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How Are We Ever Going to Stop the Blockbuster Video Monopoly?

by on July 21, 2020 · 0 comments

Does anyone remember Blockbuster and Hollywood Video? I assume most of you do, but wow, doesn’t it seem like forever ago when we actually had to drive to stores to get movies to watch at home? What a drag that was!

Yet, just 15 years ago, that was the norm and those two firms were the titans of video distribution, so much so that federal regulators at the Federal Trade Commission looked to stop their hegemony through antitrust intervention. But then those firms and whatever “market power” they possessed quickly evaporated as a wave of Schumpeterian creative destruction swept through video distribution markets. Both those firms and antitrust regulators had completely failed to anticipate the tsunami of technological and marketplace changes about to hit in the form of alternative online video distribution platforms as well as the rise of smartphones and robust nationwide mobile networks.

Today, this serves as a cautionary tale of what happens when regulatory hubris triumphs over policy humility, as Trace Mitchell and I explain in this new essay for  National Review Online entitled, “The Crystal Ball of Antitrust Regulators Is Cracked.” As we note:

There is no discernable end point to the process of entrepreneurial-driven change. In fact, it seems to be proliferating rapidly. To survive, even the most successful companies must be willing to quickly dispense with yesterday’s successful business plans, lest they be steamrolled by the relentless pace of technological change and ever-shifting consumer demands. It is easy to understand why some people find it hard to imagine a time when Amazon, Apple, Facebook, and Google won’t be quite as dominant as they are today. But it was equally challenging 20 years ago to imagine that those same companies could disrupt the giants of that era.

Hopefully today’s policymakers will have a little more patience and trust competition and continued technological innovation to bring us still more wonderful video choices.

[OC] Blockbuster Video US store locations between 1986 and 2019 from r/dataisbeautiful
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“Policy Gone Viral” Podcast on Evasive Entrepreneurialism

by on July 16, 2020 · 2 comments

Here’s a new episode of the James Madison Institute “Policy Gone Viral” podcast in which my former Mercatus Center colleague Andrea O’Sullivan and I discuss the future of technological innovation and the public policies governing it. The video is embedded below or you can listen to just the audio here.

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The Pacing Problem, the Collingridge Dilemma & Technological Determinism

by on August 16, 2018 · 3 comments

I recently posted an essay over at The Bridge about “The Pacing Problem and the Future of Technology Regulation.” In it, I explain why the pacing problem—the notion that technological innovation is increasingly outpacing the ability of laws and regulations to keep up—“is becoming the great equalizer in debates over technological governance because it forces governments to rethink their approach to the regulation of many sectors and technologies.”

In this follow-up article, I wanted to expand upon some of the themes developed in that essay and discuss how they relate to two other important concepts: the “Collingridge Dilemma” and technological determinism. In doing so, I will build on material that is included in a forthcoming law review article I have co-authored with Jennifer Skees, Ryan Hagemann (“Soft Law for Hard Problems: The Governance of Emerging Technologies in an Uncertain Future”) as well as a book I am finishing up on the growth of “evasive entrepreneurialism” and “technological civil disobedience.”

Recapping the Nature of the Pacing Problem

First, let us quickly recap that nature of “the pacing problem.” I believe Larry Downes did the best job explaining the “problem” in his 2009 book on The Laws of Disruption. Downes argued that “technology changes exponentially, but social, economic, and legal systems change incrementally” and that this “law” was becoming “a simple but unavoidable principle of modern life.” Continue reading →

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Regulators are Like Tommy Boy

by on April 11, 2011 · 4 comments

…says Nick Schulz, in partial answer to the question why regulators want to control telecom and wireless even though those sectors currently enjoy “rising customer satisfaction, falling prices, enviable investment levels, and greater innovation—even during the Great Recession.”

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The First Amendment & Net Neutrality: Be Careful What You Wish For

by on December 17, 2009 · 6 comments

Robert Corn-RevereAs I noted here a few days ago, the Federal Communications Commission held a workshop on Tuesday about “Speech, Democratic Engagement, and the Open Internet.”  It was a shockingly one-sided affair with the deck being stacked almost entirely in favor of advocates of Net neutrality regulation. Worse yet, those advocates shamelessly made up spooky stories about a future of “private censorship” that could only be remedied by using the First Amendment as a club to beat private players into submission. The token opposition at this Chicken Little circus was Robert Corn-Revere, a Partner at the law firm of Davis Wright Tremaine LLP in Washington, D.C.   Bob set the record straight–both in terms of baseless accusations that were flying that day as well as the revisionist histories of the First Amendment that were being put forward. I’m happy to report that Bob allowed PFF to reprint his remarks as a new white paper entitled, “The First Amendment, the Internet & Net Neutrality: Be Careful What You Wish For.”

In his essay, Corn-Revere discusses the relationship between the First Amendment and regulatory policy, particularly the treatment of new communications technologies, and he warns that government regulation of broadband networks could “provide the vehicle for advancing new First Amendment theories for media regulation” and online speech and expression more generally.  “It should not be forgotten,” he argues, “that the federal government’s initial impulse was to censor the Internet and to subject it to a far lower level of First Amendment protection. It pursued this agenda for more than a decade but was blocked by a series of First Amendment rulings.”  The Communications Decency Act and the Child Online Protection Act are just two notable examples. Luckily, the courts determined that “the open Internet would be at great risk if the government is allowed to exercise such power,” he notes, and they struck down such laws.

Continue reading →

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Net Neutrality, Slippery Slopes & High-Tech Mutually Assured Destruction

by on October 23, 2009 · 43 comments

by Berin Szoka & Adam Thierer, Progress Snapshot 5.11 (PDF)

Ten years ago, Nobel Prize-winning economist Milton Friedman lamented the “Business Community’s Suicidal Impulse:” the persistent propensity to persecute one’s competitors through regulation or the threat thereof. Friedman asked: “Is it really in the self-interest of Silicon Valley to set the government on Microsoft?” After yesterday’s FCC vote’s to open a formal “Net Neutrality” rule-making, we must ask whether the high-tech industry—or consumers—will benefit from inviting government regulation of the Internet under the mantra of “neutrality.”

The hatred directed at Microsoft in the 1990s has more recently been focused on the industry that has brought broadband to Americans’ homes (Internet Service Providers) and the company that has done more than any other to make the web useful (Google). Both have been attacked for exercising supposed “gatekeeper” control over the Internet in one fashion or another. They are now turning their guns on each other—the first strikes in what threatens to become an all-out, thermonuclear war in the tech industry over increasingly broad neutrality mandates. Unless we find a way to achieve “Digital Détente,” the consequences of this increasing regulatory brinkmanship will be “mutually assured destruction” (MAD) for industry and consumers.

New Fronts in the Neutrality Wars

The FCC’s proposed rules would apply to all broadband providers, including wireless, but not to Google or many other players operating in other layers of the Net who favor such broadband-specific rules. With this rulemaking looming, AT&T came after Google with letters to the FCC in late September and then another last week accusing the company of violating neutrality principles in their business practices and arguing that any neutrality rules that apply to ISPs should apply equally to Google’s panoply of popular services. In particular, AT&T accused Google of “search engine bias,” suggesting that only government-enforced neutrality mandates could protect consumers from Google’s supposed “monopolist” control.

The promise made yesterday by the FCC—to only apply neutrality principles to the infrastructure layer of the Net—is hollow and will ultimately prove unenforceable. Continue reading →

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European Regulators Think Consumers Too Stupid to Know How to Download a Different Browser

by on June 11, 2009 · 30 comments

According to Ina Fried of CNet News, Microsoft plans to remove its Internet Explorer web browser from the new versions of Windows 7 when it ships it in Europe later this year. [Additional coverage at ZDNet.]  MS is apparently doing so to assuage the concerns of EU antitrust officials, who have been obsessed with the company for the past decade. [Update: Here is MS official announcement.]

Apparently, European officials think their citizens are too stupid to find an alternative browser.  I mean, seriously, how hard is it?  Does the competition lack name recognition such that consumers can’t find them?  Hmmm… Google and Apple seem to be pretty well known brands, and their browsers (Chrome & Safari) are pretty easy to find.  And then there’s Mozilla’s Firefox browser (my PC favorite) and Opera (my mobile phone favorite), which are outstanding browsers. [Incidentally, Firefox already has 31% share of the European market.]

OK, OK, the regulators might say, but these competitors are just too expensive!  Uh, no, wait… every one of them is free. So, strike that theory.

Well, the regulators need another theory then. How about illegal tying of products and services! You know, there’s only certain sites or services you can use with IE, right?   Nope, that theory doesn’t work either.  And does anyone believe that MS could really tie OS functionality to the use of IE? How long would the world tolerate Outlook e-mails or Word documents that only allowed linking to URLs via IE??  Come on.

OK, any other theories left? Not that I can think of. Which brings us back to the only theory the Euro-crats have left: people are sheep. They’ll take whatever MS bundles into the OS free, you see, and they will use it more than they use competing products.  Thus, we regulators have to save them from their own stupidity! The masses just don’t know what’s good for them!  These free, integrated services are harming them! And, therefore, the only remaining solution is to kill innovation by crippling functionality and removing the free offering. That’s pro-consumer! … or so say the European antitrust bureaucrats.

Meanwhile, back in the real world, a whole lotta innovation continues to take place. But shhhh.. don’t tell the Euro-crats. They need a company to pick on. Welcome to the Theater of the Techno-Absurd.

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