualcomm over how much it charges for its chips.

When large companies declare legal war on each other the dispute usually metastasises as their respective legal teams search for further dirt they can use as leverage in the ongoing negotiations. These things usually conclude in an out-of-court settlement, the terms of which are largely determined by the relative legal strength of the respective positions.

The more likely one party is to win a court case, the stronger its position in the pre-case negotiation, which is why Qualcomm has been so keen to prove that Apple committed industrial espionage in sharing Qualcomm trade secrets with Intel in order to help it produce better modems.

While Qualcomm’s most recent court filing broadly outlines fresh allegations resulting from the discovery process, conversations we had at its recent event in Hong Kong suggested Qualcomm has got hold of emails that prove the alleged passing on of protected intellectual property took place.

If Apple did indeed offer Intel a helping hand, something that Intel denies, then the clear inference is that Intel’s modems were of insufficient quality without cheating. A worst case scenario might be that the 5G modems Apple apparently intends to use would be declared illegal, but even if that doesn’t happen there will be questions over the 5G performance of those iPhones versus phones running Qualcomm modems.

So, assuming this rumour is accurate, a hell of a lot is riding on those first Intel 5G modems. If they’re rubbish then not only will that be a direct competitive win for Qualcomm, but the sales and reputation of the iPhone are likely to suffer too. In its desire to dominate its suppliers Apple is forcing itself to make some technology choices that may be far more costly than any money saved on components.

Intel triggered into joining Qualcomm Apple spat

Qualcomm has accused Intel of cheating at modems with Apple’s help, but Intel’s weak public riposte is unlikely to sway much opinion in its favour.

Judging by the general quality of their press releases all three of the companies involved in this spat refuse to issue a single public utterance until every syllable has been pored over by battalions of lawyers. As a consequence, when they decide to slag each other off via the media the result falls pretty far short of Wildean in its wit.

To be fair to Qualcomm, its latest allegations weren’t strictly public, although you have to wonder what the source of the court filing leak that resulted in the rest of the world knowing about it was. Essentially Qualcomm is questioning how Apple was able to replace its modems with Intel ones in the latest iPhones and figured it must have given Intel trade secrets to ensure its modems were up to the job.

Intel’s General Counsel Steven Rodgers posted a riposte entitled ‘Qualcomm’s Rhetoric Pierced’, which promised all kinds of rebuttals, refutations and rebukes but instead delivered a disappointingly generic whinge that amounted to ‘how dare you?’ It started fairly promisingly with a round up of all the fines Qualcomm has been hit with over the past couple of years for violating competition laws.

But then it degenerated into a general purpose moan about how unfair the allegations are when everyone at Intel works really hard, actually. “We are proud of our engineers and employees who bring the world’s best technology solutions to market through hard work, sweat, risk-taking and great ideas,” pouted Rodgers. “Every day, we push the boundaries of computing and communication technologies. And, the proof is in the pudding: Last year, the U.S. Patent Office awarded more patents to Intel than to Qualcomm.”

The correct form of the proverb is ‘the proof of the pudding is in the eating’, but if Intel chooses to keep its patents inside some form of dessert, who are we to judge? “For the most part, we have chosen, and will continue to choose, to respond to Qualcomm’s statements in court, not in public,” said Rogers, showing the acute judgment that you would expect of a senior Lawyer. Qualcomm has yet to publicly respond.

US contemplates its own version of GDPR

The U.S. National Telecommunications and Information Administration has started a 30-day public hearing process to gather comments on its policy options towards consumer privacy protection.

Shortly after Europe’s General Data Protection Regulation (GDPR) came into force in late May, “a global tidal wave of new and updated privacy regulations” have followed hot on the heels of GDPR as it was called at the recent Digital Futures conference (see the picture). Regulations and laws passed in jurisdictions from India to California with other markets in between have largely modelled after the European legislation.

In the latest move, on Tuesday September 25, the US federal government, through the National Telecommunications and Information Administration (NTIA), kick-started a month-long process to hear from the public on the approach towards privacy protection.

“The United States has a long history of protecting individual privacy, but our challenges are growing as technology becomes more complex, interconnected, and integrated into our daily lives,” said David Redl, NTIA Administrator and Assistant Secretary of Commerce for Communications and Information. “The Trump Administration is beginning this conversation to solicit ideas on a path for adapting privacy to today’s data-driven world.”

The feedback requested is two-fold. The first part is on the outcome of any future privacy legislation. This includes:

  • Organizations should be transparent about how they collect, use, share, and store users’ personal information.
  • Users should be able to exercise control over the personal information they provide to organizations.
  • The collection, use, storage and sharing of personal data should be reasonably minimized in a manner proportional to the scope of privacy risks.
  • Organizations should employ security safeguards to protect the data that they collect, store, use, or share.
  • Users should be able to reasonably access and correct personal data they have provided.
  • Organizations should take steps to manage the risk of disclosure or harmful uses of personal data.
  • Organizations should be accountable for the use of personal data that has been collected, maintained or used by its systems.

All these are rather similar to what GDPR and the up-coming e-Privacy regulation are designed to achieve.

Meanwhile the NTIA is also requesting comments on the overall “High-Level Goals for Federal Action”, the key points including:

  • “Harmonize the regulatory landscape” between existing and future legislations;
  • “Legal clarity while maintaining the flexibility to innovate” to enable new business models and technologies while privacy is protected;
  • “Comprehensive application” to “all private sector organizations that collect, store, use, or share personal data in activities that are not covered by sectoral laws”;
  • “Incentivize privacy research” in technologies and services that improve privacy protections.
  • FTC should be the enforcement agency

However a few other points stand out that deserve a closer look. One probably deserves a full quote:

Employ a risk and outcome-based approach.  Instead of creating a compliance model that creates cumbersome red tape—without necessarily achieving measurable privacy protections—the approach to privacy regulations should be based on risk modeling and focused on creating user-centric outcomes.  Risk-based approaches allow organizations the flexibility to balance business needs, consumer expectations, legal obligations, and potential privacy harms, among other inputs, when making decisions about how to adopt various privacy practices.  Outcome-based approaches also enable innovation in the methods used to achieve privacy goals.  Risk and outcome-based approaches have been successfully used in cybersecurity, and can be enforced in a way that balances the needs of organizations to be agile in developing new products, services, and business models with the need to provide privacy protections to their customers, while also ensuring clarity in legal compliance.

NTIA’s focus is clearly to avoid heavy-handed measures to regulate what can be done, but rather giving flexibility to businesses to make their own judgement what measures to take. This is also in the same spirit as the first part of the consultation which is “focuses on the desired outcomes of organizational practices, rather than dictating what those practices should be.”

Another point that draws our attention is related to “Scalability”, which stresses that small companies operating in good faith, and 3rd party processing data on behalf of other organisations should be treated differently from big companies that own and control personal data.

The two points above combined make a balanced message for the internet giants, which are not necessarily the biggest fans of privacy regulations. While they are afforded more flexibility, they are also going to be treated more strictly if they contravene. However as we wrote earlier, because of their size, the Googles and Facebooks of the world are much quicker in ticking the compliance boxes.

One more point that worth highlighting, probably for entertainment purposes than anything else, relates to “Interoperability” with other major global legislations. Here, for whatever reason it pointedly does not refer to GDPR but uses the example of “APEC Cross-Border Privacy Rules System.”

In general, the NTIA’s approach is balanced and measured, which is largely in line with our attitude towards privacy protection. On one hand we deplore the blatant abuse of privacy by companies like Facebook and Cambridge Analytics. On the other hand, we also sympathise with the small and medium-sized businesses operating in Europe, most of which had to scramble some policies at the eleventh hour, but may still fall foul of consumers. France’s private data protection agency CNIL (Commission nationale de l’informatique et des libertés) registered a 64% increase in consumer complaints after GDPR came to force over the same four months last year.

As Mary Meeker highlighted, draconian laws could limit the exploratory nature of tech innovators. That many countries model their privacy legislation after GDPR confirmed that Europe’s policymakers are “world-class in setting standards”, as a recent article in The Economist put it. But in the same article the newspaper also highlighted the gap between Europe and the AI leaders, China and US, neither of which is role model in guarding individual privacy, though for entirely different purposes.

In a recent Telecoms.com online poll, a third of the respondents agreed with the statement that there should be “flexible rules to allow users to trade privacy for benefits”. An optimal regulatory environment should give this minority group the freedom to do so while providing the other two third consumers with strict privacy protection.

The Children Act: US lawmakers asking to know how YouTube collects data on children

US Congressmen have demanded Google CEO answers questions on how YouTube tracks the data of minors.

Anyone who has been a parent to toddlers or pre-schoolers in the last dozen years must have felt, like it or not, YouTube has been a wonderful thing. It does not only provide occasional surrogate parenting but also delivers much genuine pleasure to the kids, from entertainment to education, with sheer silly laughter in between.

Meanwhile we have also recognised that YouTube can be a pain as much as a pleasure. The pre-roll and interstitial ads on such content are all clearly pushed at kids, in particular game and toy shopping; recommendations are based on what has been played therefore encouraging binge watching; not to mention the disturbing Peppa Pig or Micky Mouse spoof parodies that keep creeping through, a clear sign that, while you are watching YouTube, “YouTube is watching you”.

But neither the pleasure nor the pain should have been there in the first place, because, though not many of us have paid attention, “YouTube is not for children”, as the video service officially puts it. In its terms of service YouTube does require users to be 13 years and above. But, unlike Facebook, which would lock the user out unless he has an account, anyone can watch YouTube without the need of an account. An account is only needed when someone intends to upload a clip or make a comment. Even in situation like this, children can pretend to be above the age limit by inputting a faked date of birth, or simply by using someone else’s account. And YouTube has known that all along, it even teaches users how to make “family-friend videos”. Admit it or not, YouTube is for children.

Following complaints from 23 child and privacy advocacy groups to the Federal Trade Commission (FTC), two congressmen, David Cicilline (D) of Rhode Island, and Jeff Fortenberry (R) of Nebraska, sent a letter to Google’s CEO Sundar Pichai on September 17, demanding information on YouTube’s practices related to collection and usage of data of underaged users. The lawmakers invoked the Children’s Online Privacy Protection Act 1998 (COPPA), which forbids the collection, use or disclosure of children’s online data without explicit parental consent, and contrasted it with Google’s terms of service which give Google (and its subsidiaries) the permission to collect user data including geolocation, device ID, and phone number. The congressmen asked Google to address by October 17 eight questions, which are essentially related to:

  • What quantity and type of data YouTube has collected on children;
  • How YouTube determines if the user is a child, what safeguard measures are in place to prevent children from using the service;
  • How children’s content is tagged, and how this is used for targeted advertising;
  • How YouTube is positioning YouTube Kids, and why content for children is still retained on the main YouTube site after being ported to the Kids version

Google would not be the first one to fall foul of COPPA. In a recent high-profile case, FTC, which has the mandate to implement the law, fined the mobile advertising network inMobi close to $1 million for tracking users’, including children’s location information without consent.

This certainly is a headache that Google can do without. It has just been humiliated by the revelation that users’ location data was still being tracked after the feature had been turned off, not to mention the never-ending lawsuits in Europe and the US over its alleged anti-trust practices. It also, once again, highlights the privacy minefield the internet giants find themselves in.  Facebook is still being haunted by the Cambridge Analytica scandal, while Amazon’s staff were selling consumer data outright.

Nine years before COPPA came into force, an all-encompassing Children Act was passed in the UK in 1989. In one of its opening lines the Act states “the child’s welfare shall be the court’s paramount consideration.” This line was later quoted by the author Ian McEwan in his novel, titled simply “The Children Act” (which was recently made into a film of the same title). In that spirit we laud the congressmen for taking the action again YouTube’s profiteering behaviours. To borrow from McEwan, sometimes children should be protected from their pleasure and from themselves.

Amazon China staff were reportedly selling-on user data

Amazon is conducting an internal investigation into allegations that its staff in China received bribes from merchants for user data.

According to a report by the Wall Street Journal, staff of the online retailing giant’s China operation received between $80 and more than $2,000 to part internal user and sales data to brokers, who would then re-sell them to merchants who do business on Amazon platform. According to the WSJ report, it was not only Amazon’s internal sales metrics and users’ email addresses that were sold, also on offer was additional services. The staff would help the buyers to delete negative reviews and to re-open banned Amazon accounts.

It is said the malpractice was particularly rampant in Amazon’s office in Shenzhen, the city bordering Hong Kong. It is not the first time China’s online retailers suffered from data security comprise. Back in 2016 over 20 million of Alibaba’s users had their data hacked. Nor is this the first time that Amazon has found itself in the centre of data leaking controversies, but earlier cases were related to its cloud service AWS. So it is astonishing that in the present case, data was not breached by hacking but through blatant criminal transactions. It is not clear how many users have had their data sold.

Amazon released a statement saying “We have zero tolerance for abuse of our systems and if we find bad actors who have engaged in this behaviour, we will take swift action against them, including terminating their selling accounts, deleting reviews, withholding funds, and taking legal action.”

Amazon set up its business in China in 2004 after acquiring a competing online bookshop Joyo with $75 million. It was rebranded Amazon China in 2011.

Huawei claims Australian ban is politically motivated

Chinese kit vendor Huawei has ramped up its rhetoric following the recent announcement that it is barred from the Australian 5G market.

“The Australian Government’s decision to block Huawei from Australia’s 5G market is politically motivated, not the result of a fact-based, transparent, or equitable decision-making process,” said Huawei in a lengthy public statement. Much of it was a fairly standard diatribe about the importance of competition, apparently designed to appeal to the Australian public.

The more substantial stuff attacked the basis for the decision, which essentially amounted to a profound distrust of the Chinese state and concern that it would use Huawei (or ZTE) to get up to no good if it had half the chance. The original statement didn’t offer any concrete evidence for these concerns, however, and that seems to be especially galling to Huawei.

“Chinese law does not grant government the authority to compel telecommunications firms to install backdoors or listening devices, or engage in any behaviour that might compromise the telecommunications equipment of other nations,” says the statement. “A mistaken and narrow understanding of Chinese law should not serve as the basis for concerns about Huawei’s business. Huawei has never been asked to engage in intelligence work on behalf of any government.”

While there’s no reason to question any of that, it’s also easy to see why it provides insufficient reassurance to a country worried about the intentions of the Chinese state. President Xi Jinping has been steadily increasing his control over the Communist Party and could potentially either change the law or act extra-judicially in order to force Huawei to play ball in future.

Another good query raised in the Huawei statement concerned the technological basis for the decision, which flagged up 5G as presenting a far more significant security challenge thanks to its distributed architecture. There is no fundamental difference between 5G and 4G network architecture; the core networks and access networks are still separated,” said the statement.

“Moreover, 5G has stronger guarantees around privacy and security protection than 3G and 4G. We urge the government to take an objective and fact-based approach to security issues, and work together on effective long-term solutions. Open dialogue, joint innovation, and close collaboration are essential to the ongoing development of the telecommunications industry.”

The techies advising the Australian government would presumably take issue with that statement, but it’s hard to argue with a request to address security concerns collaboratively. The statement concludes defiantly by criticizing Australia for failing to follow due process or give Huawei the opportunity to defend itself before taking this surprise, unilateral action.

“The Australian government’s actions undermine the principles of competition and non-discrimination in fair trade,” said the statement. “The government has not issued any specific concerns about Huawei’s governance, security, or suitability to safely and securely conduct business in Australia, so we’ve been given nothing to respond to. We will continue to engage with the Australian government, and in accordance with Australian law and relevant international conventions, we will take all possible measures to protect our legal rights and interests.”

One of the co-signatories of the decision was Scott Morrison, who has completed a busy week by becoming the new Australian Prime Minister. The incumbent, Malcolm Turnbull, was booted out by his own party following profound disagreements over its immigration and energy policies. There will have to be a proper general election before long but this development would seem to cement the move for the time being at least.

It’s hard to avoid the conclusion that Huawei is being treated as a proxy in the escalating diplomatic tensions between China and the west. It may well be as innocent as it claims, but the opacity of the Chinese government and its apparently limitless global ambition is increasingly causing western governments to err on the side of caution.

It’s probable that the Australian decision was initiated by Turnbull in a failed attempt to placate hardliners with his party, but it also seems likely that US President Trump is putting pressure on allied countries to join him in his bid to shackle China. This is bad news for Huawei, which may well end up having to repurpose that statement for other countries in the not too distant future.

Telecoms M&A: Enforcers take aim at gun-jumping

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Jean-Julien Lemonnier, Counsel at international law firm White & Case, takes a look at the issue of ‘gun-jumping, which has recently landed Altice in hot water.

Telecoms multinational Altice recently found itself under fire for conduct around its acquisition of Portugal Telecom, receiving a record breaking €125 million euro fine in April 2018 from the EU commission for ‘gun-jumping’. This is not the first fine imposed on Altice for gun-jumping. In November 2016, the company was fined (€80 Million) by the French Competition authority on the same grounds (acquisition of SFR and another company).

Gun-jumping, or a breach of the standstill obligation, is a violation which occurs when parties take steps to implement a transaction prior to having received clearance from the competition authorities. Parties involved can be fined and ordered to unwind any steps they have taken.

With regulators across the globe increasingly monitoring and taking action against gun-jumping, and an apparent surge in M&A activity across the Telecoms sector, companies involved in these deals need to be aware of the issue and how to avoid falling foul of the rules.

What does gun-jumping entail?

Most practitioners classify gun-jumping as a scenario in which the parties to a transaction appropriately send formal notification of the transaction to the relevant competition agency, but then coordinate their activities during the mandatory pre-closing suspensive period. This conduct is referred to as ‘substantive gun-jumping’, and it usually leads to an intricate approach by competition authorities involving several theories of harm. Competition enforcers also often look into what is called ‘procedural gun-jumping’, which is a separate infringement for a complete absence of any filing before the respective authority (see for instance the recent decision of the Danish Competition and Consumer Authority, that saw companies fined approximately €540.000 for not notifying a merger).

Why is gun-jumping a trending topic in 2018?

Gun-jumping has been in the spotlight for the past several years and telecoms companies need to be keenly aware of the increasing activism of local and global antitrust enforcers. Recently, both procedural and substantive gun-jumping have been widely sanctioned, with several fines ranging in the millions of euros.

A clear trend can be discerned in cases spanning all continents and sectors. In 2016, in North America, the US Department of Justice fined Flakeboard and SierraPine a combined total of close to US$5 million dollars for pre-closing coordination conduct in violation of the Hart-Scott-Rodino and Sherman antitrust acts. The same year in South America, CADE, the Brazilian competition agency, sanctioned Cisco and Technicolor approximately €8 million after having issued gun-jumping guidelines in 2015.

In Asia, MOFCOM, the Chinese competition enforcer, has recently put in place a gun-jumping whistleblower notice and has sanctioned a foreign undertaking (Canon, for its acquisition of Toshiba Medical) ¥300,000 (€38,000 approximately).

In Europe, in 2014 the Commission fined the Norway-based Marine Harvest €20 million (the case was upheld by the General Court and is now pending in the Court of Justice). In April 2018, the Commission imposed a €125 million fine upon Altice for implementing its acquisition of Portugal Telecom (Altice lodged an appeal against this decision). Member States including Poland, Romania, Spain, Austria and several others have imposed fines ranging in the hundreds of thousands on local operations.

In the UK (in the context of an ex-post control in May 2018), the Competition and Markets Authority imposed a £100,000 penalty upon a company for a failure to comply, without reasonable excuse, with the requirements imposed by the interim order issued by the CMA (which required the company to seek the CMA’s consent before taking any action which might prejudice a reference of the merger or impede the taking of any action under the Enterprise Act 2002 by the CMA).

Multiplication of these cases helps to have a better understanding of behaviours that may or may not constitute gun-jumping practices.

As such, in the context of the acquisition of KPMG Denmark by EY, the Danish Competition Authority ruled that the companies, by announcing the early termination of KPMG Denmark cooperation agreement with KPMG International, had jumped the gun. On appeal, the Danish Maritime and Commercial Court referred the case to the European Court of Justice for a preliminary ruling on the interpretation of the standstill obligation.  The ECJ stated on May 2018 that the termination of the cooperation between KPMG Denmark and KPMG International before the merger approval by the Danish Competition Authority does not violate the gun-jumping prohibition because the termination did not contribute to a change of control over KPMG Denmark. This decision leave room for a treatment of conducts which do not contribute to a change of control, based on antitrust laws.

On this ground, other jurisdictions, like in the US, sanctioned parties to a merger because of a coordination of their competitive conduct prior to the closing. Very recently, the Australian Competition and Consumer Commission (ACCC) has taken its first proceedings in relation to gun-jumping against a company specialising in biological storage and management, for alleged cartel conduct in the context of the acquisition by a company of its assets in cord blood and tissue banking business.

In France, up until the Altice decision, gun-jumping sanctions had only been imposed where there was a complete lack of notification with the national enforcer. However, Altice—which is a full-on substantive gun-jumping case—has been in the spotlight for over a year, raising several questions for future operations.

Is the Altice case in France indicative of a shift towards a more restrictive stance on pre-clearance conduct? 

The French Competition Authority’s (FCA) analysis in the Altice case of November 2016 has been widely discussed by practitioners as it was the first time, at least at the European level, that a gun-jumping decision provided an almost ‘catalogue-like’ and in-depth assessment of several types of pre-closing practices.  With Altice, the FCA appears to have taken a bold step, imposing, at the time it was rendered, the highest worldwide fine for gun-jumping conduct: €80 million.

There is spirited debate among practitioners as to how to interpret the somewhat restrictive approach of the decision in several key areas, notably information exchange. In particular, as far as information exchange is concerned, the FCA has held that ‘whatever the reasons for which the undertakings would need to exchange information, it is incumbent on them to establish a framework which would eliminate all communication of strategic information between independent undertakings in light of the Guidelines on the applicability of Article 101 TFEU [Treaty on the Functioning of the European Union] to horizontal cooperation agreements’ (paragraph 260). Furthermore, the wording of the decision (here quoted from an English translation of the decision) appears to make it difficult for in-house legal advisers to be included in the deal process. Moreover, it seems that they ‘cannot be considered as making possible the avoidance of the dissemination of strategic information between the two undertakings’.

The decision continues: ‘As a matter of fact, the two individuals who were the recipients of the commercially sensitive information were the in-house counsels, who are not subject to the same rules of confidentiality applicable to external attorney. They are subject to the hierarchic authority of the company and cannot be considered as independent of the company’s management.  For this reason, it should be considered that their access to commercially sensitive information is equivalent to the entire company obtaining access to the said information (paragraph 318).

During a March 2017 conference, the FCA attempted to limit the decision’s reach by stating that it consists of more of a sui generis decision than a landmark one. As regards the involvement of in-house legal divisions in deal process, the FCA explained that its intention was to prevent it, but to remind that in such a case, precautionary appropriate measures have to be put in place. However, the decision could have broader implications because this rigid approach taken by the Authority forms part of the body of precedents of its administrative practice and therefore could lead to similar cases in the future.

What advice should be given to dealmakers in the current regulatory climate?

Facing questions arising from recent gun-jumping cases, several authorities have published guidelines in order to inform companies considering an M&A transaction.

As an example, the Brazilian Administrative Council for Economic Defence (CADE) issued its “Guidelines for the analysis of previous consummation of merger transactions”.

Likewise, the U.S. Federal Trade Commission (FTC) published on March 20 2018 updated guidance to sensitize undertakings of the risks of sharing information with a competitor before and during negotiations.

In France, following the Altice case, Isabelle De Silva, President of the FCA, published an article in May 2018 to shed light on the competitive issues of this decision.

Several lessons can be drawn from these documents and cases.

In general, caution should be taken towards potential issues related to sale or purchase agreements (SPAs). In particular, the wording of the SPA should not be over-restrictive, granting veto rights over certain types of conduct of the target, which would result in de facto control. On the other hand, the acquirer and the target should not over-interpret the SPA clauses. In the French Altice case, SFR asked for Altice’s approval of certain actions without the SPA expressly requiring it, giving the FCA the impression of control.

Information exchange also appears to be a more and more controversial area in merger control (and also from an antitrust perspective), meaning that the composition and internal functioning of ‘clean teams’ may fall under the scrutiny of competition authorities in order to ensure that adequate safeguards are applied.

Joint commercial dealings are another type of conduct that should be handled with caution. The joint conception of future projects during the suspensive period could be flagged by competition agencies. As seen in the French Altice case, the FCA sanctioned a joint project of the acquirer and the target that was conceived during the suspensory period and was launched just days after clearance was granted.

What can we expect from the road ahead?

At the time of writing, the Commission has just released on its website the public version of its Altice decision. At first glance, the facts appear to be comparable if not sometimes identical to the French Altice case (especially the exchange of commercially sensitive information, the intervention in marketing campaigns, and the contents of the SPA). We can expect that the debates that will take place in the coming months will provide additional guidance on how to interpret the wording of this (125 page) decision. Likewise, additional criteria may be provided by the Commission (Canon/Toshiba case), and in national competition authorities’ decisions, which should be rendered in the coming months.

Amdocs and Openet settle baffling, endless patent dispute

After eight years of ensuring expensive holidays for their lawyers, rival telecoms software companies Amdocs and Openet have decided to call it a draw.

An extremely short announcement from Amdocs said “Amdocs and Openet today announced that they have settled a patent infringement dispute in the United States Federal District Court for the Eastern District of Virginia.  As part of the confidential settlement, Amdocs agreed to license certain patents to Openet.”

Back in 2010 youthful Light Reading hack Ray Le Maistre spoke to (then and still) Openet CEO Niall Norton in a bid to find out what Amdocs’ problem was. Norton, however, seemed to be as baffled as everyone else by this act of unilateral legal aggression and chose to conclude that it was merely a measure of how intimidated Amdocs was by the plucky Irish BSS upstart.

“[Amdocs] is a good company and a ferocious competitor,” said Norton at the time. “It’s good to know they’re thinking about us as much as we’re thinking about them. We’re open-minded about what might happen next. Our lawyers say this could take anything between three and 12 months to sort out.”

That’s what they always say Niall and then, before you know it, eight years have gone past and they’re the only ones with any cash. To be fair the case does seem to be especially arcane. A spot of light Googling revealed one case that was apparently resolved in 2016 and another that came to a conclusion a month or so ago. Both accounts seem like very effective cures for insomnia but we don’t feel any more enlightened about the merits and outcome of this litigatiathon as a result of enduring them.

In essence Amdocs accused Openet of infringing on some of its patents and the fact that Openet is now going to shell out some license fees would seem to vindicate it to some degree. But if we assume Amdocs’ intention was at the very least to force Openet to entirely abandon the technology in question, and maybe even to force it out of business, then the case seems to have been a failure.

ZTE shares spike after it’s officially let off the hook – for now

Embattled Chinese kit vendor ZTE has announced its US export ban has been lifted, which prompted a 16% jump in its share price.

Last week the US Department of Commerce tweeted that it would lift the ‘denial order’ on ZTE once it had handed over $400 million to be kept aside to deter it from getting up to its old tricks. This announcement indicates ZTE has managed to scrape together the cash and has now jumped through sufficient hoops to get off the hook – for now.

“Pursuant to an order issued on 13 July 2018 (U.S. time), BIS has terminated the 15 April 2018 Denial Order and removed ZTE from the Denied Persons List, effective immediately,” said the short, legalese investor announcement from new Chairman Li Zixue.

So that would appear to be that. So long as ZTE is squeaky clean for a few years it will eventually get the 400 mil back and it’s now free to start trying to repair the colossal damage this whole episode has caused. There’s still the matter of the dissenting senators, but this seems to be a fait accompli.

The 16% share price spike points to limited optimism from investors that it will be able to do that, and its preliminary results for the first half of this year anticipate a loss of around RMB8 billion (over $1 billion) – a 450% year-on-year decrease – so it might not be time to break out the bubbly at ZTE towers just yet.

US DoJ throws $85 billion spanner in the works of AT&T-Time Warner

The US Department of Justice has decided to appeal the June 12 court ruling allowing AT&T’s $85 billion acquisition of Time Warner, it announced late on Thursday.

In a brief Notice of Appeal filed on July 12, the DoJ notified the District Court that it intends to bring the case to the Court of Appeals against the ruling that will allow AT&T’s planned acquisition of Time Warner to go ahead with no restrictions.

The US government, which had until August 12 to ponder an appeal, took a month to decide it would lodge an objection to the mega-acquisition. US entertainment industry news site Deadline sourced a copy of the Notice, signed by Craig Conrath, who was leading the government’s legal team during the trial. It doesn’t elaborate on the grounds upon which the appeal would be lodged, but the decision to appeal seems to have caught AT&T by surprise.

“The Court’s decision could hardly have been more thorough, fact-based, and well-reasoned,” David McAtee, the operator’s General Counsel, said in a statement. “While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the DOJ has chosen to do so under these circumstances.  We are ready to defend the Court’s decision at the D.C. Circuit Court of Appeals,” he blustered.

The ramifications of the potential appeal could hardly be greater — not only regarding the future of a newly-created WarnerMedia business, and whether it might need to decouple from its parent company, but also for the whole telecom and media industries. The boardrooms of Comcast and Disney will be full of sweaty palms (yuk!), as the outcome of the appeal will set a precedent for future vertical integration deals, including their bidding war for 21st Century Fox.

If the DoJ was to win the appeal, the US Solicitor General could bring the case to the Supreme Court, where the judges generally siding with President Trump are in the majority. Since the days when he was a candidate, Mr. Trump has been a vocal opponent to the merger, citing the danger of “too much concentration of power in the hands of too few.” However, such a decision would not be without a twist: Eriq Gardner, the Senior Editor at The Hollywood Report, discovered in a disclosure paper that John Roberts Jr, one of the Supreme Court Chief Justices, still holds Time Warner shares.

AT&T has been moving very fast after the June 12 ruling to integrate the two companies, from appointing executives to stamping its authorities over HBO, although it has decided to leave Turner Broadcasting, the owner of CNN among other assets, independent until February 2019. However, it has already broken at least one promise related to the deal: instead of making the service more affordable, it just raised the monthly bill for its DirecTV Now service by $5.