Research Programs
More
What are you looking for?
Showing Latest Publications
Scholarship Concern about both fake news and the size of Internet mega-platforms like Facebook is popular these days. In each case the concern is intuitively obvious yet the pathway by which it manifests into tangible harm ambiguous.
Concern about both fake news and the size of Internet mega-platforms like Facebook is popular these days. In each case the concern is intuitively obvious yet the pathway by which it manifests into tangible harm ambiguous. There are clear examples of “fake news” being used for illegitimate purposes, as well as examples of platforms engaging in (or facilitating) alarming behavior – but it is challenging to draw a clean line between such problematic conduct and other non-problematic or even desirable conduct. Better understanding these delineations is a pressing task.
Fake news is largely distributed via social media platforms like Facebook. Indeed, the more malicious of such news is often designed specifically to take advantage of these platforms. It is reasonable to think that the concerns that we have about each may therefore be related – that fake news is a Facebook problem. This is the approach put forth in recent work by Sally Hubbard, who argues that fake news is an antitrust problem. Her basic thesis is that platforms with substantial market-share, such as Facebook, have pushed quality news organizations out of the market and that those news organizations would be better able to compete for consumer attention if there were more competition between platforms like Facebook.
It is a clever and provocative argument. But it is ultimately not a compelling one. Facebook isn’t what’s killing quality news – the Internet did that, and Facebook (and other social media) are merely the deformed phoenices that arose from the traditional media’s online ashes. Facebook and its ilk may be “killing news,” but it is not because these mega-platforms are harming competition – rather, the problem is that traditional media simply cannot effectively compete with social media in the winner-take-all marketplace for consumer attention. This may be a problem – it is certainly an issue that we as a society are and will continue to consider from law and policy perspectives – but it is not an antitrust problem.
I address these issues in more depth in the following three parts. I start by reviewing the evidence about what is killing the news (it’s not Facebook!). I then look at competition in the information economy and at the horizontal and vertical relationships between Facebook and the news media. I then turn the argument on its head, looking at how the problem we face – both with too little quality news and too much fake news – may be better addressed with less competition rather than more.
Throughout this discussion I will treat two recent articles as urtext: Hubbard’s piece in Forbes in which she explains “Why Fake news Is An Antitrust Problem,”2 and a follow-up interview on the topic that she did with Vox.3 I also note that throughout I will follow Hubbard’s lead and use Facebook as the poster-example of a significant social-media platform – though both she and I recognize that other tech platforms operate in this space. Indeed, the fact that Facebook, Twitter, and Google are all important platform-sources of news (fake and otherwise) demonstrates the most basic concern with the argument, that there is no lack of competition for information, true or otherwise.
Popular Media ICLE Executive Director Geoffrey Manne shares his take on the proposed merger of AT&T and Time Warner in The Wall Street Journal.
Withholding Time Warner content from competitors would make no financial sense. AT&T has agreed to pay $85 billion for Time Warner. More than half of Time Warner’s revenue, $6 billion last year, comes from fees that distributors pay to carry its content. Because fewer than 15% of home-video subscriptions are on networks owned by AT&T (DirecTV, U-verse, and DirecTV Now), the bulk of that revenue comes from other providers.
Read the full piece here.
Regulatory Comments In its description of this workshop, the Commission notes that “consumers may suffer injury when information about them is misused,” and suggests that this workshop “will address questions such as how to best characterize these injuries, how to accurately measure such injuries,” and so on.
In its description of this workshop, the Commission notes that “consumers may suffer injury when information about them is misused,” and suggests that this workshop “will address questions such as how to best characterize these injuries, how to accurately measure such injuries,” and so on. While these are crucial questions, we offer these comments in order to address another set of questions that is missing from the event’s description: How should the Commission determine whether or not, in fact, the conduct leading to such injuries constitutes actionable “misuse[]?” The question is a fundamental one that must be addressed in order to evaluate how businesses, consumers, and the Commission itself do and should respond to purported informational injuries.
Fundamentally, there is a great deal of ambiguity about how consumer protection law should treat data and data breaches. When there is a data breach, the calculation of the extent of informational harm (if any) to consumers is a difficult one. This is complicated, of course, by the sometimes tenuous connection between conduct and injury. It is further complicated, even assuming that particularized harm can be accurately assessed, by the need to balance harms against the benefits conferred by decisions within the firm to optimize a product or service, to lower prices, or to promote other consumer-valued features, such as ease-of-use, performance, and so forth. Where the same conduct that may produce informational injury also produces consumer benefit, determining whether the net effect is, in fact, harmful or not is essential.
The Commission purports to evaluate injury (along with the other elements required by Section 5(n) of the FTC Act) under a so-called “reasonableness” standard. Superficially, at least, this seems sensible: Unfairness entails a balancing of risk, benefits, and harms, and a weighing of avoidance costs consistent with a negligence regime.3 Easily seen and arguably encompassed within this language are concepts from the common law of negligence such as causation, foreseeability and duty of care. The FTC collapses this into its “reasonableness” approach, specifically eschewing strict liability:
The touchstone of the Commission’s approach to data security is reasonableness: a company’s data security measures must be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities…. [T]he Commission… does not require perfect security; reasonable and appropriate security is a continuous process of assessing and addressing risks; there is no one-size-fits-all data security program; and the mere fact that a breach occurred does not mean that a company has violated the law.
Giving purchase to a reasonableness approach under the Commission’s own guidance would seem to require establishing (i) a clear baseline of appropriate conduct, (ii) a company’s deviation from that baseline, (iii) proof that its deviation caused, or was significantly likely to cause, harm, (iv) substantial harm, (v) proof that the benefits of (e.g., the cost savings from) a company’s conduct didn’t outweigh the expected costs, and (vi) a demonstration that consumers’ costs of avoiding harm would have been greater than the cost of the harm.
Unfortunately, by eliding the distinct elements of a Section 5 unfairness analysis in the data security context, the FTC’s reasonableness approach risks ignoring Congress’ plain requirement that the Commission demonstrate duty, causality and substantiality, and perform a cost-benefit analysis of risk and avoidance costs.
While the FTC pays lip service to addressing these elements, its inductive, short-cut approach of attempting to define reasonableness by reference to the collection of practices previously condemned by its enforcement actions need not — and, in practice, does not — actually entail doing so. Instead, we “don’t know… whether… practices that have not yet been addressed by the FTC are ‘reasonable’ or not,” and we don’t know how the Commission would actually weigh them in an actual rigorous analysis.
At the root of this workshop is the implicit recognition that some, including the FTC itself, have asserted that the unauthorized exposure of private information may be, in and of itself, a harm to individuals, apart from any concrete economic consequences that may result from the exposure. In the FTC’s Opinion in LabMD, for instance, the Commission asserted that
the disclosure of sensitive health or medical information [that] causes additional harms that are neither economic nor physical in nature but are nonetheless real and substantial and thus cognizable under Section 5(n)… disclosure of the mere fact that medical tests were performed irreparably breached consumers’ privacy, which can involve “embarrassment or other negative outcomes, including reputational harm.”
We would contend, however, that defining and evaluating the types of “informational harms” that should be actionable in the case of a data breach, requires that the Commission also address fundamental problems with its overall approach to identifying cognizable injury and determining liability under Section 5.
As we discuss below and explain in detail in the attached paper, the FTC’s current “reasonableness standard” for liability under Section 5 runs the risk of being no standard at all. And it is impossible to escape the troubling conclusion that ultimately (and wrongly) the mere retention of data by a firm could be enough to violate Section 5 under this approach.
Such an approach does not comport with the scope of the Congressional grant of authority in Section 5, particularly as it was explicitly limited by Section 5(n). Instead, it converts what should be thought of fundamentally as a demanding cost-benefit requirement meant to limit the Commission’s discretion into a lenient strict liability standard. Before the Commission can understand how to fit different sorts of potential harms into its enforcement framework, it should clarify its approach, and ensure that it is in line with the text and intent of Section 5.
TOTM Yesterday Learfield and IMG College inked their recently announced merger. Since the negotiations were made public several weeks ago, the deal has garnered some wild speculation and potentially negative attention. Now that . . .
Yesterday Learfield and IMG College inked their recently announced merger. Since the negotiations were made public several weeks ago, the deal has garnered some wild speculation and potentially negative attention. Now that the merger has been announced, it’s bound to attract even more attention and conjecture.
TOTM In a recent post at the (appallingly misnamed) ProMarket blog (the blog of the Stigler Center at the University of Chicago Booth School of Business . . .
In a recent post at the (appallingly misnamed) ProMarket blog (the blog of the Stigler Center at the University of Chicago Booth School of Business — George Stigler is rolling in his grave…), Marshall Steinbaum keeps alive the hipster-antitrust assertion that lax antitrust enforcement — this time in the labor market — is to blame for… well, most? all? of what’s wrong with “the labor market and the broader macroeconomic conditions” in the country.
Presentations & Interviews David Chavern (News Media Alliance, whose members include NYT, WSJ, Tronc (Chicago Tribune, LA Times)), in a July 9, 2017 Wall Street Journal op-ed and . . .
David Chavern (News Media Alliance, whose members include NYT, WSJ, Tronc (Chicago Tribune, LA Times)), in a July 9, 2017 Wall Street Journal op-ed and subsequent press release, called for an antitrust exemption from Congress that would allow newspapers to negotiate collectively with Facebook and Google for stronger intellectual property protections, better support for subscription models, and a “fair share” of revenue and data.
From his Op Ed, “How Antitrust Undermines Press Freedom: Facebook and Google dominate online ads, and news companies can’t join forces to compete”:
…[E]xisting laws are having the unintended consequence of preventing news organizations from working together to negotiate better deals that will sustain local, enterprise journalism that is critical to a vibrant democracy. News organizations are limited with disaggregated negotiating power against a de facto duopoly that is vacuuming up all but an ever-decreasing segment of advertising revenue.
As part of the argument, the long decline in newspaper advertising revenues are compared to the relatively large control that Facebook and Google have over the online portion of the advertising market as part of an effort to paint online platforms as the sole, or a primary, driver for the decline in the fortunes of newspapers.
Geoffrey Manne joined the ABA Teleconference forum to discuss these issues and their broad antitrust implications. In particular, Mr. Manne noted that:
The full call is embedded below.
Written Testimonies & Filings Written Statement of Geoffrey A. Manne on “Antitrust Concerns and the FDA Approval Process” U.S. House of Representatives Committee on the Judiciary, Subcommittee on Regulatory Reform, Commercial, and Antitrust Law.
Written Statement of Geoffrey A. Manne on
U.S. House of Representatives Committee on the Judiciary, Subcommittee on Regulatory Reform, Commercial, and Antitrust Law
Poorly drafted regulations, especially in heavily regulated industries, can create opportunities for anticompetitive abuse. Established companies know how to navigate regulatory mazes, and the complexities of such regimes create innumerable opportunities for nominal compliance at the expense of competition, innovation, and new entry.
The legislative and regulatory impulse when faced with deeply entrenched regulations and their competitive manipulations is often to pile on, either with even more-complex regulatory amendments or else antitrust enforcement that side-steps the root problem, focusing on “fixing” allegedly anticompetitive conduct rather than reforming the underlying laws that facilitate it.
But the government has a questionable track record in promoting competition, not infrequently adopting policies seemingly tailor-made to perpetuate, rather than constrain, harmful conduct.
The FDA Act and the regulations promulgated under it by the agency stand as Exhibit A in this regard. Last year’s controversy over Mylan Pharmaceuticals’ price hike on the EpiPen, for example, is symptomatic of the problem. The market for pharmaceuticals is complicated, but one thing seems clear in the pricing controversy: the FDA has been an effective ally for Mylan in keeping out competitive producers of generic epinephrine auto-injectors. Drug safety is important, of course, but since 1962 the FDA has also reviewed drugs for “efficacy,” which introduced massive delay and uncertainty, arguably without concomitant benefit. And the FDA’s approval and oversight processes for generics and biosimilars, although improved since 1962, continue to impede effective entry. Thus, with the field clear of competitors, it is no surprise that Mylan was able to raise prices. Only following the angry public outcry did the FDA finally accelerate its review process and approve a competing product last month.
But efficacy review is not the FDA’s only regulatory cul de sac through which pharmaceutical manufacturers can employ regulatory policies to keep unwanted competitors off the block. In particular, one aspect of the FDA’s drug safety oversight regime has emerged as a device for some manufacturers to delay generic entry: the Risk Evaluation and Mitigation Strategies, or “REMS,” program.
What I will refer to collectively as the FDA Act’s REMS program comprises two elements that are relevant here: First, it requires branded drug manufacturers to make samples of their drugs available to would-be generic entrants so that they can use them in the lengthy safety and efficacy testing process required to secure FDA approval. Second, it requires brand drug companies to adopt a concerted set of practices and policies aimed at mitigating the risks inherent in the use of most drugs, and additional, more restrictive practices to ensure the safe use of particularly dangerous or addictive drugs — the so-called “REMS with ETASU” (“Elements to Assure Safe Use”). The program also requires that brand manufacturers allow generic entrants to share in these enhanced mitigation processes in order, presumably, to streamline the process and economize on compliance costs.
By forcing collaboration between competitors, the REMS program is practically tailor-made for problems. Although the FDA Act specifically prohibits the use of these regulatory elements to block lower-cost, generic alternatives from entering the market (of course), almost immediately following the law’s enactment, a small handful of branded pharmaceutical companies began using REMS for just that purpose (also, of course).
Some (now-former) FTC commissioners, among others, have raised concerns that brand drug manufacturers can (and do) take advantage of these provisions by adopting tough negotiating positions that, they allege, amount to anticompetitive exclusion requiring agency enforcement. I believe that that would be decidedly the wrong approach to dealing with the issue. These are not properly antitrust problems; they are problems of poor regulatory design.
But it is also true that the program itself exists to implement an underlying policy that may be even worse, and it is likely that reforming a few key elements of the program would help prevent such abuses — but Congress should adopt more fundamental policy changes, as well.
The first part — sharing samples — cannot easily be fixed by removing the required collaboration, at least not without completely revamping (or removing) the FDA’s drug safety and efficacy oversight function (however desirable reform of these functions would be). But the second — sharing REMS programs — can be.
Read the full statement here.
Presentations & Interviews Geoffrey Manne joins Chris Segers and Anthony Bianco on CNBC for a discussion of Amazon's size and how it is expected to grow. WATCH: Video
Geoffrey Manne joins Chris Segers and Anthony Bianco on CNBC for a discussion of Amazon’s size and how it is expected to grow.
TOTM Last week the editorial board of the Washington Post penned an excellent editorial responding to the European Commission’s announcement of its decision in its Google . . .
Last week the editorial board of the Washington Post penned an excellent editorial responding to the European Commission’s announcement of its decision in its Google Shopping investigation. Here’s the key language from the editorial…
