So, the Department of Justice has formally filed suit against Apple and several major book publishers claiming collusion over eBook pricing. Let’s say Apple and the publishers are guilty as charged and in violation of our nation’s antitrust laws. Here’s my opinion on that: So what? What Apple and the publishers are doing here is trying to find a way to sustain creative works in an era when copyright law is slowly dying. As I noted here in a post yesterday, I take no joy in reporting the fact that property rights for intellectual creations no longer function effectively. I wish they did still work, but they are failing rather miserably in an age of highly decentralized digital dissemination. Moreover, I am not prepared to see government go to absurd enforcement extremes in an attempt to make intellectual property rights work. But, that being said, something needs to sustain and cross-subsidize cultural creations in an age of mass piracy. I have increasingly come to believe that consolidation of content and conduit (or devices) is a big part of the answer. Alternatively, some sort of informal collusion among cultural creators and information distributors may be the answer.

Apple and the publishers have figured that out and come up with a plan that keeps intellectual works flowing while making sure that the creators behind them get paid. At a time when copyright critics always say “just find a better business model” Apple and the publishers did just that. But now Department of Justice officials say that business model should be forbidden. That’s crazy.  If we’re going to let copyright die, we should at least grant more pricing and deal-making flexibility to the creative community to structure business arrangements that might give them a lifeline.

But won’t such deals give publishers and other creative artists and industries more pricing power that will help them keep prices up artificially? Yes, of course! That is the whole point! God forbid we actually have to pay something to cultural creators. Ain’t that a scandal. But here’s a news flash: That’s what copyright law was all about, too. It was about helping creators put some fences around their “property” to help them maintain some degree of pricing power for goods with zero marginal cost. The scheme worked brilliantly for many years. It spawned a vibrant marketplace of ideas and helped America become the leading exporter of expressive works on the planet. But now the effectiveness of traditional copyright is fading rapidly. Industry consolidation, cross-promotions, pricing deals, and so on, will increasingly be the “better business model” some will turn to.  So, are we going to allow it? Or will critics just keep mouthing “go find a better business model” and have the government step in every time they don’t like the one industry chooses?  I say let experimentation continue.

This morning, the Senate Judiciary Committee’s Subcommittee on Privacy, Technology, and the Law had a hearing entitled: “Protecting Mobile Privacy: Your Smartphones, Tablets, Cell Phones and Your Privacy.” It was a remarkably scattered affair, and I blogged three key—and very distinct—elements of it on the Cato@Liberty blog:

• The Department of Justice used this “mobile privacy” hearing to call for increased surveillance of Internet and mobile phone users.
• To escape a prosecutorial dead-end, Senator Blumenthal (D-CT) strongly suggested that he would outlaw the collection of radio signals. Where this government power would lead is quite profound.
• Ignoring mobile privacy, Senator Schumer (D-NY) touted his hobby-horse, mobile app censorship.

Valid concerns with what mobile operating system providers Google and Apple have done with location information were somewhat lost in this disjointed and confused hearing.

Unlike with wiretaps, law enforcement agents are not required by federal statutes to obtain search warrants before employing pen registers or trap and trace devices. These devices record non-content information regarding telephone calls and Internet communications. (Of course, “non-content information” has quite a bit of content – who is talking to whom, how often, and for how long.)

The Electronic Privacy Information Center points out in a letter to Senate Judiciary Committee Chairman Patrick Leahy (D-VT) that the Department of Justice has consistently failed to report on the use of pen registers and trap and trace devices as required by law:

The Electronic Communications Privacy Act requires the Attorney General to “annually report to Congress on the number of pen register orders and orders for trap and trace devices applied for by law enforcement agencies of the Department of Justice.” However, between 1999 and 2003, the Department of Justice failed to comply with this requirement. Instead, 1999-2003 data was provided to Congress in a single “document dump,” which submitted five years of reports in November 2004. In addition, when the 1999-2003 reports were finally provided to Congress, the documents failed to include all of the information that the Pen Register Act requires to be shared with lawmakers. The documents do not detail the offenses for which the pen register and trap and trace orders were obtained, as required by 18 U.S.C. § 3126(2). Furthermore, the documents do not identify the district or branch office of the agencies that submitted the pen register requests, information required by 18 U.S.C. § 3126(8).

EPIC has found no evidence that the Department of Justice provided annual pen register reports to Congress for 2004, 2005, 2006, 2007, or 2008. “This failure would demonstrate ongoing, repeated breaches of the DOJ’s statutory obligations to inform the public and the Congress about the use of electronic surveillance authority,” they say.

It’s a good bet, when government powers are used without oversight, that they will be abused. Kudos to EPIC for pressing this issue. Senator Leahy’s Judiciary Committee should ensure that DoJ completes reporting on past years and that it reports regularly, in full, from here forward.

And so begins another fight over data retention. As Declan summarizes:

Republican politicians on Thursday called for a sweeping new federal law that would require all Internet providers and operators of millions of Wi-Fi access points, even hotels, local coffee shops, and home users, to keep records about users for two years to aid police investigations. The legislation, which echoes a measure proposed by one of their Democratic colleagues three years ago, would impose unprecedented data retention requirements on a broad swath of Internet access providers and is certain to draw fire from businesses and privacy advocates. […] Two bills have been introduced so far — S.436 in the Senate and H.R.1076 in the House. Each of the companion bills is titled “Internet Stopping Adults Facilitating the Exploitation of Today’s Youth Act,” or Internet Safety Act.

Julian also has coverage over at Ars and quotes CDT’s Greg Nojeim who says the data retention language is “invasive, risky, unnecessary, and likely to be ineffective.”  I think that’s generally correct.  Moreover, I find it ironic that at a time when so many in Congress seemingly want online providers to collect and retain LESS data about users, this bill proposes that ISPs be required to collect and retain MORE data. One wonders how those two legislative priorities will be reconciled!!

Don’t get me wrong. It’s good that Congress is taking steps to address the scourge of child pornography — especially with stiffer sentences for offenders and greater resources for law enforcement officials. Extensive data retention mandates, however, would be unlikely to help much given the ease with which bad guys will likely circumvent those requirements using alternative access points or proxies.  Finally, retention mandates pose a threat to the privacy of average law-abiding citizens and impose expensive burdens of online intermediaries.

We’ve had more to say about data retention here at the TLF over the years.  Here’s a few things to read:

• Yahoo! Data-Retention Policy vs. The New Justice Department, by Cord Blomquist
• Another Reason to Be Wary of Age Verification & Data Retention Mandates, by Adam Thierer, October 30, 2006.
• Mandatory Data Retention: How Much is Appropriate? by Adam Thierer, June 26, 2006.
• Internet Data Storage Is The Wrong Way To Combat Child Sexual Exploitation, by Hance Haney, Sept. 20, 2006.
• Data Retention on the Move, by Jim Harper, June 1, 2006.

You can tell I like my writing when I take a sentence from a post and make it the title.

Annnyway, my brief comment on the whistleblower who outed “Stellar Wind” is on the Cato@Liberty blog.

Today was a big day — and not just because there was an election going on! As I mentioned yesterday, the other big news was that the U.S. Supreme Court was hearing oral arguments in the potentially historic free speech case of Federal Communications Commission v. Fox Television Stations, Inc. Again, all the background you need can be found in my post yesterday, so here I will just be summarizing my general thoughts about how the oral arguments played out this morning.

Unfortunately, because no electronic devices or even notepads are allowed in the courtroom, much of what I am relaying here is from memory or from the notes that I surreptitiously scribbled on a tiny piece of scrap paper when the guards weren’t looking. (And yes, I have been reprimanded before for taking notes in the Court!)  The transcript has just been released, however, so you can read it through and judge for yourself.  Anyway, here are some general thoughts:

• Balance of Questioning by Justices: Generally speaking, things did not go as well as I had hoped they would.  The justices asked some tough questions for both counsels, but some of the justices seemed surprisingly deferential to the FCC. When Fox lawyer Carter Phillips rose to speak, for example, he was almost immediately interrupted by a barrage of questions from Justice Scalia and Chief Justice Roberts, who both seemed sympathetic to the FCC’s argument that the agency had taken sufficient steps to justify its change of policy about “fleeting expletives” on TV or radio. Scalia, in particular, was probably the most deferential to the agency throughout the questioning this morning.  Not a good sign for the broadcasters or the First Amendment.

• The Chicken-Egg Debate about What Drives Culture:  Scalia also raised the most hard-nosed questions about the impact of such words on our culture. In terms of the ‘chicken-and-egg’ debate about whether media influences society or media just reflects society, Scalia clearly believes that media drives culture. He suggested that broadcasters had unduly influenced culture.  Again, not good for the broadcasters or free speech advocates, but other justices didn’t say much on this issue.

• The APA & Substantive Constitutional Issues: Souter (joined by Roberts and Scalia) also led a line of questioning about whether Fox was essentially asking for a new test under administrative law that provided less deference to an agency when substantive First Amendment cases where being considered. There have always been sticky admin law / APA-related issues involving agency deference when substantive issues and constitutional rights were at stake.  It will be very interesting to hear what, if anything, the Court has to say about that in this case. But, at least from the tone of the questioning I heard today, the Justices still seem quite deferential to agency decision-making even if free speech issues are in play.  Again, really not good for the broadcasters, but this could tip the opposite direction in the final decision.

• Scarcity v. Abundance as a Regulatory Rationale: There was a very interesting line of questioning raised by Justice Ginsburg that lead to a shocking response from U.S. Solicitor General Gregory Garre. She asked about what impact the Internet and online speech cases has had — or should have — for the case before the court. She stressed how much things had changed since the Court’s Pacifica holding in 1978 and implied that might have some bearing on the matter before the court today. [This was one of the key points I raised in my amicus with CDT, in which we argue that changing technological and marketplace realities have a profound bearing on this case and FCC regulation of speech in general].

Amazingly, Solicitor General Garre suggested that the government actually had a stronger case today when it regulates broadcast platforms differently than all other forms of media. His reasoning: Precisely because there are so many other unregulated platforms where kids might see or hear objectionable media, it was vital for the government to quarantine one platform and make sure it is safe from objectionable programming. This is an astonishing argument for the government to set forth as a rationale for regulation as it essentially turns the old “scarcity rationale” for regulation on its head.  Back in the old days, we were told broadcasting had to be regulated because it was scarce.  Today, by contrast, the government tells us we have to regulate broadcast platforms because of media abundance. Damned if you do, damned if you don’t!

This line of questioning generally helps the broadcasters, but if the Court doesn’t reach the substantive First Amendment issues in its decision, then it’s meaningless.

• Community Standards: On a related note, Justice Ginsburg also asked some sharp questions about the continuing sensibility of the “contemporary community standards” test for broadcast television and radio regulation. She wanted to know how the FCC determines these things and how they surveyed the public to determine what “the community” thought was appropriate for broadcast TV and radio. Solicitor General Garre didn’t really have a good answer, and how could he; this is arbitrary government at its worst. The FCC is asking us to believe that a handful of vocal anti-free speech advocates speak for all Americans when they complain to the FCC about various shows. It’s a farce. Millions of average American viewers just turn off the TV and go to bed happy each night after watching TV; they don’t send in a letter to the FCC saying that they liked what they saw. By contrast, the regulatory advocates bombard the FCC with complaints and then the FCC says that counts as the will of the people.

Anyway, these questions about community standards generally help the broadcasters, but I doubt the court will follow through with this line of reasoning in their final decision. They should, however, because it is silly to think the relevant “community” can be determined just by considering broadcast in isolation.  After all, more and more kids these days are watching video online and via other alternative media distribution platforms.

• The End of Live TV & Radio?: There were several questions from Justices Breyer and Scalia about tape delays and whether broadcasters had the ability to essentially delay all live programming to make sure no dirty words got through.  I thought the justices would have understood why ending live television and radio was a bad idea, but some of them sounded like they were enamored with that notion. Again, very, very troubling for the broadcasters. (Incidentally, during this line of questioning, I found myself thinking how now might be a good time to invest in the tape delay technology business! Seriously, if the FCC wins this case, it may be that every broadcaster in America has to invest in tape delay equipment and rigorously scrub live TV on the fly.  Just think how silly this is in the age of the Internet and instantaneous online video.)

• • –

Again, these are just my initial thoughts. I need to go through the transcript again later and digest everything again before I say anything more.  Overall, however, I am concerned for the First Amendment after this morning’s arguments in the Supreme Court. We could get a close decision in favor of the FCC and the agency’s ongoing effort to expand content controls.

On the other hand, it’s difficult to get a read on some the members of the court. After all, Justices Alito and Thomas didn’t say a peep today, and Justice Kennedy only spoke up once or twice.  And just because some of them asked hostile questions that seemed deferential to the FCC, that doesn’t automatically mean they will ultimately vote in the agency favor in this case.  We’ll just have to wait till next spring or summer to get their final verdict.

Tomorrow morning, the U.S. Supreme Court will hear oral arguments in the potentially historic free speech case of Federal Communications Commission v. Fox Television Stations, Inc. I plan on attending and will try to post some thoughts about how the arguments played out here later tomorrow afternoon or evening. [I won’t be able to live blog of Twitter it because no electronic devices are allowed in the courtroom, which I’ve always thought is outrageous.] In the meantime, here again is the background of the case.

The FCC v. Fox case is the indecency case involving the FCC’s new policy for “fleeting expletives.” I wrote about the Second Circuit Court of Appeals decision here and the full 2nd Circuit decision is here. [By contrast, the so-called “Janet Jackson case” — CBS v. FCC — took place in the Third Circuit Court of Appeals and that court recently handed down a decision that also went against the FCC. I wrote about the Third Circuit’s decision here.]

In a 2-1 decision, the Second Circuit ruled that “the FCC’s new policy sanctioning “fleeting expletives” is arbitrary and capricious under the Administrative Procedure Act for failing to articulate a reasoned basis for its change in policy.” The decision demonstrates how, over just the past few years, the FCC has arbitrarily thrown out 30+ years worth of precedent and greatly expand the scope of its regulatory authority over speech on broadcast TV and radio. As a result, the FCC’s order was vacated and remanded to the agency. The agency appealed the decision, however, and the Supreme Court accepted it for review.

As I noted back in August, I submitted an amicus brief to the Supreme Court along with my friends John Morris and Sophia Cope of the Center for Democracy & Technology. In that brief, we argued that this case will have profound ramifications for the future of the First Amendment and the regulatory treatment of old and new media platforms alike. It is important that the FCC not be permitted to so casually change its regulatory approach, as it did in the matter before the Court today. The FCC’s new approach has created a confusing and arbitrary regulatory atmosphere that leaves many speakers wondering what they can and cannot say on broadcast television and radio stations today.

It’s also vital that the Court recognize how the FCC is being unduly influenced by a small handful of particular vociferous special interest groups who are artificially inflating the number of indecency complaints and attempting to propagate the myth that they speak for the masses. It is important for the Supreme Court to not allow a small minority to achieve a “heckler’s veto” over content on television or radio.

Finally, it is important that the Supreme Court rein in the FCC in this matter to also ensure the agency does not seek to expand its powers to cover new media platforms. The First Amendment rights of speakers using cable, satellite, and even the Internet, could be at stake here. We live in an age of media and technological convergence and, therefore, it is vital the Court not allow the FCC to engage in a form of regulatory convergence by letting this old regime bleed over into new quarters.

What many of us will be listening for tomorrow during oral arguments is some sort of indication of whether the Court wants to get into the substantive First Amendment issues at stake here, or instead just stick to the procedural (APA) issues that were at the heart of the Second Circuit decision. In particular, a lot of us are wondering whether the Court will get into the the thorny issues and theories set forth in the Court’s controversial 1978 decision of FCC v. Pacifica Foundation.  This summer, upon its 30th anniversary, I penned a 6-part series of essays about the Pacifica decision and the “pervasiveness doctrine.”  It will be very interesting to see if pervasiveness is discussed tomorrow in the questioning by the justices. If it is, that could signal that the court might be willing to get into the substantive First Amendment issues here instead of merely addressing process-related concerns.

If you are interested in reading more opinions about the FCC v. Fox case, I have itemized all the amicus briefs before the court. [I have also blasted some folks on the Left who filed briefs in the case for failing to defend the First Amendment and instead calling upon the court to just defend their sacred regulatory cows (namely, the Red Lion decision and the “scarcity rationale” for FCC regulation of the media marketplace.)] Finally, here are a few additional articles or essays about the case that you might want to check out for basic background, or to see what others are saying:

• SCOTUS Wiki page for the case
• SCOTUS Blog argument preview
• Adam Liptak, “Must It Always Be About Sex?” New York Times
• William Triplett, “Fox v. FCC heads to Court,”Variety
• David G. Savage, “On the Supreme Court Docket: bleeeeeep,” Los Angeles Times
• Joan Biskupic, “Supreme Court to Hear FCC Appeal over Dirty Words,” USA Today

C|Net’s Charles Cooper reports today that Department of Justice trustbusters are considering a comprehensive antitrust attack on Google.

Sources who have provided testimony to the government say a departmental debate revolves around whether antitrust regulators should challenge Google’s proposed revenue-sharing deal with Yahoo, or go for the whole enchilada–and haul Google into court on broader charges related to its dominance in search advertising.

C|Net’s Declan McCullagh speculated earlier this week about how Google would fare under an Obama administration:

[Obama’s] technology campaign platform pledges to “reinvigorate antitrust enforcement” and “step up review of merger activity.” He complained to the American Antitrust Institute that “the current administration has what may be the weakest record of antitrust enforcement of any administration in the last half century.” If the Bush administration’s current antitrust probe of Google, coupled with this week’s apparent threat of a federal lawsuit, amounts to a “weak” record, imagine what antitrust true believers in an Obama administration might do. (A three-way split of Google into search, applications, and display ads, anyone?)

I’m not sure whether structural separation is on Google’s near-term horizon, but Washington, D.C.’s parasite economy will make its move.