[I am participating in an online “debate” at the American Constitution Society with Professor Ben Edelman. The debate consists of an opening statement and concluding responses. Professor Edelman’s opening statement is here. I have also cross-posted the opening statement at Truthonthemarket and Tech Liberation Front. This is my closing statement, which is also cross-posted at Truthonthemarket.]
Professor Edelman’s opening post does little to support his case. Instead, it reflects the same retrograde antitrust I criticized in my first post.
Edelman’s understanding of antitrust law and economics appears firmly rooted in the 1960s approach to antitrust in which enforcement agencies, courts, and economists vigorously attacked novel business arrangements without regard to their impact on consumers. Judge Learned Hand’s infamous passage in the Alcoa decision comes to mind as an exemplar of antitrust’s bad old days when the antitrust laws demanded that successful firms forego opportunities to satisfy consumer demand. Hand wrote:
we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel.
Antitrust has come a long way since then. By way of contrast, today’s antitrust analysis of alleged exclusionary conduct begins with (ironically enough) the U.S. v.Microsoft decision. Microsoft emphasizes the difficulty of distinguishing effective competition from exclusionary conduct; but it also firmly places “consumer welfare” as the lodestar of the modern approach to antitrust:
[I am participating in an online “debate” at the American Constitution Society with Professor Ben Edelman. The debate consists of an opening statement and concluding responses. Professor Edelman’s opening statement is here. I have also cross-posted this opening statement at Truthonthemarket.]
The theoretical antitrust case against Google reflects a troubling disconnect between the state of our technology and the state of our antitrust economics. Google’s is a 2011 high tech market being condemned by 1960s economics. Of primary concern (although there are a lot of things to be concerned about, and my paper with Geoffrey Manne, “If Search Neutrality Is the Answer, What’s the Question?,” canvasses the problems in much more detail) is the treatment of so-called search bias (whereby Google’s ownership and alleged preference for its own content relative to rivals’ is claimed to be anticompetitive) and the outsized importance given to complaints by competitors and individual web pages rather than consumer welfare in condemning this bias.
The recent political theater in the Senate’s hearings on Google displayed these problems prominently, with the first half of the hearing dedicated to Senators questioning Google’s Eric Schmidt about search bias and the second half dedicated to testimony from and about competitors and individual websites allegedly harmed by Google. Very little, if any, attention was paid to the underlying economics of search technology, consumer preferences, and the ultimate impact of differentiation in search rankings upon consumers.
So what is the alleged problem? Well, in the first place, the claim is that there is bias. Proving that bias exists — that Google favors its own maps over MapQuest’s, for example — would be a necessary precondition for proving that the conduct causes anticompetitive harm, but let us be clear that the existence of bias alone is not sufficient to show competitive harm, nor is it even particularly interesting, at least viewed through the lens of modern antitrust economics.
Federal Communications Chairman Genachowski previewed the universal service reform plan the commissioners are discussing in a speech today.
The speech offers a masterful summary of the myriad inefficiencies created by the current universal service subsidies and intercarrier compensation payments. Most of the examples highlight plain old-fashioned waste. The universal service program collects billions of dollars from telephone subscribers, then simply wastes a goodly portion of it by subsidizing telephone competition in places where unsubsidized service from cable or satellite already exists, subsidizing multiple mobile wireless competitors, and subsidizing local phone companies that have little incentive for cost containment because they are still subject to rate-of-return regulation. The intercarrier compensation system uses per-minute charges to collect billions of dollars from telephone subscribers and hands it to phone companies that sometimes charge as little as $8 a month for phone service. There’s also a race to game this system as the companies that benefit seek new ways to inflate the regulated charges they collect, and the companies that pay seek clever ways to avoid paying.
It’s a powerful brief for reform. Never thought I’d live to see the day whan an FCC chairman would say so many things that are substantiated by economic research.
Nevertheless, a few parts of the speech give me cause for concern about the solutions the FCC commissioners may be discussing.
First, the chairman claims that 18 million Americans live in areas without access to broadband — up from the 14 million estimated in the National Broadband Plan. The size of this figure suggests to me that the FCC is still over-estimating the number of people without access by defining “broadband” as a speed fast enough to exclude 3G wireless, many small rural Wireless Internet Service Providers, and satellite. Absent an adjustment in the definition of broadband, the subsidy program will be larger than it needs to be, and so telephone consumers will pay excessive universal service charges. Continue reading →
A leading organization of computing professionals is seeking a Public Policy Analyst in its Washington DC Office of Public Policy. The position will assist in carrying out the society’s policy agenda by working with the federal government, the organization’s volunteer leadership and other organizations. The position’s duties include:
• Following, researching, analyzing and reporting on policy issues being discussed in the Congress, the Executive Branch, the Judicial Branch and the media
• Providing advice and direction on policy issues and strategies for engagement • Keeping members informed of relevant policy developments
• Developing and/or reviewing policy position statements (letters, white papers, etc.)
• Planning meetings and/or conference calls
• Developing and managing projects to implement policy agenda
• Maintaining and updating website
• Identifying and recommending opportunities to further the overall policy agenda
• Producing and distributing newsletters, blog posts and various other communications
The qualifications for this position are:
• Minimum of a Bachelor’s Degree
• Command of the legislative, regulatory and legal process, including the ability to conduct legal research and analyze policy developments
• Minimum of three years of experience in the policy, legislative or regulatory
environment
• Superior communication (writing and oral) and organizational skills
• Demonstrated interest in and/or prior experience in the technology policy
• Ability to work both in teams and independently
• Self-starter and ability to manage multiple projects and meet tight deadlines • Strong IT skills
Applicants should submit a resume and cover letter describing interests and qualifications by e-mail policy.analyst.job@gmail.com
A year ago, I filed a joint amicus brief with the Electronic Frontier Foundation urging the Supreme Court to overturn California’s paternalistic law on the dangerous grounds that videogame depictions of violence constituted “obscenity” unprotected by the First Amendment. Fortunately, we won. Thus, the First Amendment protects all media, while parents have a variety of tools available to them to limit what content their kids can consume, or games they can play.
But in case you’re wondering what the world might look like had the decision gone the other way, check out the contrast between the US version of Maroon 5’s hit song “Misery” and the UK version. First, here’s the (raucous and sexy) US version:
Now, here’s the UK version, where the sexually suggestive parts remain (kids love that stuff) but all the “violent” parts have been replaced with, or covered by, ridiculous cartoon images. Really, it’s just too funny. The best part is where the knife she uses to stab the gaps between his fingers on the table has been replaced with a cartoon ice cream cone. Don’t try that at home, kids—you’ll make a chocolatey mess! Continue reading →
[NOTE: The following is a template for how to script congressional testimony when invited to speak about online safety issues.]
Mr. Chairman and members of the Committee, thank you inviting me here today to testify about the most important issue to me and everyone in this room: Our children.
There is nothing I care more about than the future of our children. Like Whitney Houston, “I believe the children are our future.”
Mr. Chairman, I remember with fondness the day my little Johnny and Jannie came into this world. They were my little miracles. Gifts from God, I say. At the moment of birth, my wife… oh, well, I could tell you all about it someday but suffice it to say it was a beautiful scene, with the exception of all the amniotic fluid and blood everywhere. I wept for days.
Today my kids are (mention ages of each) and they are the cutest little angels on God’s green Earth. (NOTE: At this point it would be useful for you to hold up a picture of your kids, preferably with them cuddling with cute stuffed animals, a kitten, or petting a pony as in the example below. Alternatively, use a picture taken at a major attraction located in the Chairman’s congressional district.) Continue reading →
On the podcast this week, Derek Bambauer, associate professor of law at Brooklyn Law School, discusses his forthcoming University of Chicago Law Review article entitled Orwell’s Armchair. In the paper, Bambuer writes that America has begun to censor the Internet, and he distinguishes two forms of censorship: hard and soft. He defines hard censorship as open and transparent, and where the government directly controls what information can and cannot be transmitted. Soft censorship, says Bambauer, is indirect, where government tells third parties to prevent users from accessing information, and it’s not clear what is being censored. He submits that if America is going to censor the Internet, it should do so through hard censorship. Indirect censorship strategies, he writes, are less legitimate than direct regulation.
To keep the conversation around this episode in one place, we’d like to ask you to comment at the webpage for this episode on Surprisingly Free. Also, why not subscribe to the podcast on iTunes?
California police will now be able to conduct warrantless searches of optical disc (DVD, CD, BluRay) factories to look for piracy and seize pirated discs, under a bill just signed by California Governor Jerry Brown (full text). Even those who think copyright law has gone much too far, or cherish fair use, shouldn’t defend such blatant, commercial piracy, which does nothing but deny creators the market for their artistic products. One need only look at China to see how such infringement can destroy creative industries.
The bill’s sponsors justify this law as necessary to enforce existing laws that require manufacturers to label discs so their origin and validity can be established. That seems like a reasonable requirement and one worth enforcing. But like the Electronic Frontier Foundation, I’m highly skeptical the courts will uphold the constitutionality of this law. And I worry about the consequences of upholding warrantless searches. The debate centers on whether optical disc manufacturing qualifies as a “closely regulated industry” under New York v. Burger, 482 U.S. 691, 701. (1987). The sponsors argued:
In determining whether a particular industry is closely regulated, the Court looks to a history of regulation in the industry as well as the hazardous nature of the industry. Examples of closely regulated industries that fall under this exception include auto dismantling yards and the mining industry. Here, the optical disc manufactures are subject to the provisions of chapter 11.5 of the Business and Professions Code, as well as 653h and 653w of the Penal Code [California’s anti-copyrighting laws]. These manufacturers are also subject to federal copyright restrictions. These provisions may be enough for a court to determine that this industry is closely regulated, and therefore, potentially subject to administrative searches.
That’s a pretty weak argument—and one that could sweep in a wide variety of other industries, including media. That analysis goes on to allege that the searches and seizures authorized by the bill would be reasonable, which EFF also disputes on all points. As a subsequent California Senate committee counsel’s official legal analysis noted, “It is unclear whether this bill, which allows law enforcement to search private property without a warrant, would stand up to a constitutional challenge.” That official analysis, which covers both sides of the argument goes on to note (p. 7) the First Amendment problems raised by deeming any media business, including those that only manufacture physical media, as “closely regulated.”
The bill’s sponsors make a second argument that would set an even more dangerous precedent: Continue reading →
I’m currently finishing up my next book. It addresses various strands of “Internet pessimism” and attempts to explain why all the gloom and doom theories we hear about the Internet’s impact on modern culture and economy are not generally warranted. A key theme of my book is that most Internet pessimists overlook the importance of human adaptability in the face of technological change. The amazing thing about humans is that we adapt so much better than other creatures. We learn how to use the new tools given to us and make them part of our lives and culture. The worst situations often bring out the most creative, innovative solutions. Media critic Jack Shafer has noted that “the techno-apocalypse never comes” because “cultures tend to assimilate and normalize new technology in ways the fretful never anticipate.”
In a cultural sense, humans have again and again adapted to technological change despite the radical disruptions to their lives, mores, manners, and methods of learning. As Aleks Krotoski recently points out in her new Guardian essay, “How the Internet Has Changed Our Concept of What Home Is”: Continue reading →
Nearly a year after the FCC passed controversial new “Open Internet” rules by a 3-2 vote, the White House finally gave approval for the rules to be published last week, unleashing lawsuits from both supporters and detractors.
The supporters don’t have any hope or expectation of getting a court to make the rules more comprehensive. So why sue? When lawsuits challenging federal regulations are filed in multiple appellate courts, a lottery determines which court hears a consolidated appeal.
So lawsuits by net neutrality supporters are a procedural gimmick, an effort to take cases challenging the FCC’s authority out of the D.C. Circuit Court of Appeals, which has already made clear the FCC has no legal basis here.
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.