Abstract

The right to be forgotten, which began as a part of European law, has found increasing acceptance in state privacy statutes recently enacted in the U.S. Commentators have largely analyzed the right to be forgotten as a clash between the privacy interests of data subjects and the free speech rights of those holding the data. Framing the issues as a clash of individual rights largely ignores the important scholarly literatures exploring how giving data subjects the ability to render certain information unobservable can give rise to systemic effects that can harm society as a whole. This Essay fills this gap by exploring what the right to be forgotten can learn from the literatures exploring the implications of adverse selection, moral hazard, and the emerging policy intervention know as ban the box.

Abstract

Medical devices are increasingly connected, both to cyber networks and to sensors collecting data from physical stimuli. These cyber-physical systems pose a new host of deadly security risks that traditional notions of cybersecurity struggle to take into account. Previously, we could predict how algorithms would function as they drew on defined inputs. But cyber-physical systems draw on unbounded inputs from the real world. Moreover, with wide networks of cyber-physical medical devices, a single cybersecurity breach could pose lethal dangers to masses of patients.

The U.S. Food and Drug Administration (FDA) is tasked with regulating medical devices to ensure safety and effectiveness, but its regulatory approach—designed decades ago to regulate traditional medical hardware—is ill-suited to the unique problems of cybersecurity. Because perfect cybersecurity is impossible and every cybersecurity improvement entails costs to affordability and health, designers need standards that balance costs and benefits to inform the optimal level of risk. FDA, however, conducts limited cost-benefit analyses, believing that its authorizing statute forbids consideration of economic costs.

We draw on statutory text and case law to show that this belief is mistaken and that FDA can and should conduct cost-benefit analyses to ensure safety and effectiveness, especially in the context of cybersecurity. We describe three approaches FDA could take to implement this analysis as a practical matter. Of these three, we recommend an approach modeled after the Federal Trade Commission’s cost-benefit test. Regardless of the specific approach FDA chooses, however, the critical point is that the agency must weigh costs and benefits to ensure the right level of cybersecurity. Until then, medical device designers will face continued uncertainty as cybersecurity threats become increasingly dangerous.

ICLE Academic Affiliate Christopher Yoo participated in the FTC’s Hearing #11: The FTC’s Role in a Changing World on the panel, Implications of Different Legal Traditions and Regimes for International Cooperation. Read the full transcript here. Video of the event is embedded below

ICLE academic affiliate Christopher Yoo participated in the FTC’s Hearing #10: Competition and Consumer Protection Issues in U.S. Broadband Markets on the panel, Evolving Markets and Technological Developments: Policy Applications. Read the full transcript here. Video of the event is embedded below.

Summary

While the three-step burden-shifting framework for evaluating antitrust cases under the rule of reason is conceptually well-accepted and understood, case law remains unclear regarding what suffices to satisfy each party’s burden at each of the three stages. This case offers the Court an opportunity both to clarify what constitutes harm to competition and to explain the nature of the shifting burdens in rule of reason analysis.

In their merits briefing, rather than offer tools for providing structure to the rule of reason, Petitioners urge the Court to adopt an amorphous standard that would permit plaintiffs to satisfy their burden without evidence of durable market power— and even without direct proof of anticompetitive effects as the term is traditionally and properly understood in Section 1 jurisprudence. Acquiescing to Petitioners’ vague conception of a plaintiff’s prima facie burden would untether antitrust law from rigorous economic analysis and harm consumers by increasing significantly the risk of error in lower courts. This would leave litigants with little to no certainty regarding what evidence they should introduce, let alone what evidence a court would find persuasive in any given case, and no clarity as to what businesses can and cannot do.

Without an approach to establishing plaintiff’s burden disciplined by economic analysis and proof, the balance of false positive (Type I) and false negative (Type II) errors—which is critical to proper adjudication of the antitrust laws—would be thrown off keel. The fundamental goal of antitrust law is to foster consumer welfare by enhancing or increasing output in a relevant market. Output is the touchstone of antitrust analysis because a dominant firm’s ability to constrain market-wide output is what allows it to anticompetitively raise prices and harm consumers. Petitioners’ approach, however, would flip this analysis on its head and allow price effects to dictate results, thereby permitting courts to ignore output effects—the sine qua non of antitrust analysis—in ascertaining whether a plaintiff satisfied its prima facie burden.

Such a result is contrary to this Court’s precedent and particularly problematic here. This Court has recognized that vertical restraints might “[increase prices] in the course of promoting procompetitive effects.” Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 895-96 (2007) (citing Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 728 (1988)). And modern economics provides no basis for assuming that a demonstration of price effects on only one side of a two-sided market accurately represents the market-wide effects of a course of conduct. Rather, economics predicts that market-wide welfare might increase, decrease, or remain neutral given price effects on a single side. Only an analysis of the market as a whole can illuminate the true competitive implications.

This brief explains amici’s understanding of the relevant economic analysis. It explains why basic economic principles underlying the analysis of multi-sided markets lead to the conclusion that a plaintiff should be required to demonstrate, at a minimum, that: (1) the allegedly unlawful restraint caused anticompetitive effects in the form of actual or probable restricted output market-wide—a showing that logically requires analyzing both sides of a two-sided market; and (2) the defendant had sufficient market power to restrict output in a properly defined market. These two requirements align with sound economics and would also provide clear guidance for courts in applying the rule of reason.