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Here’s a new animated explainer video that I narrated for the Federalist Society’s Regulatory Transparency Project. The 3-minute video discusses how earlier “tech giants” rose and fell as technological innovation and new competition sent them off to what the New York Times once appropriately called “The Hall of Fallen Giants.” It’s a continuing testament to the power of “creative destruction” to upend and reorder markets, even as many pundits insist that there’s no possibility change can happen.

This is an important lesson for us to remember today, as I noted in the recent editorial for The Hill about why, “Open-ended antitrust is an innovation killer“: Continue reading →

Over at Discourse magazine, Connor Haaland and I have an new essay (“Can European-Style Industrial Policies Create Tech Supremacy?”) examining Europe’s effort to develop national champion in a variety of tech sectors using highly targeted industrial policy efforts. The results have not been encouraging, we find.

Thus far, however, the Europeans don’t have much to show for their attempts to produce home-grown tech champions. Despite highly targeted and expensive efforts to foster a domestic tech base, the EU has instead generated a string of industrial policy failures that should serve as a cautionary tale for U.S. pundits and policymakers, who seem increasingly open to more government-steered innovation efforts.

We examine case studies in internet access, search, GPS, video services, and the sharing economy. We then explore newly-proposed industrial policy efforts aimed at developing their domestic AI market. We note how:

no amount of centralized state planning or spending will be able to overcome Europe’s aversion to technological risk-taking and disruption. The EU’s innovation culture generally values stability—of existing laws, institutions and businesses—over disruptive technological change. […] There are no European versions of Microsoft, Google or Apple, even though Europeans obviously demand and consume the sort of products and services those U.S.-based companies provide. It’s simply not possible given the EU’s current regulatory regime.

It seems unlikely that Europe will have much better luck developing home-grown champions in AI and robotics using this same playbook. “American academics and policymakers with an affinity for industrial policy might want to consider a model other than Europe’s misguided combination of fruitless state planning and heavy-handed regulatory edicts,” we conclude.

Head over to Discourse  to read the entire essay.

The recently-passed CARES Act included $500 million for the CDC to develop a new “surveillance and data-collection system” to monitor the spread of COVID-19.

There’s a fierce debate about how to use technology for health surveillance for the COVID-19 crisis. Unfortunately this debate is happening in realtime as governments and tech companies try to reduce infection and death while complying with national laws and norms related to privacy.

Technology has helped during the crisis and saved lives. Social media, chat apps, and online forums allow doctors, public health officials, manufacturers, entrepreneurs, and regulators around the world to compare notes and share best practices. Broadband networks, Zoom, streaming media, and gaming make stay-at-home order much more pleasant and keeps millions of Americans at work, remotely. Telehealth apps allow doctors to safely view patients with symptoms. Finally, grocery and parcel delivery from Amazon, Grubhub, and other app companies keep pantries full and serve as a lifeline to many restaurants.

The great tech successes here, however, will be harder to replicate for contact tracing and public health surveillance. Even the countries that had the tech infrastructure somewhat in place for contact tracing and public health surveillance are finding it hard to scale. Privacy issues are also significant obstacles. (On the Truth on the Market blog, FTC Commissioner Christine Wilson provides a great survey of how other countries are using technology for public health and analysis of privacy considerations. Bronwyn Howell also has a good post on the topic.) Let’s examine some of the strengths and weaknesses of the technologies.

Cell tower location information

Personal smartphones typically connect to the nearest cell tower, so a cell networks record (roughly) where a smartphone is at a particular time. Mobile carriers are sharing aggregated cell tower data with public health officials in Austria, Germany, and Italy for mobility information.

This data is better than nothing for estimating district- or region-wide stay-at-home compliance but the geolocation is imprecise (to the half-mile or so). 

Cell tower data could be used to enforce a virtual geofence on quarantined people. This data is, for instance, used in Taiwan to enforce quarantines. If you leave a geofenced area, public health officials receive an automated notification of your leaving home.

Assessment: Ubiquitous, scalable. But: rarely useful and virtually useless for contact tracing.

GPS-based apps and bracelets

Many smartphone apps passively transmit precise GPS location to app companies at all hours of the day. Google and Apple have anonymized and aggregated this kind of information in order to assess stay-at-home order effects on mobility. Facebook reportedly is also sharing similar location data with public health officials.

As Trace Mitchell and I pointed out in Mercatus and National Review publications, this information is imperfect but could be combined with infection data to categorize neighborhoods or counties as high-risk or low-risk. 

GPS data, before it’s aggregated by the app companies for public view, reveals precisely where people are (within meters). Individual data is a goldmine for governments, but public health officials will have a hard time convincing Americans, tech companies, and judges they can be trusted with the data.

It’s an easier lift in other countries where trust in government is higher and central governments are more powerful. Precise geolocation could be used to enforce quarantines.

Hong Kong, for instance, has used GPS wristbands to enforce some quarantines. Tens of thousands of Polish residents in quarantines must download a geolocation-based app and check in, which allows authorities to enforce quarantine restrictions. It appears the most people support the initiative.

Finally, in Iceland, one third of citizens have voluntarily downloaded a geolocation app to assist public officials in contact tracing. Public health officials call or message people when geolocation records indicate previous proximity with an infected person. WSJ journalists reported on April 9 that:

If there is no response, they send a police squad car to the person’s house. The potentially infected person must remain in quarantine for 14 days and risk a fine of up to 250,000 Icelandic kronur ($1,750) if they break it.

That said, there are probably scattered examples of US officials using GPS for quarantines. Local officials in Louisville, Kentucky, for example, are requiring some COVID-19-positive or exposed people to wear GPS ankle monitors to enforce quarantine.

Assessment: Aggregated geolocation information is possibly useful for assessing regional stay-at-home norms. Individual geolocation information is not precise enough for effective contact tracing. It’s probably precise and effective for quarantine enforcement. But: individual geolocation is invasive and, if not volunteered by app companies or users, raises significant constitutional issues in the US.

Bluetooth apps

Many researchers and nations are working on or have released some type of Bluetooth app for contact tracing. This includes Singapore, the Czech Republic, Britain, Germany, Italy and New Zealand.  

For people who use these apps, Bluetooth runs in the background, recording other Bluetooth users nearby. Since Bluetooth is a low-power wireless technology, it really only can “see” other users within a few meters. If you use the app for awhile and later test positive for infection, you can register your diagnosis. The app will then notify (anonymously) everyone else using the app, and public health officials in some countries, who you came in contact with in the past several days. My colleague Andrea O’Sullivan wrote a great piece in Reason about contact tracing using Bluetooth.

These apps have benefits over other forms of public health tech surveillance: they are more precise than geolocation information and they are voluntary.

The problem is that, unlike geolocation apps, which have nearly 100% penetration with smartphone users, Bluetooth contact tracing apps have about 0% penetration in the US today. Further, these app creators, even governments, don’t seem to have the PR machine to gain meaningful public adoption. In Singapore, for instance, adoption is reportedly only 12% of the population, which is way too low to be very helpful.

A handful of institutions in the world could get appreciable use of Bluetooth contact tracing: telecom and tech companies have big ad budgets and they own the digital real estate on our smartphones.

Which is why the news that Google and Apple are working on a contact tracing app is noteworthy. They have the budget and ability to make their hundreds of millions of Android and iOS users aware of the contact tracing app. They could even go so far as push a notification to the home screen to all users encouraging them to use it.

However, I suspect they won’t push it hard. It would raise alarm bells with many users. Further, as Dan Grover stated a few weeks ago about why US tech companies haven’t been as active as Chinese tech companies in using apps to improve public education and norms related to COVID-19:

Since the post-2016 “techlash”, tech companies in Silicon Valley have acted with a sometimes suffocating sense of caution and unease about their power in the world. They are extremely careful to not do anything that would set off either party or anyone with ideas about regulation. And they seldom use their pixel real estate towards affecting political change.

[Ed.: their puzzling advocacy of Title II “net neutrality” regulation a big exception].

Techlash aside, presumably US companies also aren’t receiving the government pressure Chinese companies are receiving to push public health surveillance apps and information. [Ed.: Bloomberg reports that France and EU officials want the Google-Apple app to relay contact tracing notices to public health officials, not merely to affected users. HT Eli Dourado]

Like most people, I have mixed feelings about how coercive the state and how pushy tech companies should be during this pandemic. A big problem is that we still have only an inkling about how deadly COVID-19 is, how quickly it spreads, and how damaging stay-at-home rules and norms are for the economy. Further, contact-tracing apps still need extensive, laborious home visits and follow-up from public health officials to be effective–something the US has shown little ability to do.

There are other social costs to widespread tech-enabled tracing. Tyler Cowen points out in Bloomberg that contact tracing tech is likely inevitable, but that would leave behind those without smartphones. That’s true, and a major problem for the over-70 crowd, who lack smartphones as a group and are most vulnerable to COVID-19.

Because I predict that Apple and Google won’t push the app hard and I doubt there will be mandates from federal or state officials, I think there’s only a small chance (less than 15%) a contact tracing wireless technology will gain ubiquitous adoption this year (60% penetration, more than 200 million US smartphone users). 

Assessment: A Bluetooth app could protect privacy while, if volunteered, giving public health officials useful information for contact tracing. However, absent aggressive pushes from governments or tech companies, it’s unlikely there will be enough users to significantly help.

Health Passport

The chances of mass Bluetooth app use would increase if the underlying tech or API is used to create a “health passport” or “immunity passport”–a near-realtime medical certification that someone will not infect others. Politico reported on April 10 that Dr. Anthony Fauci, the White House point man on the pandemic, said the immunity passport idea “has merit.”

It’s not clear what limits Apple and Google will put on their API but most APIs can be customized by other businesses and users. The Bluetooth app and API could feed into a health passport app, showing at a glance whether you are infected or you’d been near someone infected recently.

For the venues like churches and gyms and operators like airlines and cruise ships that need high trust from participants and customers, on the spot testing via blood test or temperature taking or Bluetooth app will likely gain traction. 

There are the beginnings of a health passport in China with QR codes and individual risk classifications from public health officials. Particularly for airlines, which is a favored industry in most nations, there could be public pressure and widespread adoption of a digital health passport. Emirates Airlines and the Dubai Health Authority, for instance, last week required all passengers on a flight to Tunisia to take a COVID-19 blood test before boarding. Results came in 10 minutes.

Assessment: A health passport integrates several types of data into a single interface. The complexity makes widespread use unlikely but it could gain voluntary adoption by certain industries and populations (business travelers, tourists, nursing home residents).

Conclusion

In short, tech could help with quarantine enforcement and contact tracing, but there are thorny questions of privacy norms and it’s not clear US health officials have the ability to do the home visits and phone calls to detect spread and enforce quarantines. All of these technologies have issues (privacy or penetration or testing) and there are many unknowns about transmission and risk. The question is how far tech companies, federal and state law officials, the American public, and judges are prepared to go.

book cover (small)I am pleased to announce the release of my latest book, “Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom.” It’s a short manifesto (just under 100 pages) that condenses — and attempts to make more accessible — arguments that I have developed in various law review articles, working papers, and blog posts over the past few years. I have two goals with this book.

First, I attempt to show how the central fault line in almost all modern technology policy debates revolves around “the permission question,” which asks: Must the creators of new technologies seek the blessing of public officials before they develop and deploy their innovations? How that question is answered depends on the disposition one adopts toward new inventions. Two conflicting attitudes are evident.

One disposition is known as the “precautionary principle.” Generally speaking, it refers to the belief that new innovations should be curtailed or disallowed until their developers can prove that they will not cause any harms to individuals, groups, specific entities, cultural norms, or various existing laws, norms, or traditions.

The other vision can be labeled “permissionless innovation.” It refers to the notion that experimentation with new technologies and business models should generally be permitted by default. Unless a compelling case can be made that a new invention will bring serious harm to society, innovation should be allowed to continue unabated and problems, if they develop at all, can be addressed later.

I argue that we are witnessing a grand clash of visions between these two mindsets today in almost all major technology policy discussions today. Continue reading →

over-the-topCBS and Time Warner Cable have been embroiled in a heated contractual battle over the past week that has resulted in viewers in some major markets losing access to CBS programming. When disputes like these go nuclear and signal blackouts occur, it is inevitable that some folks will call for policy interventions since nobody likes it when the content they love goes dark.

While some policy responses are warranted in this matter, policymakers should proceed with caution. Heated contractual negotiations are a normal part of any capitalist marketplace. We shouldn’t expect lawmakers to intervene to speed up negotiations or set content prices because that would disrupt the normal allocation of programming by placing a regulatory thumb too heavily on one side of the scale. This is why I am somewhat sympathetic to CBS in this fight. In an age when content creators struggle to protect their copyrighted content and get compensation for it, the last thing we need is government intervention that undermines the few distribution schemes that actually work well.

On the other hand, Time Warner Cable deserves sympathy here, too, since CBS currently enjoys some preexisting regulatory benefits. As I noted in this 2012 Forbes oped, “Toward a True Free Market in Television Programming,” many layers of red tape still encumber America’s video marketplace and prevent a truly free market in video programming from developing. The battle here revolves around the “retransmission consent” rules that were put in place as part of the Cable Act of 1992 and govern how video distributors carry signals from TV broadcasters, which includes CBS.

But those “retrans” rules are not the only part of the regulatory mess here. Continue reading →

Adam Thierer, Senior Research Fellow at the Mercatus Center discusses his recent working paper with coauthor Brent Skorup, A History of Cronyism and Capture in the Information Technology Sector. Thierer takes a look at how cronyism has manifested itself in technology and media markets — whether it be in the form of regulatory favoritism or tax privileges. Which tech companies are the worst offenders? What are the consequences for consumers? And, how does cronyism affect entrepreneurship over the long term?

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WP coverThe Mercatus Center at George Mason University has just released a new paper by Brent Skorup and me entitled, “A History of Cronyism and Capture in the Information Technology Sector.” In this 73-page working paper, which we hope to place in a law review or political science journal shortly, we document the evolution of government-granted privileges, or “cronyism,” in the information and communications technology marketplace and in the media-producing sectors. Specifically, we offer detailed histories of rent-seeking and regulatory capture in: the early history of the telephony and spectrum licensing in the United States; local cable TV franchising; the universal service system; the digital TV transition in the 1990s; and modern video marketplace regulation (i.e., must-carry and retransmission consent rules, among others.

Our paper also shows how cronyism is slowly creeping into new high-technology sectors.We document how Internet companies and other high-tech giants are among the fastest-growing lobbying shops in Washington these days. According to the Center for Responsive Politics, lobbying spending by information technology sectors has almost doubled since the turn of the century, from roughly $200 million in 2000 to $390 million in 2012.  The computing and Internet sector has been responsible for most of that growth in recent years. Worse yet, we document how many of these high-tech firms are increasingly seeking and receiving government favors, mostly in the form of targeted tax breaks or incentives. Continue reading →

Declan McCullagh, chief political correspondent for CNET and former Washington bureau chief for Wired News, discusses recent leaks of NSA surveillance programs. What do we know so far, and what more might be unveiled in the coming weeks? McCullagh covers legal challenges to the programs, the Patriot Act, the fourth amendment, email encryption, the media and public response, and broader implications for privacy and reform.

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Earlier today on Twitter, I listed what I thought were the Top 5 “Biggest Internet Policy Issues of 2012.” In case you don’t follow me on Twitter — and shame on you if you don’t! — here were my choices:

  1. Copyright wars reinvigorated post-SOPA; tide starting to turn in favor of copyright reform. [TLF posts on copyright.]
  2. Privacy still red-hot w ECPA reform, online advertising regs & kids’ privacy issues all pending. [TLF posts on privacy.]
  3. WCIT makes Internet governance / NetFreedom a major issue worldwide. [TLF posts on Net governance.]
  4. Antitrust threat looms larger w pending Google case + Apple books investigation. [TLF posts on antitrust.]
  5. Cybersecurity regulatory push continues in both legislative (CISPA) & executive branch. [TLF posts on cybersecurity.]

Lists like these are entirely subjective, of course, but I am basing my list on the general amount of chatter I tended to see and hear about each topic over the course of the year.

What do you think the top tech policy issues of the year were?

Here’s a presentation I delivered on “The War on Vertical Integration in the Digital Economy” at the latest meeting of the Southern Economic Association this weekend. It outlines concerns about vertical integration in the tech economy and specifically addresses regulatory proposals set forth by Tim Wu (arguing for a “separations principle” for the tech economy) & Jonathan Zittrain (arguing for “API neutrality” for social media and digital platforms). This presentation is based on two papers published by the Mercatus Center at George Mason University: “Uncreative Destruction: The Misguided War on Vertical Integration in the Information Economy” (with Brent Skorup) & “The Perils of Classifying Social Media Platforms as Public Utilities.”