Showing 9 of 22 Publications by Alec Stapp

TPRI Conference on Technology and Declining Economic Dynamism Acquisitions by Dominant Firms

Presentations & Interviews TPRI Conference Slides on Killer Acquisitions & Kill Zones

ICLE’s Geoffrey Manne, Dirk Auer, and Alec Stapp presented at the Technology and Declining Economic Dynamism conference, hosted by Boston University’s Technology and Policy Research Initiative, on the topic of acquisitions by dominant firms. Full video of the panel can be found here, while the the presentation slides are here. 

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Antitrust & Consumer Protection

The Ghosts of Antitrust Past

ICLE Issue Brief PPI Director of Technology Policy, Alec Stapp reviews the antitrust cases against IBM, AT&T, and Microsoft and discusses what we can learn from them today. He explains the relevant concepts necessary for understanding the history of market competition in the tech industry.

Alec Stapp, current Director of Technology Policy at Progressive Policy Institute, and former Research Fellow, Law & Economics at International Center for Law & Economics (ICLE), reviews the antitrust cases against IBM, AT&T, and Microsoft and discusses what we can learn from them today. He explains the relevant concepts necessary for understanding the history of market competition in the tech industry.

Introduction

Big Tech continues to be mired in “a very antitrust situation,” as President Trump so eloquently put it in 2018. Advocates for more aggressive antitrust enforcement in the tech industry often justify their proposals by pointing to the cases against IBM, AT&T, and Microsoft. In announcing her plan to break up the tech giants, Elizabeth Warren highlighted the case against Microsoft in particular:

The government’s antitrust case against Microsoft helped clear a path for Internet companies like Google and Facebook to emerge. The story demonstrates why promoting competition is so important: it allows new, groundbreaking companies to grow and thrive — which pushes everyone in the marketplace to offer better products.

Tim Wu, a law professor at Columbia University, summarized the overarching narrative recently (emphasis added):

If there is one thing I’d like the tech world to understand better, it is that the trilogy of antitrust suits against IBM, AT&T, and Microsoft played a major role in making the United States the world’s preeminent tech economy.

The IBM-AT&T-Microsoft trilogy of antitrust cases each helped prevent major monopolists from killing small firms and asserting control of the future (of the 80s, 90s, and 00s, respectively).

A list of products and firms that owe at least something to the IBM-AT&T-Microsoft trilogy.

(1) IBM: software as product, Apple, Microsoft, Intel, Seagate, Sun, Dell, Compaq
(2) AT&T: Modems, ISPs, AOL, the Internet and Web industries
(3) Microsoft: Google, Facebook, Amazon

In other words, by breaking up the current crop of dominant tech companies, we can sow the seeds for the next one. But this reasoning depends on an incorrect — albeit increasingly popular — reading of the history of the tech industry.

Click here to read the full issue brief.

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Antitrust & Consumer Protection

Comments on the California Consumer Privacy Act (CCPA)

Regulatory Comments We begin our analysis of the California Consumer Privacy Act (“CCPA”) with a discussion of the standardized regulatory impact assessment (SRIA) prepared for the AG’s Office by Berkeley Economic Advising and Research, LLC.

We begin our analysis of the California Consumer Privacy Act (“CCPA”) with a discussion of the standardized regulatory impact assessment (SRIA) prepared for the AG’s Office by Berkeley Economic Advising and Research, LLC. The bottom-line cost figures from this report are staggering: $55 billion in upfront costs and $16.5 billion in additional costs over the next decade. The analysis includes large benefits as well, but as we show in the full comments, the actual costs are even higher than the SRIA estimates and the benefits fall far short of making up for those costs.

We also draw on the the early evidence coming out of the EU related to GDPR enforcement and compliance to highlight some potential pitfalls that California is facing. In particular, after its first twelve month period in force, the compliance costs were astronomical; enforcement of individual “data rights” led to unintended con- sequences; “privacy protection” seems to have undermined market competition; and there have been large unseen — but not unmeasurable — costs in forgone startup investment.

Finally, we note that, despite the DC Circuit trimming the FCC’s 2018 Restoring Internet Freedom Order, the fact remains that the FCC still retains a conflict-preemption authority to specifically preempt state laws that are incompatible with its regulations. The DC Circuit only limited the FCC’s ability to generally preempt all potentially conflicting state laws, requiring that each preemption be challenged in a fact-intensive inquiry. Similarly, it is also possible that the broad extent of the CCPA’s rules, and their impositions on firms outside of California’s borders could lead to Dormant Commerce Clause challenges. Activities that “inherently require a uniform system of regulation” or that “impair the free flow of materials and products across state borders” violate the Dormant Commerce Clause. As the FCC noted in its RIF Order, Internet-based communications is such a type of activity.

We therefore offered the following suggestions:

  1. Clarify the definition of “personal information” so that it is not overinclusive of incidental information and also does not allow third-parties to claim rights over others’ data;
  2. Stress that the “valuation” of data is a difficult exercise, and the requirements to value data when offering different tiers of service shall be interpreted liberally;
  3. Clarify that the definition of a “business” does not mean that any firm that “receives for the business’s commercial purposes” an individual’s personal information includes firms that merely “receive” information on consumers as a normal part of operations. For example, a website that logs a user’s behavior through its site “receives” location, IP Address, and other information about that user, but should not be included in such a broad definition;
  4. Delay implementation until there is a broadly available means of ensuring that firms can reliably ascertain the validity of user data requests (i.e. that, as is happening under the GDPR, third- parties are not able to obtain information on the customers of firms by representing themselves as those customers); and
  5. Use the authority granted by the CCPA to establish a necessary exception in order to comply with applicable federal law to temporarily delay implementation until (1) it is determined that the law does not violate the Dormant Commerce Clause, and (2) the AG’s Office has the opportunity to consult with the FCC and ensure that the CCPA is not subject to conflict-preemption in light of the FCC’s authority over Internet communications.
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Data Security & Privacy

Google And Facebook Didn’t Kill Newspapers: The Internet Did

Popular Media There is an infamous chart in media circles. It shows newspaper advertising revenue steadily rising until about the year 2000. A few years later, it . . .

There is an infamous chart in media circles. It shows newspaper advertising revenue steadily rising until about the year 2000. A few years later, it drops off a cliff. Superimposed on this chart is the exponential growth of Google and Facebook…

Read the full piece here.

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Innovation & the New Economy

Why Data Is Not the New Oil

TOTM “Data is the new oil,” said Jaron Lanier in a recent op-ed for The New York Times. Lanier’s use of this metaphor is only the latest instance of what has become the dumbest meme in tech policy.

“Data is the new oil,” said Jaron Lanier in a recent op-ed for The New York Times. Lanier’s use of this metaphor is only the latest instance of what has become the dumbest meme in tech policy. As the digital economy becomes more prominent in our lives, it is not unreasonable to seek to understand one of its most important inputs. But this analogy to the physical economy is fundamentally flawed. Worse, introducing regulations premised upon faulty assumptions like this will likely do far more harm than good.

Read the full piece here.

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Data Security & Privacy

Any Way You Measure It, Warren Is Wrong to Claim “Facebook and Google Account for 70% of All Internet Traffic”

TOTM Seeing internet traffic is not the same thing as “account[ing] for” — or controlling or even directly influencing — internet traffic.

When she rolled out her plan to break up Big Tech, Elizabeth Warren paid for ads (like the one shown above) claiming that “Facebook and Google account for 70% of all internet traffic.” This statistic has since been repeated in various forms by Rolling StoneVoxNational Review, and Washingtonian. In my last post, I fact checked this claim and found it wanting.

Read the full piece here.

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Antitrust & Consumer Protection

Comments of ICLE, re: Tunney Act Review of the Sprint-T-Mobile Merger

Regulatory Comments ICLE filed a letter summarizing its analysis of the relevant empirical literature on mobile carrier mergers as part of the Tunney Act review process.

The central question of a merger review is the likely effect that the transaction will have on consumers. The DOJ’s complaint against the Sprint-T-Mobile merger is built upon the allegation that the proposed transaction represents a reduction from four to three national facilities-based mobile network operators (a so-called “4-to-3 merger”), and that such a transaction would reduce competition and result in “higher prices, reduced innovation, reduced quality and fewer choices” in the marketplace. This is an empirical question that has been studied by numerous scholars in recent years.

The upshot of the empirical literature is that, in fact, such mergers appear to increase, not decrease, innovation. Moreover, the research is, at best, inconclusive with respect to the price effects of such mergers. Based on these findings, we believe that the DOJ was correct to approve the transaction, and that this is so regardless of the expected competitive effects of the Final Judgment’s Divestiture Package, which is likely unnecessary to ensure that the market remains competitive.

ICLE filed a letter summarizing its analysis of the relevant empirical literature on mobile carrier mergers as part of the Tunney Act review process.

The letter and attached analysis can be read here. 

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Antitrust & Consumer Protection

Debunking Elizabeth Warren’s Claim That “More Than 70% of All Internet Traffic Goes through Google or Facebook”

TOTM Less than 20 percent of all Internet traffic goes through sites owned or operated by Google or Facebook. While this statistic may be less eye-popping than the one trumpeted by Warren and other antitrust activists, it does have the virtue of being true.

In March of this year, Elizabeth Warren announced her proposal to break up Big Tech in a blog post on Medium. She tried to paint the tech giants as dominant players crushing their smaller competitors and strangling the open internet. This line in particular stood out: “More than 70% of all Internet traffic goes through sites owned or operated by Google or Facebook.

Read the full piece here.

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Antitrust & Consumer Protection

A Review of the Empirical Evidence on the Effects of Market Concentration and Mergers in the Wireless Telecommunications Industry

ICLE White Paper The merger between T-Mobile and Sprint has been characterized as a “4-to-3 merger” because after the merger there will be 3 national mobile network operators. . . .

The merger between T-Mobile and Sprint has been characterized as a “4-to-3 merger” because after the merger there will be 3 national mobile network operators. Concerns have been raised regarding the effects of such mergers on competition and consumer welfare. Seeking to understand and evaluate the basis for these concerns, the International Center for Law and Economics (ICLE) undertook a comprehensive review of the economic effects of mergers and other factors affecting market concentration in the wireless telecommunications industry. The review found:

  1. In general, wireless mergers resulted in increased investment both by individual companies and by the industry as a whole. This finding suggests that such mergers have consumer benefits, due to the improvements in quality of service — including availability and speed — that result from such investments. 
  2. Levels of investment were highest in markets with three firms (although levels of investment in markets with four firms were not significantly lower).  
  3. While the effects of market concentration on prices were “conclusively inconclusive,” when mergers result in more symmetrical competition (i.e. the resultant firms are of more equal size), competition is enhanced and consumers benefit both from improvements in quality of service and price.
  4. There is no universal rule regarding the “optimal” number of mobile operators. But for a geographically large market like the U.S., with relatively low population density, it might well be three (and there is no good reason to believe that it is four).

When evaluating the merits of a merger, authorities are charged with identifying the effects on the welfare of consumers. On the basis of the studies that we review, “4-to-3 mergers” appear to generate net benefits to consumer welfare in the form of increased investment, while the effects on price are inconclusive.

Click here to download the report.

Click here to download the appendices.

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Antitrust & Consumer Protection