Declan McCullagh of CNet News reports (“Congress May Roll Dice, Legalize Net Gambling“) that some in Congress are reconsidering the wisdom of prohibitions on Internet gambling, which we have discussed here many times before. Declan notes there’s another hearing on the issue today and Rep. Barney Frank (D-MA) will be discussing his continuing effort to allow Internet casinos to obtain licenses from and be regulated by the federal government:
Frank, who will be testifying during Wednesday’s hearing, says that because nearly all states already permit some form of traditional gambling–including lotteries, betting on horse and greyhound racing, and sports wagering — the federal government should legalize and regulate the online equivalents. Instead of a blanket legalization, his legislation would require the Treasury Department to police the industry and ensure that it takes adequate steps to identify minors and compulsive gamblers.
My TLF colleague Tom Bell has done seminal work in this field and you will definitely want to check out his recent essay, “The UnInGEn-ious Act’s Non-Impact on Internet Gambling” and his classic 1999 Cato white paper, “Internet Gambling: Popular, Inexorable, and (Eventually) Legal.” What Tom has done better than anyone else is to show that, as is the case with almost every “market activity devoted to the pursuit of happiness,” eventually the law will adjust to accommodate these activities. It may take some time for the law to adjust, but it will.
Incidentally, I loved this little gem of a quote that Declan included in his story from the activist group Focus on the Family, which argues of this effort to legalize online gambling: Continue reading →
Over at Convergences I consider the writings of Polk Wagner, beginning thus:
Polk Wagner has written some worthwhile papers on law and technology. I heartily recommend those that support points on which we agree, such as The Perfect Storm: Intellectual Property and Public Values, 73 Fordham L. Rev. 1107. 2005. This paper notes how the de facto balance between copyright and fair use has shifted over the years, and that in key respects copyright has lost, not gained, ground, and also noting that fair use is far from being the only key conceptual or practical limit on copyright.
But his paper “On Software Regulation,” is a bit muddled. It may not be Professor Wagner’s fault, for the article was written following up on the “code is law” meme, which is at bottom a rather unhelpful observation. If “code is law” then so is everything else—the laws of physics, architecture, road design, engineering, biology, the laws of physics, religion, education, insect swarming patterns, families, and so on. All of these things affect human behavior and shape and regularize society. My complaint with “code is law” is not that is not true, in a sense—but that it is very unhelpful in understanding any real problem. Many institutions and systems affect human behavior, but they do so in different ways. It is understanding the differences that will be the key to resolving any serious human problems.
Consistent with this, Professor Wagner begins by noting that “code is law” tells us nothing about how code and law relate. But he restates the view that software code constitutes regulation. Software “regulates” in the sense that it makes human conduct more regular and affects the public. But is it really much like “regulation” enacted through a legal process by Congress or the FCC, or even like law described by courts? Certainly not. But the paper’s description of the differences is oddly incomplete.
For the remainder, visit Convergences here.
Please join us for this Progress & Freedom Foundation luncheon briefing today at 12-2 pm in the Capitol Visitor Center, Room SVC 208/209 at E Capitol St NE & 1st St NE. I’ll be moderating a discussion of the growing powers of the Federal Trade Commission (FTC) and what it might mean for consumers, advertisers, media creators, and the Internet.
If you can’t make it in-person, you can listen live here.
As I’ve discussed here, here and here, financial reform legislation passed by the House (HR 4173) and now under debate in the Senate would give the FTC sweeping new powers to regulate not just Wall Street, but also unfair or deceptive trade practices across the economy. This could reshape regulation in a wide range of areas, such as privacy, cybersecurity, child safety, COPPA, and child nutrition, affecting media online as well as offline. Unfortunately, as Adam and I have noted, there seems to be a disconnect at the FTC between concerns over the future of struggling media creators and efforts to step up regulation on a number of fronts, especially privacy. The FTC has also asserted expanded authority to regulate “unfair” competition in its lawsuit against Intel, based solely on the FTC’s Section 5 unfairness authority rather than traditional antitrust law. PFF has assembled a group of expert panelists—veteran FTC practitioners, scholars and insiders—to discuss these issues and more. Here’s our panel:
- Jack Calfee, Resident Scholar, American Enterprise Institute for Public Policy Research (AEI) & author of Fear of Persuasion: A New Perspective on Advertising and Regulation (1998)
- Maureen Ohlhausen, Partner, Wilkinson Barker Knauer, Consumer Protection Law and Competition Law practices, & 11-year FTC veteran
- Jim Davidson, Chair of the Public Policy group, Polsinelli Shughart PC
- Stu Ingis, Partner, Venable LLP
To Register: Please RSVP online here (for free). Continue reading →
It’s April 15, so hopefully nobody’s waiting in long lines at the post office (though we think you should be using the Internet to file electronically). Unfortunately, it’s only April but already it has been a taxing year for online commerce.
We’ve seen six tax-related categories of bills that have been introduced in state legislatures this year: (1) Privacy-invading purchase reporting laws; (2) Bounty hunter bills; (3) affiliate advertising as a nexus for requiring sales tax collection; (4) imposing hotel taxes on online travel companies; (5) expanding Internet sales taxes based on inadequate simplification; and (6) new taxes on digital downloads.
Colorado law turns online companies into the purchasing police (and snitch)
Colorado passed HB 1193 earlier this year (it takes effect in May), and in an effort to get consumers to pay the use tax on Internet purchases it requires out-of-state companies to share purchasing data with the state Dept of Revenue.
Out-of-state retailers must track and report the purchases of Coloradans and: (a) file an annual statement with purchase data for each purchaser to the Department of Revenue; (b) send buyers a summary statement of all their purchases so they know how much use tax to pay (like a 1099 form we receive on investments, only would it be called “Form 1984”?); and (c) on every invoice and receipt, notify Colorado purchasers of their need to file a sales and use tax return with the state; Colorado’s Department of Revenue will now know all the vendors where residents made online or catalog purchases from remote sellers. This would include sensitive items of a particular kind of merchandise — sex items, specialty books, items that reveal political views, etc.
Declan McCullagh wrote a good article on this yesterday. California has an almost identical bill pending (AB 2078). So does Tennessee (HB 1947). Continue reading →
As the Wall Street Journal is already reporting, today eBay sustained an important win in its long-running dispute with Tiffany over counterfeit goods sold through its marketplace. (The full opinion is available here.)
I wrote about this case as my leading example of the legal problems that appear at the border between physical life and digital life, both in “The Laws of Disruption” and a 2008 article for CIO Insight.
To avoid burying the lede, here’s the key point: for an online marketplace to operate, the burden has to be on manufacturers to police their brands, not the market operator. Any other decision, regardless of what the law says or does not say, would effectively mean the end of eBay and sites like it.
Continue reading →
Please join us for this Progress & Freedom Foundation luncheon briefing on Friday, April 16, 12-2 pm in the Capitol Visitor Center, Room SVC 208/209 at E Capitol St NE & 1st St NE. I’ll be moderating a discussion of the growing powers of the Federal Trade Commission (FTC) and what it might mean for consumers, advertisers, media creators, and the Internet.
As I’ve discussed here, here and here, financial reform legislation passed by the House (HR 4173) and now under debate in the Senate would give the FTC sweeping new powers to regulate not just Wall Street, but also unfair or deceptive trade practices across the economy. This could reshape regulation in a wide range of areas, such as privacy, cybersecurity, child safety, COPPA, and child nutrition, affecting media online as well as offline. Unfortunately, as Adam and I have noted, there seems to be a disconnect at the FTC between concerns over the future of struggling media creators and efforts to step up regulation on a number of fronts, especially privacy. The FTC has also asserted expanded authority to regulate “unfair” competition in its lawsuit against Intel, based solely on the FTC’s Section 5 unfairness authority rather than traditional antitrust law. PFF has assembled a group of expert panelists—veteran FTC practitioners, scholars and insiders—to discuss these issues and more. Here’s our panel:
- Jack Calfee, Resident Scholar, American Enterprise Institute for Public Policy Research (AEI) & author of Fear of Persuasion: A New Perspective on Advertising and Regulation (1998)
- Maureen Ohlhausen, Partner, Wilkinson Barker Knauer, Consumer Protection Law and Competition Law practices, & 11-year FTC veteran
- Jim Davidson, Chair of the Public Policy group, Polsinelli Shughart PC
- Stu Ingis, Partner, Venable LLP Continue reading →
The Federal Trade Commission (FTC) today announced the release of an 18-page Request for Public Comment (embedded below) on its implementation of the Children’s Online Privacy Protection Act or 1998 (COPPA), which governs online sharing by, and collection of information from, children under age 13. The FTC had previously announced that it would accelerate the review, which had been planned for 2015, particularly because of concerns about the mobile marketplace, as noted in the FTC’s report on that topic released in February.
COPPA has undoubtedly succeeded in its primary goal of enhancing parental involvement in their child’s online activities in order to protect the privacy and safety of children online. Yet these benefits have come at a price, as COPPA’s considerable compliance costs (estimated at $45/child, which can be crushing in the era of “free”) have likely reduced the digital media choices available for children. So I’m glad to see the Commission recognize these trade-offs by asking about the costs and benefits of COPPA and any proposed changes right off the bat (Questions 1-5). Such trade-offs are an inevitable part of life and policymakers can’t simply ignore them, even when it’s “for the children.”
The Potential for COPPA Expansion
I look forward to seeing comments on the important questions raised by the Commission about precisely how best to implement the framework enacted by Congress. But I do worry that the Commission has explicitly invited proposals for legislative changes to the statute itself. In particular:
6. Do the definitions set forth in Part 312.2 of the Rule accomplish COPPA’s goal of protecting children’s online privacy and safety? …
28. Does the commenter propose any modifications to the Rule that may conflict with the statutory provisions of the COPPA Act? For any such proposed modification, does the commenter propose seeking legislative changes to the Act?
Note that question #6 does not include the critical limitation “consistent with the Act’s requirements,” which appears no less than 17 times in subsequent questions about specific aspects of the current rules. Whatever the FTC intended, this will omission, combined with question #28, will be taken as an open invitation by many to propose not just changes in how the COPPA rules are implemented, but wholesale revisions to the COPPA statute itself. Continue reading →
He climbed cathedral mountains, he saw silver clouds below
He saw everything as far as you can see
And they say that he got crazy once and he tried to touch the sun
And he lost a friend but kept his memory
-John Denver, Rocky Mountain High
We know that states are increasingly looking to tax anything and everything, including on the Internet. As Declan McCullagh reported earlier this week, Colorado and “fifteen other states have considered or are considering enacting laws targeting Amazon and other e-commerce companies that typically do not charge sales tax for shipments sent outside their home state.” These nexus taxes are #2 on the NetChoice iAWFUL list of bad legislation.
But Colorado’s recent “track and tax” law marks the most privacy-egregious Internet-related tax law we’ve seen.
Here’s the rub: The Colorado state tax department will now have a listing of all purchases its citizens make from out-of-state companies. Why? So it can enforce its tax on purchases by way of the use tax that each of us owes to our government when sales tax isn’t collected.
HB 1193 was enacted last month as part of a package of revenue raising legislation. It originally started as an advertising nexus bill, but turned into a reporting bill when a lot of in-state companies that rely on affiliate advertising revenue complained that they would be harmed. Now it is consumer privacy that is harmed.
HB 1193 forces out-of-state retailers to track and report the purchases of Coloradans: Continue reading →
Yesterday, NetChoice joined the Center for Democracy & Technology and the Maine Civil Liberties Union (and PFF, who submitted written testimony) before the Maine legislature to oppose a bill that would restrict how health-related products can me marketed to minors under age 17.
The bill, LD 1677, is a repeal and replacement for current law passed last year that was strongly opposed by the online industry. As I previously blogged, NetChoice was a lead plaintiff in last year’s lawsuit to enjoin the law. Though well intentioned, this law was overly-broad and wrought with constitutional concerns. As a result, Attorney General Mills agreed not to enforce the statute. In October last year, NetChoice joined others in testifying before Maine Joint Standing Committee on the Judiciary regarding this law. In short, the conclusion of all parties involved was that the current legislation could not stand and that the legislature should move to quickly repeal.
So we all arrived in Augusta, ready for the next round – after all, this bill is #9 on the NetChoice iAWFUL list! But when we arrived, we were treated to a surprise amendment from the bill sponsor and this became the focus for discussion and testimony. Here’s the amended prohibition:
A person may not knowingly collect and use personal information collected on the Internet from a minor residing in this State for the purposes of pharmaceutical marketing prescription drugs to that minor, unless the minor specifically requests that information about the prescription drug be provided to them
John Morris at CDT gave great testimony and generally welcomed the amendment. However, he cautioned the committee that it should make sure that website intermediaries would not have liability for merely displaying ads. Continue reading →
Congress gets dinged a lot for slowing down innovation, but sometimes that is just what the doctor ordered. Thirty-five years ago, a Democratically controlled Congress passed the Magnuson-Moss Act in an attempt to check a hyperactive FTC.
Like a kid set loose in a candy store, the FTC at the time had gone on a binge of overreaching and harmful regulation. The core enabler of this action is the exceptionally broad mandate bestowed on the agency to regulate all “unfair” consumer activity. Unlike regulating the structural stability of bridges or safety in food, “fairness” is a subjective concept.
Congress’ prudent action to place special restrictions on FTC rulemaking [15 U.S.C. Sect. 57a(b)(2)(A)] was in direct response to the agency’s overreach and regulation of activities that would have included advertising children’s products – in essence, acting like a kid in a candy store. Magnuson-Moss was the equivalent of putting the candy behind the counter, providing Congress and courts control over how much candy was appropriate.
Now, 35 years later, the FTC has that ‘unfairness feeling’ again. In a NY Times interview last month, FTC Chairman Jon Leibowitz signaled his intent to change standard marketing tactics of disclosure and opt-out, by requiring users to opt-In for collection of information for targeting ads. They are concerned about what’s “fair” in advertising, but we know that low rates of opt-in will reduce ad revenue. If the change were put into effect, free online services might have to charge a “fare” to users.
At the same time, the FTC is seeking to shed what the Chair called “medieval restrictions” on its rulemaking powers. A change that would allow the FTC to move quickly to require opt-in. Taken together, these threats to online services and e-commerce are #1 on the NetChoice 2010 iAWFUL list. 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.