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The Finnish consultancy Rewheel periodically issues reports using mobile wireless pricing information to make claims about which countries’ markets are competitive and which are not. For example, Rewheel claims Canada and Greece have the “least competitive monthly prices” while the United Kingdom and Finland have the most competitive.

Read the full piece here.

The European Commission’s recent Google Android decision will go down as one of the most important competition proceedings of the past decade. Yet, in-depth reading of the 328-page decision leaves attentive readers with a bitter taste. The problem is simple: while the facts adduced by the Commission are arguably true, the normative implications it draws—and thus the bases for its action—are largely conjecture.

This paper argues that the Commission’s decision is undermined by unsubstantiated claims and non sequiturs, the upshot of which is that the Commission did not establish that Google had a “dominant position” in an accurately defined market, or that it infringed competition and harmed consumers. The paper analyzes the Commission’s reasoning on questions of market definition, barriers to entry, dominance, theories of harm, and the economic evidence adduced to support the decision.

Section I discusses the Commission’s market definition It argues that the Commission produced insufficient evidence to support its conclusion that Google’s products were in a different market than Apple’s alternatives.

Section II looks at the competitive constraints that Google faced. It finds that the Commission wrongly ignored the strong competitive pressure that rivals, particularly Apple, exerted on Google. As a result, it failed to adequately establish that Google was dominant – a precondition for competition liability under article 102 TFEU.

Section III focuses on Google’s purported infringements. It argues that Commission failed to convincingly establish that Google’s behavior prevented its rivals from effectively reaching users of Android smartphones. This is all the more troubling when one acknowledges that Google’s contested behavior essentially sought to transpose features of its rivals’ closed platforms within the more open Android ecosystem.

Section IV reviews the main economic arguments that underpin the Commission’s decision. It finds that the economic models cited by the Commission poorly matched the underlying fact patterns. Moreover, the Commission’s arguments on innovation harms were out of touch with the empirical literature on the topic.

In short, the Commission failed to adequately prove that Google infringed European competition law. Its decision thus sets a bad precedent for future competition intervention in the digital sphere.

Ursula von der Leyen has just announced the composition of the next European Commission. For tech firms, the headline is that Margrethe Vestager will not only retain her job as the head of DG Competition, she will also oversee the EU’s entire digital markets policy in her new role as Vice-President in charge of digital policy. Her promotion within the Commission as well as her track record at DG Competition both suggest that the digital economy will continue to be the fulcrum of European competition and regulatory intervention for the next five years.

Read the full piece here.

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

Abstract

We develop a model of inter-temporal and intra-temporal price discrimination by monopoly airlines to study the ability of different discriminatory pricing mechanisms to increase e?iciency and the associated distributional implications. To estimate the model, we use unique data from international airline markets with flight-level variation in prices across time, cabins, and markets and information on passengers’ reasons for travel and time of purchase. The current pricing practice yields approximately 77% of the first-best welfare. The source of this ine?iciency arises primarily from private information about passenger valuations, not dynamic uncertainty about demand. We also find that if airlines could discriminate between business and leisure passengers, total welfare would improve at the expense of business passenger surplus. Also, replacing the current pricing that involves screening passengers across cabin classes with offering a single cabin class has minimal effect on total welfare.

I recently published a piece in the Hill welcoming the Canadian Supreme Court’s decision in Google v. Equustek. In this post I expand (at length) upon my assessment of the case.

In its decision, the Court upheld injunctive relief against Google, directing the company to avoid indexing websites offering the infringing goods in question, regardless of the location of the sites (and even though Google itself was not a party in the case nor in any way held liable for the infringement). As a result, the Court’s ruling would affect Google’s conduct outside of Canada as well as within it.

Read the full piece here. 

It’s fitting that FCC Chairman Ajit Pai recently compared his predecessor’s jettisoning of the FCC’s light touch framework for Internet access regulation without hard evidence to the Oklahoma City Thunder’s James Harden trade. That infamous deal broke up a young nucleus of three of the best players in the NBA in 2012 because keeping all three might someday create salary cap concerns. What few saw coming was a new TV deal in 2015 that sent the salary cap soaring.

Read the full piece here.

In a recent article for the San Francisco Daily Journal I examine Google v. Equustek: a case currently before the Canadian Supreme Court involving the scope of jurisdiction of Canadian courts to enjoin conduct on the internet.

In the piece I argue that…

Read the full piece here.

Summary

The Commission’s interest in protecting the privacy of its citizens is commendable. This concern, however, should be well tempered by humility, and the Commission’s ultimate decision should be guided by the understanding that contemporary technology and market innovations have afforded consumers a degree of choice unparallelled in the history of the European Union. While some firms may build their products with the requirement that consumers allow them to use personal information, others will not. And when consumers defect from products that do not meet their individual mix of privacy, price, and other preferences, firms will take notice and change their behavior accordingly.

This leads to another related point: innovation moves so quickly today that uniform prescriptive regulation intended to govern the behavior of many thousands of firms and millions of consumers is doomed to frustration if not outright failure. Moreover, broad regulations meant to bring industry to heel frequently work to the benefit of incumbents, driving out smaller competitors or making entry nearly impossible, only further narrowing consumer choices and guaranteeing less than optimal results for all of society.

With that said, there are certainly actions for the Commission to take that ensure a competitive environment in which consumer interests are adequately protected. Chief among these areas would be to enact regulations that control the damaging effects of costly data localization rules. Overall, however, the Commission would do best to leave much of the implementation of privacy regulations to the individual EU members who are most in touch with the challenges and desires of their own constituents.