Credit card blockade of WikiLeaks donations likely to be legal, EU says

Credit card companies should not be allowed to impose an 'economic death penalty,' WikiLeaks' Assange says

A blockade on WikiLeaks payments processor DataCell by Visa, MasterCard and American Express is unlikely to violate E.U. competition rules.

MasterCard, Visa and American Express, among others, stopped processing payments for WikiLeaks when it started releasing about 250,000 secret U.S. diplomatic cables in 2010. This made it hard to raise funds, and WikiLeaks has said the blockade resulted in a 95 percent donations reduction, which cost the organization more than US$50 million.

DataCell, the company that processed WikiLeaks donations until the blockade started, last year filed a complaint with the European Commission, suggesting the blockade is a violation of European competition rules.

The Commission, however, does not think that is the case. "On the basis of the information available, the Commission considers that the complaint does not merit further investigation because it is unlikely that any infringement of E.U. competition rules could be established," an official of the European Commission said in an email on Tuesday.

The Commission said it looked at the impact of the blockade on DataCell and at the impact on the markets in which it operates. "It appears that DataCell is not prevented from accepting card payments for its own services or for the benefit of other parties; it is only payments for the benefit of WikiLeaks that DataCell cannot process. It seems unlikely that this would lead to harmful effects to competition and to consumers on the payment services markets concerned," the official said.

It is unclear when the Commission will issue a final decision. "We never announce that in advance," the official said.

WikiLeaks' founder, Julian Assange, was displeased with the news. "These companies should not have the power to impose an economic death penalty," he said during a news conference that was available via a live video link in Brussels. Assange is in self-imposed political asylum in the Ecuadorian embassy in London to avoid being extradited to Sweden, where he is wanted for questioning related to accusations of committing sexual offenses.

Assange accused "hard-right" U.S. politicians of being behind the blockade. He said Peter King, a Republican from New York and chairman of the U.S. House of Representatives Committee on Homeland Security, had tried to have WikiLeaks listed as a foreign terrorist organization. "We are not a terrorist organization, but we cannot even pay our lawyers in South America directly because Bank of America blocks the transactions," Assange said.

The famously flamboyant Assange also hit out at the "rather theatrical" attacks on WikiLeaks by Senator Joseph Lieberman, an Independent from Connecticut, and said that MasterCard Europe had acknowledged having conversations with Lieberman.

"PayPal's VP said in a recent BBC interview that they based their decision on a letter they received from the U.S. authorities," Assange added.

"We have lost at least $50 million," Assange said. "We have also lost growth, which is more difficult to calculate. WikiLeaks should be 20 times bigger than it is. This blockade has forced us to reduce our publication volume."

Assange also revealed that WikiLeaks' staff has taken a pay cut of 40 percent since last year and said he personally has taken no pay. However, he would not say how many people were employed by WikiLeaks despite repeated questions from the press. "Less than 100" was all he would acknowledge.

WikiLeaks used to receive ¬120,000 a day ($150,000) in Europe, with most donations averaging less than ¬30, Assange said. While the European Commission is unlikely to decide the payment blockade against WikiLeaks violates competition laws, the European Parliament last week called for legislation to regulate credit card companies' ability to refuse service to organizations such as WikiLeaks. The Parliament voted in favor of a text that "considers it to be in the public interest to define objective rules describing the circumstances and procedures under which card payment schemes may unilaterally refuse acceptance."

The Commission will be asked to consider the text for laws limiting the rights of credit card companies to refuse service.

"The Commission's assessment to not even investigate is in total opposite direction of the political will," said Andreas Fink, CEO of DataCell, in an email. Fink read the preliminary report send to him by the Commission.

"It basically sounds like they were hunting for an excuse to not have to investigate it," he said. The Commission essentially reasoned that one less small player in the market doesn't change the market mechanics, while the intention of competition rules is to avoid powerful, monopoly-like players like Visa dictating to the market, Fink said.

"This is an economic declaration of war from Visa but because Visa is not gaining anything directly from doing so, it is not considered harmful to the market as such," he said. What Visa orders will be obeyed, Fink said, adding that when Visa ordered service providers to stop DataCell payments to WikiLeaks in Iceland, MasterCard and American Express transactions were automatically canceled as well.

"So Visa can set the rules of the market," dictating to other credit card companies, Fink said. "This is competition control at its finest," he said, calling the situation "absurd."

"If the E.U. Commission can't see the real mechanics behind Visa and close their eyes in front of all the facts then we have to take on the burden and go all the way" to the European Court of Justice, Fink said.

Loek is Amsterdam Correspondent and covers online privacy, intellectual property, open-source and online payment issues for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

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Topics: DataCell, regulation, legal, wikileaks, finance, internet, industry verticals, government
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