You’d probably think that in this day and age, giant tech companies can pretty much do whatever they want, like acquire other companies, or alter their terms of service. But no, there are regulators who constantly keep an eye on them to make sure that their actions won’t harm consumers, disrupt the balance of the industry and of course, ensure that they still abide by the fair, reasonable, and non-discriminatory terms. So let’s take a look at how regulators are hard at work in maintaining balance in the tech industry.
EU’s Motorola Mobility Probe
Motorola Mobility is in the middle of two antitrust cases filed by Apple Inc. and Microsoft Corp. that the European Union is now looking into.
The EU is investigating as to whether or not MoMo abused their dominant market position, owning essential technologies that power mobile and gaming devices, when they sought injunction over Microsoft’s Xbox and Apple’s iPhone and iPad.
Apple and Motorola filed separate complaints alleging MoMo is unfairly using their extensive patent portfolio in trying to block competing products through court orders across Europe, and for charging excessive licensing prices for essential patents.
“Following complaints by Apple and Microsoft, the Commission will investigate, in particular, whether by seeking and enforcing injunctions against Apple’s and Microsoft’s flagship products such as iPhone, iPad, Windows and Xbox on the basis of patents it had declared essential to produce standard-compliant products, Motorola has failed to honour its irrevocable commitments made to standard setting organisations,” said the EU watchdogs.
The patents in question are: 2G and 3G mobile and wireless telecommunications, H.264 video compression and WLAN technologies.
Motorola is in its final stages of being acquired by search giant Google, and this probe could potentially harm the deal. EU competition commissioner Joaquin Almunia already warned in February that even if the acquisition is approved by all regulators, any wrong doings of both Motorola and Google will not be exonerated.
SEC’s Groupon Probe
According to sources familiar with the matter, the Securities and Exchange Commission is scrutinizing Groupon over their first set of financial results since they went public, but the SEC is still pondering as to whether or not a formal investigation will be launched.
Groupon filed their 10K financial report last Friday, which was the deadline for filing, as the reason for the SEC probe. Groupon made some last minute revisions on their financial report and that’s why they filed their 10K financial report on the last day of submission.
The reason behind the last minute revisions goes back to February, just a few weeks after they submitted their first financial report after their IPO, when Groupon chief accounting officer Joe Del Preto informed the company’s finance chief Jason Child that in January, they recorded the highest number of refunded coupons, which they had no sufficient amount of funds to cover.
Groupon differs from other daily deals site because of the Groupon Promise wherein customers are able to return one of their coupons to be refunded for the purchase. Unfortunately, a lot of people returned them back in January. Child formed a team that analyzed why the coupons were returned, raising concern over customer satisfaction. Fortunately for them, the returned coupons reflected that expensive deals were the ones being returned and not coupons in general.
And to stay on top of their game, they hired a second accounting firm, KPMG, in addition to their current accountant Ernst & Young, which will focus on making Groupon Sarbanes-Oxley Act compliant. Sarbanes-Oxley Act dictates federal regulations around accounting and disclosures of public companies.
This isn’t Groupon’s first run-in with the SEC. Last year, the SEC questioned Groupon as to why they used the $1.1 billion funding they raised in redeeming shares of their common and preferred stock, and the rest of the funding was used to fund acquisitions and for working capital and general corporate purposes. They also want to uncover the reasons behind the inconsistencies in their reports.