UPDATED: Ticketmaster agreed to pay a $10 million criminal fine to avoid prosecution over charges that it illegally accessed systems of a startup rival to steal proprietary info in an attempt to “choke off” the smaller company’s business, federal authorities said.
On Wednesday, the ticketing giant entered a three-year deferred prosecution agreement in federal court in Brooklyn to resolve five counts of computer intrusion and fraud offenses.
Under the terms of the settlement, Ticketmaster will pay a criminal penalty of $10 million and will maintain a “compliance and ethics program designed to prevent and detect violations” of computer-hacking laws as well as to prevent the “unauthorized and unlawful acquisition of confidential information belonging to competitors.” Ticketmaster also is required to report to the U.S. Attorney’s Office annually for the next three years about the company’s compliance with the measures.
According to the Justice Department’s settlement with Ticketmaster (available at this link), from August 2013 to December 2015, Ticketmaster employees “repeatedly” used stolen passwords to gain unauthorized access to non-public ticketing info from the rival firm. The now-defunct competitor, Songkick, offered artist-direct ticket presales for concerts sold in advance of general ticket sales. A former employee of ticketing firm CrowdSurge (which later merged with Songkick) who had joined Live Nation shared URLs with Ticketmaster employees that provided access to draft ticketing web pages that Songkick had built in an attempt to “steal back” one of Songkick’s top artist clients, federal prosecutors said.
Ticketmaster, owned by Live Nation Entertainment, said in a statement that in 2017 it fired both Zeeshan Zaidi, former head of Ticketmaster’s artist services division, and the former CrowdSurge exec, Stephen Mead, “after their conduct came to light.”
“Their actions violated our corporate policies and were inconsistent with our values,” Ticketmaster said in the statement. “We are pleased that this matter is now resolved.”
Ticketmaster’s deal with prosecutors comes after Zaidi in October 2019 pleaded guilty in a related case to conspiring to commit computer intrusions and wire fraud based on his participation in the scheme.
Songkick shut down in October 2017 after earlier declaring bankruptcy. In January 2018, Live Nation reached a $110 million settlement with Songkick to resolve an antitrust lawsuit the startup had filed under which Live Nation agreed to acquire Songkick’s technology assets and patents.
“Ticketmaster employees repeatedly — and illegally — accessed a competitor’s computers without authorization using stolen passwords to unlawfully collect business intelligence,” Seth DuCharme, acting U.S. Attorney for the Eastern District of New York, said in a statement. “Further, 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.”