Last week, the jury gave Alphabet (GOOGL Quick QuoteGOOGL - Free Report) a long-awaited win against Oracle (ORCL Quick QuoteORCL - Free Report) even as AT&T (T Quick QuoteT - Free Report) started bidding for Yahoo and Apple (AAPL Quick QuoteAAPL - Free Report) stores in India suffered a slight setback.

Here are the top stories-

Google Wins in Court

Google and Oracle have been fighting it out for six years over Google’s use of Java application programming interfaces (APIs) in Android. At first, the judge ruled that Java APIs could not be patented, a decision that was overturned on appeal with the case sent for retrial. The re-trial between Google and Oracle took about three weeks after which a jury of 10 unanimously voted that Google’s dependence on Java APIs was fair use under law. As expected, Oracle said it would appeal.

The question of APIs is highly sensitive because on the one hand, software developers can’t build anything useful if they can’t, without qualification, rely on another developer’s software stack. Interoperability is a must because discrete systems aren’t useful for consumers. On the other hand, companies building software need to be able to protect and commercialize their work in order to raise the funds for further development.

In this case, it was ruled that Google’s was “fair use.” The fact that the 11K lines copied amounted to just 0.0009% of Android helped. Google also pointed out that Oracle hadn’t borne the risk and cost of creating and marketing Android, which is very different from the Java code used. It also said that Sun Microsystems, which owned Java at the time, was happy with Google’s use of Java and didn’t ask for licensing fees. There was no mention of Sun’s financial difficulties at the time, which made it impossible to get into legal duel with Google and forced it to sell out to Oracle. However, Oracle did exhibit emails wherein Google executives admitted that the inability to acquire the license from Sun could lead to legal trouble in the future.

The use of APIs should probably not be deemed unfair unless such use makes it difficult for the owner to survive. For instance, if a Java-based OS couldn’t survive in the market simply because of Android’s clout and ecosystem or Google’s willful attempt to stifle it (amounting to Google’s attempt to destroy the source from which Android emerged), this would be unfair and Google should then be called on to pay up.    

Even AT&T Wants Yahoo Now

Yahoo shares were highly volatile last week as news of the core selling for just $2-3 billion were made light of by CFO Ken Goldman. The CFO indicated that such “leaks” in the press should only be expected at this stage of the talks, which were progressing extremely well.

Later, there were reports that AT&T had entered the bidding war after the digital advertising company YP Holdings (in which it has a stake) withdrew. With the next round of bidding about to commence this week, it has been reported that Verizon remains the front-runner and Microsoft (MSFT Quick QuoteMSFT - Free Report) , along with some private equity firms also remains in the race.  

India Stores Won’t Be Easy for Apple

Apple has high hopes for India and the CEO has done his bit visiting temples, fraternizing with film stars and meeting with the Prime Minister. These moves didn’t soften the government’s position on Apple retail stores in India. According to Indian law, total foreign ownership of a single-brand retail store is possible only when 30% of inputs are sourced from within the country.

It was initially thought that the waiver for companies offering “cutting-edge technology” would apply to Apple. But Apple’s application on these grounds was rejected by the Finance Ministry. Other smartphone makers (local and foreign) also objected to Apple’s plans of selling refurbished iPhones saying it would hurt competition. Brand retailers like Apple offer “empty calories,” i.e., they sell products that bring limited benefit to the economy. So the government may not allow them.

But all hope isn’t lost because the Commerce Ministry hasn’t objected to Apple’s stores and may take up the matter with the Finance Ministry. Further, Apple also has a Plan B: its manufacturers Foxconn and Pegatron are reportedly looking to manufacture in India. Apple may also be able to sweeten the deal given the two software development centers recently inaugurated in Bangalore and Hyderabad.

That said, there is no ban on selling iPhones in India. What Apple wants is to set up stores that will help to build the brand and this is where the problem appears to lie. So even if there are no Apple stores in the country right away, iPhone sales in India will likely continue to grow from the 50%+ rate in the last quarter.

Other stories you might have missed-

Corporate

Facebook Shuts Down Liverail: Facebook’s ad technology platforms are seeing some more adjustments. Last week, the company shut down the ad exchange FBX and the programmatic video ad exchange Liverail (bought in 2014). Of course the company is not chucking out all the technology. It is instead integrating the valuable parts and increasing focus on the Facebook Audience Network.  

Intel Capital Plans Restructuring: Contrary to earlier reports that suggested that Intel (INTC Quick QuoteINTC - Free Report) Capital might sell off some assets in the portfolio, President Wendell Brooks has said he will maintain and build upon the portfolio he inherited. There will be some restructuring however, with some employees leaving the company or adopting new roles.

Microsoft Starts Investing in Internet Access: Microsoft is taking a unique approach to connecting the unconnected.  While Google, Facebook and other technology companies are sinking billions to build satellites, balloons, etc. to get more people online, Microsoft is giving grants of $70K to $150K and free software to 12 small startups in countries like Rwanda, Argentina, Philippines and India. The objective is to empower them to assess the local situation and come up with local solutions that can speed up implementation.  

Google Self-Driving Plans in Detroit: Soon after Alphabet’s deal with Chrysler to build a hundred self-driving vehicles based on the Chrysler Pacifica hybrid-powered minivan model, the company has announced its acquisition of a 53K square-foot facility in Novi Michigan, 30 miles northwest of downtown Detroit. Google clearly intends to tap into the local talent in the area, which is well known for auto making (Detroit is often referred to as Motor City).

Europe Fixes Quota for Amazon, Netflix: In an attempt to encourage film production and facilitate its distribution within the EU, the European Commission has decided to set a quota for on-demand video services like Netflix, Amazon and Apple iTunes. Accordingly, these services have to provide at least 20% European content within the EU. Netflix said this wouldn’t help.

An industry trade group called DigitalEurope represented by companies like Apple and Google said that this wouldn’t protect European content and could have a detrimental impact. European screen writers and authors on the other hand said that the quota should be higher to take European drama to the world. The EC also said that EU countries could ask these providers to invest in their audio and cinematographic works.

Top Twitter Execs Leave: Jana Messerschmidt, Twitter’s head of business development, left last week, after six years in the position, as did Nathan Hubbard, Twitter's head of media and commerce, after three years with the company. Ali Jafari, VP of its video advertising business Amplify will now head all three divisions, which are being merged. Katie Jacobs Stanton, (media chief), Kevin Weil (product head), Alex Roetter (engineering head) and Brian Schipper (top HR executive) left in January this year.

Legal/Regulatory

Facebook Developments in Europe: Facebook’s model contracts (common legal arrangements used by firms to transfer personal data outside the 28-nation EU) are now up for scrutiny. The company has its European headquarters in Ireland and is therefore subject to the Irish Data Protection Commissioner’s (IDPC) rulings.

The IDPC has now asked the Court of Justice of the European Union (ECJ) to determine the validity of model contracts, especially with respect to the privacy of European citizens’ data being transferred to the U.S. The trouble started with Austrian law student Max Schrems questioning Facebook’s data transfer to the U.S. where it can be subject to government snooping.

Google Paris Office Raided by Tax Authorities: French authorities have taken exception to Google’s sweetheart deal with the U.K. government. Last week, French police and prosecutors raided Google’s Paris office for proof of tax fraud. Top American technology companies generate huge profits abroad and work out complicated tax-avoidance schemes so they don’t have to pay taxes in the countries in which they operate.

At the same time, they don’t bring their cash back to the U.S. either, because that too would attract taxes. With both international and American authorities waiting to access the cash that they are obligated to report on their balance sheets, it may not be long before they are forced to cough some up.  

SEC Investigation of Alibaba Accounting: News of an SEC probe into its accounting practices sent Alibaba shares swooning but the concern appears to be overblown. The SEC has specifically inquired about its equity method of consolidation for its logistics arm Cianio, where there doesn’t appear to be any irregularity. Cianio is also just a fraction of its total business, so any effect on Alibaba will be limited. The SEC has also asked for information about related party transactions and Singles Day accounting, but details are scarce.

New Technology/Products

Apple Siri Opened to Developers: Apple will allow software developers to connect their apps and services to Siri with a soon-to-be-released software development kit. This lays the foundation for a voice-controlled device like Amazon’s Echo, which is also being rumored to be in the works. The move may have been spurred by the success of the Echo device.

Microsoft’s voice assistant Cortana already allows app integration although it hasn’t mentioned a device yet. Google recently released a voice-controlled device called Google Home but hasn’t given details about when it’s coming or how it will be priced. 

New Xbox One Coming Soon: The 2016 Electronic Entertainment Expo (E3) could see some interesting news from Microsoft. The company is reportedly on the brink of announcing a couple of new Xbox consoles. The first, will be a cheaper, slimmer but souped-up version of the existing Xbox One and may just be called Slim for all you know. It will have 2TB of storage and possibly, a revamped controller. It will hit the market this year.

The second, to be released next year, is currently being called Scorpio. It will have a more powerful GPU and will be capable of supporting Occulus Rift. Project Helix of which these two devices are reportedly part of a plan to converge Xbox and Windows.

Google Modular Phones Coming Soon: A video at its I/O developers conference showed that Google’s modular phone Ara is alive and well, and heading into production. An SDK will be available soon and a real product as early as next year. The company has been working on the revolutionary concept for the last three years.

The concept is truly unique in that Google is making it possible for you to use just the parts your heart desires. The Ara frame has key smartphone components like chips, antenna, sensors, battery, etc. Plus there are six slots into which you can place your choice of cameras, displays, microphones, loudspeakers, music players, projectors, extra batteries, etc. manufactured by Google’s hardware partners like Samsung and Toshiba. What’s really cool is that you can modernize your phone easily without buying a new device and also use the slots for new and exciting stuff.

M&A

Apple Pay Supported in Singapore: Global Payments, which has a comprehensive array of payments solutions enabled for the Singapore market has said that it will work with Apple Pay. This means that customers can easily make both in-store and online (in case of apps) payments using Apple Pay.

Facebook-Microsoft Building Transatlantic Cable: The two companies are collaborating to build underwater infrastructure across the Atlantic. Around 6.6K kilometers in length and enabling data transfer speeds of 160 tbps, MAREA as it is called, will stretch from Virginia to Bilbao in Spain. Around two-thirds of the Digital data traveling across the Atlantic now happens on private networks laid out by these technology companies. Considering the number of services they run, data transfers and the need for reliable cabling will only increase going forward. 

Facebook Acquires Two Big Ears: Facebook has acquired Two Big Ears (TBE), a spatial audio technology company focused on 3D audio for games and VR content for an undisclosed amount. TBE will temporarily stop 3D game audio solutions as it works with Facebook to create high-quality VR audio. While it currently promises to be platform and device agnostic, we’ll just have to wait and see.

Some Numbers

BMO Optimistic About iPhone Sales, UBS Differs: Apple suppliers have been asked to produce 72-78 million iPhone 7s this year above the street’s expectations of 65 million devices. This is reportedly the highest production target in two years and led BMO analyst Tim Long to reiterate his outperform rating and price target. He says that Apple’s installed base is currently larger than ever with 25% owning devices more than two years old. This will spur upgrades.

According to a UBS analyst, however, the limited innovation in iPhone 7 will lead to sluggish upgrades, especially from iPhone 6 although he does concede that people using older devices with 4-inch screens would upgrade.   

Some Companies That Reported Last Week: Nimble Storage, Tech Data, Computer Sciences Corp, Intuit, HP Enterprise, Hewlett-Packard Company, NetApp, Palo Alto Networks

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