Research Programs
More
What are you looking for?
Showing 9 of 562 Publications
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.
ICLE Issue Brief While data portability may seem like an attractive option in certain markets, experience suggests it is not simple to impose even in cases where the trade-offs seem small.
Lawmakers and regulators are increasingly exploring the imposition of data portability requirements on technology companies, in particular large digital platforms. These would require them to allow users to download their data from those services and/or have it sent to another service on their behalf, either on a one-off or ongoing basis, depending on the proposal.
In this comment, we explore the calls for data portability that arise from distinct and often opposing parts of antitrust law and competition policy, privacy law, and data security. Specifically, we focus on claims that data portability mandates can be used to increase market competition, considering the potential costs and benefits of such requirements, and the relationship between data portability as a pro-competition tool and other moves towards stronger laws governing user privacy.
We begin by discussing the concepts involved in mainstream proposals for data portability. We then examine the various competition issues involved in calls for data portability and discuss the case for and against data portability in these cases. Finally, we discuss in detail the UK’s experience with its Open Banking mandate—the most comprehensive data sharing scheme imposed to effect a compe- tition objective—and assess its effects, both intended and unintended.
Read the full brief here.
Scholarship Property rights are an essential economic institution. As the great UCLA economist Harold Demsetz famously argued, property rights spur specialization, investment, and competition, which in turn increase productivity, innovation, and wealth throughout the economy.
Property rights are an essential economic institution. As the great UCLA economist Harold Demsetz famously argued, property rights spur specialization, investment, and competition, which in turn increase productivity, innovation, and wealth throughout the economy.
The same holds true for intellectual property rights, including patents, which are no less important than their traditional counterparts in facilitating innovation and the efficient organization of productive economic activity, particularly in the modern, high-tech economy. A wealth of literature indicates that much, if not most, of the value of innovation is passed on to consumers in the form of lower prices and higher quality goods and services. Indeed, as Nobel Laureate William Nordhaus finds, even in the presence of patents to facilitate the appropriability of the value of innovation by inventors, “only a miniscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers.” Thus, although measurement problems plague such research, there is strong evidence that nations with greater levels of patent protection have historically achieved significantly higher innovative output than those with lower levels of patent protection.
TOTM In the face of an unprecedented surge of demand for bandwidth as Americans responded to COVID-19, the nation’s Internet infrastructure delivered for urban and rural users alike. In . . .
In the face of an unprecedented surge of demand for bandwidth as Americans responded to COVID-19, the nation’s Internet infrastructure delivered for urban and rural users alike. In fact, since the crisis began in March, there has been no appreciable degradation in either the quality or availability of service. That success story is as much about the network’s robust technical capabilities as it is about the competitive environment that made the enormous private infrastructure investments to build the network possible.
Read the full piece here.
Scholarship Geoffrey A. Manne, Kristian Stout, Eric Fruits, "The Fatal Economic Flaws of the Contemporary Campaign Against Vertical Integration", Kansas Law Review, Kansas Law Review Inc. 2019 vol. 68(5)
This paper proceeds as follows. First, we examine the academic calls for stronger presumptions against vertical mergers based on, among other things, the alleged substitutability of contract for merger as a means of vertical integration, and the alleged equivalence of harms that arise from vertical and horizontal mergers. We analyze these claims on their own terms before proceeding in the next part to survey the economic literature that undermines the foundation of these arguments. We then proceed to analyze the critical differences between horizontal and vertical mergers that makes conflation of these two distinct methods of business combination impossible to truly treat as analytically equivalent. Next, we discuss the mistake of substituting static analysis for a more thorough dynamic analysis, particularly in industries marked by fluid product cycles and flexible business models.
Amicus Brief ICLE supports the petition for certiorari filed by the National Association of Broadcasters (“NAB”), et al. seeking this Court’s review of the order issued by the U.S. Court of Appeals for the Third Circuit in Prometheus Radio Project v. FCC.
This proceeding is fast becoming the Jarndyce v. Jarndyce of administrative law. For nearly two decades, a three-judge panel in the Third Circuit has blocked the FCC’s efforts to comply with its statutory obligation under the 1996 Act to review its media ownership rules periodically and repeal or modify any rules that are no longer necessary because of increased competition in local media markets.
The order in Prometheus IV is the most recent and extreme example of the Third Circuit panel’s improper interference with the FCC’s efforts to comply with this statutory obligation. In it, the panel vacated an FCC order that would have repealed or modified media ownership regulations that even the panel did not dispute are no longer needed to achieve their original purpose of promoting competition, localism, and diversity of viewpoints. See Prometheus IV, 939 F.3d at 584-588 (disputing the FCC’s analysis and conclusions as to female and minority ownership diversity, but not as to promotion of competition, localism or diversity of viewpoints).
The Third Circuit panel instead vacated the FCC’s order because two judges on the panel believed those regulations might serve another, altogether different objective—promoting minority and female ownership—that is nowhere mentioned in either the Communications Act of 1934, 47 U.S.C. § 151 et seq., or the 1996 Act. See Prometheus IV, 939 F.3d at 584- 588. In so doing, the panel exceeded the limits of judicial review authorized by the Administrative Procedure Act, 5 U.S.C. § 551 et seq., by substituting its judgment for that of the agency to which Congress had expressly delegated authority to determine whether these media ownership regulations were still both necessary and in the public interest, and by placing burdens on the agency beyond those established by Congress.
In overstepping these limits, the Third Circuit panel will further delay the elimination of regulations that are not only no longer necessary, but that are also limiting the ability of local newspapers and broadcasters to compete with increasingly important digital media platforms. These outdated regulations have already contributed to an “extinction-level crisis” in the newspaper industry, and the spread of that crisis to local broadcasters in smaller markets is imminent. Consequently, the panel’s order will cause serious and immediate injury to the public’s First Amendment interest in preserving a strong local free press. See Associated Press v. United States, 326 U.S. 1, 28 (1945) (a “free press is indispensable to the workings of our democratic society”) (Frankfurter, J., concurring).
Scholarship "Platform competition is more complicated than simple theories of vertical discrimination would have it, and there is certainly no basis for a presumption of harm."
Over the past several years, a growing number of critics have argued that big tech platforms harm competition by favoring their own content over that of their complementors. Over time, this “vertical discrimination presumption” has become the go-to argument for big tech’s staunchest critics seeking to level novel charges of anticompetitive conduct against these platforms. Indeed, judging by the grandiose claim made by one critic at a recent Senate hearing—“Digital platform self-preferencing threatens the American Dream”—the argument may be the very apotheosis of “populist antitrust.”
According to this line of argument, complementors are “at the mercy” of tech platforms. By discriminating in favor of their own content and against independent “edge providers,” tech platforms cause “the rewards for edge innovation [to be] dampened by runaway appropriation,” leading to “dismal” prospects “for independents in the internet economy—and edge innovation generally.”
The problem, however, is that the claims of presumptive harm from vertical discrimination are based neither on sound economics nor evidence.
Scholarship When Congress expands executive power for purposes of protecting the nation against an emergency—whether real or imagined—that power is often turned against vulnerable, marginalized populations that are easily scapegoated as threats to the state.
On February 15, 2019, President Donald Trump issued Proclamation 9844 pursuant to the National Emergencies Act of 19761 (NEA), declaring a “National Emergency Concerning the Southern Border of the United States.” On February 27, the House of Representatives voted 245–182 to overturn the declaration of national emergency; on March 14, the Senate agreed with the House in a 59–41 vote. The following day, the President vetoed the joint resolution. Neither house of Congress was able to override the veto and so, more than a year later, the emergency remains in place.
The border wall emergency declared by President Trump has awakened strident opposition in Congress, which is a historical anomaly. And yet, although virtually none of the previous declarations engendered the vehement outcry that accompanied the border wall emergency declaration, they were substantially different only in scope, not in kind. Including Trump’s border wall emergency declaration and four subsequent emergency declarations, Presidents going back to Jimmy Carter have declared a total of 57 emergencies under the NEA. Thirty-four of these are still active. And all but four of them could hardly be called emergencies. Even without the partisan political context of the border wall dispute, any of these should have been sufficient to raise the question of whether and how to rein in presidential power.
Regulatory Comments In order to maximize the benefits of broadband to society, including through the provision of public safety communications and services, public policy must promote the . . .
In order to maximize the benefits of broadband to society, including through the provision of public safety communications and services, public policy must promote the proper incentives for broadband buildout. Both the 2015 Title II Open Internet Order (the “OIO”) and the 2017 Restoring Internet Freedom Order (the “RIFO”) were premised on this. But each adopted a different approach to accomplishing this objective.
The OIO premised its rules on the theory that ISPs are “gatekeepers,” poised to kill the golden goose of demand for broadband by adopting business practices that could reduce edge innovation.
The key insight of the virtuous cycle is that broadband providers have both the incentive and the ability to act as gatekeepers standing between edge providers and consumers. As gatekeepers, they can block access altogether; they can target competitors, including competitors to their own video services; and they can extract unfair tolls. Such conductwould, as the Commission concluded in 2010, “reduce the rate of innovation at the edge and, in turn, the likely rate of improvements to network infrastructure.” In other words, when a broadband provider acts as a gatekeeper, it actually chokes consumer demand for the very broadband product it can supply.
The RIFO, on the other hand, properly conceives of ISPs as intermediaries in a two-sided market that aim to maximize the value of the market by adopting practices, like pricing structures and infrastructure investment, that increase the value for both sides of the market.
We find it essential to take a holistic view of the market(s) supplied by ISPs. ISPs, as well as edge providers, are important drivers of the virtuous cycle, and regulation must be evaluated accounting for its impact on ISPs’ capacity to drive that cycle, as well as that of edge providers. The underlying economic model of the virtuous cycle is that of a two- sided market. In a two-sided market, intermediaries—ISPs in our case—act as platforms facilitating interactions between two different customer groups, or sides of the market— edge providers and end users. . . . The key characteristic of a two-sided market, however, is that participants on each side of the market value a platform service more as the number and/or quality of participants on the platform’s other side increases. (The benefits subscribers on one side of the market bring to the subscribers on the other, and vice versa, are called positive externalities.) Thus, rather than a single side driving the market, both sides generate network externalities, and the platform provider profits by inducing both sides of the market to use its platform. In maximizing profit, a platform provider sets prices and invests in network extension and innovation, subject to costs and competitive conditions, to maximize the gain both sides of the market obtain from interacting across the platform. The more competitive the market, the larger the net gains to subscribers and edge providers. Any analysis of such a market must account for each side of the market and the platform provider.
In other words, the fundamental difference of approach between the two Orders turns on whether it is edge innovation, pushing against ISP incentives to expropriate value from edge providers, that primarily drives network demand and thus encourages investment, or whether optimization decisions by both ISPs and the edge are drivers of network value. The RIFO rightly understands that ISPs have sharp incentives both to innovate as platforms (and thus continue to attract and retain end users), as well as to continue to make their services useful to edge providers (and, by extension, the consumers of those edge providers’ services).
The D.C. Circuit upheld RIFO’s fundamental rationale as a supportable basis for the FCC’s rules in Mozilla v. FCC. But it also accepted that three specific concerns were insufficiently examined in the RIFO, and remanded the case to the FCC to address them. Among these was the question of the RIFO’s implications for public safety. In its Public Notice seeking to refresh the record on the remanded issues, the Wireline Competition Bureau asks (among other things):
These are the questions to which this comment is primarily addressed.
In Part I, we discuss how the RIFO fosters investment in broadband buildout, in particular by enabling prioritization and by reducing the effects of policy uncertainty. In Part II, we describe how that network investment benefits public safety both in both direct and indirect ways. In Part III, we highlight the benefits to public safety from prioritization, in particular, which is facilitated by the RIFO.
Read the full comments here.
