Technology Liberation Front

FairSearch’s Non-Sequitur Response

by Geoffrey Manne on July 25, 2011 · 1 comment

[By Geoffrey Manne and Joshua Wright. Cross-posted at TOTM]

Our search neutrality paper has received some recent attention. While the initial response from Gordon Crovitz in the Wall Street Journal was favorable, critics are now voicing their responses. Although we appreciate FairSearch’s attempt to engage with our paper’s central claims, its response is really little more than an extended non-sequitur and fails to contribute to the debate meaningfully.

Unfortunately, FairSearch grossly misstates our arguments and, in the process, basic principles of antitrust law and economics. Accordingly, we offer a brief reply to correct a few of the most critical flaws, point out several quotes in our paper that FairSearch must have overlooked when they were characterizing our argument, and set straight FairSearch’s various economic and legal misunderstandings.

We want to begin by restating the simple claims that our paper does—and does not—make.

Our fundamental argument is that claims that search discrimination is anticompetitive are properly treated skeptically because: (1) discrimination (that is, presenting or ranking a search engine’s own or affiliated content more prevalently than its rivals’ in response to search queries) arises from vertical integration in the search engine market (i.e., Google responds to a query by providing not only “10 blue links” but also perhaps a map or video created Google or previously organized on a Google-affiliated site (YouTube, e.g.)); (2) both economic theory and evidence demonstrate that such integration is generally pro-competitive; and (3) in Google’s particular market, evidence of intense competition and constant innovation abounds, while evidence of harm to consumers is entirely absent. In other words, it is much more likely than not that search discrimination is pro-competitive rather than anticompetitive, and doctrinal error cost concerns accordingly counsel great hesitation in any antitrust intervention, administrative or judicial. As we will discuss, these are claims that FairSearch’s lawyers are quite familiar with.

FairSearch, however, grossly mischaracterizes these basic points, asserting instead that we claim

“that even if Google does [manipulate its search results], this should be immune from antitrust enforcement due to the difficulty of identifying ‘bias’ and the risks of regulating benign conduct.”

This statement is either intentionally deceptive or betrays a shocking misunderstanding of our central claim for at least two reasons: (1) we never advocate for complete antitrust immunity, and (2) it trivializes the very real—and universally-accepted–difficulty of distinguishing between pro- and anticompetitive conduct.

Continue reading →

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How Do-Not-Track is Like Inconceivable

by Jim Harper on July 25, 2011 · 0 comments

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Marshall McLuhan at 100: Excerpts from his Playboy Interview

by Adam Thierer on July 21, 2011 · 6 comments

I have always struggled with the work of media theorist Marshall McLuhan. I find it to be equal parts confusing and compelling; it’s persuasive at times and then utterly perplexing elsewhere. I just can’t wrap my head around him and yet I can’t stop coming back to him.

Today would have been his 100th birthday. He died in 1980, but he’s just as towering of a figure today as he was during his own lifetime. His work is eerily prescient and speaks to us as if written yesterday instead of decades ago. Take, for example, McLuhan’s mind-blowing 1969 interview with Playboy. [PDF] The verse is awe-inspiring, but much of the substance is simply impenetrable. Regardless, it serves as perhaps the best introduction to McLuhan’s work. I strongly encourage you to read the entire thing. The questions posed by interviewer Eric Norden are brilliant and bring out the best in McLuhan.

I was re-reading the interview while working on a chapter for my next book on Internet optimism and pessimism, a topic I’ve spent a great deal of time pondering here in the past. Toward the end of the interview, McLuhan is asked by Norden to respond to some of his critics. McLuhan responds in typically brilliant, colorful fashion: Continue reading →

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This Would Be a Good Time to Not be Evil

by Jim Harper on July 20, 2011 · 5 comments

Daily news service TechLawJournal (subscription) reports that the U.S. District Court (DC) has granted summary judgment to the National Security Agency in EPIC v. NSA, a federal Freedom of Information Act (FOIA) case regarding the Electronic Privacy Information Center’s request for records regarding Google’s relationship with the NSA.

EPIC requested a wide array of records regarding interactions between Google and the NSA dealing with information security. Reports TLJ:

The NSA responded that it refused to confirm or deny whether it had a relationship with Google, citing Exemption 3 of FOIA (regarding records “specifically exempted from disclosure by statute”) and Section 6 of the National Security Agency Act of 1959 (which prohibits disclose of information about the NSA).

The FOIA merits of EPIC’s suit are one thing. It’s another for Google to have an intimate relationship with a government agency this secretive.

This would be a good time to not be evil. Google should either sever ties with the NSA or be as transparent (or more) than federal law would require the NSA to be in the absence of any special protection against disclosure.

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The Bono-Mack Bill & Giving APA Authority to the FTC to Redefine “PII”

by Berin Szoka on July 19, 2011 · 2 comments

A month ago, Rep. Mary Bono Mack introduced a bill (and staff memo) “To protect consumers by requiring reasonable security policies and procedures to protect data containing personal information, and to provide for nationwide notice in the event of a security breach.” These are perhaps the two least objectionable areas for legislating “on privacy” and there’s much to be said for both concepts in principle. Less clear-cut is the bill’s data minimization requirement for the retention of personal information.

But as I finally get a chance to look at the bill on the eve of the July 20 Subcommittee markup, I note one potentially troubling procedural aspect of the bill: giving the FTC authority to redefine PII without the procedural safeguards that normally govern the FTC’s operations. The scope of this definition would be hugely important in the future, both because of the security, breach notification and data minimization requirements attached to it, and because this definition would likely be replicated in future privacy legislation—and changes in to this term in one area would likely follow in others. Continue reading →

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Hal Singer on wireless competition

by Jerry Brito on July 19, 2011 · 1 comment

On the podcast this week, Hal Singer, managing director at Navigant Economics and adjunct professor at Georgetown University’s McDonough School of Business, discusses his new paper on wireless competition, co-authored by Gerald Faulhaber of the University of Pennsylvania, and Bob Hahn of Oxford. The FCC produces a yearly report on the competitive landscape of the wireless market, which serves as an overview to policy makers and analysts. The report has found the wireless market competitive in years past; however, in the last two years, the FCC is less willing to interpret the market as competitive. According to Singer, the FCC is using indirect evidence, which looks at how concentrated the market is, rather than direct evidence, which looks at falling prices, to make its assessment. In failing to look at the direct evidence, Singer argues that the report comes to an erroneous conclusion about the real state of competition in wireless markets.

TechFreedom Event on 7/19 – Sorrell: The Supreme Court Confronts Free Speech, Marketing & Privacy

by Adam Marcus on July 15, 2011 · 0 comments

The Supreme Court’s 6-3 decision in Sorrell v. IMS Health has been heralded as a major victory for commercial free speech rights and raised serious questions about how to reconcile privacy regulations with the First Amendment. The high Court struck down a Vermont law requiring that doctors opt in before drug companies could use data about their prescription patterns to market (generally name-brand) drugs to them. But what does the Court’s decision really mean for the regulation of advertising, marketing, and data flows across the economy? Has free speech doctrine fundamentally changed? Will existing privacy laws be subject to new legal challenges? How might the decision affect the ongoing debate about privacy regulation in Congress and at the FTC? Continue reading →

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Copyright Erodes Property℠

by Tom W. Bell on July 14, 2011 · 10 comments

Copyrights and patents differ from tangible property in fundamental ways. Economically speaking, copyrights and patents are not rivalrous in consumption; whereas all the world can sing the same beautiful song, for instance, only one person can swallow a cool gulp of iced tea. Legally speaking, copyrights and patents exist only thanks to the express terms of the U.S. Constitution and various statutory enactments. In contrast, we enjoy tangible property thanks to common law, customary practices, and nature itself. Even birds recognize property rights in nests. They do not, however, copyright their songs.

Those represent but some of the reasons I have argued that we should call copyright an intellectual privilege, reserving property for things that deserve the label. Another, related reason: Calling copyright property risks eroding that valuable service mark.

Property as a service mark, like FedEx or Hooters? Yes. Thanks to long use, property has come to represent a distinct set of legal relations, including hard and fast rules relating to exclusion, use, alienation, and so forth. Copyright embodies those characteristics imperfectly, if at all. To call it intellectual property risks confusing consumers of legal services—citizens, attorneys, academics, judges, and lawmakers—about the nature of copyright. Worse yet, it confuses them about the nature of property. The property service mark suffers not merely dilution from copyright’s infringing use, but tarnishment, too.

As proof of how copyright threatens to erode property, consider Ben Depooter, Fair Trespass, 111 Col. L. Rev. 1090 (2011). From the abstract:

Trespass law is commonly presented as a relatively straightforward doctrine that protects landowners against intrusions by opportunistic trespassers. . . . This Essay . . . develops a new doctrinal framework for determining the limits of a property owner’s right to exclude. Adopting the doctrine of fair use from copyright law, the Essay introduces the concept of “fair trespass” to property law doctrine. When deciding trespass disputes, courts should evaluate the following factors: (1) the nature and character of the trespass; (2) the nature of the protected property; (3) the amount and substantiality of the trespass; and (4) the impact of the trespass on the owner’s property interest. . . . [T]his novel doctrine more carefully weighs the interests of society in access against the interests of property owners in exclusion.

Although I do not agree with every aspect of Prof. Depooter’s doctrinal analysis, he correctly observes that trespass law includes some fuzzy bits. Nor do I complain about his overall form of argument. It is not a tack I would take, but it was near-inevitable that some legal scholar would eventually argue back from copyright to claim that real property, too, should fall prey to a multi-factor, fact-intensive “fair use” defense. I merely take this opportunity to remind fellow friends of liberty that they can expect more of the same—and more erosion of the property service mark—if they fail to recognize copyrights and patents as no more than intellectual privileges.

[Crossposted at Agoraphilia, Technology Liberation Front, and Intellectual Privilege.]

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FCC Mobile Competition Report Is One Green Light for AT&T/T-Mobile Deal

by Larry Downes on July 12, 2011 · 622 comments

By Larry Downes & Geoffrey A. Manne Published in BNA’s Daily Report for Executives

The FCC published in June its annual report on the state of competition in the mobile services marketplace. Under ordinary circumstances, this 300-plus page tome would sit quietly on the shelf, since, like last year’s report, it ‘‘makes no formal finding as to whether there is, or is not, effective competition in the industry.’’

But these are not ordinary circumstances. Thanks to innovations including new smartphones and tablet computers, application (app) stores and the mania for games such as ‘‘Angry Birds,’’ the mobile industry is perhaps the only sector of the economy where consumer demand is growing explosively.

Meanwhile, the pending merger between AT&T and T-Mobile USA, valued at more than $39 billion, has the potential to accelerate development of the mobile ecosystem. All eyes, including many in Congress, are on the FCC and the Department of Justice. Their review of the deal could take the rest of the year. So the FCC’s refusal to make a definitive finding on the competitive state of the industry has left analysts poring through the report, reading the tea leaves for clues as to how the FCC will evaluate the proposed merger.

Make no mistake: this is some seriously expensive tea. If the deal is rejected, AT&T is reported to have agreed to pay T-Mobile $3 billion in cash for its troubles. Some competitors, notably Sprint, have declared full-scale war, marshaling an army of interest groups and friendly journalists.

But the deal makes good economic sense for consumers. Most important, T-Mobile’s spectrum assets will allow AT&T to roll out a second national 4G LTE (longterm evolution) network to compete with Verizon’s, and expand service to rural customers. (Currently, only 38 percent of rural customers have three or more choices for mobile broadband.)

More to the point, the government has no legal basis for turning down the deal based on its antitrust review. Under the law, the FCC must approve AT&T’s bid to buy T-Mobile USA unless the agency can prove the transaction is not ‘‘in the public interest.’’ While the FCC’s public interest standard is famously undefined, the agency typically balances the benefits of the deal against potential harm to consumers. If the benefits outweigh the harms, the Commission must approve. Continue reading →

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Tim Harford on adapting and prospering in a complex world

by Jerry Brito on July 12, 2011

On the podcast this week, Tim Harford, economist and senior columnist for the Financial Times, discusses his new book, Adapt: Why Success Starts With Failure. He argues that people and organizations have a poor record of getting things right the first time; therefore, the evolutionary process of trial and error is a difficult yet necessary process needed to solve problems in our complex world. Harford emphasizes the importance of embracing failure in a society focused on perfection. According to Harford, one can implement this process by trying different things in small doses and developing the ability to distinguish success and failures while experimenting. A design with failure in mind, according to Harford, is a design capable of adaptation.

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