Articles by Adam Thierer 
Senior Fellow in Technology & Innovation at the R Street Institute in Washington, DC. Formerly a senior research fellow at the Mercatus Center at George Mason University, President of the Progress & Freedom Foundation, Director of Telecommunications Studies at the Cato Institute, and a Fellow in Economic Policy at the Heritage Foundation.
In my essay yesterday, “How Federal Accounting & Securities Regs Screw Up Your Chance to Invest in Facebook,” I noted how America’s counter-productive accounting, disclosure, and governance regulations are increasingly thwarting the ability of average Americans to invest in some of the leading capitalist innovators of the Digital Age. In this case it’s Facebook, but there are plenty of other innovative companies out there sticking with private shareholders so as not to trigger burdensome securities and accounting regs. In my essay, I also noted how this represented another prime example of well-intentioned regulation having profoundly unintended, anti-consumer, anti-competitive consequences. America’s convoluted and onerous securities regulations are choking off capital infusions into innovative companies and denying average investors a chance to own a share a piece of the American dream.
So, what does the Securities and Exchange Commission (SEC) plan to do about this fine mess? Regulate more, of course! As The Wall Street Journal reports today:
The Securities and Exchange Commission has begun examining whether disclosure rules for privately held firms need to be rewritten as a result of recent deals allowing investors to buy shares in Internet companies such as Facebook Inc. and Twitter Inc., according to people familiar with the situation. The review is at an early stage, these people cautioned, and SEC officials looking at the recent deals haven’t concluded that any of them run afoul of the 47-year-old rules governing private companies. The rules require firms with 500 or more shareholders of record in a given type of stock to publicly disclose certain financial information. The requirement is designed to protect investors from risking money on companies that say little about their operations and performance.
Yes, but that requirement can also trigger an onslaught of new regulatory burdens, as the Journal story continues on to note: Continue reading →
Back in 2007 I penned a law review article, “Why Regulate Broadcasting: Toward a Consistent First Amendment Standard for the Information Age” in which I argued that “If America is to have a consistent First Amendment in the Information Age, efforts to extend the broadcast regulatory regime must be halted and that regime must be relegated to the ash heap of history.” I made that argument based not only upon the fundamental bankruptcy of the rationales supporting the old broadcast regulatory regime, or its unfairness to broadcasters relative to other media competitors, but also because such asymmetrical regulations no longer make sense — and are increasingly impractical to enforce — in an age of technological convergence and media abundance.
The good news is that, slowly but surely, the courts are coming around to this logic, at least as it pertains to speech controls. We saw that again today with a ruling by the Second Circuit Court of Appeals that held as unconstitutional $1.2 million in fines that the Federal Communications Commission (FCC) levied on ABC broadcast affiliates seven years ago for airing a brief glimpse of Charlotte Ross’ bare buttocks on the cop drama “NYPD Blue.” As the Wall Street Journal’s Amy Schatz notes, “Broadcasters have now won a series of court victories against government efforts to police airwaves and fine stations for airing risqué content. The Supreme Court could soon get a chance to review the issue. In the meantime, the FCC’s campaign to enforce indecency rules has ground to a halt.”
It remains to be seen whether the Supreme Court will throw the whole regime out, but I can’t help but think that’s where we are headed. Continue reading →
As Henry Blodget explained in his excellent Business Insider column yesterday, “Goldman Sachs Clients Can Invest In Facebook’s IPO — But You Can’t,” America’s increasingly counter-productive accounting, disclosure, and governance regulations are increasingly thwarting the ability of average Americans to invest in the leading capitalist companies of the Digital Age:
in an effort to protect investors from fraud (which is actually not the reason most IPOs fail), the government erected huge new barriers to going public, making it prohibitively expensive for most small companies to IPO. So now small, speculative companies generally don’t IPO. Instead, they stay private. And/or they do what Facebook just did, which was do a “private IPO” with Goldman Sachs. What’s a private IPO? It’s a mechanism in which Goldman’s rich clients can invest in Facebook. But you can’t. Seriously!
And that’s why Facebook, among others, don’t want to go public. Over at the Truth on the Market Blog, Larry Ribstein elaborates on the insanity of this: Continue reading →
In his new book, The Net Delusion: The Dark Side of Internet Freedom, Evgeny Morozov aims to prick the bubble of hyper-optimism that surrounds debates about the Internet’s role in advancing human freedom or civic causes. Morozov, a native of Belarus, is a tremendously gifted young cyber-policy scholar affiliated with Stanford University and the New America Foundation. He’s an expert on the interaction of digital technology and democracy and writes frequently on that topic for a variety of respected media outlets.
In Net Delusion, as with many of his previous columns and essays, Morozov positions himself the ultimate Net “realist,” aiming to bring a dose of realpolitik to discussions about how much of a difference the Net and digital technologies make to advancing democracy and freedom. His depressing answer: Not much. Indeed, Morozov’s book is one big wet blanket on the theory that “technologies of freedom” can help liberate humanity from the yoke of repressive government.
Morozov clearly relishes his skunk at the garden party role, missing few opportunities to belittle those who subscribe to such theories. If you’re one of those who tinted your Twitter avatar green as an expression of solidarity with Iranian “Green Movement” dissidents, Morozov’s view is that, at best, you’re wasting your time and, at worst, you’re aiding and abetting tyrants by engaging in a form of “slacktivism” that has little hope of advancing real regime change. The portrait he paints of technology and democracy is a dismal one in which cyber-utopian ideals of information as liberator are not just rejected but inverted. He regards such “cyber-utopian” dreams as counter-productive, even dangerous, to the advance of democracy and human freedom. Continue reading →
Well, even though I just recently put to bed my annual list of the “Most Important Info-Tech Policy Books of 2010,” I’ve already started investigating what new titles we’ll need to pay attention to in 2011. Accordingly, I’ve started this list and hope that others can suggest other books I may have missed. Here’s what I’ve got so far:
I was very sad to learn this morning of the death of Alfred Kahn, the brilliant economist known as “the father of airline deregulation.” He was 93. He was a brilliant, gracious and gregarious man who never failed to have a smile on his face and make those around him smile even more. He will be missed.
Kahn has been an inspiration to an entire generation of regulatory analysts and economists. His 2-volume masterwork, The Economics of Regulation, has served as our bible and provided us with a framework to critically analyze the efficacy of government regulation. I have cited it in more of my papers and essays than any other book or article. The book was that big of a game-changer, as was Kahn’s time in government. A self-described “good liberal Democrat,” Kahn was appointed by President Jimmy Carter to serve as Chairman of the Civil Aeronautics Board in the mid-1970s and promptly set to work with other liberals, such as Sen. Ted Kennedy, Stephen Breyer, and Ralph Nader, to dismantle anti-consumer cartels that had been sustained by government regulation. These men understood that consumer welfare was better served by innovative, competitive markets than by captured regulators, who talked a big game about serving “the public interest” but were typically busy stifling innovation and market entry.
His academic and policy achievements were significant, but what I will most remember about him is that, in a field not known for lively personalities or exciting discussions, Kahn was a consistent source of great wit and entertainment. He always managed to make even the most dreadfully boring of regulatory topics interesting and entertaining. Everyone would go away happy from a Fred Kahn talk. Moreover, in a policy arena characterized by bitter intellectual bickering and endless bad-mouthing, Kahn always rose above the fray and held himself out to be a model of maturity and respectfulness. I have never heard a single person say a bad word about Alfred Kahn. Not one. That’s saying something in the field of regulatory policy! Continue reading →
I highly recommend this analysis of the Federal Trade Commission’s (FTC) new “Do Not Track” proposal by Ben Kunz over at Bloomberg Businessweek. In his essay, Kunz, the director of strategic planning at Mediassociates, a media planning and Internet strategy firm, hits many of the major themes we have developed here at the TLF when critiquing the FTC’s plan and privacy regulation more generally. Namely, we live in a world of trade-offs and regulation can have unintended consequences. Kunz argues that, “while the [FTC] may have consumers’ best interests at heart… the idea has two huge problems”:
1. It won’t stop online ads. While Do Not Call lists kept telemarketers at bay, you’ll still see tons of banners and videos everywhere online. They’ll simply be less relevant.
2. Do Not Track will send billions of dollars to the big online publishers, hurting the little sites you might find most interesting.
The second point is painful. It could really harm you, too, dear consumer, if you read things online other than The New York Times, Bloomberg, or iVillage.com. Why? The “Long Tail” of niche content is going to get crushed. Let’s follow the money. More than $25 billion was spent on U.S. online ads in 2010, according to eMarketer. About $1 billion of this went to behaviorally targeted ads tied closely to user data; nearly $8 billion overall is in some way related to online tracking.
That $8 billion has posed horrible problems for publishers of major websites, such as Bloomberg (this column’s host, for which we don’t work, so we’ll be equally critical of it) or The New York Times. Before tracking came along, such publishers were the only means of reaching a known type of audience. Business people read Businessweek.com while moms read O magazine online and iVillage.com. Like the publications of the past century, a given website has always been a proxy for an audience target. Alas for the big publishers, good data on audiences has meant that smart marketers could leave big, expensive sites behind. So in perhaps the biggest revolution of Internet marketing, the more data you can collect about today’s customers, the cheaper online advertising gets.
Continue reading →
[Here’s an oped of mine that recently ran on Reuters. Readers will recognize many of these themes and arguments since I have developed them here on the TLF many times before.]
by Adam Thierer, Mercatus Center at George Mason University
Would you like to pay $20 a month for Facebook, or a dime every time you did a search on Google or Bing? That’s potentially what is at stake if the Obama administration and advocates of stepped-up regulation of online advertising get their way.
The Internet feels like the ultimate free lunch. Once we pay for basic access, a cornucopia of seemingly free services and content is at our fingertips. But those services don’t just fall to Earth like manna from heaven. What powers the “free” Internet are data collection and advertising. In essence, the relationship between consumers and online content and service providers isn’t governed by any formal contract, but rather by an unwritten quid pro quo: tolerate some ads or we’ll be forced to charge you for service. Most consumers gladly take that deal—even if many of them gripe about annoying or intrusive ads, at times. Continue reading →
I’m always entertained by the talk among the Twitterati — especially those who seem to permanently reside in the #NetNeutrality and #FCC hashtags — about how the Internet’s “openness” is at risk, and that steps must be taken to preserve it. Regulatory regimes are often birthed by myths, and this one is no different. Contrary to what the regulation-happy worry-warts suggest, the Internet has never been more “open” than it is today. After all, as Geert Lovink reminded us in his 2008 critique of Jonathan Zittrain’s thinking about the decline of online openness:
[In] [t]he first decades[,] the Internet was a closed world, only accessible to (Western) academics and the U.S. military. In order to access the Internet one had to be an academic computer scientist or a physicist. Until the early nineties it was not possible for ordinary citizens, artists, business[es] or activists, in the USA or elsewhere, to obtain an email address and make use of the rudimentary UNIX-based applications. … It was a network of networks—but still a closed one.
And even though it will probably make the folks at Free Press and Public Knowledge have an aneurysm, it’s abundantly clear what shook-up this sleepy, closed model: commercialization. That’s right, those evil folks who had the audacity to want to make a dollar online were the ones who brought us the “open” Internet we know and love today! Continue reading →
Well, there really isn’t anything left to be said about Net Neutrality regulation that hasn’t already been said a million times before. Yes, it is the most important technology policy battle of our time, but man, I am sick of it! Anyway, I’ve summarized the “The 5-Part Case against Net Neutrality Regulation” here before, so consult that for details, as well as this paper by Berin Szoka and me, “Net Neutrality, Slippery Slopes & High-Tech Mutually Assured Destruction.”
But on this day when the Federal Communications Commission (FCC) is enshrining an audacious new regulatory regime for the Internet, I’m going to ignore the shoddy economics behind the effort, the unjustifiable legal basis for it, and the whole stinking undemocratic process leading up to it. Instead, I just want to focus on the one element of the fight that continues to interest me most, and which, ironically, the one thing that almost all intellectual combatants agree upon: Regulation is prone to excessive special interest influence. I cannot possibly articulate this concern more succinctly than professors David Farber and Gerald Faulhaber have in this Atlantic op-ed today, “Net Neutrality: No One Will Be Satisfied, Everyone Will Complain.” They note that:
“When the FCC asserts regulatory jurisdiction over an area of telecommunications, the dynamic of the industry changes. No longer are customer needs and desires at the forefront of firms’ competitive strategies; rather firms take their competitive battles to the FCC, hoping for a favorable ruling that will translate into a marketplace advantage. Customer needs take second place; regulatory ‘rent-seeking’ becomes the rule of the day, and a previously innovative and vibrant industry becomes a creature of government rule-making.”
Continue reading →
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