Yesterday I testified before the Maryland General Assembly to oppose HB 114. It’s a bad bill for consumers and online companies, and another iteration of the continuing war that traditional retailers have waged against e-commerce for the past few years. Last year NetChoice testified before Congress to oppose legislation that would would give retailers the power to force online marketplaces to interrogate their own customers about how they obtained items listed for sale.
HB 114 would require Maryland businesses and residents selling cosmetics, medicines, baby food and infant formula via an Internet auctions to notify the Department of Health & Mental Hygiene at least seven days prior to the auction. The bill applies only to sales using Internet auctions, not fixed-price format, and not newspaper classified ads. That right there makes you wonder.
The bill has been introduced under the theory of product safety. Safeway, Target, and the state retailers association all trumped up the dangers of selling baby food and infant formula online without citing any sort of actual harm. Or at least harm that is disproportionate to what exists at the physical store retail level.
There was also a lot of desperate hyperbole. A representative from Mars supermarkets (a Maryland chain) asserted that Internet auctions fund heroin addiction! Yes, testifying before state legislatures can be fun!
When you have bill proponents demonizing the Internet, it’s easy to see that the bill is about competition prevention. Namely, to prevent Internet auction sites from benefiting Maryland consumers and helping businesses compete with traditional retailers in the sale of food and drug items.
Getting back to the window dressing of public health, Continue reading →
Sun Chairman Scott McNealy seemingly wants to shine some light on the benefits of software that is open sourced, but by advocating government mandates he’s calling for the specter of regulatory darkness. Here’s a quote from him in a BBC article:
“The government ought to mandate open source products based on open source reference implementations to improve security, get higher quality software, lower costs, higher reliability – all the benefits that come with open software.”
One could dispute the substance of his comment, but not his motive:
“Open source does not require you to pay a penny to Microsoft or IBM or Oracle or any proprietary vendor any money.”
Ah, so it’s all about some businesses getting a leg up over others, and using government to do so. Even Matt Asay writes that he’s not a supporter of mandates.
The scary thing is that, according to the BBC article, McNealy has been asked to prepare a paper on open source for the Obama administration! As the new administration is touting open government, let’s hope it remains open to the best products that are available, whatever license they may carry, without tech mandates.
Tech policy aficionados should by now be familiar with efforts to reform the patent system. Issues range from fixing the poor quality of granted patents to instituting post-grant review procedural reforms. What you don’t hear much about are efforts to educate judges on patents. Because no matter how much patent law is reformed to increase patent quality on the front-end, we’re still going to see patents being litigated in court.
That’s why I’m happy to see today’s reintroduction of Rep. Adam Schiff’s and Rep. Darrell Issa’s bill, HR 628. The bill creates a pilot program to educate participating judges on patent law and the technical matters underlying patent claims in Federal District Courts (HR 628 is the same as last session’s bill HR 5418). Here’s my analysis of the bill from when it was introduced last session.
Judges have considerable power to affect a trial. They make procedural and evidentiary decisions, and often a judge’s decision at trial can only be overturned on appeal if there was an abuse of discretion (a high burden for an appellant to meet).
HR 5418 is a targeted pilot program and its effect could be substantial, if not immediate. Better informed judges can weed out frivolous claims more quickly while focusing on cases with legitimate claims. As a result, anticipated and actual costs of enforcing and defending lawsuits decrease, reducing the burden on all parties but particularly the budgets of small firms. Less money for lawyers means more money for innovating, so firms can increase their research budgets and returns on investment.
Gov. Paterson unveiled the New York budget yesterday, and among the 137 proposed new and increased taxes is a new tax on digital products. An article in today’s New York Post quotes NetChoice opposing the Governor’s effort to tax music and creativity distributed through the Internet.
New York’s approach is two-fold, broadening what is taxed and who has to collect: 1) add digital music, books, songs and movies to what can be taxed; 2) expand and assert the concept of “nexus” to cover out-of-state sellers that use an online network of affiliates
First, New York is imposing a new tax on digital goods. It’s not as the state claims, to close a “digital property taxation loophole” — instead, this is a new tax on New Yorkers, for a service that’s not taxable under today’s law.
What’s worse, why in the world would NY impose a new tax on something we all want to encourage right now? Digital downloads of music, movies, and books have no carbon footprint and use none of the oil consumed with a round-trip to the store. Moreover, there’s no plastic and paper packaging to create and crate off to a landfill. I’ve blogged on the environmental benefits of downloading here.
It’s also important to note that this is more than just a new tax, it will also extend the long hand of government to the long tail of online commerce. Who’ll be hurt? Small, independent artists that have websites to sell their own creative works. If a NY-based author or musician adds a link to her webpage saying ‘buy my book/music now on Amazon.com’, she’d be creating a new tax collection burden for Amazon–on everything Amazon sells to anyone in NY State. Amazon’s not going to sit still for that, and they might just stop their affiliate program for NY-based suppliers, authors, and musicians.
I’ve blogged about nexus issues here. Continue reading →
Today’s event on “open” and “participatory” government at Google’s DC office was interesting, if inconclusive. We all agreed that making government more transparent and ready for participation by the citizenry was good. But I left not knowing what it all really means. Tech reporter Grant Gross has a good report, and here’s what I got out of it:
- Disclosure — At a minimum, opening up government requires more disclosure. Any and all data, transcripts, reports, etc. should be put up on the web.
- Format — Don’t just disclose, but make sure the information is formatted for ease of access and finding information. Funneling information will be really important. The spigot could pour out information, but if there’s no ability for citizens to find and understand issues that affect them, there’s only a partial benefit to being open. Opportunities for private sector here.
- Participation — what this means, I’m still not entirely sure, but seems to be the notion that “we the people” should be more involved in government and tech can help us. It could mean regular comments from affected parties on agency and committee websites, not just the occasional responses to proposed rulemakings. However, flooding the process with “white noise” could be a problem, as could be self-selection for those who post comments (so there should be caution when gauging public opinion writ-large).
Someone on the panel mentioned mySociety, which is a nonprofit org in the UK that designed a website service called FixMyStreet. The site acts as a middleman between residents that want to report potholes and the proper authorities to fix them. This is an interesting private sector approach for using technology to help us participate at the local government level. Likewise, Jim Harper’s WashingtonWatch helps track legislation in Congress, and provides opportunities for comments.
Ultimately, no matter what technologies exist and how many private sector initiatives there are, we need buy-in from government. Technology will help, but it’ll take behavioral changes by the powers-that-be to really use and implement web 2.0 tools. Government 2.0 will hopefully result in better decision-making and increased accountability.
The 3rd meeting of the United Nation’s Internet Governance Forum (IGF) met this week in Hyderabad, India. One of the concerning takeaways is the increased posturing by governments to assert greater control over the Internet.
For the uninitiated, the IGF is an outgrowth of the World Summit on the Information Society (WSIS), and is meant to be a multi-stakeholder “talk shop” on public policy issues related to the development and governance of the Internet. It’s the forum for governments and social policy agendas, whereas ICANN is meant to be a technical body for coordinating the Internet’s naming system.
The U.S. had advocated for a minimal role for the United Nations and IGF, while many governments want to assert more control then they possess at ICANN. A compromise was struck at the final WSIS meeting in Tunis – “Enhanced Cooperation” – in order to defer choosing between existing or new mechanisms.
As my colleague Steve DelBianco describes it, it’s sort of like the way he handled his teenage son when he nagged him about getting a new car to drive: work on ‘Enhanced Transportation’ instead.
Steve and NetChoice work to avoid a new mechanism for Internet Governance that’s designed by, and for, governments. Instead, preferring on Enhanced Cooperation within existing mechanisms.
Yet there’s danger on the horizon. My colleague Mark Blafkin reports in this blog post that at the Hyderabad meeting, politicians were spouting populist rhetoric about returning control of the Internet to “the people.”
Everton Lucero, the Brazilian representative to ICANN’s Government Advisory Council (GAC) delivered a beautiful speech filled with inspiring rhetoric about returning Internet Governance back to the concept of “We the People” and taking the power out of the hands of the “nobles and landlords.” Unfortunately, that is all it was: a beautiful speech that ignored reality in an attempt to grab the power to control the Internet and censor content. Brazil’s government has shown an increasing distaste for Freedom of Speech, especially on the Internet. The government had a recent documentary exposing some of the most egregious efforts at political censorship of the press pulled from local television.
Continue reading →
Remember being in grade school when a classmate’s rabble rousing would ruin it for everybody, and the teacher would hold back the class from going to recess? The other students would moan and groan and justifiably feel that punishing the entire class for one person’s misdeeds was unfair. This is what I fear for the tech industry, due to the trouble-making of the financial crisis.
If politicians turn their gaze from the financial sector to tech in 2009, they will likely focus on the issue of personally identifiable information (PII) and privacy. And here’s why.
Now is a tenuous time for all markets. Our politicians are looking to reassure Americans by regulating areas of the economy where there’s minimal regulation and a perceived lack of transparency. Rightly or wrongly, there’s a perceived lack of transparency in the collection and use of a user’s online data. And the following overarching trends and recent events could combine to further a pro-regulatory privacy agenda in 2009:
- Criminal Abuse: The Federal Trade Commission estimates that as many as 9 million Americans have their identities stolen each year. Increasingly, identity thieves use online phishing scams to deceive consumers. Phishers and other online criminals exist because more and more of us are in the pond—we store and access our personal and sensitive data online.
- Private Abuse: The lack of transparency surrounding the failed experiment with NebuAd’s deep packet inspection behavioral tracking by some ISPs.
- Private Use: The collection of user information is at the center of the web-delivered content and social media that helps define the Web2.0 economy. According to the Interactive Advertising Bureau, Internet advertising revenues for the first six months of 2008 were $11.5 billion, a 15.2 percent increase over the first half of 2007. Search histories and stored cookie profiles help create a user dossier that ad companies use to display specific ads, and to help generate the more than $120 billion in online retail sales expected this year.
- Market Power: The DOJ investigation of the Google and Yahoo deal based on the market power of Google creates a big brother stigma on all online data collection practices.
Continue reading →
Ticketmaster last week completed its acquisition of Front Line Management, a talent agency — expanding Ticketmaster’s empire into a vertically integrated unit renamed “Ticketmaster
Entertainment.” Combine the acquisition with AC/DC announcing it is the latest band to use Ticketmaster’s “paperless ticket” technology on its live tour, and I’m left wondering — are we on the highway to ticket hell?
As I’ve written in a previous posting, Ticketmaster has introduced what it calls a “Paperless Ticket” and Veritix has a paperless ticketing technology called Flash Seats. The concept is the same – no more paper tickets.
And while I’m unabashedly pro-technology on many fronts, here’s where I’m skeptical. The use of electronic tickets, when combined with the recent vertical integration moves of both Ticketmaster and Live Nation, could provide less control for consumers to do what they want with tickets.
The trend in the industry is to integrate the 4 major aspects of a live show: 1) primary ticket sales; 2) management and promotion; 3) direct artist to fan (clubs and paraphernalia); and 4) secondary ticket sales. Technology can be used to help tie the ticket to all aspects of the business, and even provide more control to music artists, but the downside could be a lack of consumer control once the ticket is purchased.
Under Ticketmaster’s paperless tickets policy, you have to present a credit card and a government-issued photo identification for admittance. What if you want to sell the ticket? Or your baby sitter cancels in the last minute and you want to give your tickets to a friend? Can’t do it. At least not under the current policy.
AC/DC’s latest tour is named after its new album, Black Ice. Let’s hope that electronic tickets aren’t the cause of consumers skidding out of control of their own tickets.
The Commerce Department released an interesting paper yesterday on competitiveness and legal costs. It’s conclusion: support U.S. competitiveness by reducing legal costs and uncertainty. At a time when small IT firms are finding it harder to access capital from here at home, they need look far, wide, and global. (earlier this year ACT released a report on the importance of foreign direct investment to innovative technology startups).
And it appears that our litigiousness will end up hurting investment from overseas.
The paper, The U.S. Litigation Environment and Foreign Direct Investment: Supporting U.S. Competitiveness by Reducing Legal Costs and Uncertainty, notes that high U.S. tort costs are a competitiveness issue that merits sustained efforts aimed at getting these costs in line with those of other nations. There is also a pressing need for additional economic research on the impact of a litigious society on a country’s ability to attract foreign direct investment (FDI).
Overall the U.S. legal system is the best in the world. But we can and should be better. America’s open investment policy is based on the principle that foreign investors should not be treated differently.
The new Obama or McCain administration needs to be a good promoter of this, even in the face of protectionist forces and a bad domestic economy.
Online and IT privacy is a ripe issue for President Obama’s or McCain’s administration. It often takes a confluence of concerns and momentum to elevate an issue to the national forefront, and with privacy we have concerns related to targeted ads, ID theft, government snooping, electronic health records, and to be blunt — Google. There will be pressure for policymakers to enact a “comprehensive privacy policy” — but what does that mean?
I heard that question raised last week. Last Friday the Technology Policy Institute held an event that featured Peter Swire, Obama’s privacy/security advisor, and Orson Swindle, McCain’s privacy/security advisor.
Swindle downplayed the notion of “comprehensive” privacy, because the need for privacy is contextual. Sometimes you’ll want more, other times less. If Congress were to enact privacy legislation back in 2000, when concerns over “cookies” were raging, it would have stunted the growth of the Internet and new business models. What we have now isn’t perfect, he stressed, but regulation is even more imperfect.
Swire ducked the question about whether Obama would favor “comprehensive” privacy legislation. Obama has been silent on the issue, he said. He did discuss what he called “market failure” that occurs when new technologies pose new risks. He brought up electronic health records as an example…shouldn’t government help protect people’s medical information?
Swindle said that the FTC is in a perfect position to respond to the privacy challenges posed by new technology. Swire said that the FTC is necessary but not sufficient to get the job done.
My two cents, which I wrote in my recent paper on cyber security: Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.