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European Commission Objection to App Store Rules Lack Empirical Support

TOTM The European Commission recently issued a formal Statement of Objections (SO) in which it charges Apple with antitrust breach. In a nutshell, the commission argues that Apple . . .

The European Commission recently issued a formal Statement of Objections (SO) in which it charges Apple with antitrust breach. In a nutshell, the commission argues that Apple prevents app developers—in this case, Spotify—from using alternative in-app purchase systems (IAPs) other than Apple’s own, or steering them towards other, cheaper payment methods on another site. This, the commission says, results in higher prices for consumers in the audio streaming and ebook/audiobook markets.

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Antitrust & Consumer Protection

Impact of the Durbin Amendment’s Cap on Interchange Fees

TL;DR The Dodd-Frank Act of 2010 set price controls for debit-card interchange fees charged by banks with more than $10 billion in assets.

Background…

The Dodd-Frank Act of 2010 set price controls for debit-card interchange fees charged by banks with more than $10 billion in assets. Known colloquially as the “Durbin Amendment” after Sen. Dick Durbin, who sponsored the original proposal, the provision was supposed to cut costs for customers and merchants by cutting the interchange fees charged by large banks roughly in half.

But…

Covered banks and credit unions have recouped these losses by eliminating free checking accounts, raising minimum balance requirements, and charging higher maintenance fees. While retailers have seen cost reductions as a result of the Durbin Amendment, there is little evidence those savings have been passed on to consumers. 

However…

In recent years, some lawmakers have signaled interest in limiting interchange fees on credit-card transactions, as well. Some elements of the retail sector likewise sought a cap on credit card interchange fees as part of COVID-19 relief legislation in 2020. Sen. Durbin himself also recently suggested the Durbin Amendment’s cap on interchange fees should be extended to credit cards. The predictable result would be a reduction in credit and rewards programs made available to consumers.

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Financial Regulation & Corporate Governance

ICLE’s Principles for the Future of Broadband Infrastructure

ICLE Issue Brief The COVID-19 pandemic has highlighted the resilience of U.S. broadband infrastructure, the extent to which we rely on that infrastructure, and the geographies and communities . . .

The COVID-19 pandemic has highlighted the resilience of U.S. broadband infrastructure, the extent to which we rely on that infrastructure, and the geographies and communities where broadband build-out lags behind. As the extent and impact of the digital divide has been made clearer, there is renewed interest in the best ways to expand broadband access to better serve all Americans.

At ICLE, we would caution policymakers to eschew calls to address the digital divide simply by throwing vast sums of money at the problem. They should, instead, pursue a principled approach designed to encourage entry in new regions, while avoiding poorly managed subsidies and harmful price controls that would discourage investment and innovation by incumbent internet service providers (ISPs). Here is how to do that.

  • To the extent it is necessary at all, public investment in broadband infrastructure should focus on providing internet access to those who don’t have it, rather than subsidizing competition in areas that already do.
  • Highly prescriptive mandates—like requiring a particular technology or requiring symmetrical speeds— will be costly and likely to skew infrastructure spending away from those in unserved areas.
  • There may be very limited cases where municipal broadband is an effective and efficient solution to a complete absence of broadband infrastructure, but policymakers must narrowly tailor any such proposals to avoid displacing private investment or undermining competition.
  • Consumer-directed subsidies should incentivize broadband buildout and, where necessary, guarantee the availability of minimum levels of service reasonably comparable to those in competitive markets.
  • Firms that take government funding should be subject to reasonable obligations. Competitive markets should be subject to lighter-touch obligations.

Read the full brief here.

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Telecommunications & Regulated Utilities

What You Need to Know About the EU’s New AI Regulation

TOTM The European Commission this week published its proposed Artificial Intelligence Regulation, setting out new rules for  “artificial intelligence systems” used within the European Union. The . . .

The European Commission this week published its proposed Artificial Intelligence Regulation, setting out new rules for  “artificial intelligence systems” used within the European Union. The regulation—the commission’s attempt to limit pernicious uses of AI without discouraging its adoption in beneficial cases—casts a wide net in defining AI to include essentially any software developed using machine learning. As a result, a host of software may fall under the regulation’s purview.

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Innovation & the New Economy

Open Letter by Public Interest Organizations in Favor of Direct EV Sales and Service

Written Testimonies & Filings The signatories of this letter represent a broad range of public interest organizations who urge that any state laws still prohibiting car companies from selling their cars directly to consumers, or opening service centers for those vehicles, be amended to permit direct sales and service of EVs

We, the signatories of this letter, represent a broad range of public interest organizations. Our individual interests include such diverse matters as environmental protection, fair competition, consumer protection, economic growth and workforce development, and technology and innovation. Some of us frequently find ourselves on different sides of public policy debates. However, today we find common ground on an issue of considerable public importance concerning sales of electric vehicles (“EVs”). Specifically, we urge that any state laws still prohibiting car companies from selling their cars directly to consumers, or opening service centers for those vehicles, be amended to permit direct sales and service of EVs

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Innovation & the New Economy

Open Letter by Academics in Favor of Direct EV Sales and Service

Written Testimonies & Filings The signatories of this letter, active or emeritus professors employed at public or private universities in the United States, come from across the political spectrum, and have a wide variety of views on regulation, environmental and consumer protection, and free enterprise as a general matter, but find common ground on the important issue of automotive direct sales.

We, the signatories of this letter, are active or emeritus professors employed at public or private universities in the United States. We specialize in economics, competition policy, market regulation, industrial organization, or other disciplines bearing on the questions presented in this letter. We come from across the political spectrum, and have a wide variety of views on regulation, environmental and consumer protection, and free enterprise as a general matter, but find common ground on the important issue of automotive direct sales.

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Innovation & the New Economy

Irish Decision Will Raise Stakes to Resolve Transatlantic Data Trade

TOTM We can expect a decision very soon from the High Court of Ireland on last summer’s Irish Data Protection Commission (“IDPC”) decision that placed serious . . .

We can expect a decision very soon from the High Court of Ireland on last summer’s Irish Data Protection Commission (“IDPC”) decision that placed serious impediments in the way of using “standard contractual clauses” (SCC) to transfer data across the Atlantic. That decision, coupled with the July 2020 Court of Justice of the European Union (CJEU) decision to invalidate the Privacy Shield agreement between the European Union and the United States, has placed the future of transatlantic trade in jeopardy.

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Data Security & Privacy

The FTC Did Not ‘Fumble the Future’ in Its Google Search Investigation

TOTM In the final analysis, what the revelations do not show is that the FTC’s market for ideas failed consumers a decade ago when it declined to bring an antitrust suit against Google.

Politico has released a cache of confidential Federal Trade Commission (FTC) documents in connection with a series of articles on the commission’s antitrust probe into Google Search a decade ago. The headline of the first piece in the series argues the FTC “fumbled the future” by failing to follow through on staff recommendations to pursue antitrust intervention against the company. 

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Antitrust & Consumer Protection

Chairman Pai Symposium: Wrap-Up and Thoughts for the Future FCC

TOTM The next chair has an awfully big pair of shoes (or one oversized coffee mug) to fill. Chairman Pai established an important legacy of transparency and process improvement, as well as commitment to careful, economic analysis in the business of the agency.

One of the themes that has run throughout this symposium has been that, throughout his tenure as both a commissioner and as chairman, Ajit Pai has brought consistency and careful analysis to the Federal Communications Commission (McDowellWright). The reflections offered by the various authors in this symposium make one thing clear: the next administration would do well to learn from the considered, bipartisan, and transparent approach to policy that characterized Chairman Pai’s tenure at the FCC.

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Telecommunications & Regulated Utilities