Ticketmaster has agreed to pay a $10 million fine after being
charged with illegally accessing computer systems of a competitor
repeatedly between 2013 and 2015 in an attempt to “cut [the
company] off at the knees.”
A subsidiary of Live Nation, the California-based ticket sales
and distribution company used the stolen information to gain an
advantage over CrowdSurge — which merged with Songkick in
2015 and later acquired by Warner Music Group (WMG) in 2017 — by
hiring a former employee to break into its tools and gain insight
into the firm’s operations.
“Ticketmaster employees repeatedly – and illegally – accessed a
competitor’s computers without authorization using stolen passwords
to unlawfully collect business intelligence,” said[1]
Acting U.S. Attorney Seth DuCharme.
“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.”
The allegations were first reported[2]
in 2017 after CrowdSurge sued Live Nation for antitrust violations,
accusing Ticketmaster of accessing confidential business plans,
contracts, client lists, and credentials of CrowdSurge tools.
According to court documents[3]
released on December 30, after being hired by Live Nation in 2013,
Stephen Mead, who was CrowdSurge’s general manager of U.S.
operations, shared with Zeeshan Zaidi, the former head of
Ticketmaster’s artist services division, and another Ticketmaster
employee the passwords to Artist Toolbox, an app that provided
real-time data about tickets sold through the victim company.
Besides password theft, Mead is also accused of providing
“internal and confidential financial documents” retained from his
former employer, as well as URLs for draft ticketing web pages so
as to learn which artists planned to use CrowdSurge to sell tickets
and “dissuade” them from doing so.
On October 18, 2019, Zaidi pled guilty in a related case to
conspiring to commit computer intrusions and wire fraud for his
participation in the scheme, stating, “we’re not supposed to tip
anyone off that we have this view into [the victim company’s]
activities.”
An unnamed Ticketmaster executive said in an internal email the
goal was to “choke off” and “steal” its signature clients by
winning back the presale ticketing business for a second major
artist that was a client of CrowdSurge.
Both Mead and Zaidi are no longer employed by Ticketmaster.
Ticketmaster previously settled a lawsuit brought by Songkick in
2018 by agreeing to pay the company’s owners $110 million and
acquire its remaining intellectual property not sold to WMG for an
undisclosed amount.
Besides paying the $10 million penalties, Ticketmaster is
expected to maintain a compliance and ethics program to detect and
prevent such unauthorized acquisition of confidential information
belonging to its rivals.
The company will also be required to make an annual report to
the U.S. Attorney’s Office over the next three years to ensure
compliance.