Friday, May 21, 2010

EPJ Opens Web Site to Anyone Who Has Been Questioned by the SEC or FTC

Another front in the revolution has broken out.

WSJ explains:
U.S. trustbusters have set their sights on Silicon Valley, with a growing number of investigations targeting possible anticompetitive behavior by technology companies. Now they are having to deal with an unexpected consequence: Potential witnesses are using blogs to blurt out details of an inquiry as it is being conducted.

Many of the technology-savvy people contacted by Federal Trade Commission staff investigating Google Inc.'s $750 million deal to buy mobile advertising company AdMob Inc. have written online about the conversations. Some of their blog posts discuss the kinds of questions the FTC is asking, the apparent attitudes of agency investigators and their level of familiarity with online advertising.

"There is no way the FTC knows enough to support a decision to block the deal," wrote a blogger from Wertago, a mobile nightlife application. The post was entitled "Ignorance and Hubris at the FTC."

Though there is no written rule against disclosing the details of such investigations, FTC staffers typically tell potential witnesses that such inquiries are nonpublic.

"It is highly unusual in every respect," says Eric Goldman, director of the High Tech Law institute at Santa Clara University in California. "Historically, whenever the FTC was doing its homework, it was able to keep it behind the veil. We don't normally get to see [an investigation] developing in real time."

Google and AdMob certainly hope the online chatter will help their deal get approved. Both Google and AdMob Chief Executive Omar Hamoui have encouraged some mobile-software companies to blog about their experiences with the FTC and say why they support the deal, according to people familiar with the matter. Google points to the blogs as evidence that those who best know the sector support the acquisition...

Such noisy public feedback—even before the FTC has taken any action—is potentially uncomfortable for investigative agencies. Might it also affect the decision whether to act?

"Absolutely," said Jeffrey Schmidt, a former head of the FTC's competition bureau, now a partner at Linklaters LLP. When making a case against a merger, FTC lawyers like to point to customers that would be adversely affected, he said. The negative reviews from bloggers could suggest the agency would have a hard time producing sympathetic witnesses in court.
What the bloggers are doing here needs to be emulated by others who have been questioned by regulators.

As of right now, EPJ is welcoming reports from anyone who has been questioned by the SEC or FTC. We will carry, at our discretion, such reports on our site. Please email  reports to

No comments:

Post a Comment