Summary

We would like to thank you for the opportunity to comment on these important and timely issues. In the preamble to this Notice of Inquiry (“NOI”) the NTIA notes that is responsible for “protecting and promoting an open and interoperable internet, advocating for the free flow of information, and strengthening the global marketplace for American digital products and services.” We agree with the implicit assumption of this statement that it is possible to both promote an open Internet as well as protect the interests of American creators.

With this in mind, we would like to offer some comments on how best to assess the oft-asserted tension between policies that purport to maximize freedom online and those that seek to protect the interests of rightsholders.

It is undeniable that, in some cases, the unfettered flow of information can contribute to the infringement of the intellectual property rights of American citizens and companies, and that this is contrary to NTIA’s mission to promote the marketplace for American digital products and services. But it is also undeniable that the protection of intellectual property rights can promote both the creation of information and its dissemination. Our intellectual property laws reflect the congressional and judicial balancing of these dynamics: There is little reason to think that the legislative and legal principles that determine when content or its distribution is illegal offline apply any less when content is distributed online.

The flow of information is, in fact, never “unfettered.” When considering the free flow of information online, the goal should be the same as it is offline: to increase the flow of legitimate information and to decrease the flow of illegitimate information.

Properly considered, there is no novel conflict between promoting the flow of information and protecting intellectual property rights online. While the specific mechanisms employed to mediate between these two principles may differ — and, indeed, while technological change can alter the distribution of costs and benefits in ways that must be accounted for — the fundamental principles that determine the dividing line between “legal” and “illegal” content and its distribution offline can and should be respected online.

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Despite the Federal Communication Commission’s decision in December 2017 to eliminate the common carrier regulations for Internet services — the so-called net neutrality rules the FCC created in 2015 — the net neutrality debate rages on. The Trump FCC preempted states’ authority to regulate the Internet, yet governors in six states have attempted to enforce net neutrality principles via executive order and three states have passed “baby net neutrality bills.” Several more state bills are pending. Can state agencies regulate Internet services? What are the legal and practical impediments? What are the consequences of businesses operating under inconsistent regulations amongst the states and at the federal level? Gus Hurwitz, Brent Skorup, and Geoffrey Manne discuss this new front in regulation, federalism, and grassroots activism.

The full episode is embedded below.

Ours is not an age of nuance.  It’s an age of tribalism, of teams—“Yer either fer us or agin’ us!”  Perhaps I should have been less surprised, then, when I read the unfavorable review of my book How to Regulate in, of all places, the Federalist Society Review.

Read the full piece here.

Summary

High-tech and network industries have a long history of evoking populist scrutiny. New technologies frequently disrupt incumbent, often less centralized, business models and interfere with existing relationships between sellers and consumers. Inevitably, the paradigmatic small-town buggy manufacturer displaced by technological advance directs his ire against the large, distant car companies that make the automobiles responsible for his demise. Even consumers and business owners who benefit from enhanced efficiency or entirely new and beneficial products often end up feeling dependent on them. Adding to that a distrust of firms that operate in geographies or at scales that are distant from typical consumer experiences, critics express their concerns about firms with a single heuristic: big is bad.

Although often framed in more complex antitrust terms — large firms are accused of employing anticompetitive business practices, including the development of “predatory” innovations designed to expand their reach and thwart potential competition, for example — populist antipathy is, at root, fundamentally about the “bigness” of these high-tech firms. Companies that owe their success — and their size — to clever implementations of innovative technologies are ultimately decried not for their technology or their business models but for their expansive operations. Standard Oil, AT&T (in the early 20th century), IBM, AT&T (in the late 20th century), Microsoft, and, most recently, Google, Facebook, Amazon, and (once again) AT&T have regularly found themselves in the crosshairs of antitrust enforcers for growing large by besting (and, often, buying) their competitors.

The size of these companies — among the largest in the American economy — endows them with the superficial appearance of market power, providing competitors and advocates with a rhetorical basis for antitrust action against them. But their problems also extend beyond mere allegations that they are too large: in each case, these companies have also engaged in some conduct disfavored by powerful political actors. The appearance of market power and the firms’ problematic-to-some conduct give rise to calls to use antitrust law to regulate their behavior — or, perhaps most troubling, to constrain their perceived power by breaking them up.

This article is not an apologia for the bad acts of the modern tech industry. There is no question that some of today’s largest companies have transformed society and the economy over the years (not necessarily always for the better) and have engaged in arguably troubling conduct in the process. But whatever the beliefs of those calling for the breakup of Big Tech, the question remains whether it is wise to shoehorn broader social and political concerns into the narrow, economic remit of antitrust law.

Read the full piece here.

This has been a big year for business in the courts. A U.S. district court approved the AT&T-Time Warner merger, the Supreme Court upheld Amex’s agreements with merchants, and a circuit court pushed back on the Federal Trade Commission’s vague and heavy handed policing of companies’ consumer data safeguards.

Read the full piece here.

Summary

A recent tweet by Lina Khan, discussing yesterday’s American Express decision, exemplifies an unfortunate trend in contemporary antitrust discourse.  Khan wrote:

The economists cited by the Second Circuit (whose opinion SCOTUS affirms) for the analysis of ‘two-sided’ [markets] all had financial links to the credit card sector, as we point out in FN 4 [link to amicus brief].

Her implicit point—made more explicitly in the linked brief, which referred to the economists’ studies as “industry-funded”—was that economic analysis should be discounted if the author has ever received compensation from a firm that might benefit from the proffered analysis.

There are two problems with this reasoning.  First, it’s fallacious.  An ad hominem argument, one addressed “to the person” rather than to the substance of the person’s claims, is a fallacy of irrelevance, sometimes known as a genetic fallacy.  Biased people may make truthful claims, just as unbiased people may get things wrong.  An idea’s “genetics” are irrelevant.  One should assess the substance of the actual idea, not the identity of its proponent.

Second, the reasoning ignores that virtually everyone is biased in some way.  In the antitrust world, those claiming that we should discount the findings and theories of industry-connected experts urging antitrust modesty often stand to gain from having a “bigger” antitrust.

In the common ownership debate about which Mike Sykuta and I have recently been blogging, proponents of common ownership restrictions have routinely written off contrary studies by suggesting bias on the part of the studies’ authors.  All the while, they have ignored their own biases:  If their proposed policies are implemented, their expertise becomes exceedingly valuable to plaintiff lawyers and to industry participants seeking to traverse a new legal minefield.

At the end of our recent paper, The Case for Doing Nothing About Institutional Investors’ Common Ownership of Small Stakes in Competing Firms, Mike and I wrote, “Such regulatory modesty will prove disappointing to those with a personal interest in having highly complex antitrust doctrines that are aggressively enforced.”  I had initially included a snarky footnote, but Mike, who is far nicer than I, convinced me to remove it.

I’ll reproduce it here in the hopes of reducing the incidence of antitrust ad hominem.

Professor Elhauge has repeatedly discounted criticisms of the common ownership studies by suggesting that critics are biased.  See, e.g., Elhauge, supra note 26, at 1 (observing that “objections to my analysis have been raised in various articles, some funded by institutional investors with large horizontal shareholdings”); id. at 3 (“My analysis of executive compensation has been critiqued in a paper by economic consultants O’Brien and Waehrer that was funded by the Investment Company Institute, which represents institutional investors and was headed for the last three years by the CEO of Vanguard.”); Elhauge, supra note 124, at 3 (observing that airline and banking studies “have been critiqued in other articles, some funded by the sort of institutional investors that have large horizontal shareholdings”); id. at 17 (“The Investment Company Institute, an association of institutional investors that for the preceding three years was headed by the CEO of Vanguard, has funded a couple of papers to critique the empirical study showing an adverse link between horizontal shareholding and airline prices.”); id. (observing that co-authors of critique “both have significant experience in the airline industry because they consulted either for the airlines or the DOJ on airline mergers that were approved notwithstanding high levels of horizontal shareholding”); id. at 19 (“The Investment Company Institute has responded by funding a second critique of the airline study.”); id. at 23-24 (“Even to the extent that such studies are not directly funded by industry, when an industry has been viewed as benign for a long time, confirmation bias is a powerful force that will incline many to interpret any data to find no adverse effects.”).  He fails, however, to acknowledge his own bias.  As a professor of antitrust law at one of the nation’s most prestigious law schools, he has an interest in having antitrust be as big and complicated as possible: The more complex the doctrine, and the broader its reach, the more valuable a preeminent antitrust professor’s expertise becomes.  This is not to suggest that one should discount the assertions of Professor Elhauge or other proponents of restrictions on common ownership.  It is simply to observe that bias is unavoidable and that the best approach is therefore to evaluate claims according to their substance, not according to who is asserting them.

The EC’s Android decision is expected sometime in the next couple of weeks. Current speculation is that the EC may issue a fine exceeding last year’s huge 2.4B EU fine for Google’s alleged antitrust violations related to the display of general search results. Based on the statement of objections (“SO”), I expect the Android decision will be a muddle of legal theory that not only fails to connect to facts and marketplace realities, but also will perversely incentivize platform operators to move toward less open ecosystems.

Read the full piece here.

The Eleventh Circuit’s LabMD opinion came out last week and has been something of a rorschach test for those of us who study consumer protection law.

Read the full piece here.