E-Commerce Taxation & Regulation

New York’s proposed iPod tax includes porn

by Sonia Arrison on February 17, 2009 · 8 comments

As the Associated Press put it recently, “Talk of a New York tax increase just got a little, er, hotter.” But seriously, at a time when the nation is about to spend $787 billion on a so-called “stimulus,” new taxes on top of what we will already be paying is scandalous. New York is going to go through very hard times, and new taxes on digital downloads will only make things worse. In a recent story by NPR, the hosts noted that to avoid the tax, porn makers could just leave the state. Such a move might make local conservatives happy (although they are unhappy with the tax because they see it as legitimizing porn), but it would indeed push more businesses out of the state (as was the case with overstock.com) and ironically harm tax revenues in the long run.

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In Maryland, a Bill that Fixes Nothing (Except Competition in Favor of Big Box Retailers)

by Braden Cox on February 4, 2009 · 10 comments

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 →

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Google’s Growing Advertiser Base

by Berin Szoka on January 11, 2009 · 6 comments

The NYT reports that Google has recently disclosed in an SEC filing that it had 1 million advertisers as of 2007. Some analysts suggest that Google’s growing scale will lead to higher ad prices:

Ben Schachter, an analyst with UBS, said he expects the current number is likely to be between 1.3 million and 1.5 million. Google declined to comment on the current size of its advertising base.

“It is a number that people have wanted to know for a long time,” Mr. Schachter said. More advertisers means more revenue — and more revenue, on average, for every search query — for a couple of reasons: a larger number of queries will have ads matched against them; and on popular queries, competition for placement will be more intense, and as a result, ad prices, which are set by auction, will be higher.

But is Google’s success really driving up ad prices? The same piece also notes that:

Interestingly, each advertiser, on average, spent a little more than $16,000 a year on Google. That figure changed little between 2003 and 2007.

As one of the commenters on the piece noted:

If average advertiser expenses hasn’t really changed in the last 5 years, maybe Google’s argument that it’s not a monopoly because prices are determined by ad auctions, not Google’s search share, holds some weight.

Meanwhile, Google Watch notes Microsoft’s recent success in signing up Verizon, Dell, Sun and Hewlett-Packard as partners for Microsoft’s Live Search engine and asks whether Google’s success is driving potential partners into Microsoft’s arms, as Microsoft appears to be working harder to gain market share for its own search and advertising products. So can Microsoft—and Yahoo!—regain momentum?

Perhaps 2009 will bring some answers to these questions—and more hard data about ad prices. But whatever happens, it’s a safe bet that speculation and fierce argument will abound with every new development in the search/advertising wars.

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Martin Abandons Unconstitutional Filitering Proposal; What About Obama’s Universal Broadband?

by Berin Szoka on December 14, 2008 · 22 comments

Chairman Mao–er… Martin–has canceled (WSJ) the FCC’s December 18 meeting, when the Commission was set to vote on Martin’s proposal to rig an auction to give away a valuable piece of spectrum (“AWS-3”) to M2Z networks. In exchange for a sweetheart deal on the spectrum, the company would have been required to use a quarter of it to provide a free (but very slow) wireless broadband service. Martin had initially proposed to require that the service be made porn-free, but eventually suggested that users over 18 would be able to opt-out of network-level filtering.

Two weeks ago, when it became clear that Martin would attempt to ram this proposal through while he still could, I asked how the ascendant Left would respond:

Will the defenders of free expression triumph over those who see ensuring free broadband as a social justice issue? Or will those on the Left who usually joining us in opposing censorship simply remain silent as the government extends the architecture of censoring the “public airways” onto the Net (where the underlying rationale of traditional broadcast regulation–that parents are powerless–does not apply)?

I’m glad to see that the deathblow to this unconstitutional proposal did indeed come from the political Left–specifically, from Sen. John Rockefeller, (D-W.Va.) and Rep. Henry Waxman, (D-Calif.), who will be responsible for overseeing the FCC in the new Congress. (The Bush administration had already opposed the proposal, as with so many of Martin’s abuses, had failed to stop it.)

With President-elect Obama having declared that, “Here in the country that invented the Internet, every child should have the chance to get online,” it seems almost certain that the Administration will press ahead with some kind of universal broadband proposal of its own. But what would such a proposal look like? If it’s another public broadband utility, would it include network-level filtration like Martin’s proposal? If so, will the Democratic opponents of government censorship stick by their principles and fight that, too?

I suspect we may find that what’s constitutional is politically impossible (unfiltered free Internet) and what’s politically possible (filtered free Internet) is unconstitutional. Continue reading →

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Beware the Era of Financial Regulation and its Spillover onto Tech Companies

by Braden Cox on November 25, 2008 · 7 comments

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 →

7 comments

Why Libertarians Should Oppose “Shrinkwrap” Contracts

by Alex Harris on October 28, 2008 · 45 comments

Presumably, everyone reading this post has purchased software at some point in the past 15 years. If you have, you may have agreed to a contract unwittingly. Breaking the seal of the shrinkwrap around the box might bind you to the terms and conditions contained inside. This is but one of many new ways you can be determined to agree to contractual terms you may have never seen.

In the last decade, Gateway came under fire for its means of doing business with consumers. A customer would order her computer over the phone, but when it would come, it would contain a list of terms including things like a mandatory abritration clause – and always stating that the customer was deemed to have accepted the terms by not returning the computer (at her expense) by some period of time. A number of court cases raised the question whether this practice really created a binding contract.

As libertarians, we are generally in favor of contracts. But a contract is a mutually consensual agreement. The critical question for shrinkwrap contracts and the like is whether both parties have really assented. In the Gateway cases, there are three main interpretations of what is going on: Continue reading →

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PFF Launches Center for Internet Freedom

by Berin Szoka on October 24, 2008 · 12 comments

The Progress & Freedom Foundation has just launched the new Center for Internet Freedom. CIF offers an alternative to the proliferation of advocacy groups calling for government intervention online by offering timely analyses and critiques of proposals that diminish the vital role of free markets, free speech and property rights. We aim to drive the Internet policy debate in new directions by emphasizing a layered approach of technological innovation, user education, user self-help, industry self-regulation, and the enforcement of existing laws consistent with the First Amendment. Such an approach is a less restrictive—and generally more effective—alternative to increased regulation.

Here are some of the issues I’ll be working on as CIF’s Director in conjunction with my esteemed colleagues Adam Thierer, Adam Marcus, and adjunct fellows:

Defending online advertising as the lifeblood of online content & services, especially in the “Long Tail”;
Emphasizing market solutions to problems of privacy protection, especially regarding the use of cookies and packet inspection data;
Protecting online speech and expression both in the U.S. and abroad;
Defending Section 230 immunity for Internet intermediaries;
Opposing online taxation and legal barriers to e-commerce and digital payments, especially at the state and local levels; and
Ensuring that Internet governance remains transparent and accountable without hampering the evolution of the Internet.

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Should Government Funding Be Part of a Broadband Plan? Have Your Say on November 18

by Drew Clark on October 22, 2008 · 7 comments

Readers of Tech Liberation Front may be interested in a new breakfast series that BroadbandCensus.com has recently begun.

The next event in this series, “Should Government Funding Be Part of a National Broadband Plan?” will be held on Tuesday, November 18, from 8 a.m. to 10 a.m., and will include Stan Fendley, the director of legislative and regulatory policy for Corning, Inc., Kyle McSlarrow, CEO of the National Cable and Telecommunications Association (NCTA), and John Windhausen, Jr., president of Telepoly Consulting. I will moderate the discussion.

Two weeks after Election Day, this Broadband Breakfast Club meeting will consider one of the hottest topics in telecom: can and should funding for broadband work its way into a pending fiscal stimulus package?

Future meetings of the breakfast club (December 2008 through March 2009) will consider the role of broadband applications in harnessing demand, how the universal service fund will be changed by high-speed internet, the role of wireless in universal broadband, and the extent of competition in the marketplace.

The Broadband Breakfast Club meets monthly at the Old Ebbitt Grill, at 675 15th Street, NW, in Washington. (It’s right across the street from the Department of the Treasury.)

Beginning at 8 a.m., an American plus Continental breakfast is available downstairs in the Cabinet Room. This is followed by a discussion about the question at hand, which ends at 10 a.m. Except for holidays (like Veteran’s Day), we’ll meet on the second Tuesday of each month, until March 2009. The registration page for the event is http://broadbandbreakfast.eventbrite.com.

Continue reading →

7 comments

10 Years Under the Digital Millennium Copyright Act – Success or Failure?

by Drew Clark on October 8, 2008 · 5 comments

It’s nearing Halloween, so it must mean the anniversary of the Digital Millennium Copyright Act is just around the corner. In fact, it was 10 years ago, on Sunday, that Congress passed the DMCA, on October 12, 1998. The law was signed by President Clinton on October 28, 1998.

The information and news service that I have launched, BroadbandCensus.com, is “celebrating” the passage of the law with the inaugural event of the Broadband Breakfast Club. The breakfast event will take place on Tuesday, October 14, from 8 a.m. to 10 a.m., at the Old Ebbitt Grill at 675 15th Street NW, Washington, DC.

This event will bring together several key stakeholders together to share perspectives on this topic:

Drew Clark, Executive Director, BroadbandCensus.com (Moderator)
Mitch Glazier, Senior Vice President, Government Relations, Recording Industry Association of America
Michael Petricone, Senior Vice President, Government Affairs, Consumer Electronics Association
Wendy Seltzer, Practitioner in Residence, Glushko-Samuelson Intellectual Property Law Clinic, American University Washington College of Law
Emery Simon, Counselor, Business Software Alliance

Breakfast for registrants will be available beginning at 8:00 a.m., and the forum itself will begin at around 8:30 a.m., and conclude promptly at 10 a.m. The event is open to the public. The charge for the breakfast is $45.00, plus an Eventbrite registration fee. Seated attendance is limited to the first 45 individuals to register for the event.

Future events in the Broadband Breakfast Club monthly series will feature other key topics involved in broadband technology and internet policy. In fact, you can mark your calendar for the next event on Tuesday, November 18, from 8 a.m. to 10 a.m., also at the Old Ebbitt Grill.

For more information about BroadbandCensus.com, or about the Broadband Breakfast Club at Old Ebbitt Grill – on the second Tuesday of each month – please visit http://broadbandcensus.com, or call me at 202-580-8196.

5 comments

Craigslist Founder Craig Newmark to Speak at Google in DC October 3

by Berin Szoka on September 29, 2008 · 13 comments

In 1995, Internet entrpreneur Craig Newmark started Craigslist — an online community featuring free classified ads. Thirteen years later, Craigslist serves 567 cities in 55 countries and is a good example of how the power, reach and openness of the Internet can help turn a simple idea into a global phenomenon.

As part of the ongoing “Google D.C. Talks” series, Craig — who still helps users in a customer service role at Craigslist — will speak about the founding of the future of Craigslist, the future direction of the Internet, and what public policy makers can do to keep the Internet and American democracy free, open and vibrant. For anyone who’s ever bought or sold a used piece of furniture or concert tickets on Craigslist, you won’t want to miss hearing from the man who started it all.

Speaker:
Craig Newmark, Customer Service Rep & Founder, craigslist

Moderator:
Alan Davidson, Director, Public Policy and Government Affairs, Google

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