James Gattuso

Google Joins the FTC Bandwagon on Neutrality Regulation

Should the FCC enforce net neutrality rules? No, says Google’s top policy executive. According to Andrew McLaughlin, the firm’s global public policy head: “Cutting the FCC out of the picture would be a smart move.”

The comments were made yesterday at the Tech Policy Summit in San Jose. As reported in Tech Daily and Communications Daily, McLaughlin argued that neutrality should be thought of as “an attorney general or FTC problem.”

This is a surprising statement from Google, which has lead the fight for neutrality regulation for over a year. Most proposals for neutrality regulation have put the FCC in charge–including the S. 215, by Sen. Olympia Snowe and Byron Dorgan.

Its also a sensible idea–one that many of us have long advocated. (See, for instance, this statement by the Progress and Freedom Foundation’s DACA working group.) At its heart, the net neutrality debate is over competition: how much is there, is it enough, and what to do if it is not. Such issues are the bread and butter of the FTC–which has close to a hundred years experience dealing with them.


In recent weeks, the FTC has been actively staking its claim on network neutrality issue–highlighted by a two-day long workshop earlier this month. Google’s seeming endorsement is a major step forward to the idea.

Anyone worried about this outbreak of harmony, should however be reassured that there is still plenty of points of conflict left out there. Critically, McLaughlin argued that new–industry-specific–rules are still needed for neutrality, whoever enforces them, intead of applying the same antitrust rules that apply to everyone else.

But now’s not the time to quibble, these things have to be taken one step at a time. For now, the message is: “Welcome aboard, Andrew. Glad to have you on the FTC bandwagon”.

February 28, 2007 | Comments |

Viewing 5 Comments

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    How does further empowering the FTC, an agency with a long history of prosecutorial abuse, economic ignorance, and a violent opposition to private property rights constitute a good thing?
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    Skip... Because the Federal Communications Commission has a LONGER history of abuse, GREATER economic ignorance, and even MORE violent opposition to property rights. Also, the FTC is willing to examine problems after the fact and not engage in preemptive regulation of industry behavior of market structures. The FCC is a "regulate first, ask questions later" agency. At least the FTC waits until someone suggests a problem has developed before regulating.

    Of course, I'm no lover FTC after-the-fact regulation either, but it's a hell of lot less onerous that what the FCC does on a daily basis. Abolish them both and I'd be happy. But if we can only get one out of the picture right now, it's a no-brainer: make it the FCC.
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    Well, I could be convinced that the FCC is worse than the FCC, but I dispute this statement:

    "Also, the FTC is willing to examine problems after the fact and not engage in preemptive regulation of industry behavior of market structures."

    That's absolutely false. I've documented a number of industries where the FTC has engaged in preemptive regulation, health care being at the top of the list. The FTC has long forbidden various market structures for physician and hospital groups--based on no empirical evidence--and violated every norm of due process to enforce its views.

    If you want an example of technology markets, just look at the FTC's long-running litigation against Rambus. There, the Commission is trying to assert control over patent policy and usurp the roles of not just the patent system but the Article III courts themselves. The result has been a litigation disaster that's enriched many lawyers at the expense of all industry participants. And Rambus is a case where the FTC definitely regulated first and asked questions . . . well, never.

    Also, Gattuso's claim that we can "apply the same antitrust rules that apply to everyone else" is false and misleading. The very nature of antitrust is that different rules are applied differently based solely on the political judgment of regulators. If anything, it would be better for the FCC to simply make up a bunch of "neutrality" rules and enforce them semi-consistently than to give lawyers a total free hand in manufacturing antitrust claims after-the-fact.
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    Skip -- I'm sympathetic to your concerns, Lord knows I've been critical of antitrust on more than one occasion. Certainly, this shouldn't be an FTC lovefest. But two factors tilt me toward the FTC. First, the FCC has industry-specific responsibility, while the FTC has general jurisdiction. If you are at the FCC, all you have is one sector to regulate -- if you find it doesn't need regulation, you are out of a job. (If all you have is a telecom hammer, everything looks like a telecom nail that needs hammering, to mangle a metaphor). If you are at the FTC, however, can always simply move on to something else (hopefully more productive). Second, while the FTC certainly has had its share of political interference, it pales in comparison to the record of the FCC. Antitrust law, for all its flaws, has been surprisingly focused on actual economics. Just compare the FCC's public interest standard to the concept of consumer welfare in antitrust. So given the choice between the two admittedly imperfect agencies, I'll take the FTC.
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    James -- Your point about the dangers of industry-specific regulation is well taken. But I continue to be amazed at your defense of the FTC and antitrust. If there's "actual economics" going on at the FTC, I haven't seen it. All I've seen is a bunch of individuals and businesses who've been ruined by vindictive Bureau of Competition staffers. (If there's anything productive about the FTC, it's at the non-antitrust Bureau of Consumer Protection.)

    And how exactly is "consumer welfare" a better standard than "public interest"? Frankly, most FTC cases I've seen use those two phrases interchangeably. The problem is "consumers" in the FTC's mind can mean large insurance companies, while the "criminals" are individual physicians or even self-employed management consultants who violate the FTC's mysterious and vague rules.

    My real point here is not that the FTC is better or worse than the FCC. There's subjective value at work here. If you're the one getting screwed by the FTC, the FCC's abuses are irrelevant, and vice versa. But I have a real problem with this half-assed attempt to rationalize antitrust regulation--such as calling it "actual economics"--simply to make the FCC look worse by comparison.

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