Ongoing Series

What’s really motivating the pursuit of Google?

by on June 14, 2011 · 3 comments

I have an op-ed up at Main Justice on FTC Chairman Leibowitz’ recent comment in response the a question about the FTC’s investigation of Google that the FTC is looking for a “pure Section Five case.”  With Main Justice’s permission, the op-ed is re-printed here:

There’s been a lot of chatter around Washington about federal antitrust regulators’ interest in investigating Google, including stories about an apparent tug of war between agencies. But this interest may be motivated by expanding the agencies’ authority, rather than by any legitimate concern about Google’s behavior.

Last month in an interview with Global Competition Review, FTC Chairman Jon Leibowitz was asked whether the agency was “investigating the online search market” and he made this startling revelation:

“What I can say is that one of the commission’s priorities is to find a pure Section Five case under unfair methods of competition. Everyone acknowledges that Congress gave us much more jurisdiction than just antitrust. And I go back to this because at some point if and when, say, a large technology company acknowledges an investigation by the FTC, we can use both our unfair or deceptive acts or practice authority and our unfair methods of competition authority to investigate the same or similar unfair competitive behavior . . . . ”

“Section Five” refers to Section Five of the Federal Trade Commission Act. Exercising its antitrust authority, the FTC can directly enforce the Clayton Act but can enforce the Sherman Act only via the FTC Act, challenging as “unfair methods of competition” conduct that would otherwise violate the Sherman Act. Following Sherman Act jurisprudence, traditionally the FTC has interpreted Section Five to require demonstrable consumer harm to apply.

But more recently the commission—and especially Commissioners Rosch and Leibowitz—has been pursuing an interpretation of Section Five that would give the agency unprecedented and largely-unchecked authority. In particular, the definition of “unfair” competition wouldn’t be confined to the traditional measures–reduction in output or increase in price–but could expand to, well, just about whatever the agency deems improper. Continue reading →

SHARE: 3 comments

Privacy Solutions: How to Block Facebook’s “Like” Button And Other Social Widgets

by on May 20, 2011 · 10 comments

Social widgets, such as the now-ubiquitous Facebook “Like” button and Twitter “Tweet” button, offer users a convenient way to share online content with their friends and followers. These widgets have recently come under scrutiny for their privacy implications. Yesterday, The Wall Street Journal reported that Facebook, Twitter, and Google are informed each time a user visits a webpage that contains one of the respective company’s widgets:

Internet users tap Facebook Inc.’s “Like” and Twitter Inc.’s “Tweet” buttons to share content with friends. But these tools also let their makers collect data about the websites people are visiting. These so-called social widgets, which appear atop stories on news sites or alongside products on retail sites, notify Facebook and Twitter that a person visited those sites even when users don’t click on the buttons, according to a study done for The Wall Street Journal.

It wasn’t exactly a secret that social widgets “phone home.” However, the Journal’s story shed new light on how the firms that offer social widgets handle the data they glean regarding user browsing habits. Facebook and Google reportedly store this data for a limited period of time — two weeks and 90 days, respectively — and, importantly, the data isn’t recorded in a way that can be tied back to a user (unless, of course, the user affirmatively decides to “like” a webpage). Twitter reportedly records browsing data as well, but deletes it “quickly.”

Assuming the companies effectively anonymize the data they glean from their social widgets, privacy-conscious users have little reason to worry. I’m not aware of any evidence that social widget data has been misused or breached. However, as Pete Warden reminded us in an informative O’Reilly Radar essay posted earlier this week, anonymizing data is harder than it sounds, and supposedly “anonymous” data sets have been successfully de-anonymized on several occasions. (For more on the de-anonymization of data sets, see Arvind Narayanan and Vitaly Shmatikov’s 2008 research paper on the topic).

Continue reading →

SHARE: 10 comments

Some Thoughts on the Cell Phone Locational Privacy Hullabaloo

by on May 3, 2011 · 1 comment

I spaced out and completely forget to post a link here to my latest Forbes column which came out over the weekend.  It’s a look at back at last week’s hullabaloo over “Apple, The iPhone, and a Locational Privacy Techno-Panic.” In it, I argue:

Some of the concerns raised about the retention of locational data are valid. But panic, prohibition and a “privacy precautionary principle” that would preemptively block technological innovation until government regulators give their blessings are not valid answers to these concerns. The struggle to conceptualize and protect privacy rights should be an evolutionary and experimental process, not one micro-managed at every turn by regulation.

I conclude the piece by noting that:

Public pressure and market norms also encourage companies to correct bone-headed mistakes like the locational info retained by Apple.  But we shouldn’t expect less data collection or less “tracking” any time soon.  Information powers the digital economy, and we must learn to assimilate new technology into our lives.

Read the rest here. And if you missed essay Larry Downes posted here on the same subject last week, make sure to check it out.

SHARE: 1 comment

Search Bias and Antitrust

by on March 24, 2011 · 2 comments

[Cross-posted at Truthonthemarket.com]

There is an antitrust debate brewing concerning Google and “search bias,” a term used to describe search engine results that preference the content of the search provider.  For example, Google might list Google Maps prominently if one searches “maps” or Microsoft’s Bing might prominently place Microsoft affiliated content or products.

Apparently both antitrust investigations and Congressional hearings are in the works; regulators and commentators appear poised to attempt to impose “search neutrality” through antitrust or other regulatory means to limit or prohibit the ability of search engines (or perhaps just Google) to favor their own content.  At least one proposal goes so far as to advocate a new government agency to regulate search.  Of course, when I read proposals like this, I wonder where Google’s share of the “search market” will be by the time the new agency is built.

As with the net neutrality debate, I understand some of the push for search neutrality involves an intense push to discard traditional economically-grounded antitrust framework.  The logic for this push is simple.  The economic literature on vertical restraints and vertical integration provides no support for ex ante regulation arising out of the concern that a vertically integrating firm will harm competition through favoring its own content and discriminating against rivals.  Economic theory suggests that such arrangements may be anticompetitive in some instances, but also provides a plethora of pro-competitive explanations.  Lafontaine & Slade explain the state of the evidence in their recent survey paper in the Journal of Economic Literature:

We are therefore somewhat surprised at what the weight of the evidence is telling us. It says that, under most circumstances, profit-maximizing vertical-integration decisions are efficient, not just from the firms’ but also from the consumers’ points of view. Although there are isolated studies that contradict this claim, the vast majority support it. Moreover, even in industries that are highly concentrated so that horizontal considerations assume substantial importance, the net effect of vertical integration appears to be positive in many instances. We therefore conclude that, faced with a vertical arrangement, the burden of evidence should be placed on competition authorities to demonstrate that that arrangement is harmful before the practice is attacked. Furthermore, we have found clear evidence that restrictions on vertical integration that are imposed, often by local authorities, on owners of retail networks are usually detrimental to consumers. Given the weight of the evidence, it behooves government agencies to reconsider the validity of such restrictions.

Of course, this does not bless all instances of vertical contracts or integration as pro-competitive.  The antitrust approach appropriately eschews ex ante regulation in favor of a fact-specific rule of reason analysis that requires plaintiffs to demonstrate competitive harm in a particular instance. Again, given the strength of the empirical evidence, it is no surprise that advocates of search neutrality, as net neutrality before it, either do not rely on consumer welfare arguments or are willing to sacrifice consumer welfare for other objectives.

I wish to focus on the antitrust arguments for a moment.  In an interview with the San Francisco Gate, Harvard’s Ben Edelman sketches out an antitrust claim against Google based upon search bias; and to his credit, Edelman provides some evidence in support of his claim.

I’m not convinced.  Edelman’s interpretation of evidence of search bias is detached from antitrust economics.  The evidence is all about identifying whether or not there is bias.  That, however, is not the relevant antitrust inquiry; instead, the question is whether such vertical arrangements, including preferential treatment of one’s own downstream products, are generally procompetitive or anticompetitive.  Examples from other contexts illustrate this point.

Continue reading →

SHARE: 2 comments

Virginia Postrel Takes on the Zittrain Thesis

by on March 14, 2011 · 0 comments

On numerous occasions here and elsewhere I have cited the enormous influence that Virginia Postrel’s 1998 book, The Future and Its Enemies, has had on me.  Her “dynamist” versus “stasis” paradigm helps us frame and better understand almost all debates about technological progress. I cannot recommend that book highly enough.

In her latest Wall Street Journal column, Postrel considers what makes the iPad such a “magical” device and in doing so, she takes on the logical set forth in Jonathan Zittrain 2009 book, The Future of the Internet and How to Stop It, although she doesn’t cite the book by name in her column. You will recall that in that book and his subsequent essays, Prof. Zittrain made Steve Jobs and his iPhone out to be the great enemy of digital innovation — at least as Zittrain defined it. How did Zittrain reach this astonishing conclusion and manage to turn Jobs into a pariah and his devices into the supposed enemy of innovation? It came down to “generativity,” Zittrain said, by which he meant technologies or networks that invite or allow tinkering and all sorts of creative uses. Zittrain worships general-purpose personal computers and the traditional “best efforts” Internet. By contrast, he decried “sterile, tethered” digital “appliances” like the iPhone, which he claimed limited generativity and innovation, mostly because of their generally closed architecture.

In her column, Postrel agrees that the iPad is every bit as closed as Zittrain feared iPhone successor devices would be. She notes: “customers haven’t the foggiest idea how the machine works. The iPad is completely opaque. It is a sealed box. You can’t see the circuitry or read the software code. You can’t even change the battery.” But Postrel continues on to explain why the hand-wringing about perfect openness is generally overblown and, indeed, more than a bit elitist: Continue reading →

SHARE: 0 comments

Book Review: Siva Vaidhyanathan’s “Googlization of Everything”

by on March 9, 2011 · 11 comments

In one sense, Siva Vaidhyanathan’s new book, The Googlization of Everything (And Why Should Worry), is exactly what you would expect: an anti-Google screed that predicts a veritable techno-apocalypse will befall us unless we do something to deal with this company that supposedly “rules like Caesar.” (p. xi)  Employing the requisite amount of panic-inducing Chicken Little rhetoric apparently required to sell books these days, Vaidhyanathan tells us that “the stakes could not be higher,” (p. 7) because the “corporate lockdown of culture and technology” (p. xii) is imminent.

After lambasting the company in a breathless fury over the opening 15 pages of the book, Vaidhyanathan assures us that “nothing about this means that Google’s rule is as brutal and dictatorial as Caesar’s. Nor does it mean that we should plot an assassination,” he says. Well, that’s a relief!  Yet, he continues on to argue that Google is sufficiently dangerous that “we should influence—even regulate—search systems actively and intentionally, and thus take responsibility for how the Web delivers knowledge.” (p. xii)  Why should we do that? Basically, Google is just too damn good at what it does. The company has the audacity to give consumers exactly what they want! “Faith in Google is dangerous because it increases our appetite for goods, services, information, amusement, distraction, and efficiency.” (p. 55) That is problematic, Vaidhyanathan says, because “providing immediate gratification draped in a cloak of corporate benevolence is bad faith.” (p. 55) But this begs the question:  What limiting principle should be put in place to curb our appetites, and who or what should enforce it? Continue reading →

SHARE: 11 comments

The Problem of Search Engines as Essential Facilities

by on February 4, 2011 · 5 comments

For my contribution to Berin Szoka and Adam Marcus’ (of TechFreedom fame) awesome Next Digital Decade book, I wrote about search engine “neutrality” and the implicit and explicit claims that search engines are “essential facilities.” (Check out the other essays on this topic by Frank Pasquale, Eric Goldman and James Grimmelmann, linked to here, under Chapter 7).

The scare quotes around neutrality are there because the term is at best a misnomer as applied to search engines and at worst a baseless excuse for more regulation of the Internet.  (The quotes around essential facilities are there because it is a term of art, but it is also scary).  The essay is an effort to inject some basic economic and legal reasoning into the overly-emotionalized (is that a word?) issue.

So, what is wrong with calls for search neutrality, especially those rooted in the notion of Internet search (or, more accurately, Google, the policy scolds’ bête noir of the day) as an “essential facility,” and necessitating government-mandated access? As others have noted, the basic concept of neutrality in search is, at root, farcical. The idea that a search engine, which offers its users edited access to the most relevant websites based on the search engine’s assessment of the user’s intent, should do so “neutrally” implies that the search engine’s efforts to ensure relevance should be cabined by an almost-limitless range of ancillary concerns. Nevertheless, proponents of this view have begun to adduce increasingly detail-laden and complex arguments in favor of their positions, and the European Commission has even opened a formal investigation into Google’s practices, based largely on various claims that it has systematically denied access to its top search results (in some cases paid results, in others organic results) by competing services, especially vertical search engines. To my knowledge, no one has yet claimed that Google should offer up links to competing general search engines as a remedy for its perceived market foreclosure, but Microsoft’s experience with the “Browser Choice Screen” it has now agreed to offer as a consequence of the European Commission’s successful competition case against the company is not encouraging. These more superficially sophisticated claims are rooted in the notion of Internet search as an “essential facility” – a bottleneck limiting effective competition. These claims, as well as the more fundamental harm-to-competitor claims, are difficult to sustain on any economically-reasonable grounds. To understand this requires some basic understanding of the economics of essential facilities, of Internet search, and of the relevant product markets in which Internet search operates.

The essay goes into much more detail, of course, but the basic point is that Google’s search engine is not, in fact, “essential” in the economically-relevant sense.  Rather, Google’s competitors and other detractors have basically built precisely the most problematic sort of antitrust case, where success itself is penalized (in this case, Google is so good at what it does it just isn’t fair to keep it all to itself!). Continue reading →

SHARE: 5 comments

Correcting Herb Kohl (& Kayak & Bing Travel) on Google/ITA

by on December 2, 2010 · 1 comment

Today comes news that Senator Kohl has sent a letter to the DOJ urging “careful review” of the proposed Google/ITA merger. Underlying his concerns (or rather the “concerns raised by a number of industry participants and consumer advocates that I believe warrant careful review”) is this:

Many of ITA’s customers believe that access to ITA’s technology is critical to competition in online air travel search because it cannot be matched by other players in the travel search industry. They claim that ITA’s superior access to information and superior technology enables it to provide faster and better results to consumers. As a result, some of these industry participants and independent experts fear that the current high level of competition among online travel agents and metasearch providers could be undermined if Google were to acquire ITA and start its own OTA or metasearch service. If this were to happen, they argue, consumers would lose the benefits of a robustly competitive online air travel market.

For several reasons, these complaints are without merit and a challenge to the Google/ITA merger would be premature at best—and a costly mistake at worst. Continue reading →

SHARE: 1 comment

The EU tightens the noose around Google

by on December 1, 2010 · 2 comments

[Cross-posted at Truth on the Market]

Here we go again.  The European Commission is after Google more formally than a few months ago (but not yet having issued a Statement of Objections).

For background on the single-firm antitrust issues surrounding Google I modestly recommend my paper with Josh Wright, Google and the Limits of Antitrust: The Case Against the Antitrust Case Against Google (forthcoming soon in the Harvard Journal of Law & Public Policy, by the way).

According to one article on the investigation (from Ars Technica):

The allegations of anticompetitive behavior come as Google has acquired a large array of online services in the last couple of years. Since the company holds around three-quarters of the online search and online advertising markets, it is relatively easy to leverage that dominance to promote its other services over the competition.

(As a not-so-irrelevant aside, I would just point out that I found that article by running a search on Google and clicking on the first item to come up.  Somehow I imagine that a real manipulative monopolist Google would do a better job of white-washing the coverage if its ability to tinker with its search results is so complete.)

More to the point, these sorts of leveraging of dominance claims are premature at best and most likely woefully off-base.  As I noted in commenting on the Google/Ad-Mob merger investigation and similar claims from such antitrust luminaries as Herb Kohl:

If mobile application advertising competes with other forms of advertising offered by Google, then it represents a small fraction of a larger market and this transaction is competitively insignificant.  Moreover, acknowledging that mobile advertising competes with online search advertising does more to expand the size of the relevant market beyond the narrow boundaries it is usually claimed to occupy than it does to increase Google’s share of the combined market (although critics would doubtless argue that the relevant market is still “too concentrated”).  If it is a different market, on the other hand, then critics need to make clear how Google’s “dominance” in the “PC-based search advertising market” actually affects the prospects for competition in this one.  Merely using the words “leverage” and “dominance” to describe the transaction is hardly sufficient.  To the extent that this is just a breathless way of saying Google wants to build its business in a growing market that offers economies of scale and/or scope with its existing business, it’s identifying a feature and not a bug.  If instead it’s meant to refer to some sort of anticompetitive tying or “cross-subsidy” (see below), the claim is speculative and unsupported.

The EU press release promotes a version of the “leveraged dominance” story by suggesting that

The Commission will investigate whether Google has abused a dominant market position in online search by allegedly lowering the ranking of unpaid search results of competing services which are specialised in providing users with specific online content such as price comparisons (so-called vertical search services) and by according preferential placement to the results of its own vertical search services in order to shut out competing services.

The biggest problem I see with these claims is that, well, they make no sense. Continue reading →

SHARE: 2 comments

Europe Reimagines Orwell’s Memory Hole

by on November 16, 2010 · 2 comments

Inspired by thoughtful pieces by Mike Masnick on Techdirt and L. Gordon Crovitz’s column yesterday in The Wall Street Journal, I wrote a perspective piece this morning for CNET regarding the European Commission’s recently proposed “right to be forgotten.”

A Nov. 4th report promises new legislation next year “clarifying” this right under EU law, suggesting not only that the Commission thinks it’s a good idea but, even more surprising, that it already exists under the landmark 1995 Privacy Directive.

What is the “right to be forgotten”?  The report is cryptic and awkward on this important point, describing “the so-called ‘right to be forgotten’, i.e. the right of individuals to have their data no longer processed and deleted when they [that is, the data] are no longer needed for legitimate purposes.”

Continue reading →

SHARE: 2 comments

← Previous Entries

Next Entries →