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Business Leader – ICLE Director of Competition Policy Sam Bowman was cited by Business Leader in a story about the the Competition and Markets Authority’s move to block Facebook parent Meta’s acquisition of Giphy. The full story is available here.

The authors also fear it could leave the UK relatively worse off as a place to set up a tech business if other countries, especially the United States, don’t follow suit. Sam Bowman, the report’s co-author, said: “The UK government has misjudged the prospects for a similar crackdown on tech M&A in the United States, and as a result may back Britain into a corner. If we proceed with such stringent rules blocking these deals, but the US does not, the UK will become a terrible place to found a tech startup, since it will be so much harder to be acquired here than it would be in Silicon Valley. Even the European Union is not proposing such anti-tech rules. The UK startup scene is something to be proud of – it would be a profound mistake to make its life so much harder, and leave the UK as a global outlier.”

The report, authored by entrepreneurship think tank The Entrepreneurs Network along with the International Center for Law & Economics, highlights the importance of takeovers to the UK’s startup ecosystem.

Townhall – ICLE President Geoffrey Manne was cited by Townhall in a piece about antitrust legislation recently introduced in the U.S. Senate. You can read the full piece here.

If these reform efforts succeed, lawmakers will have created a powerful antitrust regime that outlaws pro-competitive, beneficial conduct but is insulated from scrutiny. Just like the European Commission, which holds significant discretionary power and, according to legal expert Geoffrey Manne, “enjoys remarkable — even implausible — success in defending its decisions.”

Bloomberg Law – ICLE Senior Fellow Dirk Auer was quoted by Bloomberg Law in a story about a ruling by the EU’s General Court that Google violated European Competition rules. The full story is available (behind a subscriber firewall) here.

“The ruling will make it harder for platforms to favor their own services because they risk infringing competition law as soon as doing so harms a rival,” said Dirk Auer, a professor at Liege University in Belgium. “Unfortunately, this will be detrimental to consumers.”

TorrentFreak – The International Center for Law & Economics (ICLE) was cited by TorrentFreak in a piece about its recent comments to the U.S. Department of Commerce on anonymous Internet as a Service communications. You can read the full piece here.

Last week, the response from The International Center for Law and Economics (ICLE) was published online. This independent bi-partisan research center relies on input from academics and regularly shares its thoughts on important policy debates. That includes the executive cybersecurity order.

According to ICLE, real anonymity is hard to find on the Internet. Using the term “pseudonymous” would be more appropriate. However, certain tools and services definitely make it harder for law enforcement to track down criminals.

VPNs, Tor, and proxy services can be used for good. However, they can also be abused by malicious actors, the research center notes.

“[I]t remains the case that when anonymity is combined with easily accessible tools like virtual private networks, proxy servers, and The Onion Network (Tor), it can tend to confound law enforcement,” they write.

PORTLAND, Ore. (Nov. 4, 2021) — A new issue brief from the International Center for Law & Economics (ICLE) looks at the “reverse Robin Hood” fallacy, which holds that credit-card rewards programs benefit the rich at the expense of the poor.

A popular subject in the consumer press that also has been taken up by some academic studies, “reverse Robin Hood” contends that merchants use higher retail prices to pass on the cost of interchange fees to consumers, financed largely by poorer cash users, while rich rewards-card users get the benefits.

Authored by ICLE Academic Affiliate Todd Zywicki, Associate Director of Legal Research Ben Sperry, and Senior Scholar Julian Morris, the ICLE brief applies the economics of multi-sided markets and the realities of credit-card networks to reveal that this narrative is largely a myth. Moreover, the authors find, capping credit-card interchange fees will likely harm the poorest consumers the most.

“This framework helps explain that all participants in the credit-card ecosystem benefit from its establishment of complex relationships,” the authors write. “Sometimes, this means participants on one side of the platform, such as merchants, pay charges that are used to provide benefits to another side of the platform, such as consumers. But doing so often ultimately benefits participants on the side that pays—for example, by increasing their sales sufficiently that net income increases despite the additional cost.”

The issue brief notes that, for “reverse Robin Hood” to be true, each income group must be buying the same basket of goods and services from the same merchants. In real life, different cohorts of consumers frequently shop in different places and often buy different things, depending on income. In this more realistic scenario, merchants adjust prices based on the incidence of card usage, meaning the redistributive effect is dampened. In other words, rewards-card users largely pay for their own benefits.

Moreover, merchants don’t pass through 100% of the costs of interchange fees to consumers in the form of higher prices. The literature suggests a pass-through range of between 22% and 74%, with a median of roughly 50% in the long run. This means that a reduction in interchange fees won’t necessarily lead to lower prices, either. That’s exactly what consumers experienced after the Durbin Amendment imposed caps on interchange fees for debit cards in 2010.

“If the experience with caps on debit card fees under the Durbin Amendment is any indication, the benefits of interchange-fee caps will be much smaller than the costs to consumers, especially lower-income consumers,” the authors write.

The full issue brief can be downloaded here. For more information or to schedule an interview with the authors, contact ICLE Editor-in-Chief R.J. Lehmann at [email protected] or (908) 265-5272.

When:

Wednesday, November 17, 2021 from 1:00pm – 2:00pm ET/7:00pm – 8:00pm CET

What:

Join the International Center for Law & Economics for a discussion with two new authors exploring important themes of emerging technologies and decentralization in view of policymakers’ proposed regulatory interventions.

Thibault Schrepel, author of Blockchain + Antitrust: The Decentralization Formula, and Neil Chilson, author of Getting out of Control: Emergent Leadership in a Complex World, will examine the other’s book in light of his own, as well as the implications for issues like blockchain evolution and competition law.

Who:

• Thibault Schrepel, Associate Professor, Department of Transnational Legal Studies, VU Amsterdam University, the Netherlands, and Faculty Affiliate, The CodeX Center, Stanford University
• Neil Chilson, Senior Research Fellow, Technology and Innovation, The Charles Koch Institute
• Moderator: Geoffrey A. Manne, President and Founder, International Center for Law & Economics

Where:

RSVP for the Zoom Webinar here

USA Today – ICLE Director of Law & Economics Programs Gus Hurwitz was quoted by USA Today in a story about platform liability for the sale of counterfeit and defective goods. You can read the full piece (behind a subscribe paywall) here.

While it is illegal under the Consumer Product Safety Improvement Act of 2008 to sell a recalled product, Facebook is merely facilitating the sale. A similar debate has been playing out in numerous court cases, with judges weighing whether Amazon can be held liable for defective or dangerous products sold on its site, said Justin “Gus” Hurwitz, a professor of law at the University of Nebraska-Lincoln who focuses on regulation in the tech world. Amazon has generally been considered responsible only if the item shipped from an Amazon warehouse, Hurwitz said. The fact that Facebook might make a small commission for coordinating some sales likely wouldn’t increase the company’s liability, he said.

“There is no legal framework that would require Facebook to do anything about recalled products,” Hurwitz said. “The issue here is that Facebook isn’t doing the sale. Facebook is only mediating the sales between buyer and seller.”

Hurwitz said the issue dovetails with a larger conversation about content moderation and whether platforms should be responsible for the conduct of their users, whether that be posting misinformation or selling dangerous goods. He said he doubts that debate will result in legislation requiring Facebook to police its marketplace or generate enough public pressure that Facebook takes a more proactive stance on its own. Doing so, he said, could actually invite legal scrutiny.

“Companies could be reasonably worried that if they start policing these products and a dangerous recalled product is sold, that consumers or courts might say, ‘Hey you’re responsible for this. You had told us that you were protecting us,’” Hurwitz said. He added that Facebook might be concerned about “creating liability that does not exist.”

 

Jurist – ICLE President Geoffrey Manne was cited by Jurist in a piece about the recent surge of antitrust enforcement actions against major tech platforms. You can read the full piece here.

False positives are costly, while the fallout from false negatives can be mitigated. As noted by legal expert Geoffrey Manne, monopolized markets encourage “incentives of new entrants to compete for supracompetitive profits” which in turn limits the “social costs of Type II errors more effectively than the legal system’s ability to correct or ameliorate the costs of Type I errors.” In other words, antitrust benefits from restraint. When pro-competitive behavior is outlawed by government regulation or the courts, it may, as Easterbrook warned, “be lost for good.”

Roll Call – ICLE President Geoffrey Manne was quoted by Roll Call in a story about President Joe Biden’s appointments to key technology and antitrust positions. You can read the full piece here.

Geoffrey Manne, president of the International Center for Law and Economics, which advocates limited antitrust regulation of digital platforms, said that when Biden hired Wu to work in the White House, it was an olive branch to progressive Democrats.

“It sort of seemed not like a super important position that would give him a chance to flex his policy muscles, but didn’t seem like it would necessarily indicate anything about the administration’s agenda,” he said. “Now, with Lina as FTC chairwoman and Jonathan at DOJ, it is surprising, and it doesn’t seem to match the campaign rhetoric.”

Whether Biden favors breaking up the technology companies is immaterial, Manne said.

“We’re not talking about Biden anymore,” he said. “We’re talking about Kanter and Tim Wu and Lina Khan. Who cares what Biden personally thinks? He set things in motion that he obviously doesn’t mind happening. And I think those guys are very serious about it.”