The big news out of Europe today is that the European Court of Justice (ECJ) has invalidated the 15-year old EU-US safe harbor agreement, which facilitated data transfers between the EU and US. American tech companies have relied on the safe harbor to do business in the European Union, which has more onerous data handling regulations than the US. [PDF summary of decision here.] Below I offer some quick thoughts about the decision and some of its potential unintended consequences.
#1) Another blow to new entry / competition in the EU: While some pundits are claiming this is a huge blow to big US tech firms, in reality, the irony of the ruling is that it will bolster the market power of the biggest US tech firms, because they are the only ones that will be able to afford the formidable compliance costs associated with the resulting regulatory regime. In fact, with each EU privacy decision, Google, Facebook, and other big US tech firms just get more dominant. Small firms just can’t comply with the EU’s expanding regulatory thicket. “It will involve lots of contracts between lots of parties and it’s going to be a bit of a nightmare administratively,” said Nicola Fulford, head of data protection at the UK law firm Kemp Little when commenting on the ruling to the BBC. “It’s not that we’re going to be negotiating them individually, as the legal terms are mostly fixed, but it does mean a lot more paperwork and they have legal implications.” And by driving up regulatory compliance costs and causing constant delays in how online business is conducted, the ruling will (again, on top of all the others) greatly limits entry and innovation by new, smaller players in the digital world. In essence, EU data regulations have already wiped out much of the digital competition in Europe and now this ruling finishes off any global new entrants who might have hoped of breaking in and offering competitive alternatives. These are the sorts of stories never told in antitrust circles: costly government rulings often solidify and extend the market dominance of existing companies. Dynamic effects matter. That is certainly going to be the case here. Continue reading →
Well, you got it! Here’s a essay of mine that The Daily Caller ran today discussing the ramifications of the decision.
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Internet freedom got a reprieve Tuesday when the U.S. Court of Appeals for the District of Columbia slapped down a brazen attempt by the Federal Communications Commission (FCC) to ignore the rule of law and begin imposing onerous regulations on broadband network operators. The decision,
Comcast v. FCC, deals with arcane matters of regulatory agency jurisdiction, but the stakes were profound and the ramifications for the future of the Internet will reverberate for years to come.
In a nutshell, the FCC argued it had the right to impose so-called “Net neutrality” regulations on a private broadband operator based merely on a handful of principles that the agency had previously said it would
not be enforcing as law. Net neutrality regulations would put FCC bureaucrats in the Internet’s driver’s seat and let them determine what was “just and reasonable” of private networks. Critics have rightly feared that Net neutrality sounded all too much a Fairness Doctrine for the Internet since similar language had been used in the broadcast era to justify all sorts of FCC meddling and micromanagement.
Regardless, the FCC’s original position—that its Net neutrality principles were
only principles and nothing more—made sense since even a high school civics student can tell you that only Congress can make laws. Moreover, for a brief time, even the FCC seem to realize that laws that would comprehensively regulate such an important sector of the American economy, as Net neutrality rules would, almost certainly require our elected leaders in Congress to reopen and tweak existing statutes like the Telecommunications Act of 1996. After all, Congress had never authorized wide-reaching regulation of the Net or broadband networks, and so, if the agency wanted to extend its regulatory tentacles and wrap them around the Internet it only seems reasonable they get the blessing of lawmakers before doing so. And, for a time, the FCC stuck to a “Hands Off the Net” approach.
Continue reading →
I’ve been blathering on about this week’s big Supreme Court decision in FCC v. Fox, [See Parts 1, 2, 3, 4, 5], so I thought I would just wrap this series of essays up with a collection of other articles and views on the decision in case readers are looking for alternative perspectives:
Mainstream Media Stories
Conservative, Religious, & “Family” Groups
Free Speech Advocates or Other Views
As I noted earlier, the U.S. Supreme Court today handed down a historical First Amendment decision in the case of Federal Communications Commission v. Fox Television Stations. The Court ruled in the FCC’s favor by a 5-4 margin. My initial general thoughts are here. In this piece, I’ll talk a bit more about the majority’s decision in the case.
The most important thing to realize about the Court’s 5-4 decision in
FCC v. Fox is that the Court has intentionally dodged all the serious constitutional issues in play here and instead decided the case solely on procedural grounds. “We decline to address the constitutional questions at this time,” the majority says. (p. 26) Writing for the majority, Justice Scalia says:
There is… no basis in the Act or this Court’s opinions for a requirement that all agency change be subjected to more searching review. Although an agency must ordinarily display awareness that it is changing position… and may sometimes need to account for prior fact finding or certain reliance interests created by a prior policy, it need not demonstrate to a court’s satisfaction that the reasons for the new policy are better than the reasons for the old one. It suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better, which the conscious change adequately indicates.
Of course, it’s not entirely unusual for the Court to decide important regulatory cases by sticking to administrative law / APA issues, but what’s different in this case is that we’re not talking about the regulation of widgets here. We are talking about the regulation of freedom of speech and expression. Shouldn’t the administrative law analysis change a bit when the issues at stake implicate profound constitutional imperatives? I think so, but the majority doesn’t address that.
Continue reading →
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