Ticketmaster pays $10 million fine after hacking a startup rival

Ticketmaster has agreed to pay a $10 million criminal fine to avoid prosecution over charges that it illegally accessed a rival’s computer system, Reuters has reported. “Ticketmaster employees repeatedly — and illegally — accessed a competitor’s computers without authorization using stolen passwords to unlawfully collect business intelligence,” acting US attorney Seth DuCharme said in a press release.

According to court filings and previous reports, Stephen Mead left Ticketmaster rival Songkick in 2012 (after signing a confidentiality agreement), and subsequently joined Ticketmaster parent Live Nation. He then allegedly shared Songkick’s login information with Ticketmaster employees, including Ticketmaster’s former head of Artist Services, Zeeshan Zaidi. Separately, Zaidi pled guilty to wire fraud and conspiring to commit computer intrusions “based on his participation in the same scheme,” according to the DoJ.

Songkick allows artists to sell presale tickets ahead of general ticket sales, and the unnamed employee was also accused of sharing URLs that led to drafts of those ticketing pages. A Ticketmaster executive wanted the company aimed to “choke off” its competitor and “steal back one of [its] signature clients,” the prosecution wrote.

DoJ:

In January 2014, Coconspirator-1 emailed Zaidi and a second Ticketmaster executive multiple sets of usernames and passwords for Toolboxes. Coconspirator-1 encouraged the executives to “screen-grab the hell out of the system,” but also warned, “I must stress that as this is access to a live [victim company] tool I would be careful in what you click on as it would be best not [to] giveaway that we are snooping around.” (Emphasis in original.) The information from the Toolboxes was then used to prepare a presentation for other senior executives that was intended to “benchmark” Ticketmaster’s offerings against those of the victim company.

The DoJ said that the information was also shared within Ticketmaster. “Ticketmaster’s employees brazenly held a division-wide ‘summit’ at which the stolen passwords were used to access the victim company’s computers, as if that were an appropriate business tactic,” DuCharme wrote. “Ticketmaster used stolen information to gain an advantage over its competition, and then promoted the employees who broke the law.”

In 2018, Ticketmaster paid Songkick $110 million in a settlement over a lawsuit accusing Ticketmaster of abusing its market power to control ticket sales. Ticketmaster also paid an undisclosed sum to acquire Songkick technology and patents. During the lawsuit, Songkick also accused Ticketmaster of corporate espionage, which reportedly caught the attention of the DoJ, according to the New York Times.

The $10 million fine seems like a mild punishment given the charges filed and the fact that Live Nation saw $11.5 billion in revenue for 2019. However, the COVID-19 pandemic has hit the company’s business drastically, with revenue in Q3 2020 at $184 million compared to $3.8 billion in Q3 2019 — a drop of over 95 percent. In a statement, a Ticketmaster spokesperson said “Ticketmaster terminated both Zaidi and Mead in 2017, after their conduct came to light. Their actions violated our corporate policies and were inconsistent with our values. We are pleased that this matter is now resolved.”