ICLE Affiliate Review: April 2026

“What Is Law? A Coordination Model of the Characteristics of Legal Order” by Gillian K. Hadfield and Barry R. Weingast asks whether legal order requires a centralized enforcement agency. The paper argues it does not. It presents a model in which a system of decentralized enforcement, carried out collectively by individual agents, sustains legal order. The article is part of the authors’ broader project to decouple law from the state and to show that the former does not conceptually depend on the latter (see, e.g., Hadfield & Weingast, 2013; Hadfield & Weingast, 2018).

Hadfield and Weingast’s central thesis is that the defining characteristics of legal order do not conceptually depend on centralized, coercive state enforcement. Legal order instead emerges as a coordination equilibrium sustained by decentralized collective punishment, so long as a shared institution provides authoritative, publicly knowable classifications of wrongful conduct. On this view, law functions as a coordination technology. Its core function is not to command through force, but to align expectations.

Methodologically, the paper offers a piece of foundational law & economics modeling. Rather than evaluate the efficiency of particular legal rules, Hadfield and Weingast adopt a rational-choice framework to explain the emergence of legal order itself. They rely on standard tools—repeated games, belief updating, and equilibrium analysis—but deploy them at a highly abstract institutional level. The aim is not empirical prediction, but an existence proof: to show that legal order with rule-of-law characteristics can, in principle, arise without centralized enforcement.

The paper proceeds in three steps. First, the authors construct a formal repeated-game model in which enforcement is entirely decentralized and individual agents hold heterogeneous, private views about what counts as wrongful behavior. Second, they show that an equilibrium with effective deterrence can still be sustained if a third-party institution supplies a common logic for classifying conduct, even though that institution lacks enforcement power. Finally, they demonstrate that the institutional features required for this equilibrium—generality, impersonality, stability, openness, and publicity—closely mirror the attributes traditionally associated with the rule of law.

Read the full piece here.

Law & economics traces its intellectual roots to the University of Chicago. That lineage still shapes how the field is understood. Chicago price theory—especially Gary Becker’s (1976) systematic application of maximization, equilibrium, and stable preferences across social life, and George Stigler’s (1992, p. 459) suggestion that “every durable social institution or practice is efficient, or it would not persist over time”—left a deep imprint.

It also left a durable misunderstanding.

Many assume economic analysis purports to prove that existing institutions are good, justified, or normatively desirable. That confusion surfaces most clearly in debates over Richard Posner’s wealth-maximization rule, among critics and supporters alike.

In policy discourse, “efficiency” often functions as an evaluative conclusion—a way to endorse current arrangements or to claim that legal and political disputes can be resolved by neutral technocratic criteria. Read that way, economic analysis looks like a theory of justification.

Within the economic framework, though, efficiency is evaluatively empty by design. It operates inside the model. It does not rank alternative social states, and it does not supply an independent moral criterion. Efficiency follows from the assumption of constrained maximization. It describes the internal coherence of a model, not the justice of an outcome.

Posner acknowledged that limit. He did not treat efficiency as self-justifying. Instead, he defended wealth maximization as an adjudicative decision rule grounded in liberal commitments—not as a claim that “efficiency” itself carries independent normative force.

Read the full piece here.

In 1992, the U.S. Supreme Court held in Eastman Kodak Co. v. Image Technical Services that a firm without market power in photocopiers might still possess market power in photocopier parts and service. The Court’s logic turned on opportunistic hold-up: Kodak could profit by trading short-run exploitation of locked-in customers for long-run losses in equipment sales. That tradeoff, the Court concluded, could establish antitrust market power.

Benjamin Klein’s 1993 article, “Market Power in Antitrust: Economic Analysis after Kodak,” alls this a category error. Hold-up is real; Klein helped define it in “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process” (1978), co-authored with Robert Crawford and Armen Alchian.

But hold-up is not market power. The Court took the framework Klein helped build and pressed it into service for a task it was never meant to perform.

That misstep carries a broader lesson for law & economics. The Court in Kodak relied on sound economic concepts—hold-up, switching costs, lock-in—but aimed them at the wrong legal question. Law & economics demands more than importing good economics into legal disputes. It requires matching the right economic concept to the right legal question. Klein’s contribution lies in doing exactly that—and in understanding both sides well enough to know the difference.

Read the full piece here.

I started researching self-employment and independent work over a decade ago because I’d been exposed to it my whole life — my parents were self-employed — and I could see it growing steadily since at least the 1990s. What intrigued me was a persistent puzzle: Most people in this workforce wanted to stay independent, yet they also wanted access to benefits like health insurance and retirement savings. Why couldn’t these two coexist? The demand was clearly there — but the supply was not.

Over time, the answer became clearer. The problem wasn’t a lack of interest from workers or even businesses. It was the law.

Read the full piece here.

Abstract

When law and economics (L&E) emerged as a field in the middle of the twentieth century, it focused on using economic theory to study the common law. During this period, L&E offered insights so novel that it not only profoundly influenced legal doctrine, but the movement’s key figures also became some of the most cited and acclaimed scholars in the American academy. The field of law and economics has since continued to grow and become more technically sophisticated, but it is also a less cohesive movement. Moreover, L&E has been misunderstood and misrepresented by the emerging law and political economy (LPE) movement. In this Essay, we start the process of reclaiming L&E by offering a definition of the current field: Contemporary law and economics is an academic field that (1) has a commitment to using the social scientific method of inquiry to (2) study questions about the law and legal institutions (3) in a way that is typically informed by economic insights. We then describe L&E’s comparative advantages, explain its relationship to the LPE movement, and suggest a roadmap for its renewed relevance.

Read the full piece at SSRN.

Abstract

This Article argues that Japan’s trajectory in artificial intelligence is best understood as an evolutionary process in which bottom-up deployment of AI across industrial and service domains co-evolves with a policy framework that integrates restrained industrial support and anticipatory competition enforcement. In contrast to the centralized foundation-model strategies pursued in the United States and China and the regulatory-led framework emerging in the European Union, Japan’s approach highlights how sustained deployment, domain specialization, and incremental learning can reshape both industrial structure and the focus of competition policy. Drawing on developments across robotics, manufacturing, mobility, and enterprise software, the Article introduces the concept of the deployment layer to explain how value creation and competitive bottlenecks increasingly arise at the interfaces through which AI systems are operationalized rather than within models alone. This perspective reframes industrial policy debates by suggesting that compute access, experimental deployment, and organizational learning may matter more than large-scale frontier-model subsidies, while competition policy must increasingly address control over data, infrastructure, and integration pathways. The Article concludes that Japan’s experience illustrates an alternative governance model for AI in which industrial policy and competition enforcement evolve together through iterative market learning, offering a framework for understanding AI governance as a process of policy co-evolution rather than discrete regulatory intervention.

Read the full piece at SSRN.

Markets might be able to price truth. Whether anyone wants to buy it is another question.

In a recent post, we looked at a small cluster of systems that try to use markets to correct misinformation.

Start with a simple analogy: bad information is a kind of pollution, a familiar problem in law & economics. In this case, the pollution manifests as a market failure in journalism and social media. A well-designed “truth-bounty” system could, in theory, reward those who earn public trust and capture attention by being right. That would increase the production and spread of high-quality news, while pushing misinformation to the margins.

Some of these proposals cut out authors and publishers altogether. Prediction markets and “retrodiction markets” would let anyone with a view—and some cash—bet on what’s true. Think the moon landing was faked? Buy “Yes” or “No.” Maybe the 1977 film “Capricorn One” (about a staged Mars landing) reflected conspiracy culture. Or maybe it was, depending on your priors, closer to documentary.

This is not entirely hypothetical. Financial markets already host a version of it. Certain firms do investigative work to uncover fraud and mismanagement in publicly traded companies, then take positions that pay off when the information becomes public. Short-selling ahead of the reveal can be quite profitable. That’s the “Hindenburg model,” named for Hindenburg Research, an early and prominent practitioner.

All of this sounds elegant in theory. In practice, these incentive-aligned truth machines face serious obstacles—especially when one tries to export them from finance into the messier world of politics and social discourse, where reliable information is in short supply and trust is even scarcer.

Read the full piece here.

Abstract

The U.S. Federal Trade Commission’s (FTC’s) recent campaign against “Big Tech censorship” of conservative viewpoints is unjustified as a matter of policy and likely to fail as a matter of law. The FTC’s policy argument for intervention rests on four factual premises: (1) that major technology platforms systematically and unjustifiably suppress user-generated content that expresses conservative viewpoints; (2) that such suppression harms consumers by “drying up access to ideas”; (3) that censorship of conservative content is a manifestation of anemic competition among platforms; and (4) that intervention by the FTC would increase opportunities for expression and enhance market output. Each of those factual premises is unsound. A survey of the empirical literature demonstrates that right-leaning content is more often amplified than suppressed by leading technology platforms and that disparities in enforcement are better explained by differences in engagement patterns and misinformation sharing. Moreover, even if some platforms did suppress particular viewpoints, there is no evidence of marketwide “drying up” of ideas—the harm FTC leadership has identified as central to its interventionist rationale. Nor is content moderation a result of deficient competition among platforms; it is instead a means by which platforms compete, accommodate heterogenous preferences of users and advertisers, overcome network effects, and expand opportunities for citizens to broadcast their ideas to large groups of people. Finally, there is little reason to believe that FTC intervention would improve upon the status quo, as each of the alternative content moderation approaches the Commission might impose would leave users worse off than they are under the current state of affairs. The policy argument for FTC intervention is thus quite weak.

When it comes to the law, the FTC’s prospective enforcement theories face serious—and likely fatal—obstacles. Efforts to penalize or coerce technology platforms for their content-moderation decisions raise substantial First Amendment concerns, as recent Supreme Court precedent makes clear that platforms’ editorial judgments about what speech to host, promote, or demote are protected expressive activity. Even apart from those constitutional limits, the FTC would likely fail because the statutory provision it claims the technology platforms are violating—the FTC Act’s prohibition on “unfair methods of competition” and “unfair or deceptive acts or practices”—provides no viable basis for liability. FTC liability theories based on inter-platform agreements, advertiser boycotts, agreements with the government, and unilateral exclusionary practices fail to establish an unfair method of competition. Nor can the Commission meet the legal tests for “deception” or “unfairness” and thereby establish an unfair or deceptive act or practice. An FTC enforcement action based on alleged Big Tech censorship of conservatives is thus likely to fail as a matter of law.

Read the full piece at SSRN.

ICLE Academic Affiliate Seth Weinberger was a guest on Good Day Seattle to discuss what’s next for Iran following the U.S. and Israel’s military attack. Watch the segment below:

ICLE Academic Affiliate Daniel Lyons was quoted in a Roll Call article regarding oral arguments before the Supreme Court concerning AT&T and Verizon’s challenge to the FCC’s power to impose forfeitures:

Daniel Lyons, a nonresident fellow at the American Enterprise Institute and law professor at Boston College, said the case, combined with other recent Supreme Court rulings restricting federal agencies, could result in a shift from internal agency judges to more time-consuming, costly cases in federal courts.

“In the short run, the policy impacts of this will be really significant. Agencies will wind up doing a lot less than we as a society expected them to do over the last 20-30 years,” Lyons said.

Read the full piece here.

Interest and Independence of Amicus Curiae

The amici are present or former academics and former government enforcers. The  Appendix lists their names and affiliations. The amici share an interest in the development of antitrust law and the proper application of summary judgment principles in Sherman Act conspiracy cases. All parties consented to the filing of this brief. No party’s counsel authored any part of the brief, and only the amici and their counsel contributed funds for the preparation or submission of the brief.

Introduction

“The dizzying increase in fuel prices associated with the OPEC oil embargo of 1973 had a severe impact on the trucking industry.” Cent. Forwarding, Inc. v. ICC, 698 F.2d 1266, 1268 (5th Cir. 1983). The Interstate Commerce Commission (ICC), which regulated the industry, responded with rate increases, and when oil prices spiked much higher in 1979, the ICC responded with fuel surcharges. See id. at 1268–69.

Defendants adopted fuel surcharges (hereinafter, FSCs) in 2000. Trucks and trains use the same fuel, but trains are more efficient. Appellants observe that “everything changed in 2003.” Brief for Plaintiffs-Appellants (Pl. Br.) 1. Indeed, the “most remarkable surge in the price of oil since 1979 occurred between mid-2003 and mid-2008 with the WTI [West Texas Intermediate crude] price climbing from $28 to $134 per barrel.” Christiane Baumeister & Lutz Kilian, Forty Years of Oil Price Fluctuations: Why the Price of Oil May Still Surprise Us, J. Econ. Persps., Winter 2016, at 139, 147. The underlying data was before the district court. Dep’t of Energy, Energy Info. Admin., Cushing, OK WTI Spot Price, www.eia.gov/dnav/pet/hist/RWTCD.htm.

Plaintiffs alleged a conspiracy among Defendants relating to their use of FSCs, and they argue that the conspiracy can be inferred from circumstantial evidence. But Defendants had to act as fuel prices rose, and the obvious action was aggressive use of escalators tied to the price of oil—their FSCs. As the district court concluded, Defendants did not act simultaneously or in remarkably similar ways, and their actions were consistent with the pursuit of independent self-interest.

Appellants argue that Defendants’ use of FSCs in 2003 was “nothing like” what came before, and that this alone raises “a triable question about concerted action.” Pl. Br. 50–51. But fuel price increases beginning in 2003 were “nothing like” what came before. The necessity of decisive action and the rationality of the action taken amply support the district court’s conclusion that the evidence did not tend to exclude the possibility that Defendants acted independently.

Summary of Argument

1. The district court faithfully applied precedent demanding evidence from which a reasonable jury could find the inference of a conspiracy more attractive than the alternative inference of independent action. The court determined that a reasonable jury could not infer that Defendants conspired.

Erratic and rapidly rising fuel prices provided “a strong basis for the inference of independent action.” Op. 77. Consequently, a reasonable jury could not infer conspiracy from some similarities in Defendants’ FSCs and some conversations between pairs of Defendants touching on FSCs. Conspiracy can be inferred from marketplace conduct only with actions contrary to independent self-interest. Plaintiffs did not show that anything about Defendants’ FSCs was contrary to their independent self-interest.

2. The district court did not grant summary judgment because of an absence of unusual parallelism. The court concluded that the nature and extent of parallelism did not itself support the inference of conspiracy, and then went on to meticulously examine Plaintiffs’ other evidence and argument, and the record as a whole.

The district court did not explain Defendants’ FSCs as “mere interdependent” conduct, but rather as rational independent action.

The district court did not ignore “plus factors,” but rather required evidence that tends to exclude the possibility of independent action. Ticking a few “plus factor” boxes does not assure that a reasonable jury could find the inference of a conspiracy more attractive than the alternative inference of independent action.

Argument

I. The District Court Correctly Applied the Proper Summary Judgment Standard

Plaintiffs alleged that Defendants engaged into a conspiracy relating to

their FSCs, in violation of Section 1 of the Sherman Act. After many years of litigation, the district court granted Defendants’ motion for summary judgment. Appellants submit that the court departed from “bedrock summary-judgment principles,” Pl. Br. 30, but Appellants misstate those principles and mischaracterize the district court’s ruling.

A. The District Court Applied the Proper Standard

Appellants fault the district court for demanding that Plaintiffs’ evidence “make the inference of a conspiracy more ‘attractive’ than the alternative inference of independent action.” Pl. Br. 30–31, quoting Op. 35. But this articulation of the summary judgment standard is fully consonant with bedrock principles articulated by the Supreme Court.

In Matsushita, the Supreme Court held that “conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. To survive a motion for summary judgment or for a directed verdict, a plaintiff seeking damages for a violation of § 1 must present evidence that tends to exclude the possibility that the alleged conspirators acted independently.” Matsushita Elect. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986) (citations and internal quotation marks omitted).

In Twombly the Supreme Court reiterated that, at “the summary judgment stage a § 1 plaintiff ’s offer of conspiracy evidence must tend to rule out the possibility that the defendants were acting independently.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554 (2007).

The district court accurately articulated the standard of Matsushita and Twombly. Op. 34–37. Among other things, the court observed that “Matsushita simply demands that the nonmoving party’s inferences be reasonable in order to reach a jury, in light of the alternative inferences and economic realities.” Op. 36, see Matsushita, 475 U.S. at 588.

For guidance on which inferences are reasonable, the district court referred to a pre-Matsushita decision by this Court requiring that “plaintiffs’ evidence must make the inference of a conspiracy more ‘attractive’ than the alternative inference of independent action.” Op. 35, citing Fed. Prescription Serv., Inc. v. Am. Pharm. Ass’n, 663 F.2d 253, 267 (D.C. Cir. 1981) (“inference of conspiracy . . . is warranted only when a theory of rational, independent action is less attractive than that of concerted action”).

In that case, this Court rejected the trial court’s conspiracy finding. The Court held that the trial court clearly erred in finding a conspiracy on the basis of parallel conduct that was not a kind that “could only make sense in the context of ” a conspiracy, but rather could “be persuasively explained by the exercise of rational, independent judgment.” Fed. Prescription, 663 F.2d at 267.

Appellants wrongly assert that Federal Prescription’s “less attractive” formulation demands proof of the underlying claim just to get the opportunity to prove it at trial. Pl. Br. 30. It does nothing of the kind. What it demands is evidence that would permit a reasonable trier of fact to find a conspiracy, which is exactly what Matsushita demands.

The district court did what it was required to do. “If the defendant in a run-of-the-mill civil case moves for summary judgment or for a directed verdict based on the lack of proof of a material fact, the judge must ask himself not whether he thinks the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). The court asked that question, and the answer was no.

B. The District Court Applied the Standard Correctly

“[A]ntitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case.” Matsushita, 475 U.S. at 588. But “Matsushita demands only that the nonmoving party’s inferences be reasonable in order to reach the jury.” Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 468 (1992). And Appellants argue that “inferences of collusion . . . are entirely permissible here.” Pl. Br. 37.

In carefully reviewing the evidence, the district court was not, as Appellants argue, “usurping the jury’s role.” Pl. Br. 31. The district court applied the Matsushita standard and granted summary judgment because “a reasonable jury could not conclude” that Defendants’ actions relating to their FSCs were “the result of a conspiracy.” Op. 37.

Contrary to Appellants’ claim, the district court did not draw “improper inferences” in concluding that “Defendants’ focus on FSCs was driven by erratic and rapidly rising fuel prices.” Pl. Br. 43–44. Uncontroverted government data demonstrated “erratic and rapidly rising fuel prices.” With occasional ebbs, oil prices doubled between the Spring of 2003 and the Summer of 2005, and then doubled again by the Summer of 2008. Dep’t of Energy, Energy Info. Admin., Cushing, OK WTI Spot Price, www.eia.gov/dnav/pet/hist/RWTCD.htm.

The district court was amply justified in concluding that erratic and rapidly rising fuel prices gave Defendants “a rational business motivation for aggressively pursuing higher FSCs.” Op. 70 (capitalization altered). And the court rightly observed that “an independent business justification for the defendants’ behavior makes inferring the requisite illegal conspiratorial agreement for a Sherman Act section 1 violation more difficult.” Op. 70.

Appellants argue that the evidence of Defendants’ meetings nevertheless could support a reasonable inference of conspiracy. Pl. Br. 46–50. But the district court carefully reviewed the evidence and concluded that “none of the meetings relied on by plaintiffs aid them in making plausible an inference of conspiracy.” Op. 120. Defendants “had a few meetings and a handful of sporadic communications where FSCs may have merely come up, though not contemporaneously to any change in defendants’ conduct or the context of creating an agreement.” Op. 152.

The district court correctly concluded that the mere fact of the meetings was not a permissible basis for inferring conspiracy. Op. 105–07, 152. Pairs of Defendants communicated because they partnered in numerous “interline” movements. Op. 7–8. Interline movements were quite important because Defendants CSX and NS operated in the East, while Defendants BNSF and UP operated in the West. Op. 6.

Appellants point to a May 2003 meeting at which NS and UP allegedly agreed that “it would be a positive outcome if all roads had the same process in the eyes of our customers.” Pl. Br. 49–50. The district court observed that the meeting occurred shortly after NS and UP announced FSC formulas and there was no evidence of parallel action following the meeting, which “undercuts any inference” of conspiracy. Op. 115–16.

Appellants point to a July 2003 meeting between BNSF and NS, several months after the conspiracy’s alleged onset, discussing a “potential industry position” on FSCs. Pl. Br. 48–49. Appellants ignore the district court’s observation that discussing a “potential” position “suggests that none was extant already” and thus “undermines plaintiffs’ alleged conspiracy.” Op. 119.

Appellants argue that the “district court read Matsushita to require that Plaintiffs show inter-Defendant pricing dialogues tethered to ‘simultaneous’ (or ‘near-simultaneous’) and ‘unusual’ lockstep pricing actions across all Defendants.” Pl. Br. 35. The district court did no such thing. Instead, it carefully examined the evolution of Defendants’ FSCs for any parallelism from which a reasonable jury could have inferred a conspiracy. Op. 42–69.

Nor did the district court fall into the “trap” of “considering Plaintiffs’ conspiracy evidence piecemeal,” as Appellants argue. Pl. Br. 45. Judge Posner identified this “trap” but observed that “zero plus zero equals zero.” In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651, 655 (7th Cir. 2002). The district court rightly concluded that most of Plaintiffs’ evidence was a “zero,” and it concluded that “all of plaintiffs’ evidence together” did “not tend to exclude the inference of independent action.” Op. 150.

The district court recognized that the “ultimate inquiry . . . is a holistic one,” Op. 150, because the whole of Plaintiffs’ circumstantial evidence could be greater than the sum of its parts, Op. 40–41, 149–50. And the court concluded that the evidence, “evaluated cumulatively,” did not tend to exclude the possibility of independent action. Op. 151. Appellants disparage the district court’s holistic assessment of the evidence but identify no synergy in the evidence that the district court overlooked. Pl. Br. 46–47.

Viewing the evidence as a whole, the court concluded that it did not tend to exclude the possibility of independent action, “especially given the strong showing made by defendants that they acted in their unilateral self-interest.” Op. 151. “[T]here is no reason to infer that [Defendants] had agreed among themselves to do what was only natural anyway.” Twombly, 550 U.S. at 566.

C. The Missing Plus Factor Is Action Against Self-Interest

“A plaintiff may establish a conspiracy under Section 1 of the Sherman Act by circumstantial evidence such as inferences drawn from the behavior of the alleged co-conspirators.” Kreuzer v. Am. Acad. of Periodontology, 735 F.2d 1479, 1487–88 (D.C. Cir. 1984). “Such an inference may only be drawn, however, when an alleged conspirator has acted contrary to his own independent interest.” Id. at 1488.

Kreuzer is consistent with Matsushita and Twombly. Recapitulating the holding of Matsushita, Twombly observed that conduct “consistent with conspiracy” is of no avail to plaintiffs opposing summary judgment if it is “just as much in line with a wide swath of rational and competitive business strategy unilaterally prompted by common perceptions of the market.” Twombly, 550 U.S. at 554. Thus, marketplace conduct supports an inference of conspiracy only when it is contrary to unilateral self-interest.

“Where the conduct of an alleged co-conspirator is in its own economic self-interest only if the other alleged co-conspirators follow suit, there is strong circumstantial evidence of a conspiracy.” Honey Bum, LLC v. Fashion Nova, Inc., 63 F.4th 813, 823 (9th Cir. 2023). Put another way, conspiracy can be inferred from “perilous” conduct, which cedes business unless rivals respond in a parallel fashion and thus bypass opportunities to gain business. Kleen Prods. LLC v. Ga.-Pac. LLC, 910 F.3d 927, 937–38 (7th Cir. 2018).

Parallel conduct supported an inference of conspiracy in Interstate Circuit, Inc. v. United States, 306 U.S. 208, 221–22 (1939). “Key to Interstate Circuit’s conspiracy finding was its determination that each distributor’s decision to accede to Interstate’s demands would have been economically self-defeating unless the other distributors did the same.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 331 (3d Cir. 2010).

Appellants argue that Defendant’s FSCs during the period of alleged conspiracy “were a significant break from the surcharges of the past.” Pl. Br. 25. But fuel prices indisputably soared; Defendants had powerful self-interested reasons to act in response; and aggressive use of FSCs was an obvious and sensible action. Appellants do not argue that breaking from the past was “perilous” or unwarranted by circumstances.

“Here, detailed evidence of each defendant’s internal debates and analyses . . . demonstrates independent decision-making and logical, self-interested business justifications for the choices each defendant made.” Op. 77, see Op. 139–43. Appellants identify no factual dispute as to whether either the construction of Defendant’s FSCs or the expansion of their coverage was consistent with independent self-interest.

II. The Amici Provide No Sound Basis for Reversing the Grant of Summary Judgment

A. The District Court Did Not Demand Unusual Parallelism

Amicus curiae States and the American Antitrust Institute mistakenly assert that the district court granted summary judgment on the basis that Plaintiffs could not show unusual parallelism. Brief for the District of Columbia and 22 States as Amicus Curiae in Support of Appellants (St. Br.) 15–19; Brief of the American Antitrust Institute (AAI) in Support of Plaintiffs-Appellants and Reversal (AAI Br.) 5–13, 16–17.

Circumstantial proof of a price-fixing conspiracy entails inference from conduct, especially parallel prices and parallel price movements. See, e.g., Am. Tobacco Co. v. United States, 328 U.S. 781, 804–05 (1946); High Fructose, 295 F.3d at 654. In ruling on summary judgment, a court determines what inferences a reasonable jury could draw from the conduct documented in the record within the context of the other evidence.

“Parallel behavior of a sort anomalous in a competitive market” supports an inference of conspiracy. In re Text Messaging Antitrust Litig., 782 F.3d 867, 870 (7th Cir. 2015). And parallel conduct can support an inference of conspiracy if “inconsistent with that to be expected from each party individually pursuing his own interest.” Kreuzer, 735 F.2d at 1487.

The State and AAI amici argue that the district court erred by asserting: “Parallel conduct . . . requires pricing decisions so ‘unusual,’ they could not be expected from an ordinary competitive market.” Op. 48, quoted by St. Br. 15–16; AAI Br. 5, 14. The court’s phrasing was not ideal, but it correctly described parallelism that would support an inference of conspiracy. See Twombly, 550 U.S. at 556 n.4 (“[C]omplex and historically unprecedented changes in pricing structure made at the very same time by multiple competitors, and made for no other discernible reason, would support a plausible inference of conspiracy.” (internal quotation marks omitted)).

The amici do not question the district court’s conclusion that a reasonable jury could not infer conspiracy from the details and evolution of Defendants’ FSCs. Op. 42–69. The amici argue instead that the court erred by treating the absence of unusual parallelism as a sufficient basis for granting summary judgment. St. Br. 15–19, 24; AAI Br. 5–6, 11, 14, 16, 19–20. But the court did not do that. After concluding that no parallels in Defendants’ FCSs could support an inference of conspiracy, the court devoted nearly 100 pages to exhaustively reviewing all the other evidence.

Amicus AAI alone argues that parallel conduct is a “threshold” trivially crossed because Defendants’ small numbers made their actions “invariably parallel.” AAI Br. 5, 7–9, 13. And once the threshold was crossed, AAI argues that “the district court should have ended its inquiry into parallel conduct.” AAI Br. 7. AAI’s authority for the threshold notion is a pleading decision. Mosaic Health, Inc. v. Sanofi-Aventis U.S., LLC, 156 F.4th 68 (2d Cir. 2025), cited at AAI Br. 5–6, 13. And AAI asserts that the district court “raise[d] the bar for pleading.” AAI Br. 5.

In ruling on summary judgment, the court was tasked with determining whether the evidence “tends to exclude the possibility that the alleged conspirators acted independently.” Matsushita, 475 U.S. at 588 (internal quotation marks omitted). The nature and extent of parallelism unquestionably was relevant. See, e.g., Twombly, 550 U.S. at 553, 556 n.4.

B. The District Court Did Not Rely on “Mere Interdependence”

On the authority of a single article, the academic amici argue that courts systematically err in evaluating circumstantial evidence of collusion by assuming that all parallel conduct could be due to “mere interdependence.” Brief of Amicus Curiae Antitrust Law and Economics Professors in Support of Plaintiffs-Appellants and Reversal (Acad. Br.) 2–4, 7–8.

But the district court did not explain Defendants’ aggressive use of FSCs as “mere interdependence,” and the academic amici offer scant support for the charge that the “‘mere interdependence’ assumption runs throughout” the court’s opinion. Acad. Br. 8; see AAI Br. 20 (“The district court’s analysis also rests on an economically incorrect assumption that interdependence necessarily explains supracompetitive pricing in an oligopoly.”).

The district court observed that Defendants’ actions were “not completely independent but rather interdependent.” Op. 72. Defendants’ FSC formulas were public, and the court noted the attention that Defendants paid to each others’ formulas. Op. 78–94. As the court acknowledged, interdependent competitors always take account of each others’ actions. Op. 36, 38–39.

Interdependent competitors sometimes act in parallel. Op. 39–44. And the district court noted that Defendants sometimes emulated one another’s FSC formulas. Op. 78–79 (CSX emulated BNSF), 82–83 (UP emulated BNSF), 89, 91 (NS emulated CSX). But the district court did not rely on “mere interdependence” to explain why all four Defendants’ began aggressively pursuing FSCs in 2003.

The district court carefully examined the record and concluded that the “detailed evidence of each defendant’s internal debates and analyses as each one considered when and how to change its FSCs demonstrates independent decision-making.” Op. 77 (emphasis added), see id. 139–40. In other words, the court concluded that Defendants’ pursuit of FSCs was a “rational and competitive business strategy unilaterally prompted by common perceptions of the market.” Twombly, 550 U.S. at 554.

C. Plus Factors Do Not Tend to Exclude the Possibility of Independent Action

While appellants mention “plus factors” in passing, Pl. Br. 26, 34, 35, the academic amici focus on them, Acad. Br. 6–8, 14–23. Citing only “plus factors,” the academic amici claim that “more than enough evidence exists for a reasonable juror to infer an agreement.” Acad. Br. 27. As a practical matter, the amici argue that summary judgment in antitrust conspiracy cases is a box-ticking exercise and that Plaintiffs ticked the necessary boxes.

Unlike recent appellate decisions, the academic amici do not analyze “plus factors” in the context of Matsushita and Twombly. The amici do not explain why particular “plus factors” necessarily “show that the inference of conspiracy is reasonable in light of the competing inference[] of independent action.” Matsushita, 475 U.S. at 588.

The academic amici baselessly argue that the district court held that “multiple long-established plus factors are no longer valid.” Acad. Br. 7–8. The notion of “long-established plus-factors” is problematic at the start because “plus factors” are not fixed and invariant. Actions and background facts become “plus factors” when, in a particular context, they “make the inference of rational independent choice less attractive than that of concerted action.” Lum v. Bank of Am., 361 F.3d 217, 230 (3d Cir. 2004).

Citing Twombly, the Ninth Circuit explained that “plus factors are economic actions and outcomes that are largely inconsistent with unilateral conduct but largely consistent with explicitly coordinated action.” In re Musical Instruments & Equip. Antitrust Litig., 798 F.3d 1186, 1194 (9th Cir. 2015); see also In re Publ’n Paper Antitrust Litig., 690 F.3d 51, 62 (2d Cir. 2012) (“Plus factors” are “circumstances” that, “when viewed in conjunction with the parallel conduct, would permit a fact-finder to infer a conspiracy”).

The district court conducted a holistic analysis of the evidence, as the academic amici and AAI advocate. Acad. Br. 25–27, AAI Br. 12. But the court’s holistic analysis, unlike that advocated by the amici, faithfully applied the Matsushita standard. Applying that standard, the court correctly concluded that Plaintiffs’ purported “plus factors” were insufficient.

Rather than treat Plaintiffs’ purported “plus factors” as boxes to be ticked, the district court viewed them in light of Matsushita’s requirement that Plaintiffs “show that the inference of conspiracy is reasonable in light of the competing inference[] of independent action.” Matsushita, 475 U.S. at 588. The academic amici wrongly characterize the district court’s analysis as holding Plaintiffs’ “plus factors” to be “irrelevant.” Acad. Br. 13–14, 17, 19.

The district court correctly concluded that high concentration, high entry barriers, and inelastic demand suggested weak competition but did “not push plaintiffs over the line toward an inference of conspiracy.” Op. 145. The amici wrongly assert that the court held these market characteristics “irrelevant to Sherman Act agreement analysis.” Acad. Br. at 13–16. The district court correctly concluded that a “conspiratorial motive does not move the needle in plaintiffs’ favor” given that Defendants had a “clear rational business motive” to use FSCs aggressively in coping with rising fuel prices. Op. 105. The amici wrongly assert that the district court held a motive to conspire “irrelevant to the agreement inquiry.” Acad. Br. 13, 17–19.

The district court correctly concluded that communications among Defendants “should be accorded little, if any weight” in view of their content and the context in which they occurred. Op. 105. The amici wrongly assert that the district court held the communications “irrelevant to the agreement inquiry.” Acad. Br. 19–24 (capitalization altered).

Another error attributed by the amici to the district court is analyzing “the common-motive evidence in isolation from market-structure evidence.” Acad. Br. 19. But doing so would have been to Plaintiffs’ benefit. High concentration, high entry barriers, and inelastic demand tend to yield weak competition and high profits without collusion (and without “conscious parallelism”), which results in a weak motive to conspire and run the risk of prosecution and payment of treble damages.

The academic amici submit that price-fixing allegations based on parallel conduct should always survive summary judgment if plaintiffs show that market structure is conducive to collusion and that the defendants had motive and opportunity to conspire. Acad. Br. 3, 27–28. This submission is irreconcilable with Matsushita because these boxes can be ticked even if the evidence does not tend to exclude the possibility of independent action.

In a market structure conducive to collusion, competitors “recognize a mutual interdependence of their price-output decisions, and therefore act interdependently.” Joe S. Bain, Industrial Organization 114 (2d ed. 1968); see In re Flat Glass Antitrust Litig., 385 F.3d 350, 359 (3d Cir. 2004). The results can be parallel conduct and diminished competitive vigor, which may be undesirable, but they are not a sufficient basis for inferring conspiracy. See, e.g., Twombly, 550 U.S. at 553–54, Op. 145.

Motive is ubiquitous. The Ninth Circuit observed that: “Any firm that believes that it could increase profits by raising prices has a motive to reach an advance agreement with its competitors.” See Musical Instruments, 798 F.3d at 1194. A motive to conspire exists whenever there is competition, but criminal enforcement and treble damages actions are potent deterrents. The district court was right to conclude that “a mere motive to conspire does not alone tend to exclude the possibility of independent action.” Op. 104.

Competitors legitimately communicate on matters of industry concern. “Atypical communications between alleged coconspirators can constitute a plus factor because such communications provide the opportunity for parties to come to (and enforce) an illicit agreement. But to qualify as a plus factor, such communications must go beyond the ‘standard fare’ of business and trade-association practice.” Honey Bum, 63 F.4th at 823.

After a holistic review of a voluminous record, the district court wrote a thorough 166-page decision. The court properly concluded that Plaintiffs’ “evidence lacks the crucial thrust of a conspiracy claim: facts that tend to exclude the possibility that defendants acted unilaterally and made their decisions independently.” Op. 165–66.

Conclusion

This Court should affirm the district court’s June 24, 2025 grant of summary judgment.

At the International Center for Law & Economics’ March 13 conference in Rome—“Substance over Slogans: Competition and the Wealth of Nations”—the third panel, “From Mainframes to Mandates: The Evolution of Platform Regulation,” featured Dirk Auer, Randal C. Picker, David Bosco, Nicola Giocoli, and Thomas A. Lambert. The discussion used the history of computing to frame current debates, emphasizing how policy, investment, and technological change shape competition—and cautioning against easy analogies from past antitrust interventions.

The panel then turned to platforms and AI. Participants explored tradeoffs between open and closed ecosystems, unbundling, and mergers, while debating whether traditional tools still fit platform markets. The tension was clear: pressure to act early collides with the high—and often unpredictable—error costs of intervening in fast-moving industries.

Video of the full panel is embedded below.

At the International Center for Law & Economics’ March 13 conference in Rome—“Substance over Slogans: Competition and the Wealth of Nations”—the fourth panel, “Gatekeepers or Guardians: Designing Platforms in the Face of Regulation,” featured Lazar Radic, Eric Seufert, Andrei Hagiu, Herbert Hovenkamp, and Thomas A. Lambert. The discussion focused on how to conceptualize platforms—as gatekeepers that require constraint or as curators that create value through governance—and how frameworks like the Digital Markets Act (DMA) shape those roles.

Panelists then examined tradeoffs in regulating practices like price parity, self-preferencing, and interoperability, along with the broader shift toward ex ante rules. The core tension was clear: bright-line regulation offers speed and certainty, but risks high error costs in complex, fast-moving markets, where intervention can just as easily distort incentives and harm consumers as promote competition.

Video of the full panel is embedded below.

At the International Center for Law & Economics’ March 13 conference in Rome—“Substance over Slogans: Competition and the Wealth of Nations”—the sixth panel, “Judges or Experts: Who Should Rule the High-Tech Economy?” featured Francisco Marcos, the Hon. Douglas H. Ginsburg, Maria Maciá, Mariateresa Maggiolino, and A. Douglas Melamed. The discussion compared courts, agencies, and industrial policy across key dimensions—speed, expertise, due process, and error costs—highlighting that each institutional model comes with distinct strengths and weaknesses.

The panel then focused on how those tradeoffs play out in practice, especially across U.S. and European systems. Participants raised concerns about politicization, overreach, and institutional bias, while also exploring hybrid approaches like specialized courts. The bottom line: the real question isn’t who should decide, but how to design institutions that balance expertise, independence, and error costs in fast-moving markets.

Video of the full panel is embedded below.

At the International Center for Law & Economics’ March 13 conference in Rome—“Substance over Slogans: Competition and the Wealth of Nations”—the final panel, “The Institutions of Contestability: Governance, Contract, and Exit,” featured Geoffrey A. Manne, M. Todd Henderson, Maria Maciá, Randal C. Picker, and Pierre Régibeau. The discussion shifted focus from antitrust doctrine to the broader institutional conditions that make markets competitive—firm formation, capital access, labor mobility, governance, and exit.

Panelists then explored how those institutions shape competition in practice, debating the relative role of antitrust alongside bankruptcy, corporate governance, and venture capital. The core point was straightforward: competition depends less on enforcement and more on whether systems enable entry, experimentation, and failure.

Video of the full panel is embedded below.

Executive Summary

The International Center for Law & Economics (ICLE) welcomes the opportunity to submit these comments to the Competition and Markets Authority (CMA) regarding the proposed Conduct Requirements (CRs) for Google’s general search services. ICLE is a nonprofit, nonpartisan research centre dedicated to promoting economically grounded public policy. Our work applies law & economics analysis to competition policy, including digital markets, artificial intelligence, and platform regulation. We seek to ensure that competition law rests on clear legal standards, established precedent, and robust empirical evidence, and that regulatory interventions protect consumers, rather than particular competitors.

The CMA’s consultation arises at a pivotal moment for the UK digital economy. Google’s designation with Strategic Market Status (SMS) triggers the Digital Markets, Competition and Consumers Act 2024’s ex ante regulatory framework. While the DMCC Act aims to promote competition and innovation, the specific measures proposed here risk producing the opposite effect, if not carefully calibrated. Across the consultations, the central issue is proportionality: whether the proposed interventions address demonstrable consumer harm or instead impose costs on product quality, innovation, and user experience in order to alter competitive relationships among firms.

Our analysis draws on two established competition-law principles. First, the error-cost framework recognises that regulatory decisions under uncertainty can produce harmful false positives, particularly in dynamic markets where innovation is cumulative and path-dependent. Second, competition policy protects competition, rather than competitors. Conduct that disadvantages rivals—such as integrated search features, direct answers, or ranking differentiation—may nonetheless benefit users by reducing search costs and improving relevance. These principles are especially important in digital and AI-enabled markets characterised by rapid technological change, dispersed knowledge, and evolving consumer preferences.

We then evaluate the three proposed CRs.

Publisher Conduct Requirement: The proposed controls on the use of publisher content in generative-AI services risk distorting competition by imposing obligations on a single firm, while other AI developers remain subject only to generally applicable law. The measure also seeks to resolve disputes about the permissible use of copyrighted material—questions more appropriately addressed through intellectual-property law. In addition, the opt-out mechanism may degrade AI-generated search responses and fragment the user experience, while less distortive tools such as transparency and attribution could address many of the CMA’s concerns.

User Choice Conduct Requirement: The proposal for recurring choice screens and complex switching journeys rests on behavioural assumptions that receive limited support from real-world evidence. Empirical studies of prior remedies, including the Microsoft browser ballot and the Android choice screen, show modest and short-lived effects on market outcomes. Repeated prompts may therefore impose recurring time and attention costs on millions of users who already have settled preferences, without materially improving contestability.

Fair Ranking Conduct Requirement: The proposed obligation of ‘objective’ and ‘non-discriminatory’ ranking misunderstands the nature of search, whose value depends on selective curation and integration. The CMA has not identified direct evidence that individual ranking decisions are unfair, yet the CR would impose complex compliance obligations that are difficult to administer in machine-learning systems. Restrictions on integrated features may also eliminate efficiencies that reduce search costs and improve relevance, potentially degrading product quality without clear competitive benefits.

Taken together, the proposals risk substituting regulatory design for market processes, addressing uncertain or indirect harms with measures that impose immediate and durable costs. We therefore encourage the CMA to adopt a proportionate and evidence-based approach, to rely on demonstrable consumer harm rather than changes affecting particular rivals, and to prefer less distortive measures—especially transparency and attribution—over restrictions on product design and innovation.

I. Analytical Framework for Assessing the Proposed Conduct Requirements

The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) marks a structural reorientation of UK competition policy, shifting from primarily ex post enforcement toward an ex ante regulatory regime for firms designated with Strategic Market Status (SMS). Although Parliament has now settled the legislative framework, the CMA retains substantial discretion in designing and implementing Conduct Requirements (CRs). That discretion remains bounded by statutory obligations, including proportionality, evidence-based analysis, and a focus on consumer outcomes, rather than the commercial position of particular competitors.

These consultations therefore raise questions not only about specific remedies, but also about how enforcement should operate in dynamic and technologically complex markets. In such settings, regulatory decisions must be made under persistent uncertainty. The law & economics literature has long recognised that intervention entails a risk of error, and that enforcement policy should account for both the likelihood and the cost of mistaken intervention. Where innovation is cumulative and path-dependent—as in digital and AI-enabled services—the cost of prohibiting beneficial conduct may be durable, while some competitive harms may dissipate through entry and technological change. This asymmetry makes careful calibration of intervention especially important.

A related concern is analytical focus. Competition policy seeks to protect competition, not particular competitors. Conduct that disadvantages rivals—such as integrated features or direct answers in search—may nonetheless benefit users by improving relevance, reducing search costs, and accelerating access to information. Assessing the lawfulness of such practices therefore requires close attention to demonstrable consumer harm, rather than changes in traffic, revenues, or other outcomes affecting rival firms.

The CMA’s proposed CRs should be evaluated against these principles. The central question is whether the proposed measures address clear and substantiated consumer harm in a proportionate manner, or whether they risk restricting product design and innovation in circumstances characterised by technological change, dispersed knowledge, and evidentiary uncertainty.

A. The Error-Cost Framework and Enforcement in Digital Markets

Central to our analysis is the ‘error-cost’ framework, a foundational contribution of law & economics scholarship to the design of competition-law institutions. Developed by Judge Frank Easterbrook and extended by scholars including Geoffrey Manne and Joshua Wright, the framework recognises that regulatory decision-making under uncertainty inevitably produces errors. The appropriate enforcement posture therefore seeks to minimise the total expected cost of those errors.[1] In complex and dynamic markets, authorities must weigh both the probability and the consequences of two distinct categories of error.

In competition enforcement, Type I errors (false positives) arise when authorities condemn conduct that is pro-competitive or benign. The economic consequences of over-enforcement can be durable: prohibitions may eliminate a business practice, chill experimentation, and foreclose associated efficiencies. Type II errors (false negatives), by contrast, occur when authorities fail to sanction anticompetitive conduct, potentially leading to supracompetitive prices or reduced output. As Judge Easterbrook observed, such errors may be partly self-correcting, because the prospect of monopoly profits attracts entry and competitive responses that erode market power over time.[2]

In digital markets, there are strong reasons to expect Type I errors to be particularly costly.[3] As Manne notes, uncertainty is ‘further magnified when antitrust decisions are made in innovative, fast-moving, poorly understood, or novel market settings’.[4] Innovation in these markets is cumulative and path dependent. If a regulator mistakenly proscribes a business model (e.g., integrated product features sometimes described as self-preferencing) or restricts a consumer-valued innovation (e.g., AI-generated overviews in search) the resulting welfare loss may be difficult to reverse. The foreclosed line of development may not re-emerge once firms redirect investment elsewhere. In this way, Type I errors can durably distort innovation incentives in dynamic industries.

The compounding nature of innovation losses reinforces this asymmetry. As John Yun explains, even modest regulatory drag on the rate of technological progress can generate substantial long-term welfare losses.[5] Measures that merely slow innovation—without stopping it—still impose accumulating costs over time. Consumers bear these costs through foregone improvements in quality, functionality, and price.

By contrast, the effects of Type II errors may be moderated in markets characterised by rapid technological change. Supracompetitive returns attract entry and encourage disruptive innovation. The history of the digital economy—including the displacement of AOL by Google, Yahoo by Facebook, and MySpace by later social-media platforms—illustrates that apparently durable positions can erode when confronted by superior technology or business models.[6] This does not suggest that enforcement is unnecessary. Rather, it indicates that dynamic adjustment should inform the calibration of intervention, particularly where evidence of durable consumer harm remains uncertain.

The CMA’s current proposals, particularly those addressing AI-related features and search-ranking conduct, risk underweighting Type I error costs. Several proposed conduct requirements assume that the authority can reliably distinguish between ‘fair’ and ‘unfair’ product-design choices in a setting characterised by emergent algorithmic outputs and rapid technological change. Yet, as F.A. Hayek observed, regulators necessarily lack access to the dispersed and contextual knowledge embedded in market processes.[7] The error-cost framework therefore supports a cautious approach: intervention should focus on clear and demonstrable consumer harm, rather than speculative concerns about potential competitive disadvantage.

B. Competition, Not Competitors

A recurring theme in the CMA’s consultation documents is the attention afforded to ‘publishers’ and ‘rival search engines’—entities that often stand in a partly competitive and partly complementary relationship with the SMS firm. Promoting a contestable market is a legitimate regulatory objective. The analysis must nonetheless avoid drifting toward a ‘competitor-welfare’ approach, in which the practical aim becomes preserving rivals’ revenues, rather than improving consumer outcomes.[8] Competition law has long distinguished between protecting competition and protecting competitors. Even in Brown Shoe Co. v. United States, the U.S. Supreme Court stated that ‘[i]t is competition, not competitors, which the [Sherman] Act protects’.[9]

This distinction has concrete implications. As Manne and Wright explain in the search context, conduct that disadvantages competitors—such as presenting a direct answer or an integrated feature above a link to a third-party website—may benefit consumers by reducing search costs and improving relevance.[10] When a search engine displays a maps result, a knowledge panel, or an AI-generated summary, users obtain information immediately, rather than through additional navigation, delay, and cognitive effort. The resulting reduction in traffic to third-party sites reflects competition on the merits, not necessarily anticompetitive foreclosure.[11]

Restrictions designed to preserve traffic flows or advertising revenues for incumbent publishers would therefore risk prioritising competitor interests over consumer welfare. The empirical literature on self-preferencing remains mixed and context-specific, and vertical integration often produces measurable consumer benefits.[12] The CMA’s assessment should accordingly focus on demonstrable consumer harm, rather than the commercial impact on rival firms.

II. Assessment of the Proposed Publisher Conduct Requirement

The CMA’s proposed Publisher Conduct Requirement (Publisher CR) governs Google’s use of publisher content—crawled for general search—in generative-AI services such as AI Overviews, AI Mode, and the Gemini assistant.[13] The proposal has three components. First, opt-out controls would allow publishers to withhold ‘Search Content’ from grounding in search generative-AI features and from training and grounding in broader AI services. Second, transparency obligations would require disclosure of how content is used and provision of engagement metrics to publishers. Third, attribution requirements would require reasonable steps to identify and credit publisher material in AI-generated responses.[14]

The CMA’s theory of harm rests on a leveraging concern: because Google holds SMS in general search, publishers allegedly have ‘no realistic option but to allow their content to be crawled’, enabling Google to extend that content into AI applications without meaningful choice.[15] Even accepting bargaining asymmetry in search, the proposed CR raises three concerns.

First, it risks distorting competition in generative-AI services by imposing obligations on a single firm while other AI developers relying on similar publicly available content remain outside the regime. Second, it addresses disputes about the use of copyrighted material that are more appropriately resolved through generally applicable intellectual-property law, rather than firm-specific competition rules. Third, the design of the controls may fragment AI-generated search responses and reduce their usefulness to users, undermining features intended to lower search costs.

These issues bear directly on proportionality. Intervention should address demonstrable consumer harm, not redistribute value among market participants or indirectly resolve copyright disputes, and the CMA should consider whether less distortive measures—particularly transparency and attribution—could achieve its objectives without degrading product quality or altering competitive conditions.

A. Regulatory Asymmetry in Generative-AI Markets

The proposed Publisher CR would create a marked regulatory asymmetry in generative-AI services. Google would face legally binding obligations to provide granular opt-out controls for training and grounding, alongside transparency, reporting, and attribution requirements.[16] Competing providers of generative-AI systems—including OpenAI, Anthropic, Meta, and a growing ecosystem of open-source foundation-model developers—would face no equivalent constraints, because they are not designated with SMS in general search and therefore fall outside the DMCC regime.

The competitive implications are significant. Output quality in generative-AI systems depends on the breadth and recency of data used for training and grounding. If publishers exercise opt-out rights at scale—an outcome the low-friction design of the controls may facilitate—Google would either exclude large portions of web content from AI-generated search responses or produce responses with material gaps. Either outcome would reduce the quality of Google’s AI Overviews and AI Mode relative to rival services that may continue to rely on the same publicly available web content without restriction. The proposal would therefore not merely affect product design; it would alter competitive conditions between providers of generative-AI services.[17]

This does not imply that Google lacks competitive advantages in general search, including efficient access to crawled content. It does indicate that proprietary search-index data is not a prerequisite for building competitive generative-AI products. Leading frontier models—ChatGPT, Claude, Llama, and DeepSeek—were developed without access to a dominant search index. Open datasets such as Common Crawl, together with commercial licensing arrangements, supply training material across the industry.[18] As prior ICLE submissions to this Authority and the U.S. Department of Justice note, ‘being the firm with the most data appears to be far less important than having enough data’, a threshold accessible to many firms.[19] Consistent with this, generative-AI markets exhibit rapid entry and substantial investment, and enforcement authorities have not identified concrete anticompetitive harm arising from incumbents’ data holdings in AI markets.[20]

International experience also illustrates the risk of competitive distortion from asymmetric digital-market regulation. Under the EU Digital Markets Act, Google removed certain integrated features, including clickable map modules and embedded previews, from European search results to comply with self-preferencing rules. Reports indicate a slower and more fragmented user experience, without clear competitive gains for rivals.[21]

The proposed Publisher CR could produce similar effects. By introducing gaps in AI-generated search responses where opted-out content would otherwise appear, the measure risks degrading the UK search experience while leaving competing generative-AI providers unaffected.

B. Copyright Issues Are Not Competition Issues

The Publisher CR appears motivated in part by concern that Google uses content crawled for search in AI applications without adequate publisher consent. The underlying issue—whether the use of publicly available web content for AI training and grounding infringes copyright—is, however, a matter of intellectual-property law, rather than competitive conduct.

Whether an AI developer’s use of copyrighted material constitutes ‘fair dealing’ under UK law (or ‘fair use’ under U.S. law) applies uniformly across firms, irrespective of market position.[22] A start-up training a foundation model on publicly available web content confronts the same copyright question as Google. By using the DMCC framework to create what is effectively an opt-out regime applicable only to a designated firm, the CMA risks addressing an intellectual-property dispute through a competition-law instrument.

This approach would produce a two-tier structure of rights and obligations. Google would need to secure effective consent—through opt-out mechanisms—to use publisher content for AI grounding, while other AI developers would remain subject only to generally applicable copyright law. If grounding AI search responses in publicly available web content constitutes fair dealing, Google should be permitted to do so on the same basis as other market participants. If it does not, the appropriate remedy lies in copyright enforcement applied consistently across firms, rather than in an asymmetric competition-law obligation imposed on a single company.

C. Technical Design and Consumer Effects of the Opt-Out Controls

The proposed controls also raise concerns about technical implementation and user impact. The Publisher CR distinguishes among three uses—training foundation models, fine-tuning derivative models, and grounding AI-generated responses—and applies different obligations to each.

The CMA acknowledges Google’s submission that fine-tuning ‘helps the model learn how to process information rather than what current information to display’ and that permitting opt-outs from fine-tuning would ‘raise the risk of downranking or mis-ranking publisher content in organic search results’.[23] The Authority has therefore provisionally excluded fine-tuning of search AI models from the opt-out regime. This reflects a proportionate assessment of product functionality. Similar considerations, though operating differently, arise in relation to grounding.

AI Overviews and AI Mode rely on retrieval-augmented generation, in which responses are corroborated by reference to material retrieved from the search index at query time. Allowing publishers to opt individual pages out of grounding, while remaining indexed for general search, would effectively give them a page-by-page veto over AI-generated responses. The likely consumer effect is a fragmented experience: authoritative information may appear as traditional links but be absent from the AI-generated summary.[24] Because these features are intended to reduce search costs, such fragmentation would reduce their usefulness and quality. The CMA should weigh these foreseeable user costs against the more speculative benefits of the opt-out mechanism.[25]

For these reasons, the Publisher CR would benefit from revision. First, the controls should not extend to AI training. Questions about the use of publisher content for model training are properly addressed through generally applicable intellectual-property law rather than firm-specific competition regulation. Second, the CMA’s proportionality analysis should account for competitive asymmetry. The CR imposes binding obligations on Google alone, while rival AI developers using similar web content remain unconstrained, creating incentives for publishers to withhold content selectively. Third, where intervention is warranted, priority should be given to transparency and attribution. Clear disclosure of how content is used, and proper attribution in AI-generated responses, would address many of the CMA’s concerns, while avoiding the product degradation and competitive distortion associated with the proposed opt-out controls.

III. Assessment of the Proposed User Choice Conduct Requirement

The proposed User Choice CR—including periodic choice screens, information screens, and ‘test-drive’ functionalities—rests on the premise that such interventions reliably promote competition.[26] The CMA identifies two objectives: ‘(i) increasing competition in general search services and (ii) having more people use a general search provider that better matches their preferences’.[27]

The consultation states that the obligations are supported by evidence showing that choice screens increase engagement, improve comprehension, and enable active decision-making in digital markets.[28] This evidence relies substantially on experimental and survey-based studies, including research by Mozilla[29] and recommendations issued by Bureau Européen des Unions de Consommateurs (BEUC),[30] which examine user interaction with designed choice interfaces. By contrast, longitudinal analyses of observed market behaviour receive less weight. Evidence from earlier EU remedies, including the Microsoft browser ballot and the Android choice screen, indicates more limited effects on market shares. These studies generally find modest changes in usage patterns, suggesting that users often continue to select their preferred service when presented with alternatives.

As Omar Vásquez Duque observes in a recent empirical assessment:

[A] key assumption behind choice screens is that consumer inertia sustains market dominance. However, the findings here suggest that consumers may not be as inert as conventionally assumed…This raises questions about the “true” effectiveness of choice screens… If effectiveness is defined as “encouraging users to consider alternative options,” and the browsers’ assessments are accurate, then choice screens have been partially successful. However, if the goal is to increase market contestability, the evidence suggests that choice screens alone are ineffective.[31]

These mixed findings raise proportionality concerns. Requiring recurring prompts imposes certain costs on users, including time and interruption, while the benefits to competition remain uncertain. Behavioural research also indicates that repeated prompts may produce habituation rather than deliberation, and that users with settled preferences may treat such screens as obstacles rather than meaningful opportunities to choose.

The CMA acknowledges that ‘focusing solely on levels of switching to alternative providers may be a misleading measure of a choice screen’s effectiveness’.[32] That observation underscores the central question: if switching is not the relevant metric, it is unclear how the intervention’s benefits should be measured or whether the associated user costs are justified.

A. Empirical Evidence on the Effectiveness of Choice Screens

The CMA’s proposal assumes that presenting users with a choice will materially shift market shares. The empirical record from EU choice-screen remedies suggests otherwise: observed changes in share are typically small and rarely exceed a few percentage points.[33]

A relevant precedent is the Android choice screen introduced following the European Commission’s Google Android decision.[34] An econometric analysis by Francesco Decarolis, Muxin Li, and Filippo Paternollo, using difference-in-differences methods, finds a statistically significant reduction in Google’s mobile search share in the European Economic Area (EEA). The magnitude, however, is modest—less than one percentage point in the headline estimate, with some variation across specifications.[35] Although rivals with greater pre-remedy awareness (proxied by desktop share) benefited somewhat more, the overall effect falls short of materially deconcentrating the market.[36]

Market-share data point in the same direction. Figure 1 reports European search-engine shares from January 2015 to May 2025, based on Statista data derived from the StatCounter tracking environment.[37] Over this period, Google’s share remains relatively stable, generally between roughly 90 and 95 per cent. Competing providers, including Bing, Yandex, and Yahoo!, remain clustered at low levels and rarely exceed a combined 5 to 8 per cent share.

FIGURE 1: Search Engine Market Share in Europe, January 2015 to May 2025

SOURCE: Statista

The CMA has acknowledged similar outcomes in its SMS Decision:

Since August 2019, following the European Commission’s Google Android decision, Google has introduced choice screens for general search providers on all new Android phones in the EEA and UK. However, notwithstanding Google’s submissions that this created opportunities for third-party providers to be set as the default (see paragraph 5.164(c)), data provided by Google shows that in every month since April 2020, a large majority ([redacted]%) of UK users have selected Google Search as their default when presented with the Android choice screen.[38]

These results are consistent with users selecting a preferred service when presented with alternatives. A choice screen that does not materially affect user preferences may therefore add friction without improving contestability.

Evidence from earlier remedies is similar. Retrospective analysis of the 2010 Microsoft browser ballot screen finds that Internet Explorer’s share declined during the remedy period, but comparable declines occurred globally due to the growth of Chrome and Firefox. Using non-EEA countries (the United States, Canada, and Australia) as a control group, Vásquez Duque estimates a causal effect of roughly 1.4 to 2 percentage points.[39]

Overall, the empirical literature does not show that choice screens reliably transform market outcomes. As Vásquez Duque concludes in more recent work, observed effects appear to reach a ceiling, suggesting that ‘choice screens do not meaningfully alter users’ preferences’.[40]

B. Behavioural Economics and Repeated Choice Screens

The CMA proposes requiring choice screens not only at device set-up but ‘at regular points thereafter’. The rationale draws on behavioural economics. But the proposal does not sufficiently consider related concepts, including rational apathy and status-quo efficiency.

Research on behavioural interventions (‘nudges’) indicates that they can influence behaviour in low-stakes or uncertain settings but are less effective where users hold stable preferences for an experience good, such as a search engine.[41] As Vásquez Duque explains:

A rational user would search for an option as long as the alternative’s expected benefit is higher than the search costs, including the user’s time. But for many if not most users, it may make sense to stick to an option that meets a satisfactory level of quality. If this were the case, any option that met such a satisfaction level would become the user’s preferred default. And this choice may form a habit, which is likely to persist until the user experiences negative feedback or a more attractive option is brought to her attention.[42]

For many users, the marginal benefit from switching search providers may be small, while switching costs—learning a new interface or losing personalisation history—remain non-zero. Although the CMA estimates the value of users’ time,[43] the analysis gives limited attention to established research on mandated disclosure, choice fatigue, and banner blindness.[44] The consultation addresses these concerns briefly:

Google has raised a concern that the repeated display of choice screens leads to user fatigue. However, we do not consider that a relatively short prompt to consider their search choice once a year is too onerous for users. [45]

Evidence on habituation suggests that repeated prompts may not prompt careful deliberation. Users frequently respond by selecting the most familiar option simply to remove an interruption.[46] Increasing the frequency of prompts may therefore not expand effective choice but instead increase friction for users who already have settled preferences.

Recent meta-analyses of nudge interventions also indicate that effects observed in controlled or pilot settings often diminish when implemented at scale, partly because of publication bias and contextual variation.[47] Even where behavioural policies appear effective, results require cautious interpretation.

The aggregate burden is also relevant. If the UK has roughly 50 million adult mobile users and approximately 90 per cent are satisfied with Google Search, an annual mandatory choice prompt would interrupt about 45 million users who have no intention of switching, in order to reach a smaller group who might otherwise use existing device settings. This ‘time tax’ should be weighed in the proportionality assessment.

Requiring all users to make an annual active choice would therefore impose recurring costs on many users who are already satisfied with their service. The measure may address a perceived competitive concern without clear evidence of corresponding consumer harm, and its effectiveness as an instrument for altering market outcomes remains uncertain.

IV. Assessment of the Proposed Fair Ranking Conduct Requirement

The proposed Fair Ranking Conduct Requirement (Fair Ranking CR)[48] seeks to ensure that Google’s ranking decisions are ‘objective’, ‘non-discriminatory’, and ‘transparent’, supported by a publisher complaints mechanism and reporting obligations concerning ranking policies that may affect other markets.[49] These objectives are understandable. The design of the intervention, however, raises concerns about its implications for innovation and consumer welfare.

The CMA’s investigation has not identified direct evidence that individual ranking decisions are unfair. As the consultation explains:

We have not seen direct evidence that Google’s individual ranking decisions are unfair. However, taken in the round: the role of Google’s general search as a critically important digital tool for people and businesses; the lack of trust and perception of unfairness in Google’s ranking; the lack of sufficient transparency about how Google implements and operationalises its ranking in practice; and the direct impact this lack of trust has had on publishers, including deterring investment, leads us to consider that there is merit in introducing a formal requirement.[50]

The proposal therefore responds primarily to perceptions of potential unfairness and their effects on publisher behaviour.[51] This context underscores the need for caution in imposing obligations on a product whose core function is selective ranking.

The requirement of ‘objectivity’ risks misunderstanding how search operates. As Manne and Wright explain, the value of a search engine derives from its ability to prioritise some results over others.[52] Search is an exercise in curation: from billions of web pages, the system promotes a small number of results based on predicted relevance. Because ranking is inherently relative—elevating one result necessarily lowers another—differentiation is not itself evidence of anticompetitive conduct, but a necessary feature of the product.[53]

The non-discrimination obligation also presents practical enforcement difficulties. The proposal would prohibit Google from considering, among other things, whether a publisher advertises with Google, enters commercial arrangements, or exercises statutory rights. Modern search ranking, however, depends on the interaction of thousands of signals processed through machine-learning systems. Determining whether any single prohibited factor affected a particular outcome will often be infeasible. A publisher experiencing reduced traffic after a dispute may infer retaliation, but the change may equally reflect an algorithmic update, shifting user behaviour, or changes in content quality. The result could be persistent and difficult-to-resolve disputes.

Related concerns arise from the requirement that Google apply the same criteria to its own services and those of third parties. Research frequently finds that vertical integration on digital platforms produces efficiencies.[54] Integrated features—such as map results or flight modules—can reduce search costs by allowing users to obtain information directly within the search interface. As Robert Bork and Gregory Sidak observe, the consumer-welfare benefits of integration arise precisely from the immediate availability of the integrated result.[55] A categorical restriction on self-preferencing would risk sacrificing these efficiencies in order to preserve competitor distinctiveness.[56] The CMA’s interpretative notes recognise that designing a feature containing only Google inputs is not itself a breach, but its placement in rankings may be.[57] In practice, placement and design are closely connected: the usefulness of an integrated feature depends on where it appears.

The Fair Ranking CR therefore risks constraining product design in ways that reduce functionality. By attempting to mandate neutrality in a process defined by curation, and by treating integration as presumptively problematic, the proposal may degrade the user experience without clear gains in market contestability.

V. Conclusion

The CMA’s proposed Conduct Requirements for Google’s general search services constitute a significant intervention in a rapidly evolving sector. ICLE does not question the Authority’s mandate to promote competitive and contestable digital markets, nor the relevance of Google’s position in general search within the DMCC framework. As currently drafted, however, the three CRs risk imposing durable costs on UK consumers and on innovation in digital and AI services.

Across the proposals, a common concern is calibration. The measures would address uncertain or indirect harms with obligations that carry clear and immediate effects: degraded product functionality, fragmented search results, recurring user friction, and altered competitive conditions between firms subject to the regime and those outside it. The Publisher CR risks creating asymmetric regulation in generative-AI markets and using competition law to resolve copyright disputes. The User Choice CR relies on behavioural assumptions not strongly supported by real-world evidence and may impose recurring time costs on users without materially improving contestability. The Fair Ranking CR seeks to regulate ranking neutrality in a process defined by necessary curation and integration, creating practical enforcement difficulties and potential reductions in product quality.

These concerns reflect the broader insight of the error-cost framework. In dynamic markets characterised by uncertainty, the costs of mistaken intervention may be persistent, while some competitive harms may diminish through entry, innovation, and technological change. Proportionality therefore requires particular caution where conduct may benefit consumers, even if it disadvantages rivals.

ICLE respectfully encourages the CMA to anchor its final measures in demonstrable consumer harm, to rely primarily on real-world evidence, and to prefer less distortive tools—particularly transparency and attribution—over restrictions on product design. A framework that protects competition rather than competitors, and that recognises the limits of regulatory knowledge in complex markets, will better advance the DMCC Act’s objective of improving outcomes for UK consumers.

[1] Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1, 14–15 (1984). Easterbrook offers the clearest exposition of the error-cost approach to antitrust, arguing that ‘[t]he economic system corrects monopoly more readily than it corrects judicial errors’.

[2] Id. at 15.

[3] Geoffrey A. Manne & Joshua D. Wright, Innovation and the Limits of Antitrust, 6 J. Competition L. & Econ. 153, 165 (2010) (extending Easterbrook’s error-cost framework to innovative markets and arguing that ‘antitrust scrutiny of innovation and innovative business practices is likely to be biased toward assigning a higher likelihood that a given practice is anticompetitive than later literature and evidence ultimately justify’).

[4] Geoffrey A. Manne, Error Costs in Digital Markets, in The Global Antitrust Institute Report on the Digital Economy 3 (Joshua D. Wright & Douglas H. Ginsburg eds., 2020) (observing that ‘[t]he risk of error is always present given the limits of knowledge, but it is magnified by the precedential nature of judicial decisions’, and that this problem is ‘further magnified when antitrust decisions address innovative, fast-moving, poorly understood, or novel market settings’).

[5] See John M. Yun, The Folly of AI Regulation, in Artificial Intelligence and Competition Policy 247, 252 (Alden Abbott & Thibault Schrepel eds., 2024) (‘Let us start, in period 0, with T = 100 and an annual growth of 30%. Due to compounding, after 10 years T grows to nearly 14× its original size. If the growth rate instead falls marginally to 25%, T grows to slightly over 9× its original size over the same period — still substantial, but about 5× lower than under 30% growth. Even a “modest” reduction in the growth rate of an emerging technology — e.g. 5% in absolute terms — can therefore produce significant long-run social-welfare losses, magnified over longer horizons’).

[6] See Geoffrey A. Manne & Dirk Auer, Antitrust Dystopia and Antitrust Nostalgia: Alarmist Theories of Harm in Digital Markets and Their Origins, 28 Geo. Mason L. Rev. 1281, 1343–45 (2021) (reviewing economic evidence on data-related theories of harm and finding incumbent data advantages far less pronounced than commonly assumed); Geoffrey A. Manne & Dirk Auer, From Data Myths to Data Reality: What Generative AI Can Tell Us About Competition Policy (and Vice Versa), CPI Antitrust Chron. (February 2024), at 12 (arguing that ‘competition or regulatory intervention to “correct” data barriers and data network and scale effects is liable to do more harm than good’).

[7] See F.A. Hayek, The Use of Knowledge in Society, 35 Am. Econ. Rev. 519, 526–27 (1945) (explaining that the price system communicates dispersed information unavailable to any single agent or planner). For an application in the competition-policy context, see Cento Veljanovski, Hayekian Competition Policy: A Historical Perspective, GW Competition & Innovation Lab Working Paper (2024).

[8] See Lazar Radic, Geoffrey A. Manne & Dirk Auer, Digital Competition Regulation: Costs, Tradeoffs, and Consequences, Int’l Ctr. for L. & Econ. (2025) (arguing that digital-competition regulation’s ‘true objectives align more with redistributing economic power, protecting less efficient competitors, and diminishing the competitive advantages of dominant digital platforms’ than with protecting consumer welfare).

[9] Brown Shoe Co. v. United States, 370 U.S. 294, 344 (1962) (‘It is competition, not competitors, which the [Sherman] Act protects’). See also Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488 (1977) (holding that plaintiffs must prove ‘antitrust injury — injury of the type the antitrust laws were intended to prevent’).

[10] See Geoffrey A. Manne & Joshua D. Wright, Google and the Limits of Antitrust: The Case Against the Case Against Google, 34 Harv. J.L. & Pub. Pol’y 171 (2011) (arguing antitrust should not infer consumer harm from conduct that disadvantages rivals, stressing the risk of false positives and the need for concrete evidence of consumer harm; identifying procompetitive rationales and welfare-enhancing design choices in search, and cautioning against condemning conduct merely because it reallocates traffic among competitors). See also Geoffrey A. Manne & Joshua D. Wright, If Search Neutrality Is the Answer, What’s the Question?, 2012 Colum. Bus. L. Rev. 151, 155 (2012) (arguing that ‘search bias’ or editorial discretion often benefits consumers by reducing users’ search costs and improving the search experience).

[11] See Robert H. Bork & J. Gregory Sidak, What Does the Chicago School Teach About Internet Search and the Antitrust Treatment of Google?, 9 J. Competition L. & Econ. 663, 680 (2013) (discussing consumer-welfare benefits of product integration in search).

[12] See, e.g., Brian Albrecht & Geoffrey A. Manne, Self-Preferencing Isn’t a Sin. It’s Often the Way Competition Works., Truth on the Mkt. (20 August 2025), https://truthonthemarket.com/2025/08/20/self-preferencing-isnt-a-sin-its-often-the-way-competition-works (explaining that self-preferencing often reflects technical or efficiency considerations rather than exclusionary intent); see also Juliette Caminade, Juan Carvajal & Christopher R. Knittel, An Economic Analysis of the Self-Preferencing Debate, 32 Competition 1 (2022) (reviewing theoretical and empirical literature on self-preferencing and dual-mode platforms and concluding the evidence is ‘mixed’, warranting a careful, case-by-case approach); see also Austl. Competition & Consumer Comm’n, Digital Platform Services Inquiry—Interim Report No. 5: Regulatory Reform 94 (September 2022), https://www.accc.gov.au/system/files/Digital%20platform%20services%20inquiry.pdf (‘Although self-preferencing conduct is often benign, conduct that leverages market power over a key online service into a related service, without a procompetitive rationale, can distort competition and decrease consumer welfare’).

[13] Competition & Mkts. Auth. (CMA), Consultation: Publisher Conduct Requirement—Google’s General Search Services (28 January 2026) (UK) [hereinafter Publisher CR Consultation].

 

[14] Id., ¶¶ 1.5, 1.10–1.11.

[15] Id. ¶ 1.5(a) (‘Given Google’s SMS in general search services, publishers have no realistic option but to allow their content to be crawled’).

[16] Id., ¶¶ 4.6–4.12 (describing the covered use cases and distinguishing grounding of search generative-AI features from training or grounding of broader generative-AI services).

[17] See Lazar Radic, Geoffrey A. Manne & Dirk Auer, Digital Competition Regulation: Costs, Tradeoffs, and Consequences, Int’l Ctr. for L. & Econ. (2025) (documenting how asymmetric digital-competition regulation can produce perverse competitive outcomes that harm consumers it aims to protect).

[18] See Manne & Auer, Antitrust Dystopia and Antitrust Nostalgia, supra note 6.

[19] See Geoffrey A. Manne, Dirk Auer, Kristian Stout, Lazar Radic & Mario A. Zúñiga, ICLE Comments to DOJ on Promoting Competition in Artificial Intelligence, Int’l Ctr. for L. & Econ. (15 July 2024), at 5–12. See also Geoffrey A. Manne, Dirk Auer & Mario A. Zúñiga, ICLE Comments to UK Competition and Markets Authority on AI Partnerships, Int’l Ctr. for L. & Econ. (9 May 2024), https://laweconcenter.org/resources/icle-comments-to-uk-competition-and-markets-authority-on-ai-partnerships.

[20] Dirk Auer & Mario A. Zúñiga, AI Partnerships and Competition: Damned if You Buy, Damned if You Don’t, ICLE White Paper 2025-08-19, at 4–5 (2025) (finding that AI partnerships are ‘largely benign from a competition-law perspective’ and that ‘no enforcement body has found concrete evidence of anticompetitive harm’ arising from them).

[21] Written Testimony of Dirk Auer, Director of Competition Policy, Int’l Ctr. for L. & Econ., Before the Subcomm. on Antitrust, Commercial & Admin. Law of the H. Comm. on the Judiciary, U.S. House of Representatives (16 December 2025) (documenting that DMA compliance forced Google to remove integrated features from European search results, producing ‘a slower, more fragmented experience’ without measurable competitive benefits).

[22] Giuseppe Colangelo, A Competition Policy Analysis of Copyright Protection in Generative AI, Sing. J.L. Stud. 271 (2025). See ICLE Comments on Artificial Intelligence and Copyright, Int’l Ctr. for L. & Econ. (30 October 2023) (analysing fair-use implications of AI training and concluding the issue is better addressed through uniform intellectual-property adjudication than firm-specific competition regulation).

[23] Publisher CR Consultation, supra note 13, ¶¶ 4.10(c)–(d) (summarising Google’s submissions that fine-tuning ‘helps the model learn how to process information rather than what current information to display’ and that allowing publishers to opt out of fine-tuning would ‘raise the risk of downranking or mis-ranking publisher content in organic search results’).

[24] See Manne & Wright, If Search Neutrality Is the Answer, What’s the Question?, supra note 10.

[25] See Manne, supra note 4.

[26] Competition & Mkts. Auth. (CMA), Consultation: User Choice Conduct Requirement—Google’s General Search Services (28 January 2026) (UK) [hereinafter User Choice CR Consultation].

[27] Id. at 52.

[28] Id. ¶ 4.4.

[29] Mozilla, Can Browser Choice Screens Be Effective? Experimental Analysis of the Impact of Their Design, Content and Placement (September 2023), https://research.mozilla.org/files/2023/09/Can-browser-choice-screens-be-effective_-Mozilla-experiment-report.pdf.

[30] Bureau Européen des Unions de Consommateurs (BEUC), An Effective Choice Screen Under the Digital Markets Act: BEUC Recommendations, BEUC-X-2023-131, at 10 (19 October 2023).

[31] Omar Vásquez Duque, The Magical Number 2 (Minus Two): An Empirical Analysis on the Efficacy of Choice Screens to Increase Competition in Digital Markets, at 17 (15 January 2026) (unpublished manuscript), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5264993.

[32] User Choice CR Consultation, supra note 26, ¶ 4.5 (‘[F]ocusing solely on levels of switching to alternative providers may be a misleading measure of a choice screen’s effectiveness, given that it should allow consumers to find a provider in line with their preferences, which may result in them staying with their existing (or incumbent) provider’).

[33] See Vásquez Duque, The Magical Number 2, supra note 31, at 3 (‘When choice screens have affected a dominant actor’s market share at all, the effect size has been, at most, 2%’).

[34] Comm’n Decision 2019/C 402/08, Case AT.40099—Google Android, 2019 O.J. (C 402) 19.

[35] Francesco Decarolis, Muxin Li & Filippo Paternollo, Competition and Defaults in Online Search, 17 Am. Econ. J.: Microeconomics 369 (2025).

[36] The study found larger market-share shifts in Russia and Turkey (>10%), driven primarily by the presence of a strong local incumbent (Yandex) able to compete on quality, rather than by the choice screen itself. See id. at 389–93.

[37] Statista, Market Share of Leading Search Engines in Europe from January 2015 to May 2025, https://www.statista.com/statistics/1386805/search-engines-market-share-all-devices-europe (last visited 16 February 2026).

[38] Competition & Mkts. Auth., Strategic Market Status Investigation into Google’s General Search Services: Final Decision ¶ 5.173(c) (10 October 2025) (UK).

[39] Omar Vásquez Duque, Active Choice vs. Inertia? An Exploratory Assessment of the European Microsoft Case’s Choice Screen, 19 J. Competition L. & Econ. 60 (2023).

[40] See Vásquez Duque, supra note 31, at 17.

[41] See Vásquez Duque, supra note 39, at 77–78.

[42] Id. at 78.

[43] User Choice CR Consultation, supra note 26, ¶ 5.14 (‘When combined with an estimate of the average value of a UK consumer’s time, this gives an average time cost per showing of the choice screen of a little under 14p’).

[44] Omri Ben-Shahar & Carl E. Schneider, The Failure of Mandated Disclosure, 159 U. Pa. L. Rev. 647, 651 (2011) (arguing that ‘mandated disclosure not only fails to achieve its stated goal but also leads to unintended consequences that often harm the very people it intends to serve’).

[45] User Choice CR Consultation, supra note 26, ¶ 4.34.

[46] Rainer Böhme & Stefan Köpsell, Trained to Accept? A Field Experiment on Consent Dialogs, in Proceedings of the SIGCHI Conference on Human Factors in Computing Systems 2403 (2010) (finding that interruption dialogs foster habituation and heuristic responses, as users are ‘trained’ to dismiss them and consent becomes increasingly ‘blind’).

[47] Bo Hu et al., Assessing Nudge Impact: A Comprehensive Second-Order Meta-Analysis, 38 J. Behav. Decision Making, no. 5, art. e70053 (2025).

[48] Competition & Mkts. Auth. (CMA), Consultation: Fair Ranking Conduct Requirement—Google’s General Search Services (28 January 2026) (UK) [hereinafter Fair Ranking CR Consultation].

[49] Id. ¶ 2.1.

[50] Id. ¶ 1.11.

[51] Id. ¶¶ 1.9–1.10.

[52] See Manne & Wright, If Search Neutrality Is the Answer, What’s the Question, supra note 10.

[53] Id. at 158.

[54] See Manne & Wright, Google and the Limits of Antitrust, supra note 10.

[55] See Bork & Sidak, supra note 11.

[56] Manne & Wright, If Search Neutrality Is the Answer, What’s the Question, supra note 10, at 189.

[57] Fair Ranking CR Consultation, supra note 48, interpretative note 5 (‘[T]he fact that a search feature (e.g. the Flights Module) might be designed and presented to include only Google inputs would not be relevant to paragraph 4.b. of the conduct requirement, but Google’s decision about where that search feature is ranked on the page would be’).

Resumen: Los mercados de fabricación semiconductores se encuentran entre los más importantes y, paradójicamente, menos estudiados y comprendidos del mundo. Consideramos que un análisis estático de estos mercados (tradicionalmente sustentado en métricas de concentración y cuotas de mercado), ofreciendo una imagen incompleta de cómo funciona realmente esta industria.

El presente artículo reseña un paper recientemente publicado por los autores (en coautoría con David J. Teece) que examina la evolución de la industria de fabricación de semiconductores a la luz de las fuerzas tecnológicas y económicas detrás de la denominada “Ley de Moore” y la menos conocida “Ley de Rock”.

Nuestros hallazgos demuestran que se trata de una industria definida por competencia “schumpeteriana”: una rivalidad impulsada por innovación continua donde el liderazgo debe re-ganarse en cada generación tecnológica. Aunque presenta barreras de entrada significativas y dinámicas “winner-takes-most”, la competencia se entiende mejor como una serie de carreras recurrentes por el mercado, en lugar de una rivalidad estática en el mercado.

Read the full piece here.

INTEREST OF AMICI CURIAE[1]

Amici curiae are former government officials with significant experience enforcing federal antitrust laws on behalf of the United States Department of Justice and/or the Federal Trade Commission. Amici are leading voices in the antitrust field; they have testified as experts before Congress, taught at top-tier educational institutions, published leading antitrust articles, and been cited in federal antitrust decisions.

In their capacity as former enforcement officials—and as antitrust practitioners, academics, and economists—amici have a substantial interest in the consistent enforcement, coherent interpretation, and predictable application of antitrust laws. Background details for each of the amici are set forth in an Addendum to this brief.

INTRODUCTION AND SUMMARY OF ARGUMENT[2]

The Supreme Court recently emphasized that “caution is key” “[w]hen it comes to fashioning an antitrust remedy.” NCAA v. Alston, 594 U.S. 69, 106 (2021). Caution is necessary because even well-intentioned judicial remedies can have unintended anticompetitive consequences that undermine the purpose of our antitrust laws. As a result, “markets are often more effective than the heavy hand of judicial power when it comes to enhancing consumer welfare.” Id.

Here, the panel failed to heed that caution when it “recommend[ed] some possible courses of action to the district court regarding an appropriate commission or fee limitation on remand.” Op. 41. Specifically, the panel suggested that Apple may recover only the direct costs of implementing linked-out purchases, even if a higher commission would not be “prohibitive.” Op. 40; see id. at 41-42. If left uncorrected, the panel’s dicta could deny Apple compensation for its enormous investments in developing the App Store and other benefits to developers.

The panel’s statements at pages 41-42 of its opinion run counter to principles of sound antitrust enforcement. That language improperly seeks to micromanage private business dealings, despite clear evidence that courts are ill-equipped to regulate prices and that their doing so can chill innovation by reducing and even eliminating businesses’ ability to earn a return on innovations. If the panel opinion remains intact, it risks discouraging Apple and other technology companies from innovating, in contravention of the public interest.

ARGUMENT

THE PANEL’S PROPOSED “COURSES OF ACTION” ARE INCONSISTENT WITH ANTITRUST PRINCIPLES

The panel allowed Apple to charge some commission on linked-out purchases. Op. 36-40. But it held that Apple must set the commission at some unspecified rate that is not “prohibitive” and suggested that a commission should cover only Apple’s direct costs in facilitating such purchases. See Op. 41-42. The panel stated that a commission should be “based on the costs that are genuinely and reasonably necessary for [Apple’s] coordination of external links for linked-out purchases, but no more.” Id. at 41. And it further suggested that Apple may only receive “compensation for the use of its intellectual property that is directly used in permitting Epic and others to consummate linked-out purchases.” Id. at 41-42. The panel erred in seeking to micromanage Apple’s charging of commissions for linked-out purchases.

A.     Antitrust Courts Should Avoid Dictating Businesses’ Prices and Terms of Dealing

“As a general rule, businesses are free to choose the parties with whom they will deal, as well as the prices, terms, and conditions of that dealing.” Pac. Bell Tel. Co. v. lifeLine Commc’ns, Inc., 555 U.S. 438, 448 (2009). For that reason, the Sherman Act “does not restrict the long recognized right” of a “private business[] freely to exercise [its] own independent discretion as to parties with whom [it] will deal.” United States v. Colgate & Co., 250 U.S. 300, 307 (1919). Nor does the Sherman Act mandate that a private business charge only a “fair” or “reasonable” price. Town of Concord v. Bos. Edison Co., 915 F.2d 17, 25 (1st Cir. 1990) (Breyer, J.). To the contrary, “possession of monopoly power, and the concomitant charging of monopoly prices” is “not unlawful” and “is an important element of the free-market system[,]” because “[t]he opportunity to charge monopoly prices-at least for a short period-is what attracts ‘business acumen’ in the first place.” Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004).

Those principles accord with “the fundamental national values of free enterprise and economic competition that are embodied in the federal antitrust laws.” FTC v. Phoebe Putney Health Sys., Inc., 568 U.S. 216, 225 (2013). If firms were compelled to “share the source of their advantage” or to charge less than the market would accept, then they would have reduced incentives to invest. Trinko, 540 U.S. at 407-08. Critically here, intrusive judicial remedies can be particularly damaging to “technological markets, where innovation ‘is essential to economic growth and social welfare’ and ‘an erroneous decision will deny large consumer benefits.” FTC v. Qualcomm Inc., 969 F.3d 974, 991 (9th Cir. 2020); cf. Phillip E. Areeda and Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application, § l739f4(C) (2d ed. 2017) (“[I]nte11ectua1 property is often characterized by large upfront costs, and the IP holder must earn enough to cover these as well as marginal costs.”) .

The foregoing principles also reflect that “judges make for poor ‘central planners’ and should never aspire to the role.” Alston, 594 U.S. at 103. “[A]s generalists, as lawyers, and as outsiders,” courts should remain cognizant of “their limitations” when “trying to understand intricate business relationships,” id. at 106-“especially in technology markets,” Qualcomm, 969 F.3d at 990. Judges should “avoid direct price administration” in particular because it is largely impossible to “determine a ‘fair price”‘ “without acting like a rate-setting regulatory agency, the rate-setting proceedings of which often last for several years.” Town of Concord, 915 F.2d at 25. Indeed, “[t]he reasonable price fixed today may through economic and business changes become the unreasonable price of tomorrow.” United States v. Trenton Potteries Co., 273 U.S. 392, 397 (1927) (cleaned up).

B.     The Panel Opinion Improperly Seeks to Dictate Apple’s Prices and Terms of Dealing

The panel opinion’s proposed “course[] of action” for remand is inconsistent with these established principles. Op. 41. That portion of the opinion micromanages granular details of Apple’s dealings with developers, and it appears to restrict Apple’s commissions on linked-out purchases to its direct costs—even if a commission that would adequately compensate Apple for the use of its intellectual property would not be “prohibitive.” Id. at 40-42. The panel took these steps even though Apple’s specific practices for outside-app purchases have hardly been scrutinized, let alone deemed unlawful.

To be sure, the panel modified certain aspects of the district court’s order and did not accept the district court’s complete ban on commissions. Op. 40-41. But the panel’s recommended “courses of action” on remand raise problems of their own. As Apple explains—and as Epic has represented—the panel opinion could be read to bar all commissions above a de minimis level, disregarding the value of Apple’s innovation and intellectual property and effectively restoring the district court’s zero-commission rule. See id. at 41-42, see Pet. 1-2, 6-7. That is precisely the type of “direct price administration” that “antitrust courts normally avoid.” Town of Concord, 915 F.2d at 25.

Moreover, the panel opinion raises serious administrability concerns. In setting a permissible commission rate, it is far from clear how Apple—or a court—should determine which costs are “genuinely and reasonably necessary,” or which intellectual property is “directly used, in facilitating linked-out purchases. Op. 41-42. As one example, the App Store provides visibility and distribution services for the apps it features—must the costs of developing the App Store somehow be apportioned to all apps in this calculus? And costs change frequently—does a permissible commission rate suddenly become “prohibitive” when Apple reduces one cost involved in purchases? The panel offers no guidance, and its amorphous direct costs standard only underscores the extent to which “identifying the proper price, quantity, and other terms of dealing” is “a role for which [courts] are ill suited.” Trinko, 540 U.S. at 408.

If left intact, the panel’s proposed approach could force Apple to share the fruits of its labor with developers at little to no cost (and with no commensurate gain). Millions of consumers and developers benefit from the App Store, and Apple incurred significant costs to develop it. Apple monetizes the App Store through its commissions, and no clear alternative monetization structure exists, especially given the wide variety of developers who use the App Store. And in particular, restrictions on outside-app purchases are necessary to prevent freeriding and to allow Apple to earn a return on its substantial investments in its intellectual property and other benefits for developers.

Courts and antitrust enforcers have long understood the dangers of forced-sharing remedies like the one that the panel opinion appears to envision here. Such obligations are in “tension with the underlying purpose of antitrust law, since [they] may lessen the incentive for the monopolist, the rival, or both to invest in … economically beneficial facilities.” Trinko, 540 U.S. at 407-08. There is no “guarantee that firms will undertake the investment necessary to produce complex technological innovations knowing that any competitive advantage deriving from those innovations will be dissipated by the sharing requirement.” AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 429 (1999) (Breyer, J., concurring in part and dissenting in part). That is why “[e]ven a monopolist generally has no duty to share (or continue to share) its intellectual or physical property with a rival.” Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1074 (loth Cir. 2013) (Gorsuch, J.). Thus, whether viewed as price setting or compulsory sharing, the panel’s apparent approach to commissions is antithetical to the goals and principles of antitrust law. For that reason, the relief envisioned by the panel opinion would be contrary to “the public interest.” Winter v. Nat. Res. Def. Council, 555 U.S. 7, 32 (2008).

The panel opinion could also have important practical consequences. Apple made significant investments to create the iPhone and develop the iOS ecosystem. Forcing Apple to give developers access to its intellectual property without adequate compensation invites free riding and discourages the type of “risk taking that produces innovation and economic growth.” Trinko, 540 U.S. at 407. Those consequences are not limited to Apple alone-any would-be developer may rationally decide not to invest in new technology with no clear path to monetizing it. And when the law discourages innovation, the ultimate losers are consumers. See Gorlick District. Ctrs., LLC v. Car Sound Exhaust Sys., Inc., 723 F.3d lol9, 1026 (9th Cir. 2013) (observing that “free-riding could ultimately hurt consumers”).

CONCLUSION

For the foregoing reasons, this Court should grant Apple’s rehearing petition.

[1] No party or party’s counsel authored this brief in whole or in part, and no one other than amici and their counsel has made a monetary contribution to this briefs preparation and submission. Cooley represents Apple in other unrelated matters, and some amici may be affiliated with firms that similarly represent Apple in other unrelated matters.

[2] Unless otherwise indicated, all internal citations and quotations are omitted.

Three section leads at the International Center for Law & Economics (ICLE) read the same viral GitHub post and reached three different conclusions. Call it a trilogue—three views, one problem, and a technology that refuses to sit still.

The GitHub issue filed last week against Anthropic’s Claude Code product carried a blunt title: “Claude Code is unusable for complex engineering tasks with the Feb updates.” The author—Stella Laurenzo, an AMD senior AI director—laid out a detailed account of technical decline.

According to Laurenzo, months of session-log data show that from January to March, median “thinking” output fell roughly 70%. The model began bailing out or asking permission to continue about 10 times per day—up from zero before early March. Self-contradictions in its reasoning tripled. API requests spiked, suggesting users had to retry repeatedly to get usable results.

Most striking, performance appeared to degrade during peak GPU-load hours and recover late at night. That pattern offers circumstantial—but suggestive—evidence that quality was being throttled as a function of server demand, rather than any deliberate design improvement.

The issue went viral. Within about 20 minutes of reading it, three of us found ourselves in a lively disagreement about how to understand it through a law & economics lens.

Read the full piece here.

ICLE Director of Innovation Policy Kristian Stout was quoted by Télérama regarding Netflix’s withdrawal of its offer for Warner Bros. and Paramount’s potential acquisition of Skydance. He analyzed the comparative economic effects of the proposed transactions, noting that a Netflix deal offered greater complementarity between the firms.

Read the full piece here.

Le rachat pourrait également soulever des questions économiques. D’après Kristian Stout, spécialiste de concurrence à l’International Center for Law & Economics, un centre de recherche indépendant, Netflix et Warner Bros. étaient plus « complémentaires. Une fusion entre la Warner et Paramount, deux studios majeurs, aboutirait à des doublons de personnels et, donc, des réductions d’effectifs de réalisateurs, techniciens, etc. ». De quoi créer de nouvelles inquiétudes au moment où les créateurs (scénaristes, producteurs, réalisateurs…) et autres professionnels de Hollywood sont confrontés à un climat morose, marqué par les incertitudes autour de l’intelligence artificielle et la baisse du nombre de productions.

OpenAI recently canceled consumer-oriented projects, including an adult content feature and the Sora video application, prioritizing enterprise tools and revenue generation. ICLE Director of Law & Economics Programs Gus Hurwitz spoke to Axios about this product strategy. He described the removal of these consumer attributes as a conventional commercial calculation to avoid investor uncertainty. Read the full piece here.

“I would look at it first as simply a pure business decision, much like their decision to shut down the Sora video generation project,” Gus Hurwitz, senior fellow and academic director of the Center for Technology Innovation & Competition at the University of Pennsylvania Carey Law School, told Axios.

The Financial Times published a column examining the economic consequences of price ceilings, drawing on a working paper co-authored by ICLE Chief Economist Brian Albrecht. Read the full piece here.

Another unexpected problem, highlighted in a new working paper from economists Brian Albrecht, Alex Tabarrok, and Mark Whitmeyer, is that in 1974 gasoline was in short supply in the big cities but “more than abundant” in rural areas. As Albrecht and colleagues point out, this is a natural consequence of constraining the price system. Since fuel sells at the price cap everywhere, why bother to pay the additional cost of delivering it to an urban area? Only when the gas stations near oil refineries are drowning in more petrol than they can sell will the tankers head to more distant markets.

Jeffrey Westling, ICLE Senior Scholar for Innovation Policy, was quoted in a Wyoming Star article on how the FCC’s “news distortion” policy creates pressure on broadcasters through its licensing power, even when it isn’t directly enforced. Read the full article here.

In responses to Wyoming Star, Jeff Westling, senior scholar of innovation policy at the International Center for Law & Economics, argued that the danger lies precisely in the policy’s legal ambiguity. The group said the FCC’s authority over broadcasters remains broad enough to create practical pressure even where an actual legal violation would be hard to prove.

That matters even more in a media environment where political pressure rarely arrives through one channel alone. Jeff Westling described the policy itself as only one piece of a wider ecosystem of influence.

Today, consumers can obtain content through a wide range of options such as cable television and digital platforms, and the barriers to communication have never been lower. If challenged, I think a lot of the FCC’s authority to regulate broadcasters will be diminished in favor of strong First Amendment protections for the broadcasters,” Jeff Westling said.

Jeff Westling argues that the cleanest solution would not be to fine-tune the doctrine but to remove the underlying authority that makes it possible.

ICLE Director of Economic Research Eric Fruits was quoted in Reason article on the proposed Paramount-Warner Bros. Discovery merger, which examined the deal’s potential effects on competition, streaming markets, and the future structure of the entertainment industry. Read the full article here.

While concerns about consolidation “cannot easily be dismissed,” says Eric Fruits, director of economic research at the International Center for Law & Economics, “the analysis isn’t that simple.”

Fruits says the Paramount–Warner Bros. “merger would reduce the number of major studios and could increase bargaining power over talent and distributors,” and increase the likelihood of job losses. At the same time, Warner Bros. is a “financially constrained firm operating in a rapidly changing market” and “a combined Paramount-[Warner Bros.] could plausibly become a stronger competitor to Netflix, Amazon, and Disney+.”

Moreover, “Americans have more access to news than ever before from broadcast, cable, digital outlets, and independent creators,” says Fruits. An August 2025 survey conducted by the Pew Research Center found that 56 percent of American adults often get their news from digital devices, while only 32 percent do so from TV.