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TOTM The States brought an antitrust complaint against Facebook alleging that various conduct violated Section 2 of the Sherman Act. The ICLE brief addresses the States’ . . .
The States brought an antitrust complaint against Facebook alleging that various conduct violated Section 2 of the Sherman Act. The ICLE brief addresses the States’ allegations that Facebook refused to provide access to an input, a set of application-programming interfaces that developers use in order to access Facebook’s network of social-media users (Facebook’s Platform), in order to prevent those third parties from using that access to export Facebook data to competitors or to compete directly with Facebook.
Read the full piece here.
TOTM The Federal Trade Commission (FTC) is at it again, threatening new sorts of regulatory interventions in the legitimate welfare-enhancing activities of businesses—this time in the . . .
The Federal Trade Commission (FTC) is at it again, threatening new sorts of regulatory interventions in the legitimate welfare-enhancing activities of businesses—this time in the realm of data collection by firms.
Popular Media Teaching the economics of innovation to college students isn’t a tough job. They understand intuitively that pro-competitive policy maximizes their ability to choose the best . . .
Teaching the economics of innovation to college students isn’t a tough job. They understand intuitively that pro-competitive policy maximizes their ability to choose the best product for them. More options for consumers leads to opportunities to optimize their choices. If the cost of one option is too high, for whatever reason, consumers can choose something else.
TOTM A raft of progressive scholars in recent years have argued that antitrust law remains blind to the emergence of so-called “attention markets,” in which firms compete by . . .
A raft of progressive scholars in recent years have argued that antitrust law remains blind to the emergence of so-called “attention markets,” in which firms compete by converting user attention into advertising revenue. This blindness, the scholars argue, has caused antitrust enforcers to clear harmful mergers in these industries.
Popular Media The antitrust debate on app store practices is all over the news almost every day. Last month, the Paris Commercial Court fined Google for abusive . . .
The antitrust debate on app store practices is all over the news almost every day. Last month, the Paris Commercial Court fined Google for abusive dealings with developers, while the Dutch competition authority issued a tenth weekly penalty payment against Apple for failing to comply with its decision to allow dating apps on its App Store to use non-Apple methods of payment. Yet, the US Court of Appeals for the Ninth Circuit will soon rule in Epic’s appeal over the Californian District Court ruling in its case against Apple.
Scholarship Abstract The institution of bankruptcy law seeks to facilitate economic efficiency by enabling the reorganization of economically viable but financially distressed firms and facilitating the . . .
The institution of bankruptcy law seeks to facilitate economic efficiency by enabling the reorganization of economically viable but financially distressed firms and facilitating the liquidation of economically failed firms. Does the U.S. Chapter 11 bankruptcy process perform this filtering function efficiently? Using data from large public bankruptcies between 1981-2010, we find that it does not. Specifically, (1) evidence on matched performance differences between bankrupt firms and industry counterparts indicate that there is no improvement in the performance gap between bankrupt firms and industry right before and after bankruptcy, and, (2) firms emerging from bankruptcy do not exhibit financial performance catch-up behavior to their going concern industry counterparts. In addition, we find (3) judicial bias in favor of reorganization in cases involving firms with more employees and operations closer to the judge’s district, suggesting that bankruptcy judges respond to social-political considerations, when deciding whether to reorganize the firm.
TOTM Federal Trade Commission (FTC) competition rulemakings, like spring, are in the air. But do they make policy or legal sense? Read the full piece here.
Federal Trade Commission (FTC) competition rulemakings, like spring, are in the air. But do they make policy or legal sense?
Amicus Brief In this brief for the 9th U.S. Circuit Court of Appeals, ICLE and 26 distinguished scholars of law & economics argue that the district court in a suit brought by Epic Games rightly found that Apple’s procompetitive justifications outweigh any purported anticompetitive effects in the market for mobile-gaming transactions.
The International Center for Law & Economics (“ICLE”) is a nonprofit, non- partisan global research and policy center aimed at building the intellectual foundations for sensible, economically grounded policy. ICLE promotes the use of law & economics methodologies to inform public policy debates and has longstanding expertise in the evaluation of antitrust law and policy.
Amici also include 26 scholars of antitrust, law, and economics at leading universities and research institutions around the world. Their names, titles, and academic affiliations are listed in Addendum A. All have longstanding expertise in, and copious research on, antitrust law and economics.
Amici have an interest in ensuring that antitrust promotes the public interest by remaining grounded in sensible legal rules informed by sound economic analysis. Amici believe that Epic’s arguments deviate from that standard and promote the private interests of slighted competitors at the expense of the public welfare.
Epic challenges Apple’s prohibition of third-party app stores and in-app payments (“IAP”) systems from operating on its proprietary, iOS platform as a violation of the antitrust laws. But, as the district court concluded, Epic’s real concern is its own business interests in the face of Apple’s business model—in particular, the commission charged for the use of Apple’s IAP system. See Order at 1-ER22, Epic Games, Inc. v. Apple Inc., No. 4:20-CV-05640 (N.D. Cal. Sept. 10, 2021), ECF No. 812 (1-ER3–183). In essence, Epic is trying to recast its objection to Apple’s 30% commission for use of Apple’s optional IAP system as a harm to consumers and competition more broadly.
Epic takes issue with the district court’s proper consideration of Apple’s procompetitive justifications and its finding that those justifications outweigh any anticompetitive effects of Apple’s business model. But Epic’s case fails at step one of the rule of reason analysis. Indeed, Epic did not demonstrate that Apple’s app distribution and IAP practices caused the significant market-wide effects that the Supreme Court in Ohio v. Am. Express Co. (“Amex”) deemed necessary to show anticompetitive harm in cases involving two-sided transaction markets. 138 S. Ct. 2274, 2285–86 (2018). While the district court found that Epic demonstrated some anticompetitive effects, Epic’s arguments below focused only on the effects that Apple’s conduct had on certain app developers and failed to appropriately examine whether consumers were harmed overall. This is fatal. Without further evidence of the effect of Apple’s app distribution and IAP practices on consumers, no conclusions can be reached about the competitive effects of Apple’s conduct.
Nor can an appropriate examination of anticompetitive effects ignore output. It is critical to consider whether the challenged app distribution and IAP practices reduce output of market-wide app transactions. Yet Epic did not seriously challenge that output increased by every measure, and Epic’s Amici ignore output altogether.
Moreover, the district court examined the one-sided anticompetitive harms presented by Epic, but rightly found that Apple’s procompetitive justifications outweigh any purported anticompetitive effects in the market for mobile gaming transactions. The court recognized that the development and maintenance of a closed iOS system and Apple’s control over IAP confers enormous benefits on users and app developers.
Finally, Epic’s reliance on the theoretical existence of less restrictive alternatives (“LRA”) to Apple’s business model is misplaced. Forcing Apple to adopt the “open” platform that Epic champions would reduce interbrand competition, and improperly permit antitrust plaintiffs to commandeer the judiciary to modify routine business conduct any time a plaintiff’s attorney or district court can imagine a less restrictive version of a challenged practice, irrespective of whether the practice promotes consumer welfare. See NCAA v. Alston, 141 S. Ct. 2141, 2161 (2021) (“[C]ourts should not second-guess ‘degrees of reasonable necessity’ so that ‘the lawfulness of conduct turn[s] upon judgments of degrees of e?ciency.’”). Particularly in the context of two-sided platform businesses, such an approach would sacrifice interbrand, systems-level competition for the sake of a superficial increase in competition among a small subset of platform users.
Read the full brief here.
TOTM Every voluntary transaction between a buyer and seller involves the creation of surplus—the difference between the subjective value a buyer attaches to the thing and . . .
Every voluntary transaction between a buyer and seller involves the creation of surplus—the difference between the subjective value a buyer attaches to the thing and the seller’s cost of producing and selling the item. Price and other contract terms determine how that surplus is split between the buyer and seller.