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TOTM Texas Attorney General Ken Paxton’s complaint against Google’s advertising business, joined by the attorneys general of nine other states, continues a long tradition of narrowing market definition to shoehorn market dominance where it may not exist.
U.S. antitrust regulators have a history of narrowly defining relevant markets—often to the point of absurdity—in order to create market power out of thin air. The Federal Trade Commission (FTC) famously declared that Whole Foods and Wild Oats operated in the “premium natural and organic supermarkets market”—a narrowly defined market designed to exclude other supermarkets carrying premium natural and organic foods, such as Walmart and Kroger. Similarly, for the Staples-Office Depot merger, the FTC narrowly defined the relevant market as “office superstore” chains, which excluded general merchandisers such as Walmart, K-Mart and Target, who at the time accounted for 80% of office supply sales.
Read the full piece here.
TOTM The European Commission has unveiled draft legislation that would overhaul the rules governing the online lives of its citizens. The draft rules are something of a mixed bag.
The European Commission has unveiled draft legislation (the Digital Services Act, or “DSA”) that would overhaul the rules governing the online lives of its citizens. The draft rules are something of a mixed bag. While online markets present important challenges for law enforcement, the DSA would significantly increase the cost of doing business in Europe and harm the very freedoms European lawmakers seek to protect. The draft’s newly proposed “Know Your Business Customer” (KYBC) obligations, however, will enable smoother operation of the liability regimes that currently apply to online intermediaries.
TOTM Google is facing a series of lawsuits in 2020 and 2021 that challenge some of the most fundamental parts of its business, and of the internet itself — Search, Android, Chrome, Google’s digital-advertising business, and potentially other services as well.
Google is facing a series of lawsuits in 2020 and 2021 that challenge some of the most fundamental parts of its business, and of the internet itself — Search, Android, Chrome, Google’s digital-advertising business, and potentially other services as well.
TOTM President Donald Trump has repeatedly called for repeal of Section 230. But while Trump and fellow conservatives decry Big Tech companies for their alleged anti-conservative bias, . . .
President Donald Trump has repeatedly called for repeal of Section 230. But while Trump and fellow conservatives decry Big Tech companies for their alleged anti-conservative bias, including at yet more recent hearings, their issue is not actually with Section 230. It’s with the First Amendment.
TL;DR It comes as no surprise to anyone that illegal conduct occurs online. Unfortunately, the individuals and businesses engaging in illegal activity may avoid detection by using tools that hide their identity. This makes enforcement difficult or even impossible.
It comes as no surprise to anyone that illegal conduct occurs online. Unfortunately, the individuals and businesses engaging in illegal activity may avoid detection by using tools that hide their identity. This makes enforcement difficult or even impossible.
In some cases, there may be targeted solutions available whereby intermediaries are required to record and verify the identity of business customers. In principle, this approach could be used to directly pursue parties actually liable for illicit content with minimal burden on either the platforms, or non-business customers.
Read the full explainer here.
TL;DR The Department of Justice and a few Republican state attorneys general have filed an antitrust suit against Google. But… The DOJ case will struggle.
The Department of Justice and a few Republican state attorneys general have filed an antitrust suit against Google. The complaint alleges that Google’s deals with Android smartphone manufacturers, Apple, and third-party browsers to make Google Search their default general search engine are anticompetitive, harming consumers by denying Google’s competitors the scale and data they need to compete.
The DOJ case will struggle. Nothing in these deals limits the ability of users to switch from Google to another search engine if they want to, and switching is trivially easy. Nor do the deals constrain Android smartphone makers from pre-installing competing search engines alongside Google. In fact, consumers benefit from these deals because they mean lower handset prices and greater incentive for Google to invest in Android. Moreover, the competition among general search engines to secure these default positions isn’t constrained by Google, and that competition should encourage all search providers to invest in their products.
TL;DR Over the past 15 years, court decisions have weakened patent protections in the US. While some academics support such weakening, the evidence suggests that it may be having a detrimental effect on innovation.
Over the past 15 years, court decisions have weakened patent protections in the US. While some academics support such weakening, the evidence suggests that it may be having a detrimental effect on innovation.
Some academics argue that patent holders tend to charge excessive license fees to firms that implement their inventions, thereby impeding downstream innovation. The courts have responded by weakening the enforcement of patents in various ways, including by denying patent holders permanent injunctions.
By making it more difficult for patent holders to obtain injunctions, courts have effectively reduced the incentive for firms to invest in primary inventions. This has arguably had a stronger negative effect on overall rates of innovation.
ICLE Issue Brief PPI Director of Technology Policy, Alec Stapp reviews the antitrust cases against IBM, AT&T, and Microsoft and discusses what we can learn from them today. He explains the relevant concepts necessary for understanding the history of market competition in the tech industry.
Alec Stapp, current Director of Technology Policy at Progressive Policy Institute, and former Research Fellow, Law & Economics at International Center for Law & Economics (ICLE), reviews the antitrust cases against IBM, AT&T, and Microsoft and discusses what we can learn from them today. He explains the relevant concepts necessary for understanding the history of market competition in the tech industry.
Big Tech continues to be mired in “a very antitrust situation,” as President Trump so eloquently put it in 2018. Advocates for more aggressive antitrust enforcement in the tech industry often justify their proposals by pointing to the cases against IBM, AT&T, and Microsoft. In announcing her plan to break up the tech giants, Elizabeth Warren highlighted the case against Microsoft in particular:
The government’s antitrust case against Microsoft helped clear a path for Internet companies like Google and Facebook to emerge. The story demonstrates why promoting competition is so important: it allows new, groundbreaking companies to grow and thrive — which pushes everyone in the marketplace to offer better products.
Tim Wu, a law professor at Columbia University, summarized the overarching narrative recently (emphasis added):
If there is one thing I’d like the tech world to understand better, it is that the trilogy of antitrust suits against IBM, AT&T, and Microsoft played a major role in making the United States the world’s preeminent tech economy. The IBM-AT&T-Microsoft trilogy of antitrust cases each helped prevent major monopolists from killing small firms and asserting control of the future (of the 80s, 90s, and 00s, respectively). A list of products and firms that owe at least something to the IBM-AT&T-Microsoft trilogy. (1) IBM: software as product, Apple, Microsoft, Intel, Seagate, Sun, Dell, Compaq (2) AT&T: Modems, ISPs, AOL, the Internet and Web industries (3) Microsoft: Google, Facebook, Amazon
If there is one thing I’d like the tech world to understand better, it is that the trilogy of antitrust suits against IBM, AT&T, and Microsoft played a major role in making the United States the world’s preeminent tech economy.
The IBM-AT&T-Microsoft trilogy of antitrust cases each helped prevent major monopolists from killing small firms and asserting control of the future (of the 80s, 90s, and 00s, respectively).
A list of products and firms that owe at least something to the IBM-AT&T-Microsoft trilogy.
(1) IBM: software as product, Apple, Microsoft, Intel, Seagate, Sun, Dell, Compaq (2) AT&T: Modems, ISPs, AOL, the Internet and Web industries (3) Microsoft: Google, Facebook, Amazon
In other words, by breaking up the current crop of dominant tech companies, we can sow the seeds for the next one. But this reasoning depends on an incorrect — albeit increasingly popular — reading of the history of the tech industry.
Click here to read the full issue brief.
Written Testimonies & Filings On Friday, April 17, 2020, ICLE President and Founder, Geoffrey A. Manne, submitted written testimony to the U.S. House of Representatives Committee on the Judiciary, Subcommittee on Antitrust, Commercial, and Administrative Law.
On Friday, April 17, 2020, ICLE President and Founder, Geoffrey A. Manne, submitted written testimony to the U.S. House of Representatives Committee on the Judiciary, Subcommittee on Antitrust, Commercial, and Administrative Law. Mr. Manne contends that underlying much of the contemporary antitrust debate are two visions of how an economy should work.
One vision, which tends to favor more intervention and regulation than the status quo, sees the economy and society as being constructed from above by laws and courts. In this view, suspect business behavior must be justified to be permitted, and . . . the optimal composition of markets can be known and can be designed by well-intentioned judges and legislators. On the other hand, there is the view of individual and company behavior as emerging from each person’s actions within a framework of property rights and the rule of law. This view sees the economy as a messy discovery process, with business behavior often being experimental in nature. This second conception often sees government intervention as risky, because it assumes a level of knowledge about the dynamics of markets that is impossible to obtain.
One vision, which tends to favor more intervention and regulation than the status quo, sees the economy and society as being constructed from above by laws and courts. In this view, suspect business behavior must be justified to be permitted, and . . . the optimal composition of markets can be known and can be designed by well-intentioned judges and legislators.
On the other hand, there is the view of individual and company behavior as emerging from each person’s actions within a framework of property rights and the rule of law. This view sees the economy as a messy discovery process, with business behavior often being experimental in nature. This second conception often sees government intervention as risky, because it assumes a level of knowledge about the dynamics of markets that is impossible to obtain.
In Manne’s view,
Antitrust law and enforcement policy should, above all, continue to adhere to the error-cost framework, which informs antitrust decision-making by considering the relative costs of mistaken intervention compared with mistaken non-intervention. Specific cases should be addressed as they come, with an implicit understanding that, especially in digital markets, precious few generalizable presumptions can be inferred from the previous case. The overall stance should be one of restraint, reflecting the state of our knowledge. We may well be able to identify anticompetitive harm in certain cases, and when we do, we should enforce the current laws. But dramatic new statutes that undo decades of antitrust jurisprudence or reallocate burdens of proof with the stroke of a pen are unjustified.
Manne goes on to address several of the most important and common misperceptions that seem to be fueling the current drive for new and invigorated antitrust laws. These misperceptions are that:
See his full testimony, here.
