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By now everyone has heard the news announced this morning that Microsoft has offered to buy Yahoo! for $44 billion. Is this earth-shattering, or something that should have been expected given the current disarray at Yahoo! and Microsoft’s distant 3rd (domestically, 4th globally) in the search race?


Either way, the FTC will face the same objections that were leveled against Google/DoubleClick, and likely from the same sources.

And just like the Google/DoubleClick merger, many of the arguments won’t be about competition, but instead will focus on privacy. One would think that with the Google/DoubleClick approval now serving as precedent, the FTC will be able to dismiss these arguments as non-jurisdictional a bit more easily. But, being that the deal is still pending in the EU and that several groups are challenging the approval in the US, Microhoo! isn’t out of the woods yet.

EPIC will also have to come up with another clever logo like this one:


My suggestion: just change the punctuation. Privacy!

Though privacy is certainly a valid concern, a question remains for privacy advocates: Who can merge? Anyone competing in the search market who desires to compete with Google is likely going to do so with at least a few acquisitions and along with the hardware, patent portfolios, and a bunch of PhDs–these search market contenders will also be combing their data. But is this reason enough to oppose such mergers? Not if we want the market to stay competitive.

Blocking mergers of search companies blocks one of the most effective methods for any group of competitors to take on Google. Without the ability to acquire or merge with other firms, organic growth is the only method left to these companies to try to catch Google, making the search race much harder to run.

But would the deal be good for consumers? There’s reason to think so. Yahoo! and Microsoft could combine their online services to compete much better with Google. A few possibilities:

1.) Turn Microsoft’s Photosynth loose on Flickr and add tags to everyone’s photos using picture recognition software. This will enrich the database immeasurably. Imagine your pictures from the Louvre suddenly being tagged with the title of the work, the name of the artist, and the year the work was created.

2.) Use Microsoft’s Live Search Images software with Flickr to create filters for faces, portraits, and black and white photos.

3.) Give every MSN and Windows Live user the ability to create custom RSS feeds using Yahoo! Pipes technology.

The potential for much better targeting also exists especially given the purchases of aQuantive and Right Media by Microsoft and Yahoo! respectively. In addition, Microhoo! could benefit from sheer economies of scale. Both of these factors mean Microhoo! could cut its margins and offer ad buyers lower rates and ad sellers higher pay-outs. The result: online content creators will have more coin in their pocket to spend on content, benefiting everyone.

I’ve been busy with other projects, like the panel discussion on privacy I did with fellow TLFer Jim Harper, but I’d like to jump in on what is now an old story. Variety, among many others, reported on June 9th that the EU resolved its qualms with Apple after Jobs and company agreed to standardize pricing policies across Europe.

Apple has been charging consumers in the UK 10% more than the rest of Europe, but Variety failed to mention why this policy was in place. The EU determined that neither Apple nor the recording companies that distribute through iTunes were varying prices in order to take advantage of consumers. Instead, as The Business Times aptly reported, the price differences were attributable to, “copyright laws specific to individual countries.”

So, Apple was pricing differently in different markets because of genuine differences in those markets, not because Steve Jobs secretly hates limeys.

What I found most disturbing about the reporting on this case was this statement from European competition commissioner Neelie Kroes:

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This clip from College Humor, 24: The Unaired 1994 Pilot, is hilarious and makes me appreciate the abundance of great new technologies that the last decade has brought us. The video features many recent and familiar, yet shockingly antiquated technologies.

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Sometimes there’s really no need to argue for free markets, you just need to remember what 1994 was like!

C|Net News reports that DHS Assistant Secretary for Policy Stewart Baker called today for national ID checks when Americans buy prescription drugs. This is yet another in a growing list of activities that federal authorities would bring within their control should the national ID system created by the REAL ID Act be implemented.

The eminently savvy Baker was unintentionally ironic when he reportedly said he “doesn’t ‘understand’ the civil liberties objections to the plan.”

In less than a decade, Google has grown from a Ph.D. research project to be the indispensable tool of the information economy. With the objective of making all information instantly and universally accessible, Google now controls the principal index to the internet and the email traffic of millions, while adding new features such as maps replete with street-level photos cataloging the non-virtual world.

How should governments around the world treat this data? Is it a great new resource for national security and law enforcement, or should we protect it from the prying eyes of bureaucrats? Should private companies be reigned in by regulation, or will government action only serve to undermine the modicum of privacy we maintain in the information age?

On January 16th Americas Future Foundation (AFF) will be hosting a roundtable to discuss these and other questions.

The panelists:

  • Marc Rotenberg of the Electronic Privacy Information Center (EPIC)
  • Amber Taylor of O’Melveny & Myers LLP
  • Jim Harper of the Cato Institute
  • Cord Blomquist of the Competitive Enterprise Institute (me)

The event will take place at the Fund for American Studies, 1706 New Hampshire Avenue, NW, near Dupont Circle. Drinks at 6:30; Roundtable begins at 7:00. Roundtables are free for AFF members, $5 for non-members. So join today! Please RSVP to Cindy Cerquitella at cindy@americasfuture.org.

Hopefully we’ll see some TLF fanboys at the event!

TLF readers may be interested in reading a piece I just wrote with John Berlau, a colleague of mine at CEI, about Hillary Clinton’s stance on video game regulation. Senator Clinton has taken a very aggressive stance against video game violence, suggesting the FTC should oversee how games are rated, opening the door to further interference with the ESRB system.

We’ve quickly received feedback from one of the heavy-hitters in the anti-gaming world. None other than Jack Thompson emailed John today. Thompson, a famous anti-gaming lawyer and activist, has supported a wide variety of legislative solutions to the supposed plague of video game violence. His email to John contained no text in the body, but the subject line read as follows:

You’re wrong. Video games inspire violence. It’s a public safety hazard and a legitimate governmental concern

He attached a PDF of a Stephen Moore column for the Wall Street Journal to back up this assertion. In the piece, Moore complains that his children have turned into zombies, claiming that video games are the “new crack cocaine.” Though I love Moore and his columns for the WSJ and agree with him more often than not, this is one of those instances of not.

Video games are addictive, I’ll say that from personal experience, but I’ve been able to wean myself off a nearly debilitating addiction to Company of Heroes–I’m now down to a reasonable 4 hours a week. But games aren’t the new crack, they’re just a new diversion that neither kids nor adults should invest too much time into. Kids don’t have the self control to keep themselves away from them, so once parents let the kids vegetate for 8 hours a day, it is a tough job for parents to refuse kids their endorphin-producing joy-machines, but government won’t do a better job.

Instead of pushing for government action, which would be a 1st Amendment violation in addition to being ineffective, Jack Thompson ought to be trying to educate parents about sensible limitations for little ones and pointing them in the direction of Adam Thierer’s Parental Controls and Online Child Protection: A Survey of Tools & Methods.

Creating a work can cost authors a lot, whereas copying a work costs others very little. Absent copyright, then, authors might find it discouragingly difficult to recoup the costs of creating fixed expressive works. Authors might then underproduce expressive works, and the public consequently suffer.

To avoid that policy tragedy, the Copyright Act empowers authors to control the reuse of their fixed expressive works. By selling those special statutory privileges, authors can offset their production costs. Thus does copyright arguably do what the common law allegedly cannot: ensure that the public enjoys an adequate supply of expressive works.

The benefits of copyright policy come at a price, however. Although it may cost a great deal to make the first copy of a fixed expression, it usually costs very little to make and distribute subsequent copies. Absent copyright protection, those works would constitute public goods. Copyright bars the public from freely enjoying the very goods labeled “public.” Instead, the Act vests copyright holders with the power to charge whatever the market will bear to escape liability for infringement. Though the monopoly rents that copyright holders thereby win allegedly provide a necessary stimulus to creativity, non-holders suffer the opportunity costs of losing cheap access to fixed expressive works. Most commentators thus understand copyright policy to aim at striking a balance between giving authors sufficient incentives to create expressive works and providing the public with adequate access to the works thereby created. [The figure below] illustrates that, the standard economic model of copyright policy.

Standard Economic Model of Copyright

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As part of a 20 minute slide show produced by the New York Dept. of Criminal Justice, Elliot’s Spitzer’s administration has cited a well-known Internet hoax as a helpful resource for parents.

The site cited, Mothers Against Videogame Addiction and Violence (mavav.org) claims to be:

organization is dedicated to educating parents of the world’s fastest growing addiction and the most reckless endangerment of children today: Video Game Addiction and Violence in Underground Video Game Cultures

The site goes on to claim that:

Video game addiction is without a doubt, becoming this century’s most increasingly worrisome epidemic, comparable even to drug and alcohol abuse. All the while, the video game industry continues to market and promote hatred, racism, sexism, and the most disturbing trend: clans and guilds, an underground video game phenomenon which closely resembles gangs.

MAVAV is actually the creation of a New York design school student, a well documented fact that is easily uncovered by research. And by research I mean about 2 minutes Googling the farcical organization. Too great a burden for the NY DOJ.

The NY Justice Dept. report also contained a reference to several over-hyped stories of questionable reliability and is riddled with errors. In addition, the report claims that Seung Hui Cho, the Virginia Tech killer, was a Counter-Strike player, a claim that has since been shown to be unsubstantiated.

If this is the worst indictment that the insidious legal mind of Elliot Spitzer can produce, gamers might not have to worry about New York’s proposed regulation of video game sales.

Hat tip: GamePolitics.com

I blogged about Greenpeace’s quarterly report on Green-Tech last week, noting that the way they display their data is manipulative, but turns out the data itself is deeply flawed.

John Timmer writes at ArsTechnica on just how poorly this quarterly report is researched:

The research in general appears lazy. Nintendo’s failing grade appears to be based entirely on this entry in the corporate FAQ, which briefly summarizes some of the steps the company has taken to protect the environment. Anything that’s not covered there is simply rated “No Information.” Similarly, all of the information on Microsoft originates from press materials and corporate statements on the company’s web site. Clearly, Greenpeace did not perform an exhaustive evaluation of chemical use through the manufacturing pipeline.

So, even if you think the shifting numbers on the graph aren’t misleading, it turns out that the whole study is pretty worthless. If an eco-friendly rating is based on cursory searches of the manufacturer’s own reports, then the best PR department wins, not the best practices. Greenpeace, along with many other environmental groups, refer to the all-PR approach to going green as”green washing.” Ironic that Greenpeace itself is now doing a bit of the scrubbing.

The front page of the Wall Street Journal Marketplace section today gave me some hope that my work and the work of many other libertarian geeks has had an impact. The WSJ concluded that while there are dominant forces like Google, Yahoo!, and Microsoft in the online advertising field, that the dynamism of the market allows for upstart companies to grab their share of the $16.9 billion online ad industry.

Pointing out that markets are dynamic and that dominance is at best temporary and always under threat from competitors or future competitors seems like economics 101, but the job nonetheless needs to be done. Our collective memory seems to resemble that of a goldfish as many in the media believe that Google is, always has been, and always will be the dominant force in online advertising.

Of course, if market dominance really perpetuated itself, MITS would dominate the PC market. After all, in 1975 the MITS Altair 8800 outsold its closest competitor, the IBM 5100, two to one. This despite the 5100’s advanced cassette tape drive!

One would expect that after 30 years, having started in such a dominant position, MITS would control the entire high-technology world. Yet, somehow MITS lost this market dominance. Even the blue monolith of IBM lost to an outside player, an upstart named Apple.

More on the WSJ piece by my colleague Ryan Radia at CEI’s OpenMarket.org.