RealTime IT News

White House Clears Verio Acquisition

One day after Nippon Communications Corp. extended the expiration date of its $5.5 billion bid to acquire Verio Inc., President Bill Clinton said he would allow the Japanese telco to buy the U.S. Internet Service Provider.

A press statement released by the White House Wednesday afternoon echoed the sentiments of the Committee on Foreign Investment in the United States (CFIUS), which ruled last week that the deal poses no security risk to U.S. security.

"As a result of the investigation and negotiations with NTT Communications and Verio, any national security issues that may have been presented by this transaction have been resolved," the statement concluded.

The gesture comes amid concerns that the play would pose a foreign espionage risk by giving Japan's state-controlled NTT access to U.S. wiretapping activities. Federal authorities also had thought foreign control over the Colorado-based ISP would hamper the U.S.'s capability of monitoring terrorists.

The statement in the landmark finding highlighted the fact that the investigation was the first one involving the foreign acquisition of a U.S. ISP conducted under the Exon-Florio provision of the Defense Production Act of 1950. The provision, which became law in 1988, authorizes the President to investigate and possibly suspend or prohibit a foreign acquisition of a U.S. company engaged in U.S. interstate commerce.

The provision specifies that the President must feel the nation's security could be at stake if such a merger were to come to fruition.

The Nippon Telegraph and Telephone Corp. subsidiary's offer had been scheduled to expire at midnight on Monday; with the extension, the firm has until Aug. 30 to complete the purchase.

NTT agreed to create a "firewall" -- a separate division of Verio -- staffed and managed only by U.S. citizens to handle any government requests for electronic surveillance.

Following the progress of the deal, analysts have said concern over such international telco and ISP plays will be the norm in the future.