Later next month, the U.S. Supreme Court will hear oral arguments in Gonzalez v. Google LLC, a case that has drawn significant attention and many bad takes regarding how Section 230 of the Communications Decency Act should be interpreted. Enacted in the mid-1990s, when the Internet as we know it was still in its infancy, Section 230 has grown into a law that offers online platforms a fairly comprehensive shield against liability for the content that third parties post to their services. But the law has also come increasingly under fire, from both the political left and the right.

Read the full piece here.

The €390 million fine that the Irish Data Protection Commission (DPC) levied last week against Meta marks both the latest skirmish in the ongoing regulatory war on the use of data by private firms, as well as a major blow to the ad-driven business model that underlies most online services.

Read the full piece here.

The Federal Trade Commission’s (FTC) Jan. 5 “Notice of Proposed Rulemaking on Non-Compete Clauses” (NPRMNCC) is the first substantive FTC Act Section 6(g) “unfair methods of competition” rulemaking initiative following the release of the FTC’s November 2022 Section 5 Unfair Methods of Competition Policy Statement. Any final rule based on the NPRMNCC stands virtually no chance of survival before the courts. What’s more, this FTC initiative also threatens to have a major negative economic-policy impact. It also poses an institutional threat to the Commission itself. Accordingly, the NPRMNCC should be withdrawn, or as a “second worst” option, substantially pared back and recast.

Read the full piece here.

Abstract

Web2 giants and Web3 projects entertain a complex relationship. They cooperate to maximize their chances of survival, yet they also compete through a combination of dynamic factors and anti-competitive strategies. The present contribution untangles Web2 and Web3’s relationship, explores their distinct value propositions, and outlines what may be one of tomorrow’s enforcement priorities for antitrust agencies.

ICLE Chief Economist Brian Albrecht gave a presentation to the Arkansas Center for Research in Economics discussing the 2022 Nobel Memorial Prize in Economic Sciences, which was awarded to Ben S. Bernanke, Douglas W. Diamond, Philip H. Dybvig “for research on banks and financial crises.” In this talk, he explored the recipients’ backgrounds and contributions to the practice of economics.

Video of the presentation is embedded below.

Introduction

The year 2022 of 12 October marks the official birth of the Digital Markets Act (DMA). As with the General Data Protection Regulation, the European Union sets itself as a forerunner in digital economy rulemaking, attempting to strengthen its global regulatory leadership, through the so-called and well-described Brussels effect. The new Regulation is, indeed, complemented by other relevant interventions addressing the role of data and digital intermediaries such as the Data Governance Act, the Digital Services Act, and the proposal for a Data Act, which will shape the European digital policy.

Against the emergence of large online platforms, several proposals have been advanced by policymakers around the world to tame digital gatekeepers, including public utilities-style regulations, break-ups, bans on vertical integration, and reforms of competition laws. Despite such different approaches, however, the envisaged solutions share the same premise, namely the urgent need for bespoke interventions because of the distrust towards current antitrust rules to face effectively the challenges of the brave new world.

The DMA endorses this view stating that, although antitrust rules apply to the conduct of gatekeepers, the scope of these provisions is “limited to certain instances of market power” (e.g., dominance on specific markets and of anti-competitive behaviour) and its “enforcement occurs ex post and requires an extensive investigation of often very complex facts on a case-by-case basis.” Moreover, competition law does not address, or does not address effectively, the challenges to the well-functioning of the market posed by the conduct of gatekeepers, which are not necessarily dominant in competition law terms.

According to this line of reasoning, given that competition law alone is unfit to tackle systemic problems posed by the platform economy, a regulatory intervention is enacted to introduce a set of ex ante obligations for digital gatekeepers dispensing enforcers from the standard antitrust analysis (i.e., relevant market definition, proof of dominance, and assessment of anticompetitive effects) and restraining gatekeepers from even providing an efficiency defence.

Against this background, the paper provides an overview of the critical aspects of the DMA to investigate whether the European Union will effectively benefit from a first-mover advantage. Section II illustrates the main features of the DMA highlighting some mismatches between its declared justification and the way in which the new Regulation will be effectively applied. Section III questions the coherency of an intervention that ostensibly disregard the ecosystem-based approach, even if it was intended to address the specific issues related to the fact that the competition in the digital economy is increasingly a competition among ecosystems. Section IV concludes.

ICLE Chief Economist Brian Albrecht was a guest on the Mornings with Brian Haldane show on Talk 107.3 in Baton Rouge, Louisiana, to discuss the Federal Trade Commission’s challenge to Facebook parent Meta’s proposed acquisition of virtual-reality app-maker Within. The full interview is embedded below.

The Sarbanes-Oxley Act of 2002 (SOX)—named for its chief sponsors, former Sen. Paul Sarbanes (D–Md.) and former Rep. Mike Oxley (R–Ohio)—was intended to restore trust in the transparency of publicly traded companies after the collapses of WorldCom and Enron Corp. revealed that their auditors had certified financial reports that overstated the firms’ assets and massively understated their liabilities.

But, of course, “transparency” isn’t quite the same thing as prudential safety and soundness. In the insurance space, more specifically, transparency doesn’t necessarily equal solvency.

Read the full piece here.

One of my favorite books is Thomas Sowell’s Knowledge and Decisions, in which he builds on Friedrich Hayek’s insight that knowledge is dispersed throughout society. Hayek’s insight that markets can bring dispersed but important knowledge to bear with substantial effectiveness is one that many of us, especially economists, pay lip service to, but it often gets lost in day-to-day debates about policy. Sowell uses Hayek’s insight to understand and critique social, economic, and political institutions, which he judges in terms of “what kinds of knowledge can be brought to bear and with what effectiveness.”

Read the full piece here.