June 2011

FCC Commissioner Robert M. McDowell delivered a terrific speech this week on “Technology and the Sovereignty of the Individual” at a broadband conference in Stockholm, Sweden.  The speech serves as another reminder that McDowell is one of those ultimate rare birds: a regulator who is a first-rate intellectual thinker and a great champion of individual liberty. It’s a beautiful statement in defense of real Internet freedom. I can’t recall ever seeing another federal official cite the great Bruno Leoni in a speech!

Here’s a sample of what Commissioner McDowell had to say:

To propel freedom’s momentum, policy makers should remember that, since their inception, the Internet and mobile connectivity have migrated further away from government control.  As the result of longstanding international consensus, the Internet itself has become the greatest deregulatory success story of all time.  To continue to promote freedom and prosperity, regulators should continue to rely on the “bottom up” nongovernmental Internet governance bodies that have a perfect record of keeping the ’Net working and open.  We must heed the advice of leaders like Neelie Kroes, who has consistently called on regulators to “avoid over-hasty regulatory intervention,” and steer clear of “unnecessary measures which may hinder new efficient business models from emerging.” I couldn’t agree more.  Changing course now could not only trigger an avalanche of international regulation, but it could halt the progress of freedom’s march as well.

Continue reading →

Yesterday’s 7-2 decision in Brown v. EMA [summaries here from me + Berin Szoka] was one of those historic First Amendment rulings that tends to bring out passions in people. You either loved it or hated it. But it’s sad to see some critics on the losing end of the case declaring that only greed could have possibly motivated the Court’s decision.

For example, California Senator Leland Yee, the author of the law that the Supreme Court struck down yesterday, obviously wasn’t happy about the outcome of the case. Neither was James Steyer, CEO of the advocacy group Common Sense Media, who has been a vociferous advocate of the California law and measures like it. What they had to say in response to the decision, however, was outlandish and juvenile. In essence, they both claimed that the Supreme Court only struck down the law to make video game developers and retailers happy.

“Unfortunately, the majority of the Supreme Court once again put the interests of corporate America before the interests of our children,” Leland Yee said in a post on his website yesterday. “As a result of their decision, Wal-Mart and the video game industry will continue to make billions of dollars at the expense of our kids’ mental health and the safety of our community. It is simply wrong that the video game industry can be allowed to put their profit margins over the rights of parents and the well-being of children.” Jim Steyer reached a similar conclusion: “Today’s decision is a disappointing one for parents, educators, and all who care about kids,” he said. “Today, the multi-billion dollar video game industry is celebrating the fact that their profits have been protected, but we will continue to fight for the best interests of kids and families.”

Mr. Yee and Mr. Steyer seem to be under the impression that the Court and supporters of its ruling in Brown cannot possibly care about children and that something sinister motivates our passion about the victory. Apparently we’re all just apparently in it to make video game industry fat cats and retailing giants happy! That’s a truly insulting position for Mr. Yee and Mr. Steyer to adopt. Perhaps it is just because they are sore about the outcome in the case that are adopting such rhetorical tactics. Regardless, I think they do themselves, their constituencies, and the public a great injustice by suggesting that only greed could possibly be motivating the outcome in this case. Continue reading →

[Cross-Posted at Truthonthemarket.com]

I did not intend for this to become a series (Part I), but I underestimated the supply of analysis simultaneously invoking “search bias” as an antitrust concept while waving it about untethered from antitrust’s institutional commitment to protecting consumer welfare.  Harvard Business School Professor Ben Edelman offers the latest iteration in this genre.  We’ve criticized his claims regarding search bias and antitrust on precisely these grounds.

For those who have not been following the Google antitrust saga, Google’s critics allege Google’s algorithmic search results “favor” its own services and products over those of rivals in some indefinite, often unspecified, improper manner.  In particular, Professor Edelman and others — including Google’s business rivals — have argued that Google’s “bias” discriminates most harshly against vertical search engine rivals, i.e. rivals offering search specialized search services.   In framing the theory that “search bias” can be a form of anticompetitive exclusion, Edelman writes:

Search bias is a mechanism whereby Google can leverage its dominance in search, in order to achieve dominance in other sectors.  So for example, if Google wants to be dominant in restaurant reviews, Google can adjust search results, so whenever you search for restaurants, you get a Google reviews page, instead of a Chowhound or Yelp page. That’s good for Google, but it might not be in users’ best interests, particularly if the other services have better information, since they’ve specialized in exactly this area and have been doing it for years.

I’ve wondered what model of antitrust-relevant conduct Professor Edelman, an economist, has in mind.  It is certainly well known in both the theoretical and empirical antitrust economics literature that “bias” is neither necessary nor sufficient for a theory of consumer harm; further, it is fairly obvious as a matter of economics that vertical integration can be, and typically is, both efficient and pro-consumer.  Still further, the bulk of economic theory and evidence on these contracts suggest that they are generally efficient and a normal part of the competitive process generating consumer benefits.  Continue reading →

On the podcast this week, Pamela Samuelson, the Richard M. Sherman Distinguished Professor of Law at Berkeley Law School, discusses her new article in the Columbia Journal of Law & the Arts entitled, Legislative Alternatives to the Google Book Settlement.  Samuelson discusses the settlement, which was ultimately rejected, and highlights what she deems to be positive aspects. One aspect includes making out-of-print works available to a broad audience while keeping transaction costs low. Samuelson suggests encompassing these aspects into legislative reform. The goal of such reform would strike a balance that benefits rights holders, as well as the general public, while generating competition through implementation of a licensing scheme.

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John Perry Barlow famously said that in cyberspace, the First Amendment is just a local ordinance.  That’s still true, of course, and worth remembering.  But at least today there is good news in the shire.  The local ordinance still applies with full force, if only locally.

As I write in CNET this evening (see “Video Games Given Full First Amendment Protection“), the U.S. Supreme Court issued a strong and clear opinion today nullifying California’s 2005 law prohibiting the sale or rental to minors of what the state deemed “violent video games.” Continue reading →

Adam Thierer has already provided an excellent overview of the Supreme Court’s decision in Brown v. Entertainment Merchants Association, striking down a California law requiring age verification and parental consent for the purchase of “violent” videogames by minors. It’s worth calling attention to two key aspects of the decision.

First, the Supreme Court has clearly affirmed that the First Amendment applies equally to all media, including videogames and other interactive media. The Court has, in the past, often accorded lesser treatment to new media, as Cato’s excellent amicus brief explains [pp 3-15]. This approach, if applied consistently by the Court in the future, will ensure that free speech continues to be protected even as technology evolves in ways scarcely imaginable today.

Second, the Court correctly rejected California’s attempt to justify governmental paternalism as a supplement for parental responsibility [Brown at 15-17]. The existing content rating system and parental controls in videogame consoles already empower parents to make decisions about which games are appropriate for their children and their values. As in the Sorrell decision handed down last week, the Court has rejected what amounts to an opt-in mandate—this time, in favor of letting parents “opt-out” of letting their kids play certain games or rating levels rather than requiring that they “opt-in” to each purchase. This is the recurring debate about media consumption—from concerns over violent or offensive speech to those surrounding privacy. And once again, speech regulation must yield to the less-restrictive alternatives of empowerment and education.

Both these points were at the heart of the amicus brief I filed with the Supreme Court in this case last fall (press release), along with Adam (my former Progress & Freedom Foundation colleague) and Electronic Frontier Foundation Staff Attorney Lee Tien and Legal Director Cindy Cohn. Here’s the summary of our argument in that brief, which provides as concise an overview of our reasoning as we could manage, broken down into separate bullets with quotations referencing the Court’s decision on that point. As you’ll see, the Court’s decision reflected all our arguments except for one, which the Court’s decision did not reach. Continue reading →

The Supreme Court wasn’t playing games with the First Amendment today. With its 7-2 decision in Brown v. EMA, the Court has protected video game creators and players from unconstitutional restrictions on what we can produce and play.

Today’s decision ensures that video games have First Amendment protection on par with books, film, music and other forms of entertainment and will help block other regulatory efforts that are justified by blindly alluding to the rationale that “it’s for the children.” The decision fits nicely alongside an impressive and growing string of recent First Amendment cases from the Court that significantly raise the bar against legislative efforts to regulate freedom of speech and expression.

Quick background: In May 2010, the Supreme Court announced that it would review a California law regulating the sale of violently-themed video games to minors. The case was Schwarzenegger v. Entertainment Merchants Association, but the name of the case changed to after Jerry Brown became governor of California.  The Ninth Circuit Court of Appeals had struck down a California law which prohibited the sale or rental of “violent video games” to minors, but California appealed and the SCOTUS took up the issue.  [Note: When we were still with the Progress & Freedom Foundation, Berin Szoka and I filed a big amicus brief with the Court in the case along with some folks at the Electronic Frontier Foundation.]  By a 7-2 vote, the Supreme Court backed the Ninth Circuit and overturned the California law. Justice Scalia wrote for the majority. Justices Thomas and Breyer dissented.

The crucial holdings in the decision are as follows: Continue reading →

At the Computers Freedom and Privacy conference, I moderated a panel on “Do Not Track.” I tried to make sure it was fun, and I think it was. Among other things, yes, I called Ed Felten, “baby.” Check it out.

If you’ve been following Reason.com or Reason.tv for the past 48 hours you will know that Jim Epstein, a Reason TV reporter, was one of two journalists arrested Wednesday for videotaping a meeting of the Washington D.C. Taxi Commission.

Epstein and Pete Tucker, who blogs for TheFightBack.org, a site that spotlights local D.C. issues that affect minorities and low-income residents, were reporting from what was expected to be contentious meeting as the Taxi Commission was set to address a plan to introduce a medallion system for the District. The proposal had generated considerable opposition from the city’s large base of cab drivers, many of whom attended the meeting to voice their opposition. They essentially believe a medallion system will concentrate cab ownership among a handful of large fleet operators and likely result in the loss of their livelihood.

The arrests were regrettable all around. Epstein’s video, which shows Tucker, dressed neatly in a white shirt and tie, being handcuffed and led away, captures a deeply uncomfortable “it-can’t-happen-here” moment. Epstein was arrested next. Epstein’s video and statement can be found here.

Aside from the fact Epstein and Tucker were released a few hours later, the best thing that can be said is that the arrests were ordered by someone who can charitably be described as a low-level local government functionary, namely Dena Reed, interim chairman of the Taxi Commission. But that doesn’t excuse it. Reed emerges from this affair looking like a third-grade hall monitor who’s allowed that modicum of authority to go to her head.

Continue reading →

[By Geoffrey Manne & Joshua Wright.  Cross-posted at Truth on the Market]

No surprise here.  The WSJ announced it was coming yesterday, and today Google publicly acknowledged that it has received subpoenas related to the Commission’s investigation.  Amit Singhal of Google acknowledged the FTC subpoenas at the Google Public Policy Blog:

At Google, we’ve always focused on putting the user first. We aim to provide relevant answers as quickly as possible—and our product innovation and engineering talent have delivered results that users seem to like, in a world where the competition is only one click away. Still, we recognize that our success has led to greater scrutiny. Yesterday, we received formal notification from the U.S. Federal Trade Commission that it has begun a review of our business. We respect the FTC’s process and will be working with them (as we have with other agencies) over the coming months to answer questions about Google and our services.

It’s still unclear exactly what the FTC’s concerns are, but we’re clear about where we stand. Since the beginning, we have been guided by the idea that, if we focus on the user, all else will follow. No matter what you’re looking for—buying a movie ticket, finding the best burger nearby, or watching a royal wedding—we want to get you the information you want as quickly as possible. Sometimes the best result is a link to another website. Other times it’s a news article, sports score, stock quote, a video or a map.

It is too early to know the precise details of the FTC’s interest.  However, We’ve been discussing various aspects of the investigation here and at TOTM for the last year.  Indeed, we’ve written two articles focused upon framing and evaluating a potential antitrust case against Google as well as the misguided attempts to use the antitrust laws to impose “search neutrality.”  We’ve also written a number of blog posts on Google and antitrust (see here for an archive).

For now, until more details become available, it strikes us that the following points should be emphasized: Continue reading →