All Things Digital

If there was an Emmy Award for legislation production, NBC Universal Chief Executive Jeff Zucker would surely win it. Last October he called upon Congress to pass a bill that would create a dedicated intellectual-property enforcement bureau and today it’s looking more and more like he’s going to get it.

This week members of the House Judiciary Committee passed the Prioritizing Resources and Organization for Intellectual Property (called “PRO IP” groan…) Act of 2007, legislation that would create an “anti-piracy czar” at the White House level, a separate IP-enforcement division at the Justice Department and ratchet up already high civil penalties for copyright infringement.

The measure is backed by many of the most powerful politicians on the House Judiciary Committee, including John Conyers (D., Mich.), Lamar Smith (R., Texas) and “Hollywood” Howard Berman (D., Calif.), the content cartel and, of course, Zucker, who likes to tell everyone that it dramatically advances the cause of protecting innovation, technological invention and creativity.

Said Zucker, “This is such an important step in combating this incredibly serious piracy and counterfeiting problem that’s getting worse, not better.”

In Zucker’s eyes, maybe. But not in the eyes of consumer folks like Google Senior Copyright Counsel William Patry who calls Pro IP “the most outrageously gluttonous IP bill ever introduced in the U.S.” and consumer advocacy group Public Knowledge which feels it is in sore need of adjustment.:

This bill takes already extraordinary copyright damages and increases them, expanding the threat of litigation intended to stifle competition and innovation. … Increasing penalties is one of the least necessary, and quite possibly counterproductive, actions the committee could take, particularly when current law is adequate to deal with most infringement issues and because the higher penalties serve only to force faster and larger settlements potentially from innovators. … Instead of following the course of this bill, the committee should look to the future, to a more realistic and rational copyright regime that can adapt pre-VCR copyright laws to a post-YouTube world.”

The U.S. Justice Department has managed the impossible. It’s brought Howard Stern and Oprah Winfrey together under a single aegis.

This morning the DOJ approved the merger of satellite radio companies Sirius Satellite Radio (SIRI) (home to Stern) and XM Satellite Radio (XMSR) (home to Winfrey), a move that will create a satellite radio company with about 14 million subscribers.

In a statement, the DOJ said it found no reason to think that combining the only two satellite radio players in the market would create a pay-radio monopoly. “After a careful and thorough review of the proposed transaction, the division concluded that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers,” the DOJ explained.

“The Division reached this conclusion because the evidence did not show that the merger would enable the parties to profitably increase prices to satellite radio customers for several reasons, including: a lack of competition between the parties in important segments even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers,” said the DOJ.

A $9,250 per-song fine might seem an excessive punishment for illegally sharing music for no personal gain, but it’s really not. According to the U.S. Justice Department, anyway.

The DOJ says the $222,000 in damages awarded to the Recording Industry Association of America in the Virgin Records America et al. v. Thomas copyright-infringement case is constitutional. Seems it didn’t quite buy Thomas’s argument that fining someone - particularly a single mother of two - $222,000 for songs that could be bought for $24 on iTunes violates a Supreme Court precedent that prohibits fines that are “so severe and oppressive as to be wholly disproportioned to the offense or obviously unreasonable.”

From the DOJ’s brief:

Although defendant claims that plaintiffs’ damages are 70 cents per infringing copy, it is unknown how many other users–‘potentially millions’–committed subsequent acts of infringement with the illegal copies of works that the defendant infringed. Accordingly, it is impossible to calculate the damages caused by a single infringement, particularly for infringement that occurs over the Internet. Furthermore, plaintiffs contend that their witnesses ‘testified to the substantial harm caused by the massive distribution of their copyrighted sound recordings over the Internet, including lost revenues, layoffs and a diminished capability to identify and promote new talent…’

“Most recently, Congress has crafted a statute that serves as a deterrent to those infringing parties who think they will go undetected in committing this great public wrong, as well as providing compensation to copyright owners who have to invest resources into protecting property that is often unquantifiable. Accordingly, given the findings of copyright infringement in this case, the damages awarded under the Copyright Act’s statutory damages provision did not violate the due process clause…”

Note: John Paczkowski is on vacation and won’t be writing or posting videos until he returns on Monday.

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. Our Tech 10 appears below.

1. Bienvenue, iPhone: France Telecom has begun selling Apple’s cellphone at selected Orange stores in Paris and other cities. The device itself will cost about $1,106 with no plan attached, or 399 euros (about $590) with one of four “Orange for iPhone” plans, Computerworld notes, adding it will cost 100 euros ($148) to unlock the handset.
2. FCC Says ‘Uncle’: A proposal by Federal Communications Commission Chairman Kevin Martin to tightly regulate the cable TV industry has been “drastically” trimmed, reports the New York Times, which noted that Martin had sought more diverse programming and reduced cable costs.
3. Amazon: 1; Feds: 0. The federal government has lost its bid to compel Amazon to release details about the book-buying habits of thousands of its customers, according to Declan McCullogh on his blog, The Iconoclast. The Justice Department sought the information to prove its case against a former Madison, Wisc., city official accused of evading taxes in selling used books online.
4. Google, Online Snitch? The search colossus has voluntarily given the IP address of an Israeli blogger who used “Google Blogger” to allegedly slander municipal council members running for reelection, the Israeli Web site Globes Online reports, calling the move “unprecedented.”
5. YouTube, Censor? The popular video-sharing site has suspended the account of a well-known Egyptian anti-torture activist who posted videos of alleged brutality by a number of Egyptian policemen, Wael Abbas told Reuters, claiming that about 100 images he had sent were no longer available on YouTube.
6. But It Doesn’t Mind those CondéNet Vids: CondéNet is announcing today that it will distribute videos from its various consumer-interest Web sites via YouTube, The Wall Street Journal reports, adding that the deal is the latest in a series for Condé Nast Publications’ digital division.
7. LinkedIn Link to News Corp.? A “well-placed source” has told VentureBeat that News Corp. (owner of this site) is in talks to buy business-networking site LinkedIn. But LinkedIn CEO Dan Nye told Fortune’s Adam Lashinsky that “It would take a helluva lot” to get him to sell.
8. The Earth, Updated: Google Maps is updating its features, prompting Duncan Riley at TechCrunch to wonder if the new features won’t ultimately send Google Earth down the path of the dodo.
9. Feeling Insecure: Web applications and holes in Windows Office are the top concerns of Internet users, according to the annual security report by SANS, a computer training and security organization, in its Top 20 risk assessment for 2007.
10. How Green Is My Gaming? Greenpeace has released a report slamming Nintendo and Microsoft for making their video-game consoles with toxic chemicals, reports BusinessWeek, noting that the enviro group’s latest ranking of electronics firms this week also highlights questions over the environmental impact of the products and how much consumers care about them.

–posted by Associate Editor John Sullivan

Nothing like an alarmist study to get Washington lawmakers worked up into a pro-legislation lather. Which is exactly what NBC Universal Chief Executive Jeff Zucker gave them at an antipiracy summit hosted by the U.S. Chamber of Commerce today.

Citing an Institute for Policy Innovation study that estimates that copyright-industry piracy costs the U.S. economy $58 billion per year (Holy cow! That’s like Mitch Bainwol’s and Dan Glickman’s salaries combined!), Zucker called upon Congress to create dedicated intellectual-property enforcement bureaus in the Justice and Homeland Security Departments and to offer federal grants for state and local governments to escalate their own policing efforts. “The unfortunate truth is that today we are losing the battle,” Zucker said. “We need, across the board, to move IP enforcement up the agenda of the federal government. … [This issue is] absolutely critical to our economic prosperity.”

Lawmakers, especially those with musical aspirations, were predictably roused by Zucker’s spiel, though it conveniently obscured the fact that the entertainment industry’s business models are clearly in need of serious work. Said Sen. Orrin “I Write the Songs” Hatch (R., Utah, pictured with Barry Manilow, right), “Our challenge is to come up with viable economic solutions that will not only protect existing intellectual-property rights, but encourage the free flow of information and ideas necessary for creativity and innovation to thrive.”

And we wonder why the stereotype of the ugly American–voracious, arrogant and self-interested–is so firmly in place in Europe…

This morning European Union Competition Commissioner Neelie Kroes lambasted the U.S. Justice Department for its criticism of the European Court of First Instance’s ruling on an antitrust judgment against Microsoft. Issued Monday, the court’s decision to dismiss Microsoft’s appeal of a landmark 2004 ruling by the EU and uphold nearly $700 million in fines sparked an immediate negative reaction from Thomas Barnett, the Justice Department’s antitrust chief, who said it would have “the unfortunate consequence of harming consumers by chilling innovation and discouraging competition. … In the United States, antitrust laws are enforced to protect consumers by protecting competition, not competitors.”

Suffice it to say, Barnett’s “we don’t do that sort of thing over here” remarks did not go over well in the EU. In an unusually harsh response EU chief antitrust enforcer Kroes said: “It is totally unacceptable that a representative of the U.S. administration criticized an independent court of law outside its jurisdiction. The European Commission does not pass judgment on rulings by U.S. courts and we expect the same degree of respect.”

If you didn’t know any better, you might think that the U.S. Justice Department’s ex parte filing on Net neutrality was intended as a synopsis of AT&T’s filing on the same subject, such are the similarities between the two.

In comments delivered to the Federal Communications Commission yesterday, the Justice Department’s Antitrust Division warned that imposing Net neutrality regulations could hamper development of the Internet and prevent service providers from upgrading or expanding their networks. “Precluding broadband providers from charging content and application providers directly for faster or more reliable service could shift the entire burden of implementing costly network expansions and improvements onto consumers,” the agency said in its filing. “If the average consumer is unwilling or unable to pay more for broadband Internet access, the result could be to reduce or delay critical network expansion and improvement.”

And, in the end, creating different tiers of Internet service is really no different than the Postal Service charging different rates for shipping varying classes of mail. “The United States Postal Service, for example, allows consumers to send packages with a variety of different delivery guarantees and speeds, from bulk mail to overnight delivery,” the agency explained. “These differentiated products respond to market demand and expand consumer choice. No one challenges the benefits to society of these differentiated products; nor does anyone seriously propose that the United States Postal Service be banned from charging different fees for next-day delivery than for bulk mailers.”

Right. And like BellSouth CTO William Smith has been saying for years now, providing Internet service is the shipping business of the digital age.

Internet advocacy groups were predictably peeved by the Justice Department’s filing. “It is at odds with reality for a Justice Department that approved the largest telecommunications merger in history with a mere press release to now claim that market forces and antitrust enforcement will be able to protect the free and open Internet,” said Gigi Sohn, president of Public Knowledge. “Perhaps the DoJ does not recall that there is very little in the way of market forces to protect consumers. Perhaps the department has forgotten that many consumers have little or no choice at all for their high-speed broadband services. A more vigorous antitrust analysis would have recognized there is a market failure and would have resulted in conditions on the AT&T takeover of BellSouth that would have benefited consumers and Internet companies.”

Google is beginning to act like the $159 billion industry heavyweight it really is. The company, which until about 18 months ago had paid politics little mind, is ramping up its presence in Washington. Today Google has 12 lobbyists on staff in its Beltway offices and it’s adding more, among them a former high-ranking Justice Department antitrust lawyer to steward its proposed $3.1 billion acquisition of online ad-tech company DoubleClick through Washington’s power circles. And it’s just pulled off a successful policy assault against Microsoft, drafting an antitrust complaint to the Justice Department that forced Microsoft to make changes to its new Vista operating system.

“I’ve never seen a tech company ramp up faster than they have in the last year or two,” tech lobbyist Ralph Hellmann told the Mercury News. “They’re using all the tools in the lobbying tool kit.”

Indeed, earlier this week, Google announced the official launch of its “Public Policy Blog,” a mouthpiece for its views on government and politics. “We’re seeking to do public-policy advocacy in a Googley way,” Andrew McLaughlin, director of public policy and government affairs at Google, explained. “Yes, we’re a multinational corporation that argues for our positions before officials, legislators and opinion leaders. At the same time, we want our users to be part of the effort, to know what we’re saying and why, and to help us refine and improve our policy positions and advocacy strategies. With input and ideas from our users, we’ll surely do a better job of fighting for our common interests.”

And remember, “Don’t be evil” isn’t just a motto, it’s a way of life, right?

“Google is not a conventional company,” company founders Larry Page and Sergey Brin said when they announced Google’s Dutch auction IPO a few years back. “We do not intend to become one.” Except when it comes to wielding power in Washington. Then it’s politics as usual. And that’s the way it’s got to be, apparently.

“Like Microsoft and other companies before it, Google has decided it will have to start playing the Washington game,” Cato Institute Executive Vice President David Boaz wrote last year. “It has opened a Washington office and hired well-connected lobbyists. One of the country’s top executive search firms is looking for a political director for the company.

“What should concern us here is how the government lured Google into the political sector of the economy. For most of a decade the company went about its business, developing software, creating a search engine better than any of us could have dreamed, and innocently making money. Then, as its size and wealth drew the attention of competitors, antibusiness activists, and politicians, it was forced to start spending some of its money and brainpower fending off political attacks. It’s the same process Microsoft went through a few years earlier, when it faced the same sorts of attacks. Now Microsoft is part of the Washington establishment, with more than $9 million in lobbying expenditures last year.

“… And that’s what the parasite economy is costing America. The founders of Microsoft and Google and other innovative companies are going to waste their brains on protecting their companies rather than thinking up new products and new ways to deliver them.

“Google’s new presence in Washington is entirely understandable, but it is a tragic symbol of the diversion of America’s productive resources into the unproductive world of political predation and the struggle to resist it.”