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Popular Media Over the weekend, Sen. Al Franken and Federal Communications Commission Commissioner Mignon Clyburn issued an impassioned statement calling for the FCC to thwart the use of mandatory arbitration clauses in internet service providers’ consumer service agreements ...
Over the weekend, Sen. Al Franken and Federal Communications Commission Commissioner Mignon Clyburn issued an impassioned statement calling for the FCC to thwart the use of mandatory arbitration clauses in internet service providers’ consumer service agreements — starting with a ban on mandatory arbitration of privacy claims in the chairman’s proposed privacy rules. Unfortunately, their call to arms rests upon a number of inaccurate or weak claims. Before the commissioners vote on the proposed privacy rules later this week, they should carefully consider whether consumers would actually be served by such a ban.
Read the full piece here.
ICLE White Paper Late last year, Tim Wu of Columbia Law School (and now the White House Office of Management and Budget), Michael Luca of Harvard Business School (and a consultant for Yelp), and a group of Yelp data scientists released a study claiming that Google has been purposefully degrading search results from its more-specialized competitors in the area of local search.
Late last year, Tim Wu of Columbia Law School (and now the White House Office of Management and Budget), Michael Luca of Harvard Business School (and a consultant for Yelp), and a group of Yelp data scientists released a study claiming that Google has been purposefully degrading search results from its more-specialized competitors in the area of local search. The authors’ claim is that Google is leveraging its dominant position in general search to thwart competition from specialized search engines by favoring its own, less-popular, less-relevant results over those of its competitors:
To improve the popularity of its specialized search features, Google has used the power of its dominant general search engine. The primary means for doing so is what is called the “universal search” or the “OneBox.”
This is not a new claim, and researchers have been attempting (and failing ) to prove Google’s “bias” for some time. Likewise, these critics have drawn consistent policy conclusions from their claims, asserting that antitrust violations lie at the heart of the perceived bias.
But the studies are systematically marred by questionable methodology and bad economics. The primary difference now is the saliency of the “Father of Net Neutrality,” Tim Wu, along with a cadre of researchers employed by Yelp (one of Google’s competitors and one of its chief antitrust provocateurs ), saying the same thing in a new research paper, with slightly different but equally questionable methodology, bad economics, and a smattering of new, but weak, social science.
TOTM Last week the International Center for Law & Economics and I filed an amicus brief in the DC Circuit in support of en banc review of the court’s . . .
Last week the International Center for Law & Economics and I filed an amicus brief in the DC Circuit in support of en banc review of the court’s decision to uphold the FCC’s 2015 Open Internet Order.
In our previous amicus brief before the panel that initially reviewed the OIO, we argued, among other things, that…
Regulatory Comments The NPRM and many of the comments supporting it reflect an ill-considered approach to privacy regulation for ISPs.
The NPRM and many of the comments supporting it reflect an ill-considered approach to privacy regulation for ISPs. Getting regulation right is always difficult, but it is all the more so when confronting evolving technology, inconsistent and heterogeneous consumer demand, and intertwined economic effects that operate along multiple dimensions.
[S]ecuring a solution that increases social welfare[] isn’t straightforward as a practical matter. From the consumer’s side, the solution needs to account for the benefits that consumers receive from content and services and the benefits of targeting ads, as well as the costs they incur from giving up data they would prefer to keep private. Then from the ad platform’s side, the solution needs to account for the investments the platform is making in providing content and the risk that consumers will attempt to free ride on those investments without providing any compensation—in the form of attention or data—in return. Finally, the solution must account for the costs incurred by both consumers and the ad platform including the costs of acquiring information necessary for making efficient decisions.
The NPRM fails adequately to address these issues, to make out an adequate case for the proposed regulation, or to justify treating ISPs differently than other companies that collect and use data.
Perhaps most important, the NPRM also fails to acknowledge or adequately assess the actual market in which the use of consumer data arises: the advertising market. Whether intentionally or not, this NPRM is not primarily about regulating consumer privacy; it is about keeping ISPs out of the advertising business. But in this market, ISPs are upstarts challenging the dominant position of firms like Google and Facebook.
Placing onerous restrictions upon ISPs alone results in either under-regulation of edge providers or over-regulation of ISPs within the advertising market, without any clear justification as to why consumer privacy takes on different qualities for each type of advertising platform. But the proper method of regulating privacy is, in fact, the course that both the FTC and the FCC have historically taken, and which has yielded a stable, evenly administered regime: case-by-case examination of actual privacy harms and a minimalist approach to ex ante, proscriptive regulations.
TOTM Netflix’s latest net neutrality hypocrisy (yes, there have been others. See here and here, for example) involves its long-term, undisclosed throttling of its video traffic on AT&T’s and . . .
Netflix’s latest net neutrality hypocrisy (yes, there have been others. See here and here, for example) involves its long-term, undisclosed throttling of its video traffic on AT&T’s and Verizon’s wireless networks, while it lobbied heavily for net neutrality rules from the FCC that would prevent just such throttling by ISPs.
It was Netflix that coined the term “strong net neutrality,” in an effort to import interconnection (the connections between ISPs and edge provider networks) into the net neutrality fold. That alone was a bastardization of what net neutrality purportedly stood for, as I previously noted…
TOTM The FCC doesn’t have authority over the edge and doesn’t want authority over the edge. Well, that is until it finds itself with no choice but to regulate the . . .
The FCC doesn’t have authority over the edge and doesn’t want authority over the edge. Well, that is until it finds itself with no choice but to regulate the edge as a result of its own policies. As the FCC begins to explore its new authority to regulate privacy under the Open Internet Order (“OIO”), for instance, it will run up against policy conflicts and inconsistencies that will make it increasingly hard to justify forbearance from regulating edge providers.
Popular Media Internet content and service providers are poised to offer an economically and socially transformative service to millions of people in developing countries: low-cost access to the Web. That is, if regulators and self-proclaimed consumer advocates don’t stop them.
Internet content and service providers are poised to offer an economically and socially transformative service to millions of people in developing countries: low-cost access to the Web. That is, if regulators and self-proclaimed consumer advocates don’t stop them.
The latest skirmish in the never-ending net-neutrality wars concerns Facebook ’s Free Basics, a “zero-rated” service that allows users to access Facebook—and other useful websites—without incurring data charges.
Regulatory Comments "The Telecom Regulatory Authority of India (“TRAI”)’s tradition of regulatory humility — the “forbearance and flexibility” that has characterized its approach to telecommunications services regulation — has enabled the explosive growth of internet usage throughout India..."
“The Telecom Regulatory Authority of India (“TRAI”)’s tradition of regulatory humility — the “forbearance and flexibility” that has characterized its approach to telecommunications services regulation — has enabled the explosive growth of internet usage throughout India, including an over 50% surge in the number of users of mobile internet in rural areas since 2001. But as the Authority considers regulations and rules to “ensure orderly growth… and protection of consumer interest,” it is important to keep in mind the fundamental lesson taught by decades of technology regulation throughout the world: where entrepreneurial companies are left relatively free to experiment with innovative new methods of developing and deploying technologies — particularly telecommunications technologies — consumers enjoy the largest increases in their standard of living.
The importance of humility in regulating highly innovative industries cannot be overstated. Even after decades of research, there is still much that economists cannot predict about the broad economic effects of technological innovation on economic growth and development. The unintended and unanticipated costs of preventing new methods of reaching underserved consumers can be substantial, and the consequences enormous to those in greatest need…”
“India is on the cusp of providing an economically and socially transformative service: near-ubiquitous, low-cost, high-value internet access that has the potential to create unprecedented opportunity and advantage for its citizens. The nation stands poised to increase the welfare of its poorest citizens with a rapidity seldom witnessed in human history. We strongly encourage TRAI to chart a wise course that allows for differentiated tariffs and the expanded internet access they can bring to India’s citizens.”
Amicus Brief "The Order represents a substantial and unprecedented expansion of the FCC’s claimed authority. The Commission asserts authority to implement agency-defined policy by any means over the entire broadband communications infrastructure of the United States..."
“The Order represents a substantial and unprecedented expansion of the FCC’s claimed authority. The Commission asserts authority to implement agency-defined policy by any means over the entire broadband communications infrastructure of the United States—in the words of FCC Chairman Wheeler, “[t]he most powerful network ever known to Man”1—under the auspices of FCC regulation; and it assumes the ability to regulate even beyond this already incredibly broad scope on an “ancillary” or “secondary” basis so long as such regulation has at least a Rube-Goldberg-like connection to broadband deployment. In the Order, the Commission claims authority that it has consistently disclaimed; it ignores this court’s holding in Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014) (“Verizon”); and it bends to the point of breaking the statutory structure and purpose of the Communications and Telecommunications Acts. For all of these reasons, the Order should be rejected as exceeding the Commission’s statutory authority and as presenting and addressing major questions—questions of “deep economic and political significance,” see, e.g., King v. Burwell, No. 14-114, slip op. at 8 (2015)—that can only be addressed by Congress. See Randolph May, Chevron Decision’s Domain May Be Shrinking, THE HILL (Jul. 7, 2015), http://thehill.com/blogs/pundits-blog/the-judici- ary/247015-chevron-decisions-domain-may-be-shrinking.
The Commission’s authority is based in the 1934 Act, as modified by the 1996 Act. The general purpose of the 1934 Act was to establish and maintain a pervasively-regulated federal telephone monopoly built upon a relatively simple and static technology. This was the status quo for most of the 20th century, during which time the FCC had authority to regulate every aspect of the telecommunications industry—down to investment decisions, pricing, business plans, and even employment decisions. As technology progressed, however, competition found its way into various parts of the industry, upsetting the regulated monopoly structure. This ultimately led to passage of the 1996 Act, the general purpose of which was to deregulate the telecommunications industry—that is, to get the FCC out of the business of pervasive regulation and to rely, instead, on competition. This objective has proven effective: Over the past two decades, competition has driven hundreds of billions of dollars of private investment, the telecommunications capabilities available to all Americans have expanded dramatically, and competition—while still developing— has increased substantially. The range of technologies available to every American has exceeded expectations, at costs and in a timeframe previously unimagined, and at a pace that leads the world…”
