The Hill reports that Rep. Zoe Lofgren of California, the sponsor behind ECPA 2.0, will be crowdsourcing ideas for a new bill on Reddit this afternoon. The bill would be aimed squarely at putting a stop to the unwarranted domain seizures as part of the Justice Department’s “Operation in Our Sites” campaign.

For those unaware, the DoJ and ICE started up “Operation in Our Sites” in 2010 to shut down Web sites found selling or spreading copyrighted content without consent. The campaign has led to over 700 Web sites being shut down.

It should be noted that Lofgren doesn’t have a problem with copyright infringing Web sites being taken down. Her problem lies in the fact that there’s no due process and no chance for targeted Web sites to defend themselves. The DoJ just takes down a Web site without warning, and those affected have no real recourse in proving their innocence.

Of course, just throwing a bill into the House might not solve anything, and it may make matters worse. That’s why Lofgren is asking for Reddit’s help in crafting the bill. Those who live and breathe the Internet would have a much better idea on how to preserve the Internet versus those in Washington that have shown time and time again that they know nothing.

Lofgren’s Reddit post is not live just yet, but we’ll update this story when it does. It should be interesting to see what ideas the users of Reddit bring to the table. The community has proven in the past that is has a good handle on law, especially when it concerns the Internet.

UPDATE: You can check out Lofgren’s Reddit post here. There’s only 10 comments after three hours, but that may be due to Lofgren’s poor choice of posting in the /r/politics subreddit where topics are quickly replaced.

The main part of the investigation seems to be Comcast’s Xfinity app, and the fact that if you use the app on their service it would not count towards your data cap where Netflix and Hulu would. That is a clear issue in my opinion and really does break antitrust rules. Also if they are found guilty, this is in direct violation of its agreements that cleared the way for its acquisition of NBCUniversal.

I can understand why they are doing this. These networks aren’t very cheap, but they are forcing us to use their services or be punished when we already pay for them. I had this problem with Time-Warner cable internet. When I was on Youtube or playing games it was fine, but if I tried to watch Netflix or stream MLB.TV my internet connection speed would go from 8Mbps down to .9Mbps. I tested it on many occasions. They came out and nothing was wrong but it was clear to me that because I didn’t buy HBO and a MLB package from them, that I basically was not going to be able to watch competing services.

Also being investigated are the cable companies’ TV Everywhere initiative, where online access requires a verified cable subscription, as well as the distribution contracts content providers sign with cable systems. There is no word on when the investigation will end, or if it is out to actually put a stop to anything. I guess the important thing is that hopefully we will be closer to the cable companies not being able to push us around anymore.

The 1.7 GB file contains what Anonymous calls “shiny things such as internal emails and the entire database dump.” They claimed that the Bureau of Justice took down their Web site as a sign of acknowledging the hack.

In classic Anonymous fashion, they have released another video that details the entire attack. The reason behind the attack is thus:

We do not stand for any government or parties, we stand for freedom of people, freedom of speech and freedom of information. We are releasing data to spread information, to allow the people to be heard and to know the corruption in their government. We are releasing it to end the corruption that exists, and truly make those who are being oppressed free. The price we pay very often is our own freedom. The price governments pay is the exposure of their corruption and the truth being revealed, for the truth will set us free in the end. So once more we call on you. Hackers, activists, and freedom fighters; join us in our struggle against these corporate hypocrites.

I will say that Anonymous has gotten much better at creating videos. It was only a few weeks ago that they would just post their message and be on their way. Now they’re making videos full of special effects with star lions and Anonymous imagery.

Oh, and before you ask, the database leak is real and is hosted on The Pirate Bay. We won’t link to it, but it’s easy enough to find. It remains to be seen if there’s actually anything incriminating in it since the Bureau of Justice is just an arm of the Department of Justice that collects stats on crime.

It’s also worth noting that this leak seems to be part of a new movement called #MondayMailMayhem or #MMM for short. The verdict is out on whether or not it’s related to #FuckFBIFriday.

The government is seeking to nullify the agreements between Apple and the five publishers that instituted an agency model of e-book sales. Under the agency model, publishers set the price of e-books, and the retailer gets 30% of the price. Under the previous wholesale model, e-books were sold in the same way as physical books: the books are sold to the retailer by the publisher, and the retailer is allowed to set whatever price they choose. This model caused concern for publishers because Amazon was selling e-books at or below wholesale in order to drive sales of their Kindle e-reader, a practice which Barnes & Noble also adopted when they released their own Nook e-reader. The government alleges that by adopting the agency model, Apple and the publishers colluded to raise e-book prices. Once the agency model agreements with Apple were in place, the publishers were able to strong-arm Amazon and Barnes & Noble into similar agreements.

Sounds cut and dried enough. But it has led some to ask a few basic questions about how anti-trust works and what is and is not allowed in open market competition in the United States. Amazon is the king of the hill in the e-book market. It seems counter-intuitive that the DOJ would sue to quell competition in that market.

The key to understanding it all comes down to understanding two things: price-fixing and “freebie marketing”.

I met a guy once who told me that every gas station owner in our town met at a particular restaurant weekly to agree on gas prices for the week. Since gas was consistent around town, it was all a matter of what was convenient for the buyer, not a price-comparison issue. Not sure if that story is true, but if so, that is price-fixing. And, it’s illegal as can be.

In the 1950s, heavy equipment manufacturers like General Electric and Westinghouse would meet in public places like golf courses to discuss how they would price their products. They agreed to rotate bids for government projects so everyone got a taste. It went on for years until the Tennessee Valley Authority realized that bids that had been submitted as sealed and secret were actually identical, down to the last dollar. In the end, almost 50 executives paid large fines and several people spent a month or more in jail for the conspiracy. Before it was all uncovered and stopped, the price-fixing system had hosed taxpayers out of $175 million dollars a year in 1050s dollars.

In the mid-1990s, Archer Daniels Midland and 4 other foreign companies colluded to raise the price of the animal feed additive lysine. Their international cartel was exposed when an employee told an FBI agent about it in the context of a completely separate matter, fearing it would be found out anyway. The resultant investigation led to the first DOJ prosecution of that scale in 40 years. ADM was also found to be conspiring to fix prices in the citrus market. Hundreds of millions of dollars in fines were assessed. But, over a nine month period, the lysine price-fixing scheme had managed to raise prices on farmers 70%.

In the case of Apple and the publishing houses, the DOJ says that their “agency model” is a price-fixing scheme. The deal was actually the brainchild of Steve Jobs. In his biography, Jobs explains the genesis of the model:

“We told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30 percent. And yes, the customer pays a little more, but that’s what you want anyway.”

Let’s pause here and look at the other term we said needed to be explained: “freebie marketing”, sometimes called the razor-and-blades business model.

This marketing scheme is based on the idea of selling one item at a low price, even below cost or free, but making profit on a complementary item. Examples of these pairings include printers and ink cartridges, cell phones and service contracts, game consoles and games, and yes, razor handles and blades. In each of these cases, many of the sellers of these items take a loss on the initial purchase in order to make money on the second item in the pair.

This is what Amazon had been doing. They had been selling their e-books for less than it costs them to get them wholesale, never going above the $9.99 mark they had set for themselves. But, in doing so, they grabbed the lion’s share of the market and gotten their Kindles spread far and wide. They are the default choice in e-readers today, in part because of the price points they set.

Amazon has other things they can put through those Kindles, including independently-published books that cost them almost nothing to carry. Last year, one of these independent authors outsold every traditionally-published author in the Kindle store. We interviewed him here about his success in Q4, 2011.

In order to be able to compete with Amazon in the e-book market, Apple needed to find a way to control pricing better. So they instituted the “agency model” as Jobs described it above.

So far, none of this really amounts to price fixing. It is a different way to sell something, but not illegal. However, for this whole thing to work, the publishers had to get other retailers, including Amazon, to go along with the model, which let them set the prices. The DOJ says that things went one step further, which makes all the difference in the world. This was in the way that they went about constructing their plans. These were competitors talking amongst themselves about how to best get Amazon to raise prices. A particular price point may not have been set, but the agreement to a particular scheme to raise prices overall was. According to the suit:

The Defendants’ conspiracy to limit e-book price competition came together as the Publisher Defendants were jointly devising schemes to limit Amazon’s ability to discount e- books… Together, Apple and the Publisher Defendants reached an agreement whereby retail price competition would cease (which all the conspirators desired), retail e-book prices would increase significantly (which the Publisher Defendants desired), and Apple would be guaranteed a 30 percent “commission” on each e-book it sold (which Apple desired).

Phrases like “jointly devising” are the damning parts of the whole thing. If proven, they are the smoking gun that proves the charge. And, keep in mind, three of the defendants have already settled in this matter

Some are saying that Apple did no price setting. Apple maintains that they are merely the “agent” in the model. But, the suit alleges that Apple is complicit because the agency model was their idea in the first place. And, to top it all off, it had to be implemented industry-wide or Apple would not play ball. Again, according to the biography, Jobs said:

“We also asked for a guarantee that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too.”

The DOJ suit puts it this way:

Apple facilitated the Publisher Defendants’ collective effort to end retail price competition by coordinating their transition to an agency model across all retailers. Apple clearly understood that its participation in this scheme would result in higher prices to consumers… Over three days in January 2010, each Publisher Defendant entered into a functionally identical agency contract with Apple that would go into effect simultaneously in April 2010 and “chang[e] the industry permanently.”

The simultaneous adoption of contracts, the identical structure of those contracts, and the fact that it was all built upon competitors putting their heads together to beat back a single entity is what is going to make this suit very heard to beat for Apple and the remaining publisher defendants.

Penguin, one of the holdout defendants in the case, released a statement from its CEO John Makinson which denies any collusion with other publishers as he outlines two reasons they are not settling with the DOJ:

“The first [reason] is that we have done nothing wrong. The decisions that we took, many them of them costly and difficult, were taken by Penguin alone… The second, and equally powerful, reason for our decision to place this matter in the hands of a court is that we believed then, as we do now, that the agency model is the one that offers consumers the prospect of an open and competitive market for e-books… we reasoned that the prevention of a monopoly in the supply of e-books had to be in the best interests, not just of Penguin, but of consumers, authors and booksellers as well.”

Since HarperCollins, Simon & Schuster and Hachette Book Group have already settled, Amazon has wasted no time in announcing victory. They released a one-sentence statement:

“This is a big win for Kindle owners, and we look forward to being allowed to lower prices on more Kindle books.”

The Justice Department announced that $230 million would be divided among Rhode Island-specific agencies. $100 would go to Federal agencies and $170 million would go to the DoJ’s own Assets Forfeiture Fund. Search Engine Land provides the exact breakdown:

East Providence PD: $60 million (12%)
North Providence PD: $60 million (12%)
RI Attorney General: $60 million (12%)
RI State Police: $45 million (9%)
RI National Guard: $5 million (1%)
US Postal Service: $40 million (8%)
IRS: $35 million (7%)
US Secret Service: $15 million (3%)
ICE: $10 million (2%)

“The result of this investigation has been a fundamental transformation of Internet pharmacy advertising practices, significantly limiting promotion to US consumers by rogue online pharmacies,” said Martin-Weis, acting director of the U.S. Food and Drug Administration’s Office of Criminal Investigations, in the initial DoJ announcement of the settlement. “This accomplishment could not have been possible without the resourceful commitment of the Rhode Island United States Attorney’s Office, as well as the tireless efforts of our law enforcement partners detailed to the OCI Rhode Island Task Force.”

Assistant U.S. Attorneys Andrew J. Reich and Richard B. Myrus of the District of Rhode Island, and FDA/OCI Special Agent Jason Simonian led the investigation. As the DoJ discussed in the announcement, the FDA/OCI Rhode Island Task Force is comprised of law enforcement agents and officers from FDA/OCI, the IRS, Immigration and Customs, the Postal Inspection Service, the Rhode Island State Police, the Rhode Island National Guard, the Rhode Island Department of the Attorney General;, the East Providence Police, and the North Providence Police.

There was also assistance from Corbin A. Weiss, Senior Counsel with the Criminal Division’s Computer Crime & Intellectual Property Section, and Sarah Hawkins, FDA Senior Counsel.

The investigation involved the tracking of a fugitive to Mexico. He had advertised the unlawful sale of drugs through Google’s AdWords.

DoJ attorney Peter Neronha (pictured) will hold a press conference in Providence today to announce how the $500 million will be distributed among federal, state and local law enforcement agencies, reports Providence Journal (via 9to5Google).

“The result of this investigation has been a fundamental transformation of Internet pharmacy advertising practices, significantly limiting promotion to US consumers by rogue online pharmacies,” said Martin-Weis, acting director of the U.S. Food and Drug Administration’s Office of Criminal Investigations, in the initial DoJ announcement. “This accomplishment could not have been possible without the resourceful commitment of the Rhode Island United States Attorney’s Office, as well as the tireless efforts of our law enforcement partners detailed to the OCI Rhode Island Task Force.”

The announcement said the investigation of Google had origins in a separate, multimillion dollar financial fraud investigation unrelated to Google. The main target of that investigation had fled to Mexico.

“While a fugitive, he began to advertise the unlawful sale of drugs through Google’s AdWords program,” the announcement said. “After being apprehended in Mexico and returned to the United States by the U.S. Secret Service, he began cooperating with law enforcement and provided information about his use of the AdWords program. During the ensuing investigation of Google, the government established a number of undercover websites for the purpose of advertising the unlawful sale of controlled and non-controlled substances through Google’s AdWords program.”

This is all sure to be considered with regards to any announcement about the division of the money.

Assistant U.S. Attorneys Andrew J. Reich and Richard B. Myrus of the District of Rhode Island, and FDA/OCI Special Agent Jason Simonian led the investigation. As the DoJ discussed in the announcement, the FDA/OCI Rhode Island Task Force is comprised of law enforcement agents and officers from FDA/OCI, the IRS, Immigration and Customs, the Postal Inspection Service, the Rhode Island State Police, the Rhode Island National Guard, the Rhode Island Department of the Attorney General;, the East Providence Police, and the North Providence Police.

There was also assistance from Corbin A. Weiss, Senior Counsel with the Criminal Division’s Computer Crime & Intellectual Property Section, and Sarah Hawkins, FDA Senior Counsel.

In other words, a lot of people and agencies were involved. Will $500 million of the search giant’s former money be enough to go around?

“Facebook takes your privacy seriously. We’ll take action to protect the privacy and security of our users, whether by engaging policymakers or, where appropriate, by initiating legal action, including by shutting down applications that abuse their privileges.”

On the note released by Facebook that challenged those practices, a comment was made by a reader:

THANK YOU FACEBOOK !!!!! — NOW WHat I want to see is some unlucky corporation get the legal butts KICKED by YOU (i.e. The Facebook Corporation) put some REAL TEETH into that new policy by actully SENDING legal documents (i.e. an INJUNCTION) against employers who pull the “Asking for My Facebook password” stunt.

Well, don’t hold your breath.

Facebook has since qualified that statement with this release to reporters:

“We don’t think employers should be asking prospective employees to provide their passwords because we don’t think it’s right the thing to do. While we do not have any immediate plans to take legal action against any specific employers, we look forward to engaging with policy makers and other stakeholders, to help better safeguard the privacy of our users.”

Fortunately, this may be an area that our government should, and may, step into. As we reported here earlier, two U.S. Senators are teaming up to pressure the U.S. Equal Employment Opportunity Commission and the DOJ “launch a federal investigation into a new disturbing trend of employers demanding job applicants turn over their user names and passwords for social networking and email websites to gain access to personal information like private photos, email messages, and biographical data that is otherwise deemed private.”

Interestingly, there are already labor laws in place in Canada that prevent this sort of thing.

AT&T had not returned a request for comment by the time the previous article was published, however they responded just a few minutes ago via email. Here is AT&T’s statement:

AT&T has followed the FCC’s rules for providing IP Relay services for disabled customers and for seeking reimbursement for those services. As the FCC is aware, it is always possible for an individual to misuse IP Relay services, just as someone can misuse the postal system or an email account, but FCC rules require that we complete all calls by customers who identify themselves as disabled.

Not surprisingly, AT&T denies any wrongdoing. It may be worth noting, however, that they make no mention of the FCC’s requirement that reimbursed calls be verified as originating in the U.S. Nor do they say whether the registration system they adopted actually follows that requirement.

What do you think? Do you believe AT&T’s insistence that they’re innocent? Let us know in the comments.

The big cost of this is the problem. As the revenue streams for municipalities around the country have been hit hard, public pools have been on the chopping blocks. Each pool lift can cost between $8,000 and $20,000 to purchase and install.

Sens. Jim DeMint and Lindsey Graham, both South Carolina Republicans, were trying to speed a bill through the Senate on Thursday to lift the regulations, but it did not see action before the chamber adjourned. Lawmakers won’t be back until Monday.

Late Thursday the Obama administration acted, granting its 60-day reprieve and saying it will also float the idea of a full six-month extension to give pools “additional time to address misunderstandings regarding compliance.”

“DOJ have been forced to admit they made a big overreach and are now retreating with a two-month delay on this unnecessary regulation,” said Wesley Denton, a spokesman for Mr. DeMint. He said his boss will still to try to pass his bill.”This isn’t over,” he said. “Senator DeMint will continue fighting to stop this big government mandate from being implemented so public pools can have the flexibility to work directly with people with disabilities.”

The Examiner provided a good example of a guideline so that readers could understand the general idea: If a restaurant bathroom has a light switch that is 52 inches above the floor, then that business is in compliance. But if the light switch is 53 inches above the floor, the restaurant owner is a civil rights violator subject to fines from the government and liable for civil damages from any disabled individual who ever used the bathroom.

In September 2010, the DOJ issued a new rule that requires all public access swimming pools to supply a lift that is suitable for transporting disabled patrons from their wheelchairs into the water. This means that if a resort has multiple pools and spas, there must be a permanently fixed lift for at least one spa, and one pool.

This guideline will direct owners to make costly modifications to their facilities: “each lift costs between $3,000 and $10,000 and installation can add $5,000 to $10,000 to the total.”

All 300,000 public pools in the United States must install a permanent fixed lift by tomorrow, March 15, and the entire prospect is impossible. Industry spokesmen state that there are not enough lifts in existence and certainly not enough people who know how to install them.

Some are calling this transformative event “Poolmageddon.”

Considering that major hotels and other public pool owners lack the resources to make the changes on time the DOJ has decided not to fine companies right away. But hotel chains like the Ramada Inn are not in the clear because the ADA has been encouraging disabled people to sue companies that have failed to comply with guidelines.

Poolmageddon may lead to another payday for trial lawyers and their clients.

Kevin Maher, senior vice president of governmental affairs for the American Hotel & Lodging Association said these groups “often file lawsuits against every business in the community. A lot of times they are not even looking for businesses to comply with the ADA, they are just looking for a quick cash settlement to go away,” and went on to explain that these guidelines will be enforced through litigation as opposed to government fines.

Another concern about the lifts is that they attract children to play on them and create safety hazards. Many businesses do not have a lifeguard on duty and injuries to children are likely ro create more opportunities for trial lawyers to line their pockets.

Trial lawyers gave President Obama more than $45 million in 2008 and Poolmageddon has been raising suspicion that there have been some dirty dealings going on.