My boss Tom Lenard of PFF penned an editorial for the Wall Street Journal yesterday about the Google-DoubleClick deal. The essay was co-authored by Paul Rubin, a PFF adjunct fellow and a professor of economics and law at Emory University. Lenard and Rubin argue that the fears about the Google-DoubleClick deal have been overstated:
Those who complain about Google’s purchase of DoubleClick make two claims. Both are flawed. The first argument is that, since both firms have a large market share of their respective spheres, a merger would be monopolistic. The flaw is that the two companies undertake activities that don’t overlap. Google places text ads mainly on its own Web sites and search-result screens. DoubleClick delivers display ads from advertisers to Web sites. It creates no ads and controls no Web sites. Even if we believe that Internet advertising is a distinct market (debatable, since it comprises only about 5% of all advertising) the combined firms will not gain any market power since they do not have any business in common.
The second argument comes from privacy advocates who have filed a brief with the FTC. They say the merger “could impact the privacy interests of 233 million Internet users in North America.” The FTC’s antitrust function and its consumer protection function are fundamentally different. Indeed, the more information markets have, the more competitive they are. If “privacy” advocates have their way, there would be less information and markets would not work as well.
Marketers use information. Some people have a cockeyed notion that if this information benefits marketers, it is to the detriment of consumers. Wrong. Consumers benefit when marketers provide them with information about products, especially new products, that they may want. A free flow of information enabling more efficient “targeting” of consumers is to their advantage.
They go on to conclude that: “Both the antitrust and the consumer protection branches of the FTC should leave this acquisition alone. It will create benefits with no increase in market power and no harmful reduction of privacy.” Read the entire piece here.
Over at the American, I’ve got a new piece up on the First Sale Doctrine, shrinkwrap licenses, and EFF’s new “promo CD” case. My favorite part was the part I didn’t write:
“Frankly, UMG’s argument reminds me of the one made by the goblin banker in the latest Harry Potter book—that somehow everything made by UMG remains their property forever, even after it is sold or given away,” von Lohmann says. “As readers of the book will recall, that’s not how the law works, not even in the fantasy world of J. K. Rowling.”
The Federal Communications Commission is a drag on progress in telecommunications and a threat to free speech. It often comes in for criticism, as it did this week at the Progress and Freedom Foundation’s Aspen Summit. But it has never been more enthusiastically criticized than by Dr. Gene Scott.
Charter and I have this game we play. About once a year, they raise the rate for my broadband connection to something ridiculous like $53.99/month. I then call them up, pretend I want to cancel, and they offer me a “special offer” that allows me to pay something more reasonable, like $29.99/month, “for a limited time” or in exchange for a 1-year contract.
Last time I did this, the process was relatively quick and painless. After some hemming and hawing, the customer service representative took my information over the phone and that was that. This year, however, Charter has figured out that there’s this thing called “the Internet.” So when I called up my friendly Charter customer service representative, she informed me that I would need to sign up for a special offer through the website. Great! I thought. I picked the package I wanted, entered my information, clicked “Order,” and up popped a small window labeled “Charter Live Chat.” (“One more step!” it said, rather optimistically)
Charter doesn’t appear to have jumped on the Web 2.0 bandwagon, as the chat window worked by means of a frame that refreshed every few seconds, creating an annoying flicker. It was also extremely slow–after I typed a message, it would take more than a minute for the lady at the other end to respond. And she didn’t appear to have any of the contact information I’d just entered. In fact, after about 10 minutes of sitting around waiting for her to get back to me, she informed me that she was unable to access my account, and I’d have to call to get the account changed.
I’m at a loss to explain what Charter is trying to accomplish with this whole Internet-based ordering process. It doesn’t seem like it would cut down on labor costs much. And it’s certainly not any faster or more convenient for the customer. Maybe they’re hoping that if they make the process as cumbersome as possible, I’ll give up and pay their inflated prices without a fuss?
Nate Anderson at Arsreports that Wal-Mart is jumping on the no-DRM bandwagon:
DRM isn’t yet dead in the music business, but it has a nasty, hacking cough. Wal-Mart is the latest company to ditch the DRM in an attempt to crack the coveted iPod market, which for years has been out of reach. The company announced this morning that it has embraced high-bitrate MP3s from Universal and EMI (iTunes only has DRM-free files from EMI, not from Universal), and it promises to continually expand its offerings.
Wal-Mart has actually run a download store for years, selling DRM-encumbered WMA files at $0.88 a pop. They couldn’t play on either the iPod or the Zune, but at least they were cheap!
Now that the DRM shackles are loosening, Wal-Mart can offer a store with at least a chance of attracting customers. As a sign of how badly Wal-Mart want to attract iPod users, the music store doesn’t list tracks as being DRM-free, but as being ready to “play on the iPod.”
Because neither Warner nor Sony BMG are yet licensing their catalogs without DRM, many of the tracks at the store are still DRM-encumbered WMA files—it’s a confusing situation and a huge drawback if the company wants iPod users to shop there. Most users don’t think in terms of what record label their favorite artists appear on, so finding music for download can be a hit-and-miss affair. Still, there’s not much that Wal-Mart can do except try to compete on price with its current selection of tracks and stress the fact that it has MP3s from Universal as well.
At this point, it’s only a matter of time before Warner and Sony BMG follow suit. Wal-Mart customers are not going to be happy about a situation in which half the music on offer plays on an iPod and the other half doesn’t. And when customers complain, Wal-Mart is likely to point the finger straight at the labels and say “we’d love to sell you unencumbered songs, but they won’t let us.” Warner and Sony will be leaving money on the table if they continue to sell their songs in crippled formats.
Kudos for Google for making amends for the bone-headed way Google decided to shut down its ill-fated video store. Customers will now be able to watch videos for another six months, and for every dollar they spent at the video store, they’ll get a dollar of Google Checkout credit and a dollar of cash. Google sure is sorry.
But here’s what I don’t get: why doesn’t Google just keep its DRM servers running? I don’t know exactly how they work, but it can’t possibly cost more to keep them running than to provide refunds to everyone who’s ever purchased from the store.
I hope this serves as a cautionary tale for other firms considering whether to introduce DRMed or non-DRMed content offerings: the DRM isn’t just a pain in the ass for the customer, it can be a pain in the ass for the vendor as well. Had Google heeded Mike’s advice and sold videos in an open format from the beginning, they wouldn’t be having these problems now, because files in open formats don’t require magical authentication servers to continue playing.
Yglesias points to yet another silly TSA rule: extra scrutiny for people wearing headgear. He’s not impressed:
People tend to forget this, but pre-9/11, American airplanes were almost never hijacked. Since 9/11, we’ve re-enforced cockpit doors, which would have been sufficient to foil the 9/11 plot. We’ve also gotten more careful about handing out silverware that can be used as a weapon, which would have been sufficient to foil the 9/11 plot, and about letting people take knives on planes more generally. What’s more, passengers now know that they should resist hijacking attempts. The three successful 9/11 hijackings succeeded because up until that day passengers were told not to attempt to resist hijackers. The one time passengers did resist, their resistance was successful.
At this point, you’ve got to figure that even without all this crap about taking your shoes off and not carrying liquids on the plane, that airplanes have become relatively unattractive targets for terrorists. You could blow up a train or a bus, open fire on a crowded subway station, try to hijack a truck carrying deadly chemicals, or do any number of additional things. Endlessly piling on more and more security measures to air travel is pointless, especially when you consider how much safer it is to travel by plane than by car in terms of accidents.
David Robinson at The American said my last blog post on Wi-Fi was intriguing and asked me to write a piece for him. I can’t turn down a request for writing, so here it is. The piece is about the recent failure of the San Francisco Wi-Fi plan with Google and Earthlink. I also advance the argument that a public/private partnership to create Wi-Fi is a generally bad idea–the regulation that comes with Muni-Wi threatens to turn providers into utilities.
Alex Wexelblat wrote last week that company policies forbidding their employees from looking at patents is a result of incompetence by those companies lawyers, but Mike Masnick explains that companies actually have a very good reason:
What’s most likely happening is that the lawyers know that you get treble damages if you can prove willful infringement, and you do that by showing that the infringer knew of the patent. So, the way you avoid that is you don’t look at any patents. This is exactly the opposite of what the patent system is supposed to be about. In fact, many patent system defenders insist that “public disclosure” is the key benefit of the patent system — but that’s a complete myth. David Levine and Michele Boldrin have already shown why patents are unlikely to increase the disclosure of inventions (because the only people who will disclose are those who know their “invention” would become public no matter what, otherwise they’re better off keeping it secret), while other reports point out that patent attorneys are increasingly focused on filing vague patents that can cover lots of things, without actually disclosing anything useful. Now we can add this growing fear of willful infringement to the reasons that public disclosure isn’t what it’s cracked up to be — and, in fact, may be hurting innovation by forcing those knowledgeable in a space to ignore the state of the art to avoid the possibility of huge fines for willful infringement.
The fact that companies have these policies is one of the clearest bits of evidence that the patent system has become little more than an elaborate and expensive game of “gotcha.” If the patent system were working the way it’s supposed to, companies would be encouraging employees to keep tabs on the patents in their field to make sure they don’t infringe any of them. However, companies appear to believe that it’s virtually impossible to avoid infringing patents, probably because there are so many of them and they tend to be so vague. So instead, companies just assume they’re going to infringe and put in place policies that will minimize their legal exposure.
I’m at a loss to see how this system is benefitting anyone other than patent lawyers. The standard theory is that patents promote the spread of new inventions by giving inventors the confidence they can disclose their inventions without having them ripped off. But if companies are forbidding their employees from looking at the patents being disclosed, it’s awfully hard to see how that theory could be right.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. Learn more about TLF →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.