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Scholarship Abstract The object of this dissertation is to study the role that innovation occupies – and should occupy – in Antitrust/Competition analysis, and to put . . .
The object of this dissertation is to study the role that innovation occupies – and should occupy – in Antitrust/Competition analysis, and to put forward a coherent framework for the analysis of “innovation defenses” (defined as situations where a restriction of competition is necessary to produce a socially desirable innovation).
The dissertation is separated into two parts.
Part I adopts a positive law and economics approach, and examines how competition law an innovation might overlap. The dissertation separates this issue into three questions: What is innovation; what are the goals of competition laws on both sides of the Atlantic; and where is the enforcement of competition laws most likely to affect innovation? Having answered these questions, the dissertation examines how European Union (“EU”) competition law currently deals with innovation defenses. If this were done in a satisfactory manner, then there would be little need for a revised innovation defense framework. To this end, the dissertation surveys recent European competition cases to determine whether they incorporate economic concepts related to innovation and whether they overtly take defendants’ incentives to innovate into account. The dissertation shows that European competition law currently does not address innovation defenses in a coherent and satisfactory manner.
Part II takes a more normative stance. In order to fill the perceived policy gap, identified in Part I, it puts forward a framework for innovation defenses (“the framework”). The goal of this framework is not so much to be applied directly, but to guide policymakers through the various issues that would arise if they decided to analyze the potential chilling effects that their enforcement activities may exert on innovation.The framework centers on two key questions: is a given innovation desirable from a social welfare standpoint (i.e. do its social benefits outweigh its social costs), and is a restriction of competition necessary in order to achieve the innovation? The framework hinges on the economic concept of appropriability. Key questions include whether firms take the existence of such frameworks into account, even unwittingly, when they make their investment decisions; how the framework should be implemented; and whether it is compatible with the stated goals of competition laws and existing antitrust legislation on both sides of the Atlantic. The dissertation then applies this framework in a number of case studies and discusses its potential implications.
Popular Media There is an infamous chart in media circles. It shows newspaper advertising revenue steadily rising until about the year 2000. A few years later, it . . .
There is an infamous chart in media circles. It shows newspaper advertising revenue steadily rising until about the year 2000. A few years later, it drops off a cliff. Superimposed on this chart is the exponential growth of Google and Facebook…
Read the full piece here.
TOTM This guest post is by Corbin K. Barthold, Senior Litigation Counsel at Washington Legal Foundation.
In the spring of 1669 a “flying coach” transported six passengers from Oxford to London in a single day. Within a few years similar carriage services connected many major towns to the capital.
TOTM Wall Street Journal commentator, Greg Ip, reviews Thomas Philippon’s forthcoming book, "The Great Reversal: How America Gave Up On Free Markets." Ip describes a “growing mountain” of research on industry concentration in the U.S. and reports that Philippon concludes competition has declined over time, harming U.S. consumers.
Wall Street Journal commentator, Greg Ip, reviews Thomas Philippon’s forthcoming book, The Great Reversal: How America Gave Up On Free Markets. Ip describes a “growing mountain” of research on industry concentration in the U.S. and reports that Philippon concludes competition has declined over time, harming U.S. consumers.
TOTM For most people, the word discrimination has a pejorative connotation of animus based upon prejudice ... but another definition is a lot less charged: the act of making or perceiving a difference.
A spate of recent newspaper investigations and commentary have focused on Apple allegedly discriminating against rivals in the App Store. The underlying assumption is that Apple, as a vertically integrated entity that operates both a platform for third-party apps and also makes it own apps, is acting nefariously whenever it “discriminates” against rival apps through prioritization, enters into popular app markets, or charges a “tax” or “surcharge” on rival apps.
TOTM “Data is the new oil,” said Jaron Lanier in a recent op-ed for The New York Times. Lanier’s use of this metaphor is only the latest instance of what has become the dumbest meme in tech policy.
“Data is the new oil,” said Jaron Lanier in a recent op-ed for The New York Times. Lanier’s use of this metaphor is only the latest instance of what has become the dumbest meme in tech policy. As the digital economy becomes more prominent in our lives, it is not unreasonable to seek to understand one of its most important inputs. But this analogy to the physical economy is fundamentally flawed. Worse, introducing regulations premised upon faulty assumptions like this will likely do far more harm than good.
TOTM Seeing internet traffic is not the same thing as “account[ing] for” — or controlling or even directly influencing — internet traffic.
When she rolled out her plan to break up Big Tech, Elizabeth Warren paid for ads (like the one shown above) claiming that “Facebook and Google account for 70% of all internet traffic.” This statistic has since been repeated in various forms by Rolling Stone, Vox, National Review, and Washingtonian. In my last post, I fact checked this claim and found it wanting.
Regulatory Comments ICLE filed a letter summarizing its analysis of the relevant empirical literature on mobile carrier mergers as part of the Tunney Act review process.
The central question of a merger review is the likely effect that the transaction will have on consumers. The DOJ’s complaint against the Sprint-T-Mobile merger is built upon the allegation that the proposed transaction represents a reduction from four to three national facilities-based mobile network operators (a so-called “4-to-3 merger”), and that such a transaction would reduce competition and result in “higher prices, reduced innovation, reduced quality and fewer choices” in the marketplace. This is an empirical question that has been studied by numerous scholars in recent years.
The upshot of the empirical literature is that, in fact, such mergers appear to increase, not decrease, innovation. Moreover, the research is, at best, inconclusive with respect to the price effects of such mergers. Based on these findings, we believe that the DOJ was correct to approve the transaction, and that this is so regardless of the expected competitive effects of the Final Judgment’s Divestiture Package, which is likely unnecessary to ensure that the market remains competitive.
ICLE filed a letter summarizing its analysis of the relevant empirical literature on mobile carrier mergers as part of the Tunney Act review process.
The letter and attached analysis can be read here.
TOTM Less than 20 percent of all Internet traffic goes through sites owned or operated by Google or Facebook. While this statistic may be less eye-popping than the one trumpeted by Warren and other antitrust activists, it does have the virtue of being true.
In March of this year, Elizabeth Warren announced her proposal to break up Big Tech in a blog post on Medium. She tried to paint the tech giants as dominant players crushing their smaller competitors and strangling the open internet. This line in particular stood out: “More than 70% of all Internet traffic goes through sites owned or operated by Google or Facebook.”
