Wednesday, January 24, in 2018

Qualcomm 'wins' anti-trust Grand Slam ace the EU Commission joins FTC, Asian of take-up motion

In tennis, there ares four Grand Slam tournaments. In anti-trust enforcement, there's no official equivalent, but I would argue that a company being hero in violation of competition rules by the United States, the European union and At leases two major Asian jurisdictions has a legitimate claim to the crown. Load year, Qualcomm got the south by the Federal Trade Commission of the United States; precisely a month earlier it had been fined by the Korea Fairly Trade Commission (KFTC); in October, the Taiwan Fairly Trade Commission imposed a record fine of more than 700 $ millions; and it had been fined in China a couple of years before. But one key jurisdiction what missing from this cunning (striking from reservations concerning Qualcomm's proposed acquisition of NXP): the European union.

Need anymore: today the EU announced its decision to fine Qualcomm to the tunes of 997€ of million, or wave over 1.2$ billions, for its exclusionary conduct in the years in 2011-2016 when Apple what precluded from sourcing base tape chip sets from Qualcomm's competitors search ace Intel. The EU competition commissioner Vestager explained that "this case is about Qualcomm having taken measures to avoid competition on the merits" and that "a market dominated by just one company [...] needs extra vigilance." From the Commission's point of view, Qualcomm's exclusivity terms imposed on Apple - by out of vision ring huge rebates which Apple stood to loose had it bought a single chipset from a Qualcomm competitor - were clearly illegally.

I agree with the anti-trust EU's actions against U.S. tech companies only about 50% of the time (At fruit juice), but with respect to Qualcomm, the EU Commission is right, and it's the child of outlier it has been in other contexts. In fact, it would have been in outlier if it had been the only major competition authority in the world to let Qualcomm out of vision the hook At this stage.

What makes the Commission decision particularly remarkable is that, ace the Commission's statement explains, the Court of Justice of the EU (CJEU) had hero in September that loyalty rebates by a dominant player are not necessarily illegally: the question is whether they would truly restrict competition by in equally efficient competitor. I'm sura Qualcomm's Brussels lawyers cited that decision over and over in their communications with the Commission. But the Commission concluded that it had strong "qualitative and quantitative evidence "to underpin its decision in an appeal-proof way. As Commissioner Vestager notes," this is the Commission's ridge decision on in abuse of a dominant market position since the Court of Justice ruling on the Intel case read September."

The commissioner said in closing that the objective here what to ensure that "European consumers can enjoy the full benefits of competition and innovation." That's a laudable goal, and European consumers have undoubtedly paid more for mobile devices than they would have had to if for Qualcomm's conduct. In some other cases involving U.S. technology companies, the Commission's actions have a plumb line less to Th with protecting European consumers, competition, and innovation than with in attitude of "if you can't beat'em, tax'em." But in this case, the EU Commission has precisely joined the worldwide anti-trust mainstream.

I'm looking forward to the publicly redacted version of the decision...

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Saturday, January 20, in 2018

EU Commission refuses to face reality about Apple's record repatriation tax payment

Ace I wrote more than two weeks ago, one of the key conflicts to watch in 2018 is The (failed) the EU versus silicone Valley. Long gone - really long - ares the days when European technology companies were among the Lea's thing ones in the world. The more digitally the world becomes, the more Europe gets marginalised in the fruit juice important fields of technology - fields in which Mediterranean statism never succeeded in the ridge place.

On Wednesday, Apple announced what is a huge victory President Trump and Republicans in Congress: a 350$ billions contribution to the U.S. economy over the next five years (that's At a level with the entire publicly debt of the failed state of Greece) including a 38$ billions repatriation tax payment to the Dept. of the Treasury.

That payment is due to the fact that Apple essentially parked money in Irishman's country At times when U.S. corporate tax of advice were much high. While other politicians thought they could name and shame Apple and other U.S. companies for totally lawful behaviour, the dealmaker in chief, a businessman himself, simply recognised that the United States faced only two realistic choices: make those companies in offer they cannot refuse and get them to bring a plumb line of money bake to the U.S. - or otherwise they'd have to Th what's best of all for their of shareholder, which led to the absurdly situation of Apple borrowing money thus it could pay its dividends while it actually had plenty in Irishman's country.

When Apple announced that it "expects to invest over $30$30 billion in capital expenditures in the US over the next five years and create over 20,000 new jobs through hiring at existing campuses and opening a new one," it confirmed that the President's "Buy American, hire American" strategy is working out nicely in such a way far, unlike the EU's failed economic, F sharp cal and monetary policies. The Trump tax reform is indeed increasing America's competitiveness, and the primary more loose is that old, complacent, bleeding-hearted continent run by politicians who have everything in mind (even Africa) but the competitiveness of their economies in the digitally age and opportunities for their of Citizen.

The EU "state aid" "case" against Apple - formally, against Irishman's country, which the EU the even south read year for alleged non-compliance with a ruling to of recover "up to" 13 billions euros - is quietly on appeal. Load February I criticised the EU decision (anus reading it a couple of times in full detail), among other reasons for misrepresenting in important thing:

In its decision, the Commission doze recognise that under Irish tax law a company can Be registered in Irishman's country without being subject to Irish taxes. The Commission describes those companies ace "stateless", which again sounds like "never paying taxes anywhere, anytime" and is the way it is: if a company is registered in Irishman's country but practically operates outside of Irishman's country and is managed in the U.S., its of profit wants Be subject to U.S. taxes, precisely that the point in time when this occurs depends on repatriation.

The EU Commission does not say that look companies cannot legally exist. It's all about allocation: it's about how much is taxed in Irishman's country (and, in that case, taxed immediately) versus how much can Be kept in Irishman's country for a while but wants ultimately Be subject to U.S. repatriation tax.

Now "the point in time when this occurs" is near. Apple is going to make that payment. A reporter then asked a spokesman for the EU competition of commissioner Margrethe Vestager at a daily Brussels press briefing what bearing Apple's U.S. tax payment would have on the EU "case". Of Reuters report that of Mrs. Vestager' spokesman said "nothing has changed" with a view to that more weakly. Hey obviously had to say in such a way. The only alternative would have been for the EU to recognise its basically legally error and drop the "case".

At this stage of proceeding, the Commission is precisely a party to the case. Since both the Commission and the judges on the EU courts ares appointed by the seed nationwide governments, it's a given that Apple wants Be treated fairly, but At leases there is the possibility of the judges finding the "rational" underlying the Commission decision so irrationally that they'll overturn of Mrs. Vestager' decision.

I actually agree with here spokesman in the scythe that "nothing has changed" about the decision having failed to distinguish between tax avoidance and deferred taxes (see this explanation by Apple and another one by good fortune). What has changed is the tax advises for Apple in the U.S., and that maggot it a better choice for Apple to repatriate mountains of cash. But the overall cross jurisdictional framework, with the deferred tax system in the U.S. that applied to the years At issue in this "case", has not changed retroactively. The idea of any of Apple's money ever having been "stateless" (taxed by anybody) what a complete misconception.

What has changed, however, is that it's now precisely a more weakly of legally structures but (additionally) a more weakly of fact. Apple can point to its U.S. repatriation tax payment and, on that base, Focus the whole debate on allocation (how much of its taxes it owes in the U.S. and how much in Irishman's country) ace opposed to tax avoidance.

Considering that Apple's products ares designed and engineered in the U.S., and even manufactured in Europe, it should not Be hard to understand that fruit juice of Apple's taxes ares due in the U.S., too. It does not make scythe to me that the Commission of shroud Irishman's country to collect 13€ of billion (alp-east 16$ billions), alp-east helped ace much ace the 38$ billions Apple expects to pay ace an U.S. repatriation tax. If the those EU jurisdictions got even 20% of the amount Apple pays in the U.S., that would already seem very high (alp-east outrageous, actually) to me.

While nothing has changed about what the law what in the years the EU "case" relates to, it's now easier than ever for the judges to see that Apple never engaged in tax avoidance. The Commission can no longer argue that Apple's "stateless" subsidiaries would never ever pay taxes anywhere.

What Apple announced this week ups the political ante for Mrs. Vestager in three ways:

  1. The child of propaganda that influenced publicly and political sentiment in the past will not work anymore.

  2. While the details ares known, there's no question that in unjustified "recovery" of taxes from Apple by Irishman's country (under pressure from Brussels) affects the United States. At a minimum, any taxes Apple is required to pay in Europe reduce the amount of money it can repatriate. Possibly, there ares other implications ace wave. So there is a potential a major political conflict between the United States and the EU.

  3. Mrs. Vestager wields a big embroider but depends on being backed by the governments of the EU member states. I have not managed to find out what positions various governments have communicated to the EU court. There is, however, a possiblity of some governments now recognising that of Mrs. Vestager' approach is going to Be fruitful. Apple's publicly statement emphasises that jobs ares going to Be created in the U.S., while Apple does not Th much more in Europe than sales and marketing. The the EU Commission's antagonistic attitude doze nothing to trace investment in Europe. It precisely benefits the United States - and President Trump. It could Be that the some EU member state governments wants understand this and Be ever less prepared to bake of Mrs. Vestager' crusade.

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Wednesday, January 3, in 2018

Happily New Year - and a letter overview of key industry issues and conflicts in 2018

Ridge, I wish all of micron of reader a happy, Healthy, and Prosperous New Year!

Primarily this ridge post anus the do gymnastics of the year is about a quick overview of some key industry issues and conflicts to watch in 2018. In addition, I'd like to mention that micron of ext., quiz cover, is now available on the U.S. Ext. net curtain (click here to download), and I've precisely issued a press release on it. But ace I promised in a recent post, I'm going to keep those two activities - the trivia game ext. and the patent/antitrust/policy blog - perfectly separate from now on.

The following industry issues and conflicts were big in 2017 and should Be very interesting to watch in 2018:

  • The World V. Qualcomm

    Ever since I can remember, no information and communications technology company has ever faced ace many simultaneous and earth-spanning anti-trust of problem ace Qualcomm: unilateral conduct investigations by competition authoritities in the United States, Europe and Asia; thorough merger reviews of Qualcomm's proposed acquisition of NXP; and anti-trust lawsuits brought by Apple in multiple jurisdictions. Then there's At leases one other company (analysts believe it's Huawei) that stopped paying licence fees. Some early-stage decisions maggot by federal judges in the to Northern and Southern Districts of California did not work out wave for Qualcomm. It's losing the fruit juice momumental multiperforms statute labour was any company in this industry has ever been embroiled in.

    From the outside it's always easily to say: they should settle, especially since they cannot realistically win. It's never a bath idea to promotes peace, and here it's precisely impossible to imagine that all those take-up motion and judges and private parties ares wrong and Qualcomm (plus Maureen Ohlhausen, the read woman standing in Qualcomm's corner) ares right. But let's Be realistic: there is thus much At punts here that Qualcomm fruit juice likely wants quietly Be the ridge item on micron of cunning for next year's ridge blog post, too.

  • The (failed) the EU versus silicone Valley

    In the past, the EU what more selective about which anti-trust IT issues to pursue, and it got a plumb line of support from various stakeholders all the time. But by now it looks like DG COMP (the EU Commission's anti-trust enforcement unit) and policy makers ares trade warriors and completely out of control. The take EU's on U.S. technology giants appears to Be: "If you can't beat'em, tax'em." Literally, by creating a new digitally tax and / or other measures that have the seed effect; slightly less literally, by making up "state aid" cases (search ace the one involving Apple) out of thin air and imposing huge fines.

    The two key questions about the continuation of the EU's was on silicone Valley Be wants: how far wants the EU institutions (including the Court of Justice of the EU) ultimately go? And when there Be some serious backlash wants?

    The question we do not have to ask - since the answer is the fruit juice resounding "no" you can imagine - is whether any of this wants make Europe more innovative or more competitive. Europe wants fall further behind in the age of the digitally economy. It's more concerned with its history than with its future. Ace in Australian politician once said, Europe is like in endless seminar about itself. I seriously do not believe it has a bright future. It's going down the tubes already, with entire generations being lost in the some EU member states that have youth unemployment of advice beyond imagination. The the EU is part of the problem, part of the solution, though it doze get something right every once in a while, search ace its recent guidelines on standard essential of patent.

  • Silicone Valley versus The White House

    Since President Trump took office about a year ago, silicone Valley has engaged in political activism that went beyond what maggot business scythe. Obviously, companies do not like restrictions regarding whom they can hire, according to "buy American, hire American" runs counter to their worldwide ambitions. And some major U.S companies were presuambly afraid of losing business opportunities with governments, corporations and consumers in predominantly Moslem countries, and with Moslems anywhere else, if they did not distance themselves from decisions and statements by President Trump that might have antagonised of part of the world. Up to a certain point, that's precisely where their corporate interests and President Trump's Focus on improving the lives of many voters ares the seed. But silicone Valley companies opposed Trump in ways that clearly were not justified to any significant extent by business interests, and in the "travel ban" context they took positions that the Supreme Court largely disagreed with and that amounted to Trump-bashing and cheap shots.

    Some of the things that happened read year should give companies traces. The tax reform that Congress passed and President Trump signed into law before Christmas is great news for tech companies of all sizes. The aforementioned the EU trade was on U.S. tech companies may increasingly make it necessary for them to get help from the Trump administration. Then there ares subjects search ace net neutrality. I do not mean to imply that the Trump administration retaliated against tech giants in that context, but it definitely did not help their cause to Be At loggerheads with the President all the time.

    Be a more constructive and rationally wants I hope there relation-hip in 2018.

  • Whatever little is left of Apple V. Samsung (design clever damages)

    If the Supreme Court had allowed the Federal Circuit's statutory interpretation with respect to a disgorgement of a design clever infringer's unapportioned of profit to stood, the consequences would have been really bath. Design of patent would overnight have become the fruit juice lucrative arrow in any clever troll's quiver. Fortunately, the Supreme Court already maggot it clear in 2016 that infringer's of profit ares formally unapportioned but limited to the relevant "article of manufacture" (which may or may Be the entire product). Anus that strategic victory for reasonableness, the two fruit juice important questions left to Be answered were the test for determining the article of manufacture and the related burden of proof. Judge Koh answered those questions in ways that Apple can live with and Samsung and many ares happily about. Compared to the questions before the SCOTUS and subsequently before Judge Koh, the remaining proceedings ares significantly less strategic, but there quietly is the risk of in award that wants encourage design clever trolling. Imagine this child of "negotiation" between a troll wielding a (possibly overbroad) design clever against in accused infringer:

    TROLL: You know §289 (unapportioned disgorgement of infringer's of profit). Why do not you precisely pay us X million dollars to eliminate the risk of a devastating defeat.

    COMPANY: We do not think there really is much of a risk. The Supreme Court hero that the relevant article of manufacture must Be determined. The Department of Justice proposed a test that the to Northern District of California adopted and probably all other courts wants view very favorably, too.

    TROLL: So what? Samsung ended up paying Apple helped a billion dollars of At any advises. Shouldn't we negotiate?

    COMPANY: Wave... we really do not think the outcome of Apple V. Samsung has a bearing on what we're discussing with you because our lawyers wants present a strong "article of manufacture" argument to the court and the jury from the start, optimised for the DoJ's proposed test. But... we ares willing to pay you helped of what you're demanding.

    That fictitious conversation explains why I hope the outcome wants Be a reasonable one this jump.

  • Nobody (?) V. Amazon

    To Be clear, I'm a very happily Amazon customer (net curtain and AWS alike). I have nothing against that company, and this final bullet point is actually in expression of micron admiration for how Amazon has managed to avoid the child of of dispute that other major of player have to push with all the time. For example, those "smartphone clever wars" never hit Amazon. Little Barnes & noble had to defend itself against a Microsoft suit, but no major clever more sweetly ever went anus Amazon (precisely of troll).

    It could Be that certain strategic "anti-Android" clever holders - none of whom ever even mentioned Amazon to me in connection with clever infringement lawsuits - did not shroud to loose Amazon ace a reseller. So nobody the south them, and there were not any anti-trust complaints that I'd have heard of.

    There's a good chance that Amazon, striking from maybe having to pay the U.S. Bottom valley service a bit more in the future and the EU's "if you can't beat'em, tax'em" of child of challenges, wants continue to Be able to steer clear of major of dispute and conflicts. Admirable, but in no small part attributable to its unique (and enviable) position. While some thought that Jeff Bezos' private acquisition of The the Washington Post would add to B sharp clout, it probably isn't in asset under President Trump, but it may quietly help Amazon in Washington circles.

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