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ICLE Comments on Proposed FTC Consent Agreement; Mastercard Incorporated

Regulatory Comments Comment on Mastercard Incorporated; Matter No. 201 0011 Commissioners, I am an expert on the law & economics of payment cards and have written extensively . . .

Comment on Mastercard Incorporated; Matter No. 201 0011

Commissioners,

I am an expert on the law & economics of payment cards and have written extensively the subject.[1] I am submitting this comment on behalf of the International Center for Law & Economics (ICLE) because we have concerns regarding the effects that the consent order may have on the functioning of and innovation in payment systems.

Among there are that the agreement will undermine the security of payments made using single-message systems; set a precedent that, if applied more broadly, would undermine the security of payments more generally; and discourage investment in innovation, especially in the development of new, secure, tokenized payment systems that have the potential to reduce fraud, theft, and other forms of counterparty risk. Such an outcome would be, in our view, entirely detrimental to the future of the U.S. payment system.

To elaborate those concerns, we attach a paper we recently produced that discusses the regulation of single-message payment systems and, in particular, the regulation of routing on such networks. We hope this work will help to inform your deliberations on the matter.

[1] See, e.g., Julian Morris & Todd J. Zywicki, Regulating Routing in Payment Networks, International Center for Law & Economics (Aug. 18, 2022), https://laweconcenter.org/resources/regulating-routing-in-payment-networks; Julian Morris, Central Banks and Real-Time Payments: Lessons From Brazil’s Pix, International Center for Law & Economics (Jun. 1, 2022), https://laweconcenter.org/resources/central-banks-and-real-time-payments-lessons-from-brazils-pix; Julian Morris, Regulating Payment-Card Fees: International Best Practices And Lessons For Costa Rica, International Center for Law & Economics (May 25, 2022), https://laweconcenter.org/resources/regulating-payment-card-fees-international-best-practices-and-lessons-for-costa-rica; Todd J. Zywicki, Julian Morris, & Geoffrey A. Manne, The Effects Of Price Controls On Payment-Card Interchange Fees: A Review And Update, International Center for Law & Economics (Mar. 4, 2022), https://laweconcenter.org/resources/the-effects-of-price-controls-on-payment-card-interchange-fees-a-review-and-update.

 

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Financial Regulation & Corporate Governance

January Threads

Popular Media Top Twitter threads from ICLE scholars on current topics. NEW PAPER ALERT: happy to share the paper (with @MarcoCappai5) “Applying ne bis in idem in . . .

Top Twitter threads from ICLE scholars on current topics.

 

 

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Brian Albrecht Discusses Noncompete Agreements on the Cato Daily Podcast

Presentations & Interviews ICLE Chief Economist Brian Albrecht joined the Cato Daily Podcast to discuss non?compete agreements in labor markets: why they exist, how they work, and the . . .

ICLE Chief Economist Brian Albrecht joined the Cato Daily Podcast to discuss non?compete agreements in labor markets: why they exist, how they work, and the Federal Trade Commission’s proposal to ban them. The full episode is embedded below. 

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Antitrust & Consumer Protection

Adam Mossoff on the Value of Patents

Presentations & Interviews ICLE Academic Affiliate Adam Mossoff was a guest on National Public Radio’s Planet Money podcast to discuss the purpose and value of patents in the . . .

ICLE Academic Affiliate Adam Mossoff was a guest on National Public Radio’s Planet Money podcast to discuss the purpose and value of patents in the economy.  The full episode is embedded below.

MALONE: Adam Mossoff – law professor at George Mason University, patent expert, and knows a lot about how patents get turned into actual, you know, money.

MOSSOFF: You know, patents are property rights, and they, like all property rights, might lead to great success or may not.

MALONE: Property rights. And Adam gave us this comparison that I find really useful. He said, you know, a patent is just an idea sketched out and then legally tied to the inventor. And that really is kind of like somebody who say, you know, just owns a piece of vacant land.

BERAS: Yeah. Adam says vacant land isn’t inherently a business. Its owner would have to figure out what to do with it.

MOSSOFF: They can sit and wait for the land to grow in value. They can lease it out and become a landlord. They can build a factory on it. They can build an office building on it. They can build a home. And then, they can sell that home.

 

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Intellectual Property & Licensing

Killer Acquisition or Leveling Up: The Use of Mergers to Enter Adjacent Markets

TOTM In the world of video games, the process by which players train themselves or their characters in order to overcome a difficult “boss battle” is . . .

In the world of video games, the process by which players train themselves or their characters in order to overcome a difficult “boss battle” is called “leveling up.” I find that the phrase also serves as a useful metaphor in the context of corporate mergers. Here, “leveling up” can be thought of as acquiring another firm in order to enter or reinforce one’s presence in an adjacent market where a larger and more successful incumbent is already active.

Read the full piece here.

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Antitrust & Consumer Protection

Rentseeking for Spectrum Sharing: The 5.9 Ghz Band Allocation

Scholarship Abstract The battle over rules governing 5.9 GHz airwaves offers important lessons in both the creation of property rights and applied public choice. Set aside . . .

Abstract

The battle over rules governing 5.9 GHz airwaves offers important lessons in both the creation of property rights and applied public choice. Set aside in 1999, the 75 MHz “Car Band” band was designated by the U.S. Federal Communications Commission (FCC) to support emerging vehicle telematics and computerized driving. Transportation regulators and automakers, including General Motors, Ford, and BMW, claimed this would efficiently promote road safety, fuel savings, and collision avoidance, as dedicated bandwidth would operate under a “spectrum commons” regime designed to favor such applications. While anticipated services gradually developed, the 5.9 GHz band did not. Spectrum inputs outside the “Car Band” accommodated driving applications, while the general development of wireless networks shifted social priorities. Eventually, Internet services companies such as Comcast, Google and Microsoft claimed the 75 MHz allocation was wastefully large and that switching access rules to favor WiFi would generate net benefits. Suggested for possible reallocation by the U.S. Department of Commerce since 2012, the FCC issued an order in 2020 to split the baby: 45 MHz of the band would be shifted to Wi-Fi, with 30 MHz remaining dedicated for Intelligent Transportation Systems. The FCC’s 2020 “Cost Benefit Analysis” purports to quantify the trade-offs involved, but upon scrutiny fails to plausibly value Wi-Fi services or to even consider the relevant opportunity costs. The costly, delay-intensive and ad hoc policy process (whose costs are additionally ignored by the FCC) begs for further development of auction mechanisms to rationalize alternative rights assignments.

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Telecommunications & Regulated Utilities

A Few Questions (and Even Fewer Answers) About What Artificial Intelligence Will Mean for Copyright

TOTM Not only have digital-image generators like Stable Diffusion, DALL-E, and Midjourney—which make use of deep-learning models and other artificial-intelligence (AI) systems—created some incredible (and sometimes . . .

Not only have digital-image generators like Stable Diffusion, DALL-E, and Midjourney—which make use of deep-learning models and other artificial-intelligence (AI) systems—created some incredible (and sometimes creepy – see above) visual art, but they’ve engendered a good deal of controversy, as well. Human artists have banded together as part of a fledgling anti-AI campaign; lawsuits have been filed; and policy experts have been trying to think through how these machine-learning systems interact with various facets of the law.

Read the full piece here.

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Intellectual Property & Licensing

Section 230 & Gonzalez: Algorithmic Recommendations Are Immune

TOTM In our previous post on Gonzalez v. Google LLC, which will come before the U.S. Supreme Court for oral arguments Feb. 21, Kristian Stout and I argued that, . . .

In our previous post on Gonzalez v. Google LLC, which will come before the U.S. Supreme Court for oral arguments Feb. 21, Kristian Stout and I argued that, while the U.S. Justice Department (DOJ) got the general analysis right (looking to Roommates.com as the framework for exceptions to the general protections of Section 230), they got the application wrong (saying that algorithmic recommendations should be excepted from immunity).

Read the full piece here.

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Innovation & the New Economy

7 Top Takeaways from the 2nd Annual Mercatus Antitrust Forum

TOTM At the Jan. 26 Policy in Transition forum—the Mercatus Center at George Mason University’s second annual antitrust forum—various former and current antitrust practitioners, scholars, judges, and agency . . .

At the Jan. 26 Policy in Transition forum—the Mercatus Center at George Mason University’s second annual antitrust forum—various former and current antitrust practitioners, scholars, judges, and agency officials held forth on the near-term prospects for the neo-Brandeisian experiment undertaken in recent years by both the Federal Trade Commission (FTC) and the U.S. Justice Department (DOJ). In conjunction with the forum, Mercatus also released a policy brief on 2022’s significant antitrust developments.

Read the full piece here.

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Antitrust & Consumer Protection