Barack Obama will be the most shadowed president in history, and it won't be just the Secret Service and press corps surrounding him.
Citizens and paparazzi armed with camera phones and a variety of other multimedia devices will chronicle every movement he makes in public and post it online.
President-elect Obama visits a Chicago deli to pick up some corned beef sandwiches. According to various reports, Obama and troop arrived at Manny's Cafeteria and Deli at 12:29 p.m. and walked out at 12:45 p.m. with two cherry pies and three corned beef sandwiches, paying $48.34 in cash.
(Credit: Change.gov)Obama's visit on Friday afternoon to Manny's Cafeteria and Deli in Chicago was treated as a major event. Some footage was recorded by the Associated Press (see below), and in the background you can see employees, as well as a horde of press members, pointing their cameras at Obama. With half the planet in possession of increasingly capable camera phones, Obama's life will fill enormous disk space in the cloud.
Politico is also keeping track of Obama's daily life with its "44" blog, documenting the president-elect's movements and important announcements during the transition to the White House. The forthcoming Obama White House will be treated like a reality TV show or West Wing, broadcast 24x7 on the Internet.
(Credit: Politico 44)Other presidents, including George W. Bush, have been similarly tracked online, but the Obama presidency brings a more finely tuned understanding to this phenomenon. Obama's pre-inauguration site, Change.gov, is providing its own play-by-play of Obama's activities, including briefly detailing the deli visit with a photo slideshow.
Posting its own version of events is a way for the Obama team to gain some control over the chaos and messaging in the midst of the incessant Obama lifestreaming that will occur over the next four or eight years. The disciplined, focused, and modulated Obama has already had a lot of practice on a big stage. Now the spotlight is all on him. Every gesture and word from Obama accessible to the public will be recorded and posted online, from a multitude of sources and points of views. His lifestream will be endlessly scrutinized and measured for meaning.
The Obama office of communications will be very busy building on the lessons learned from the campaign. Obama will likely hold more press conferences than his predecessor, but his team will continue its use of the Internet to directly reach the American people, as in Obama's weekly radio address, which is also a Web TV show that reached nearly 900,000 YouTube viewers with the November 14 edition.
Dan Manatt of PoliticsTV offers some useful suggestions--such as making the U.S. budget comprehensible to mere mortals--to the Obama communications team in a blog post on TechPresident.com:
The president's budget should become a multimedia document that makes the numbers--and the policy questions--accessible to the average citizen. The budget should be released online--not just as a pdf, as it is now, but as a multimedia, dynamic document with Web apps, widgets, and appendices applying Quicken-style functionalities, dynamic charts, etc. That way Americans can visualize and understand where their $3 trillion in tax dollars (minus the $1 trillion deficit) goes to. (Perhaps not surprisingly, private sites, including Wikipedia, http://en.wikipedia.org/wiki/United_States_federal_budget, offer citizens better digital tools to understand the budget than the White House and the OMB, http://www.whitehouse.gov/omb/budget/fy2009/).
Given the lack of confidence in the economy and the measures taken by the current administration, as well as Congress, providing more transparency into the budget process and bailouts would be helpful to the national psyche. You can expect Obama to use his online TV channel to further change the course of history.
The United States through its history has been the world's leading innovator thanks to a few hobbyists tinkering in their garages. If the U.S. wants to maintain its dominance in the world market, some argue, its policies should encourage innovation through broadband deployment.
While Congress has taken steps to promote universal broadband, a new working paper from the New America Foundation suggests a peculiar route to fostering the nation's next great innovators: allowing consumers to purchase and own their own fiber-optic connection.
In their paper Homes with Tails (PDF), Columbia Law School professor and NAF Fellow Tim Wu and Google Policy Analyst Derek Slater lay out a proposal in which a community would establish a collectively-owned fiber trunk cable that would lead to individually-owned lines into people's homes.
Columbia Law professor Tim Wu explained Friday the benefits of encouraging privately owned fiber lines.
(Credit: Stephanie Condon/CNET News)Such an architecture would be "akin to a condominium complex--also a radical form of property not too long ago," Slater said.
The fiber would lead an open point of presence (or PoP), at which different service providers could set up equipment and compete for residents' business.
The option to own fiber should be available, the authors argued, since it is unlikely that the private sector will invest in widespread fiber deployment, and there are too many unanswered questions as to how the government might fund such a venture.
"It costs billions and billions of dollars, and it's not clear what the killer app would be that would justify the investment," Wu said.
Cost would be a clear obstacle for any consumer as well, he acknowledged.
"It is true $2,000 is a lot of money, but people spend tens of thousands of dollars on home renovations all the time," Wu said.
The authors said that while there is no reason why privately owned fiber cannot work, it will require some experimentation and research.
Moreover, they said, their plan is not intended to be widespread but for places where it could easily be established, such as in newly-built communities with homeowner associations. It should be for the few who could make the most out of such great capacity.
"What could the hobbyists, the Steve Wozniaks and Steve Jobses of today, do with 10 gigabytes?" asked Wu. "We're talking about giant leaps forward."
Rob Atkinson, president of the Information Technology and Innovation Foundation, said that the plan was commendable for putting forward new policy innovation, which is lacking in the United States.
"Other nations are becoming the laboratories for democracy," he said. "This is really about policy innovation to drive technological innovation."
A representative for Verizon challenged the notion that telecommunication companies are not investing enough to drive innovation. The industry spends $65 billion annually to maintain and upgrade its networks, said Link Hoewing, Verizon's assistant vice president of Internet and technology issues.
More at issue is compelling people who have access to broadband to actually use it, Hoewing said. Consumers often say they do not need to pay for it because they have access to high-speed Internet at work.
The authors submitted their proposal was not the answer to improving broadband access in the U.S., but one of many possible solutions.
"Solving this problem is so important that we need as much experimentation and investigation to come up with many solutions as possible," Slater said.
Even as it continues to grow, Facebook is facing less pressure to reveal its finances.
The Securities and Exchange Commission in October granted the social-networking site an exemption to part of the SEC Act of 1934, which requires companies to disclose financial information once they have more than 500 stockholders and $10 million in assets.
As BusinessWeek reported, lawyers for Facebook sent the SEC a letter on October 13, asking for an exemption for its distribution of restricted stock. The letter noted that the company could in the future have more than 500 employees with restricted stock. The company currently has more than 700 employees.
While the company did not ask for an exemption for its other forms of equity--stock options or stock purchase rights--it argued that restricted stock units merit exemption because they cannot be traded and are not subject to any active investor interest. The SEC agreed to Facebook's request for an exemption until the company goes public or there is a change of control over the company.
Restricted stock has become a more common form of compensation since it has certain tax advantages over stock options.
WASHINGTON--A federal judge decided on Thursday not to impose a prison sentence on the senior directors of E-Gold, an Internet-based digital currency firm, who had previously pleaded guilty to violations of money laundering and running an unlicensed money transmitting business.
The three directors of E-Gold, in addition to its Gold & Silver Reserve parent company, were indicted in April 2007 after federal prosecutors accused the online payment site of being a haven for criminal activity like processing investment scams and payments for child pornography. They said its loose verification standards for users' identity attracted criminals.
The three men and the companies pleaded guilty to the charges in July 2008.
U.S. District Judge Rosemary Collyer said the men deserved lenient sentences because they did not intend to engage in illegal activity. Even though, Collyer said, the U.S. Justice Department wanted to use the cases to show "this new day of Internet crime is going to be...vigorously prosecuted," that alone was not enough reason to incarcerate the defendants.
Gold & Silver Reserve CEO Douglas Jackson was sentenced to 300 hours of community service, a $200 fine, and three years of supervision, including six months of electronically monitored home detention. He had faced a maximum sentence of 20 years in prison and a $500,000 fine.
Jackson was spared a heavier fine because, according to his attorney, he's deeply in debt. "Dr. Jackson has suffered, will continue to suffer, and may never be successful with E-Gold," the judge said.
Reid Jackson, Douglas Jackson's brother, and E-Gold director Barry Downey were each sentenced to three years of probation, 300 hours of community service. They also were ordered to pay a $2,500 fine and a $100 assessment fee each.
The defendants were also ordered to obtain licenses to do business in the states in which a license is required, something the company had already begun doing. In September, E-Gold hired KPMG to aid its development of an anti-money laundering program; it has already contacted every state to determine whether a license is needed.
E-Gold and Gold & Silver Reserve faced a maximum fine of $3.7 million, but because neither company could pay that much, they were fined $300,000 with the condition that $10,000 be paid on Monday, with further monthly payments to start in May 2009.
Many of E-Gold's users turned to it as an alternative to a bank account denominated in U.S. dollars, which lose money due to inflation especially when interest rates are low. By contrast, gold has zoomed upward from roughly $300 an ounce in 2002 to around $750 an ounce today.
Supporters of E-Gold and gold-denominated accounts have suggested that enabling nearly anonymous transfers of money in and out of the banking system is what led the feds to target the company. For his part, Jackson initially blasted the feds, saying the Secret Service "deceived" a judge with "bogus testimony" so they could conduct a raid on E-Gold designed to put it out of business.
Federal prosecutors claimed there was no doubt the directors knew E-Gold facilitates criminal activity. An analysis in January 2008 of the 65 most valuable E-Gold accounts showed that more than 70 percent were involved in criminal activity, according to Laurel Rimon, a Justice Department prosecutor.
Furthermore, prosecutors said, the funds that flow through E-Gold, which launched in 1996, are significant. At its height, the site had more than 4 million accounts and facilitated more than $5 million fund transfers a day.
Though illegal activity continued on E-Gold well after Douglas Jackson acknowledged the company was under investigation in 2004, the defendants claimed that they received bad legal counsel, which convinced them the site did not have to be licensed as a money transmitting business.
"If he had thought it needed to be licensed, he would have done everything in his power to make that happen," Federal Public Defender Michelle Peterson said about Reid Jackson.
The court also accepted the argument that Downey was unaware of the company's need for a license, even though he is a practicing lawyer.
The defendants also argued they have worked to the best of their abilities to cooperate with investigators, but the prosecutors provided evidence that the directors may have been trying to circumspect government interference.
The company was incorporated in Bermuda, for instance, even though its operations are based out of Melbourne, Fla. Barry Pollack, Downey's defense attorney, said the site's offshore registry did not impede the directors from responding to subpoenas. (If the site had been entirely overseas, as GoldMoney.com is, it wouldn't have had to worry about the feds. On the other hand, GoldMoney does demand proof of identity.)
Douglas Jackson founded the site on a philosophy opposed to government regulation, prosecutors said. "Dr. Jackson was very candid about his vision to create a version of a financial institution that didn't have regulations," prosecutor Jonathan Haray said.
Intentions and philosophies notwithstanding, the defense said, the defendants should remain out of jail so they could keep the site up and running and continue to help investigators track criminals. E-Gold's records of IP addresses and timestamps provide a trail to criminals--and proof the company had no intention of inviting criminal activity, the defense said.
The prosecution questioned how useful E-Gold's cooperation really was.
"The vast majority (of IP addresses from E-Gold) don't have good identifying information," said Rimon. "If an IP address leads to a P.O. box on a street corner in Estonia, that doesn't do us much good, and that's what we found in many cases."
E-Gold remains open for business today, though Jackson said in an announcement on November 14 that it was still figuring out how to comply with the registration process for new accounts now that it's subject to regulation as a "financial institution." New account creation is "temporarily suspended."
CNET News' Declan McCullagh contributed to this report.
The transition team for President-elect Barack Obama on Wednesday announced which advisers will lead the team's efforts to develop technology policy for the Obama administration.
The three team leaders of the technology, innovation, and government reform policy working group are Julius Genachowski and Blair Levin, two former Federal Communications Commission staff members, and Sonal Shah, the head of Google.org.
The purpose of the policy working group is to "develop the priority policy proposals and plans from the Obama campaign for action during the Obama-Biden administration," according to the transition team. Obama has promised to put more emphasis on technological issues as president and has even said he will appoint a chief technology officer.
Sonal Shah
(Credit: The Silicon Valley Microfinance Network)Genachowski is a former IAC executive and the founder of start-up incubator LaunchBox Digital. He served as an adviser to two FCC chairmen during the Clinton administration. Genachowski also chaired the group that helped shape the Obama campaign's Tech and Innovation Plan, and is considered by some in Washington to be a contender for the position of CTO.
Shah is the head of Google's philanthropy division and previously served as a vice president at Goldman Sachs. Both Shah and Genachowski are also on the Obama-Biden transition project advisory board.
Levin, a managing director at the firm Stifel Nicolaus, previously served as chief of staff to FCC Chairman Reed Hundt from 1993 to 1997.
WASHINGTON--Rather than investing emergency funds into old economic sectors like the auto industry, the federal government should look to the future and invest in a national broadband strategy, panelists at a broadband symposium said Wednesday.
"Let Detroit go bust, let the banks go bust--put $700 billion into broadband," said Paul Dickson, CEO of the Carbon Disclosure Project. "Broadband is the future."
The U.S. economy will surely come to a halt if the country cannot keep up with the pace of modern technology, said panelists at the event, which was hosted by the Internet Innovation Alliance.
More access and broader utilization of broadband can improve the country's future economic outlook, they said, but it can also help Americans struggling to keep up in the current economy. As resources become scarcer in tight economic times, far more government programs will be easier to reach via the Internet.
Paul Cosgrave, commissioner of the New York City department of information technology and telecommunications, discussed broadband deployment in his city on Wednesday.
(Credit: Stephanie Condon/ CNET News)"For someone trying to pull themselves up by their bootstraps, that whole process has changed," said Paul Cosgrave, commissioner of the New York City department of information technology and telecommunications. "They have to pull themselves up by the mouse cord, not necessarily their bootstraps."
It is up to President-elect Barack Obama and his administration to set the tone for broadband legislation and regulation, said David McClure, president of the United States Internet Industry Association. Yet while the goals for broadband accessibility should be far reaching, the investments to get there should be targeted at areas that need it, he said.
The panelists agreed there should be more investment in broadband deployment but acknowledged the realities of today's economic and political climate.
"There are a lot of pressures from the old economy that are going to come into the mix" as Congress works on creating a new stimulus package, either in its current lame-duck session or at the start of next year, said Elaine Kamarck, a lecturer in public policy at Harvard Kennedy School.
She urged those at the symposium to "work hard to make sure this stimulus package is a 21st century stimulus package."
Dickson said levying taxes on air fuel would be better for the economy than taxes on information and communication technology.
"The one hope for our world is being strangled," he said.
The quality of American life is clearly hampered by limited broadband access, panelists said, when a soldier can more easily search for medical information from his camp in Iraq than his home in Alabama.
Similarly, the country's potential to grow is obviously constrained when a college student is limited in which classes she can take because she does not have broadband access.
The integration of technology into the American education system pales in comparison to what has been accomplished in other countries, said Susan Patrick, president of the North American Council for Online Learning.
China has already digitized its entire kindergarten through twelfth grade curriculum, she said, and will reach 100 million more students online after WiMax becomes available.
The changes in online learning will "fundamentally shift what we call a world class education," she said.
Utilizing broadband technology in education will bolster our future workforce, but implementing it into human services programs can help the country's current workers, panelists pointed out.
New York City has seen a major increase in applicants for human services because of its Access NYC site, from which residents can determine if they are eligible for any of 35 services. The site is accessible in seven different languages.
Putting services online is "critically important when we will probably have more people applying for benefits than ever before," said Kamarck. "We have tighter budgets, and therefore any kinds of efficiencies will obviously help us keep more benefits for the people who need them."
Fears of e-voting glitches in the November election are still not over. The outcome of the Minnesota Senate race--which could give the Democrats a firmer grasp on power in Washington--may depend on whether scanning machines made mistakes two weeks ago when tabulating ballots.
Republican Sen. Norm Coleman holds a lead of only about 200 votes over his main opponent, Democrat Al Franken, but a hand recount that begins Wednesday could show that a few thousand votes were mistakenly rejected.
With Coleman's lead under a margin of 0.5 percent of the more than 2.9 million votes cast in the Minnesota senate race on November 4, the state automatically begins a hand recount of every ballot.
Minnesota used optical scanning machines to read paper ballots, and enough ballots could have been mistakenly rejected by the machines to alter the outcome of the race, said Beth Fraser, director of governmental affairs for the Minnesota secretary of state's office. The office estimates that as many as two votes for every 1,000 cast--or as many as 6,000--may have been mistakenly rejected.
The optical scanners would have rejected ballots that were not filled out correctly--for instance, if a voter circled a candidate's name rather than filling in the bubble next to the name, Fraser said. However, Minnesota law mandates that any vote in which the voter's intention is clear must be counted. In other words, the law is more liberal than the machines, and a manual recount could permit votes to be counted that a machine would reject.
"We have a pretty clear statute of what counts as a vote," Fraser said.
Starting Wednesday, election officials in 106 locations throughout the state will start sorting through ballots, paying particular attention to those that were rejected to decide whether they should be counted.
"It's kind of a consensus process," Fraser said.
Representatives for both of the two major candidates will be at every table, she said, and they are free to challenge the election officials' judgment. If anyone is left unsatisfied about the status of a vote, it will be put aside for the state canvassing board to review.
Officials aim to finish the hand recount by December 5. The state canvassing board--which is chaired by Secretary of State Mark Ritchie and includes Minnesota Chief Justice Eric Magnuson, Associate Justice G. Barry Anderson, and District Judges Kathleen Gearin and Edward Cleary--will reconvene on December 16 with the goal of getting in the final results by December 19.
While the optical scanning machines may have rejected some crucial votes, Fraser said the machines are the best option for counting votes.
"It speeds up the counting but gives us the paper ballots to count on, so the results are fully auditable," she said.
Tallying mistakenly rejected votes is unlikely to clear the controversy surrounding the recount, however. Franken's campaign filed a lawsuit on November 13 requesting that the names of voters who cast invalidated absentee ballots be made public, so those ballots can be reviewed by the canvassing board as well. A hearing on the case is set for Wednesday morning, after the recount starts.
Other incidents have called into question some of the results, such as an allegation the Minneapolis director of elections accidentally left 32 absentee ballots in her car. Additionally, Coleman has called into question the neutrality of Secretary of State Ritchie, who is a Democrat.
WASHINGTON--Government leaders need to do more than provide bailout money for America's flailing economy, Google CEO Eric Schmidt said Monday. They need to use the bailout programs as an opportunity to invest in infrastructure and look for more innovative solutions to persistent problems.
Addressing a large audience of academics, government workers, and others in Washington on Monday in his role as chairman of the board of the New America Foundation, Schmidt laid out the myriad ways in which the government could open the doors for innovation and long-term economic growth.
While he claims he is not interested in becoming President-elect Barack Obama's chief technology officer, Schmidt's talk on Monday gave not only technical solutions to problems like the need for new energy sources and immigration reform, but policy-based answers as well.
Google CEO Eric Schmidt on Monday discussed ways the government could spur economic growth through innovation and investments in infrastructure.
(Credit: Stephanie Condon/ CNET News)Google has already made inroads influencing how the government conducts its everyday business, as evidenced by Obama's use of YouTube, and the firm opinions Schmidt offered Monday indicate the company could have a strong voice in the political philosophy of the next administration as well.
"This may be the toughest economic time that most of us will face in our lifetimes," Schmidt said, but it is also a time to look for opportunities.
"Let's not just have bailout programs," he said. "Why don't we use the stimulus money to get infrastructure built?"
Schmidt emphasized the need to invest in infrastructure, both physically and otherwise. He suggested opening up the development of smart electric grids to more innovation and creating more competition among broadband providers.
"We have to find the right balance of incentives," he said. "We've had the most extreme version of the free market approach, and we've seen some of its consequences."
Those incentives, he said, could include giving matching funds to state utilities for energy efficiency programs they already run. It could also mean funding auto companies that meet emissions standards.
Government systems could also benefit from modeling the open nature of the Internet, Schmidt said.
"Open systems have this clear promise of innovation and greater choice," he said.
He called the Federal Communications Commission's decision to open up unused broadcast TV spectrum for unlicensed use an "act of remarkable courage, and one which we applaud."
"You never know where innovation's going to come from, but with an open platform, you welcome it," he said.
With that in mind, Schmidt said it is essential that "the small start-ups with funny names get founded and get funded."
He applauded Obama's promise to double federal funding for basic research, calling it "the core aspect of America's competitiveness," but one that is dependent on government funding.
Other steps can be taken to help the U.S. maintain its competitiveness, he said, such as reforming visa policies for skilled workers.
"We train these people, we bring them to the country, and then we don't give them a visa to work here where they would pay lots of taxes," Schmidt said.
As the government embraces innovative reforms, it should reform its own practices, Schmidt said, to create more public engagement and restore trust in government.
"We can stream almost all public meetings," he said. "The bandwidth is there, so why don't we get more people involved?"
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Yahoo is in yet another sticky situation as a result of a canceled advertising deal.
Digital media company DivX on Monday filed a lawsuit against Yahoo because the search company backed out of a two-year advertising agreement the companies reached in September of last year. DivX said the canceled deal will hurt its revenues.
Under the terms of the agreement, consumers who downloaded DivX video software tools were offered a co-branded version of the Yahoo toolbar as well as a version of Internet Explorer 7 with other Yahoo services. Before the Yahoo agreement was reached, DivX had a search tools deal with Google.
DivX filed suit in California Superior Court in Santa Clara County, seeking damages and specific performance under the agreement from Yahoo. In light of Yahoo's decision to back off the deal, the company adjusted its 2008 revenue estimates from a range of $95 million to $97 million to range of $90 million to $92 million.
Yahoo said in a statement the two companies have been working to restructure the toolbar distribution agreement but could not reach a resolution.
"Yahoo is disappointed with DivX's decision to pursue legal action rather than renegotiate this agreement," the statement said. "We intend to vigorously defend ourselves in court, but will reserve further comment until we've had an opportunity to review the suit."
The lawsuit comes just two weeks after Google backed out of an advertising deal with Yahoo, which would have brought in substantial revenue for Yahoo.
In theory, antitrust law helps foster competition. In reality, politically connected companies sometimes use it to bludgeon competitors and boost their own bottom line, as soon-to-be former Yahoo CEO Jerry Yang learned the hard way.
Yang had lent his prestige and the weight of his position to the proposed Google-Yahoo advertising deal, in part as an alternative to being gobbled up by Redmond, and in part as a way to get an easy $800 million a year in additional revenue.
When that proposed deal unceremoniously ended earlier this month--thanks to Microsoft's take-no-prisoners lobbying efforts in Washington, D.C., and a credulous Justice Department--Yang's time as CEO did too.
What a change. Back in the late 1990s, when Microsoft was busy fending off hordes of government antitrust lawyers, the company took a remarkable step: it actually asked Congress to reduce funding for the Justice Department's antitrust division.
That was then. Now, Microsoft has realized that spending money on antitrust lobbyists can pay off handsomely. Morality aside, that's an ROI that Warren Buffett would envy.
Consider the numbers: from February 1, 2005, and November 17, 2005, Microsoft spent $11.99 million on lobbyists, according to financial disclosure documents filed during that time. During that same period in 2006, the figure was $13.95 million. In 2007, it was $13.8 million.
But between the announcement of the Yahoo deal on February 1, 2008, and Monday, Microsoft's lobbying spending zoomed upward to $24.72 million.
Not only would that be a remarkable increase in any year, but it's especially notable during a time this year during which Congress has been quiescent on technology-related legislation. The figure also doesn't include money spent on public affairs firms and lobbyists who don't fit the relatively narrow legal definition and are not required to register with the government. (The numbers do include some spending that took place earlier than the February-November date range and was reported during that period.)
In return for millions of dollars distributed to Washington insiders, Microsoft could save billions on an eventual Yahoo purchase. Yahoo shares closed at $28.38 on February 1, the day the bid was announced, and at $10.63 on Monday. Even taking into account the market's overall fall in share prices, Microsoft may save billions by shoving Yahoo into a corner and eliminating its options.
One Redmond technique involved what's called astroturfing. CNET News reported in August about how anti-Google coalitions-one example was the American Corn Growers Association's sudden interest in the intricacies of online advertising and competition policy appeared immediately after Microsoft hired a secretive lobby firm called the LawMedia Group. Because LMG specializes in faux grassroots lobbying efforts, its efforts to sink the Google-Yahoo deal are not subject to disclosure requirements. Neither are funds spread around through trade associations.
(To be sure, Google is no saint. It tried to hamstring its Washington state rival by lodging a fanciful antitrust complaint about Windows Vista desktop search and tossed around terms like "illegal influence" when Microsoft was courting Yahoo earlier this year.)
What's odd is that the Bush administration took Microsoft's arguments about Yahoo's partial outsourcing seriously. This is the same group of antitrust bureaucrats who, along with President Bush's appointees over at the Federal Communications Commission, approved a long list of actual mergers with nary a word: XM and Sirius; Sprint and Nextel; AT&T and SBC; Verizon and MCI; and AT&T and BellSouth.
"The Bush administration has apparently never seen a telecommunications merger it didn't like," Rep. Edward Markey, a Massachusetts Democrat who leads the House Energy subcommittee on telecommunications, said earlier this year, according to the International Herald Tribune. Yet the Justice Department threatened Google and Yahoo with a lawsuit and even hired an outside attorney to run the show.
Another option for the Bushies would have been encouraging a kind of legal self-help. If Microsoft had truly believed that the Google-Yahoo deal was dodgy, it didn't need to run to Washington. It could have filed a private antitrust lawsuit instead. Redmond knows firsthand how this works: Sun Microsystems filed a private antitrust suit that Microsoft settled for $1.95 billion in 2004.
While that's not a perfect solution, it does force businesses to foot the bill for their own lawsuits, as opposed to pressuring the Justice Department to spend taxpayer dollars on a trial that could take years to resolve.
All of this should be a lesson to President-elect Barack Obama, whose campaign platform pledged to "reinvigorate antitrust enforcement" and "step up review of merger activity." He once complained to the American Antitrust Institute that "the current administration has what may be the weakest record of antitrust enforcement of any administration in the last half century."
If a supposedly weak Republican administration is so antitrust-hostile to business deals in Silicon Valley, imagine what a "reinvigorated" Obama administration will be willing to do.
Disclosure: the author is married to a Google employee.
See also:
• Yahoo CEO Yang to step down
• Yahoo's ultimate search: A new CEO
• Yang's travails: A Yahoo timeline
• A pity for Yahoo that John McCain didn't win
• Jerry Yang memo to staff about stepping down
• Microhoo revisited: Would it be a search-only deal?
