Spotlight

ICLE Director of Competition Policy Dirk Auer testified before the UK House of Lords’ Communications and Digital Committee in a May 23, 2023 hearing reviewing the Digital Markets, Consumer and Competition Bill. Videos of his answers to the Lords’ questions are embedded below.

Introduction

Chair Klobuchar, Ranking Member Lee, and distinguished members of the Subcommittee, thank you for inviting me to participate in today’s hearing on Competition in the Digital Advertising Ecosystem.

My name is Todd Henderson. I am the Michael J. Marks Professor of Law at the Chicago Law School. I am also a visiting fellow at the Hoover Institution at Stanford and an Academic Affiliate of the International Center for Law & Economics (ICLE). My testimony today is drawn largely from a paper I recently published with ICLE which examines the Advertising Middlemen Endangering Rigorous Internet Competition Accountability (AMERICA) Act,^[1] as well as other recent scholarship my ICLE colleagues have produced looking at the law & economics of the digital advertising market.^[2]

There are three primary points I want to share with the Subcommittee:

1. While monopolistic markets are associated with rising prices and restricted output, digital advertising has in recent years demonstrated the opposite, with ads becoming cheaper and more effective. Ranking Member Lee has said that the “big is bad philosophy is… part of a broader effort to overturn the consumer welfare standard,” and that “the purpose of antitrust is to advance the economic welfare of consumers.”^[3] The online display ad market is currently serving consumer welfare.
2. Ads are not stocks, and any claim that they should be regulated as stocks is based on a fundamental misunderstanding of how securities regulation works and why it exists.
3. The divestiture portion of the AMERICA Act may have…

It’s been 35 years since Californians voted by a narrow majority to pass Proposition 103, completely overhauling how the nation’s largest state regulates the business of insurance.

That’s an awfully long time. So long, it seems, that even the man who wrote Prop 103 appears to have forgotten what it actually says.

Read the full piece here.

Becky Hogan joined ICLE as Director of Finance and Administration in May 2023. She’s enjoyed living in Portland, Oregon since the early 1990’s.

Prior to joining ICLE, Becky was Director of Finance and Operations at Swift, a Wunderman Thompson agency, Intercompany Accountant at Columbia Sportswear, and Finance Manager at a boutique hotel in Portland. She graduated from UC Davis, with a bachelor’s degree in Economics.

When she’s not working, she can be found at Providence Park cheering for the Thorns and the Timbers, or wherever a musical is playing.

ICLE President Geoff Manne joined the American Bar Association’s Our Curious Amalgam podcast to debate Spencer Waller of the Loyola University Chicago School of Law over the core purpose of antitrust and whether it should be solely concerned with economic efficiency, or also used as a tool to uphold and promote democratic values. The full conversation is embedded below.

ICLE Chief Economist Brian Albrecht joined the Human Action Podcast to discuss the work of economists Armen Alchian and Robert Lucas. Video of the full conversation is embedded below.

ICLE Academic Affiliate M. Todd Henderson testified to the Senate Judiciary Subcommittee on Competition Policy, Antitrust, & Consumer Rights at their May 3, 2023 hearing on “Competition in the Digital Advertising Ecosystem.” Video of his opening statement is embedded below.

ICLE Director of Law & Economics Programs Gus Hurwitz joined Tech Policy Press’ The Sunday Show podcast to discuss, among other topics, the relationship between technology and the law and the role and politics of the Federal Trade Commission. The full episode is embedded below.

What should a competition law for 21st century look like? This point is debated across many jurisdictions. The Digital Markets, Competition, and Consumers Bill (DMCC) would change UK competition law’s approach to large platforms. The bill’s core point is to place the UK Competition and Markets Authority’s (CMA) Digital Markets Unit (DMU) on a statutory footing with relaxed evidentiary standards to regulate so-called “Big Tech” firms more easily. This piece considers some areas to watch as debate regarding the bill unfold.

Read the full piece here.

After the oral arguments in Twitter v. Taamneh, Geoffrey Manne, Kristian Stout, and I spilled a lot of ink thinking through the law & economics of intermediary liability and how to draw lines when it comes to social-media companies’ responsibility to prevent online harms stemming from illegal conduct on their platforms. With the Supreme Court’s recent decision in Twitter v. Taamneh, it is worth revisiting that post to see what we got right, as well as what the opinion could mean for future First Amendment cases—particularly those concerning Texas and Florida’s common-carriage laws and other challenges to the bounds of Section 230 more generally.

Read the full piece here.

One of the biggest names in economics, Daron Acemoglu, recently joined the mess that is Twitter. He wasted no time in throwing out big ideas for discussion and immediately getting tons of, let us say, spirited replies.

One of Acemoglu’s threads involved a discussion of F.A. Hayek’s famous essay “The Use of Knowledge in Society,” wherein Hayek questions central planners’ ability to acquire and utilize such knowledge. Echoing many other commentators, Acemoglu asks: can supercomputers and artificial intelligence get around Hayek’s concerns?

Read the full piece here.

Some may refer to this as the Roundup Formerly Known as the FTC Roundup. If you recorded yourself while reading out loud, and your name is Dove, that is what it sounds like when doves sigh.

Read the full piece here.

Brexit was supposed to free the United Kingdom from Brussels’ heavy-handed regulation and red tape. But dreams of a Singapore-on-the-Thames are slowly giving way to ill-considered regulation that threatens to erode Britain’s position as one of the world’s leading tech hubs.

The UK Competition and Markets Authority’s recent decision to block the merger of Microsoft and game-maker Activision-Blizzard offers a case in point. Less than a month after the CMA formally announced its opposition to the deal, the European Commission has thrown a spanner in the works. Looking at the same facts, the commission—no paragon of free-market thinking—concluded the merger would benefit competition and consumers, paving the way for it to move ahead in the Old Continent.

Read the full piece here.

The United Kingdom’s 2016 “Brexit” decision to leave the European Union created the opportunity for the elimination of unwarranted and excessive EU regulations that had constrained UK economic growth and efficiency.

Recognizing that fact, former Prime Minister Boris Johnson launched the Task Force on Innovation, Growth, and Regulatory Reform, whose May 2021 report recommended “a new regulatory vision for the UK.” That vision emphasized “[p]romot[ing] productivity, competition and innovation through a new framework of proportionate, agile and less bureaucratic regulation.”

Read the full piece here.

Legislation to secure children’s safety online is all the rage right now, not only on Capitol Hill, but in state legislatures across the country. One of the favored approaches is to impose on platforms a duty of care to protect teen users.

For example, Sens. Richard Blumenthal (D-Conn.) and Marsha Blackburn (R-Tenn.) have reintroduced the Kid’s Online Safety Act (KOSA), which would require that social-media platforms “prevent or mitigate” a variety of potential harms, including mental-health harms; addiction; online bullying and harassment; sexual exploitation and abuse; promotion of narcotics, tobacco, gambling, or alcohol; and predatory, unfair, or deceptive business practices.

Read the full piece here.

According to an old English proverb, children are meant to be seen and not heard. But if we aren’t careful with new online-safety legislation, kids will be neither seen nor heard in online spaces.

There has been no shortage of stories in recent months focusing on the real harms associated with teens on social media, which the platforms have already invested in mitigating in response to market demand from parents, advertisers and teens themselves. Far less attention has been paid to the benefits that teens today enjoy in terms of increased connections and access to information that was previously unimaginable in an offline world.

The federal government is set to award more than $42 billion in new grants to state governments this summer, with the goal of expanding high-speed internet access in areas that currently lack it.

But as this new Broadband Equity, Access, and Deployment program ramps up, it is crucial that states spend the money wisely.

Read the full piece here.

In the age of the internet, unfounded claims can achieve widespread adoption at remarkable speed. Antitrust regulators have apparently fallen prey to this malady.

In the U.S., Europe, the U.K. and other jurisdictions, regulators have adopted the view that acquisitions of startups by large tech platforms are being used systematically to “kill” competitive threats. Other regulators assert that acquisitions by large tech platforms create “kill zones” into which startups are reluctant to enter.

Read the full piece here.

The Federal Trade Commission (FTC) last week held its first informal hearing in 20 years on Section 18 rulemaking. The hearing itself had a technical delay, which to us participants felt like another 20 years, but was a mere two hours or so.

At issue is a proposed rule intended to target impersonation fraud. Impersonation fraudsters hold themselves out as government officials or company representatives in order to defraud unsuspecting consumers.

Read the full piece here.

As the U.S. House Energy and Commerce Subcommittee on Oversight and Investigations convenes this morning for a hearing on overseeing federal funds for broadband deployment, it bears mention that one of the largest U.S. broadband-subsidy programs is actually likely run out of money within the next year. Writing in Forbes, Roslyn Layton observes of the Affordable Connectivity Program (ACP) that it has enrolled more than 14 million households, concluding that it “may be the most effective broadband benefit program to date with its direct to consumer model.”

Read the full piece here.

A relatively minor bureaucratic change proposed by the Federal Housing Finance Agency stirred up a viral storm in right-leaning news media recently, with outlets like the Washington Times, New York Post, National Review and Fox News all reporting some variant of the sentiment expressed in the Times headline: “Biden to hike payments for good-credit homebuyers to subsidize high-risk mortgages.”

Read the full piece here.

The Federal Trade Commission (FTC) might soon be charging rent to Meta Inc. The commission earlier this week issued (bear with me) an “Order to Show Cause why the Commission should not modify its Decision and Order, In the Matter of Facebook, Inc., Docket No. C-4365 (July 27, 2012), as modified by Order Modifying Prior Decision and Order, In the Matter of Facebook, Inc., Docket No. C-4365 (Apr. 27, 2020).”

Read the full piece here.

The United Kingdom’s Competition and Markets Authority (CMA) late last month moved to block Microsoft’s proposed vertical acquisition of Activision Blizzard, a video-game developer that creates and publishes games such as Call of Duty, World of Warcraft, Diablo, and Overwatch. Microsoft summarized this transaction’s substantial benefits to video game players in its January 2022 press release announcing the proposed merger.

Read the full piece here.

The 9th U.S. Circuit Court of Appeals ruled late last month on Epic Games’ appeal of the decision rendered in 2021 by the U.S. District Court for the Northern District of California in Epic Games v Apple, affirming in part and reversing in part the district court’s judgment.

Read the full piece here.

In a May 3 op-ed in The New York Times, Federal Trade Commission (FTC) Chair Lina Khan declares that “We Must Regulate A.I. Here’s How.” I’m concerned after reading it that I missed both the regulatory issue and the “here’s how” part, although she does tell us that “enforcers and regulators must be vigilant.”

Read the full piece here.

While it bills itself a “Digital Bill of Rights,” the Florida Senate Bill 262 could actually harm consumers and businesses online by substantially raising the costs of targeted advertising.

For consumers, this would mean less “free” stuff online, as publishers switch from advertising-based to subscription-based models. For businesses, it would mean having less ability to target advertisements to consumers who actually want their products, resulting in less revenue.

Read the full piece here.

Abstract

Thomas Sowell is best known as an economic communicator and popularizer. We argue that he should be better known as an academic economist.

Summary of Argument

Courts should approach predatory pricing claims with caution because price cutting is central to competition and because false positive errors can chill competition to the detriment of economic efficiency and consumer welfare.

Total average system cost is not an appropriate price floor for finding predation; the district court was right to reject a fixed-cost standard. This Court should reject claims based on the allegedly exclusionary effect of pricing not shown to be below short-run incremental cost. Moreover, a contention that Duke Energy’s discount or rebate structure was “exclusionary” should not change the analysis, because the timing of price reductions should not be relevant.

Abstract

Seeking to boost funding for the next generation of telecommunications infrastructure, European Union (EU) policymakers have proposed mandating that some large online platforms pay a special usage fee to network operators. Framed as a way to ensure that the largest users of internet infrastructure contribute their “fair share” to telecommunications networks, the proposal would be another unnecessary and harmful regulatory intervention. These comments paper seek to demonstrate that the fair-share debate itself is, in fact, the byproduct of an earlier intrusive government initiative: net-neutrality regulation. Like net neutrality’s anti-discrimination rules, a “fair share” tax would represent a solution that doesn’t work to a problem that doesn’t exist. Moreover, the debate reflects the EU’s fundamentally misguided inclination toward an industrial-policy approach to the digital transformation, built on the unsound belief that innovation can be delivered via regulation and by subsidizing legacy domestic firms with rents transferred from successful global players. Rather than continuing to interfere in market dynamics and private negotiations without any solid evidence of market failure, the EU should instead learn from its past mistakes and acknowledge the limited scope for regulation in these dynamic markets.

I. Introduction

“[W]e have a vision, and we have a goal,”[1] European Commissioner Thierry Breton said in a February 2023 speech in Helsinki announcing the launch of a public consultation on the future of connectivity and infrastructure in the European Union (EU).[2] The consultation’s stated goal is to keep pace with transformative technological developments and…

Introduction

We welcome the opportunity to comment on the European Commission’s call for evidence on “Virtual worlds (metaverses) – a vision for openness, safety and respect.”[1]

The metaverse is an exciting and rapidly evolving set of virtual worlds. As with any new technology, concerns about the potential risks and negative consequences that the metaverse may bring have moved policymakers to explore how best to regulate this new space.

In its call for evidence, the commission suggests that preemptive regulatory steps may be needed to avoid the metaverse becoming “a more closed ecosystem with the prevalence of proprietary systems and gatekeepers.”[2] But this diagnosis rests on dubious premises.

From the outset, it is important to recognize that simply because the metaverse is new does not mean that it is unregulated. Existing regulations may not explicitly or exclusively target metaverse ecosystems, but a vast regulatory apparatus already covers most aspects of business in virtual worlds. As we explain in greater detail (Section I), this includes European competition law, the Digital Markets Act (“DMA”), the General Data Protection Act (“GDPR), the Digital Services Act (“DSA”), and many more. Before it enacts any new rules, the commission should carefully consider whether there are any metaverse-specific problems not already addressed by these legal provisions.

This sense that the metaverse is already adequately regulated is reinforced by two important factors.

The first is that competition appears particularly intense in this space (Section II). There are currently multiple firms vying to offer compelling virtual worlds.…

Introduction

Chair Klobuchar, Ranking Member Lee, and distinguished members of the Subcommittee, thank you for inviting me to participate in today’s hearing on Competition in the Digital Advertising Ecosystem.

My name is Todd Henderson. I am the Michael J. Marks Professor of Law at the Chicago Law School. I am also a visiting fellow at the Hoover Institution at Stanford and an Academic Affiliate of the International Center for Law & Economics (ICLE). My testimony today is drawn largely from a paper I recently published with ICLE which examines the Advertising Middlemen Endangering Rigorous Internet Competition Accountability (AMERICA) Act,^[1] as well as other recent scholarship my ICLE colleagues have produced looking at the law & economics of the digital advertising market.^[2]

There are three primary points I want to share with the Subcommittee:

1. While monopolistic markets are associated with rising prices and restricted output, digital advertising has in recent years demonstrated the opposite, with ads becoming cheaper and more effective. Ranking Member Lee has said that the “big is bad philosophy is… part of a broader effort to overturn the consumer welfare standard,” and that “the purpose of antitrust is to advance the economic welfare of consumers.”^[3] The online display ad market is currently serving consumer welfare.
2. Ads are not stocks, and any claim that they should be regulated as stocks is based on a fundamental misunderstanding of how securities regulation works and why it exists.
3. The divestiture portion of the AMERICA Act may have…

Fortune – ICLE Chief Economist Brian Albrecht was quoted by Fortune in a story about congressional negotiations over raising the federal debt limit. You can read full piece here.

“I don’t claim to predict politicians,” Brian Albrecht, chief economist of the International Center for Law & Economics, told Fortune. “But I tends to be an optimist about the ability to find a solution here. Even though there is a lot of theatrics, the shocking thing is Congress has found ways to get through these troubles in the past. So that’s my assumption–that they’ll find a way to do that again. I certainly don’t have big money on them not passing it.”

ICLE Chief Economist Brian Albrecht joined the Human Action Podcast to discuss the work of economists Armen Alchian and Robert Lucas. Video of the full conversation is embedded below.

Washington Examiner – ICLE Senior Scholar Ben Sperry was quoted by the Washington Examiner in a story about federal legislation to limit children’s access to social media. You can read full piece here.

Ben Sperry, senior scholar for innovation policy at the International Center for Law and Economics, told the Washington Examiner that “because the Schatz-Cotton bill bans targeted advertising for teens … more will be invested in the exclusion of teens rather than building safe, vibrant social media environments for them.”

Medium – ICLE Senior Scholar Daniel J. Gilman was cited by Adam Thierer in a piece at Medium about Biden administration efforts to regulate artificial intelligence. You can read full piece here.

So, what happens next? I’d guess that Kahn and other agencies will go on the offensive in a major way in coming months and concoct broad theories of harm in an effort to unilaterally and preemptively regulate algorithmic innovations. For some thoughts about what’s to come, read these recent essays from FTC veterans Alden Abbott (“Four Horsemen of the Bureaucratic Apocalypse Come for AI”) and Daniel J. Gilman (“Artificial Intelligence Meets Organic Folly”).

Forbes – ICLE Academic Affiliate M. Todd Henderson was quoted by Forbes in a story largely about his testimony to the Senate Judiciary Antitrust Subcommittee on competition in digital advertising. You can read full piece here.

M. Todd Henderson, Professor of Law at the University of Chicago Law School, appeared at the hearing on May 3, and made an eloquent case for why it is false equivalency to say selling and buying stocks and ads are alike. Just as he does in his recently published white paper for the International Center for Law and Economics, “Ads are not stocks, and any claim that they should be regulated as stocks is deeply misleading.”

He lays it out this way: The stock market is the primary means of wealth creation in the United States—enormous social stakes are implicated in ensuring that stock markets are well-regulated. In the stock market, companies can issue and sell shares of their stock to raise capital, and investors can buy and sell those shares in the hopes of making a profit.

Background: The European Union’s Digital Markets Act (DMA), which went into effect in November 2022,  requires online platforms deemed to be “gatekeepers” to make their services interoperable. Interoperability refers to the ability of different systems, devices, or applications to communicate and exchange information. Importantly, the DMA envisions horizontal interoperability for messaging services, as well as vertical interoperability obligations. These include the ability to install third-party app stores and to install applications through sideloading, along with ensuring access to operating systems’ critical functionalities and specific devices’ hardware capabilities.

However… While interoperability requirements can reduce switching costs between platforms and possibly  help consumers avoid being “locked-in” to inferior products, the net effects on new technology and greater competition are mostly speculative. Claims that mandatory interoperability is a “super tool” for platform competition rely on excessive switching costs between platforms effectively serving as a barrier to entry. The rise of new social networks like TikTok and messaging services like Discord suggests that network effects may be less pervasive than previously thought. Many consumers are perfectly comfortable with “multi-homing” and using multiple platforms. 

Network Effects Are Everywhere; Network Harms Are More Specific

Consumers in any market—not exclusively or even predominantly digital markets—strike a balance between using multiple providers (multi-homing) and remaining loyal to just one. Network effects can give incumbents an advantage over challengers, but identifying that a given market has network effects does not, in itself, justify mandating interoperability. For any potential interoperability mandate, we must ask how costly it is for consumers to multi-home. 

For example, a consumer may find it low-cost to download multiple apps—such as Zelle, PayPal, or Venmo—that each allow one to send money to a friend. By contrast, it may be quite costly to gain followers on a new social-media platform. Interoperability mandates have tended to focus on markets that already have low switching costs, hence limiting potential gains.

Lock-In Can Increase Competition

We say a consumer is “locked-in” when high switching costs make it difficult for them to switch suppliers even when quality changes. But markets subject to lock-in may still see fierce competition for users. Companies compete upfront to attract such consumers through tactics like penetration pricing, introductory offers, and price wars. This “competition for the market” can effectively substitute for standard compatible competition and might even be more intense, as it reduces differentiation. It is not a simple linear relationship, where lower switching costs are always better for consumers.

Interoperability Isn’t Always Good

Interoperability proponents argue that it levels the playing field between tech giants and smaller competitors. The debate often imagines a low-quality incumbent using lock-in to keep a high-quality challenger at bay. But we don’t necessarily want everything to be interoperable. It would be a problem if, e.g., everyone’s door keys were interoperable. The analogous problem in tech is cybersecurity. More interconnected systems are more vulnerable to cyberattacks and data breaches. Mandating interoperability, such as between messaging services, can inadvertently expose users to greater security risks by creating additional points of access for bad actors.

Static Standards and Dynamic Markets

There are many examples of interoperability resulting from the voluntary adoption of standards. Credit-card companies manage vast, interoperable payment networks; screwdrivers work with screws made by various manufacturers; and U.S. colleges accept credits from other institutions. 

Interoperability also tends to evolve over time and regulators should not imagine the current system will last forever. Bluetooth was initially developed for wireless communication between devices like headsets and phones, but has evolved to also enable seamless connectivity among various speakers, keyboards, smartwatches, and so forth—all from different manufacturers. This standardization has greatly simplified wireless connections and improved user experience.

Calculate Costs in Addition to Benefits

While a literature review on switching costs and network effects by esteemed scholars Joseph Farrell and Paul Klemperer concluded that “firms probably seek incompatibility too often. We therefore favor thoughtfully pro-compatibility public policy,” they also recognize that competition to be the dominant platform “can adequately replace ordinary compatible competition, and can even be fiercer than compatible competition by weakening differentiation.”

Moreover, the theoretical papers they considered mostly ask whether increasing or decreasing switching costs increases consumer welfare. Mandates implemented through public policy tend to be more blunt and, after accounting for factors like increased security risks, are less likely to pass a cost-benefit test. Consumers often come across situations where interoperability might provide some benefits, but where the costs outweigh the gains. Policymakers should take the same approach.

For more on this issue, see “Antitrust Unchained: The EU’s Case Against Self-Preferencing” by Giuseppe Colangelo; “Privacy and Security Implications of Regulation of Digital Services in the EU and in the US” by Mikolaj Barczentewicz; and “Mandatory Interoperability Is Not a ‘Super Tool’ for Platform Competition” by Samuel Bowman.

Background: The Advertising Middlemen Endangering Rigorous Internet Competition Accountability (AMERICA) Act, recently introduced by Sen. Mike Lee (R-Utah), would bar companies that own a digital-advertising exchange with more than $20 billion in annual ad revenue from also providing services to buyers and sellers of ads, or from selling advertising space themselves. The bill also would impose fiduciary-like duties on those who buy and sell online ads for others

However… While advocates of the legislation claim the changes they seek are based on analogous rules used in the regulation of securities markets, such analogies are based on fundamental misunderstandings of how securities regulation works and why it exists. The requirement for “physical separation,” which could force the breakup of vertically integrated digital-advertising platforms like Google, does not exist in securities law; many stockbrokers also own exchanges where stocks are traded. Moreover, rules that stock trades be executed at the best-available price are imposed precisely because vertical integration is common. Ultimately, stocks are regulated in the way that they are because of the central role they play in the savings and investments of everyday Americans. Advertising, while important, does not serve that role.

No ‘Physical Separation’ Rule in Stocks

In a press release announcing the introduction of the AMERICA Act, Matt Stoller of the American Economic Liberties Project expressed a sentiment common among proponents of the legislation, that just as “no one would accept Goldman Sachs running the New York Stock Exchange,” Congress should not “let corporations run all sides of a transaction in online ad markets.”

Sen. Lee likewise has said of his bill that its “restrictions and requirements mirror those imposed on electronic trading in the financial sector.”

The problem with these analogies is that there actually is no requirement in securities law that prohibits brokers from owning exchanges on which stocks are traded. Goldman Sachs does not own the NYSE, but it does own a different stock exchange (called SigmaX2) where the same stocks are bought and sold. In fact, about half of all stock trades are made on trading venues (i.e., exchanges by a different name) owned by brokers.

Thus, while the AMERICA Act would ban Google from acting as a broker on its own ad exchange, securities law—on which the law is purportedly founded—permits exactly this same conduct.

The Best-Interests Standard May Be Impossible to Enforce in Ad Tech

The AMERICA Act would also create a legal duty to act in a client’s best interest when helping them buy or sell ads. This is similar to rules in securities law, but one of the reasons such duties exist in stock markets is precisely because brokers may own exchanges and otherwise act on behalf of clients when there are real or potential conflicts of interest. 

While stockbrokers do have a duty to execute trades at the best price, there is some discretion baked into the system, especially since price is not the only factor customers care about. A recent empirical study found that only about 43% of trades were made at the “best” price, because of the impact of various discounts and other factors paid by exchanges.

As difficult as it is to enforce a best-interests rule in stock markets, establishing something akin to it in online display advertising would be a monumental task. While a stock has one price for every potential investor at any time, and it has some intrinsic value, online advertisements have many more degrees of interest. In online display-ad auctions, the price is set for a particular viewer at a particular location at a particular time. These multiple factors, and the lack of any objective valuation, makes determining the “best” price, or even a reasonable price, far more complex.

The AMERICA ACT proposes that the best-interests rule would be enforced by the U.S. Justice Department and state attorneys general, but this is a massive underestimate of the bureaucracy needed to establish and enforce such rules.

Ads Aren’t Stocks

Plenty of markets involve vertical integration with conflicts of interest, but do not require physical separation or impose fiduciary duties. For instance, auction houses provide a venue where buyers and sellers come together to bid on art and antiquities, while also providing services and advice to buyers and sellers, as well as sometimes bidding on items themselves.

The AMERICA Act takes a belt-and-suspenders approach that offers more supposed protection for advertisers and ad buyers than stock traders, even though the potential mischief and consequences are greater in the securities world. Ordinary Americans have their savings and their futures bet in the stock markets, not in ad markets, which are merely places where business-to-business services are bought and sold. There is no investment or speculation in ad markets.

Ultimately, the stock market is regulated as it is because of the profound social importance of accurate stock prices, not because of overriding concerns about conflicts of interests in general. Stocks are regulated as they are because they are stocks. Ads are not stocks, and thus, regulating them like stocks makes no sense.

For a more extensive treatment of this issue, see the ICLE white paper “Ads Aren’t Stocks, or How Bad Analogies Make Bad Law,” as well as other ICLE research on the law & economics of digital advertising here and here.

Threads from ICLE scholars on current topics.

Looking forward to discussing about data #interoperability at @mpi_inno_comp #EIPIN Conference (Friday, June 2nd). Thanks to Josef Drexl for the kind invitation pic.twitter.com/aUr7ytuyIh

— Giuseppe Colangelo (@GiuColangelo) May 30, 2023

?Will the new digital markets regulation strike the right balance?
? @AuerDirk says the proposals are problematic.
?Find out more here: https://t.co/wM8lUd8hhO pic.twitter.com/CLbuYjdJkp

— Lords Communications and Digital Committee (@LordsCommsCom) May 25, 2023

As a big fan of price discrimination (and not a fan of the Robinson-Patman Act), let me briefly explain why.

In short, our intuitions about the harms to consumers of price discrimination from the monopoly case don't extend to more firms https://t.co/oyLZlUzcg8

— Brian Albrecht (@BrianCAlbrecht) May 23, 2023

This is not a "Meta problem": all services that rely on US-EU data transfers are at risk. EU privacy regulators are fixated on constraining US-EU data transfers, when more serious privacy risks come from domestic surveillance and from unfriendly powers.? https://t.co/edBHZ53abF

— Miko?aj Barczentewicz (@MBarczentewicz) May 22, 2023

I went on The Human Action podcast to talk about Armen Alchian.

But with Lucas's death, I dropped that news on @BobMurphyEcon, so we had to spend a while on his contributions. Enjoy!https://t.co/Riu0kkiuX1

— Brian Albrecht (@BrianCAlbrecht) May 19, 2023

The Irish Data Protection Commission has reportedly ordered @facebook parent @Meta to cease all data transfers to the United States and assessed a penalty expected to be the largest ever for violation of the GDPR. A?…https://t.co/G258oUdziI

— Int'l Ctr Law & Econ (@LawEconCenter) May 17, 2023

Why would OpenAI's CEO call for more AI regulation?

But my AP history book told me regulation came from advocacy groups over the complaints of businesses!

I'm kidding, but it is always a good time to reteach supply and demand ?

— Brian Albrecht (@BrianCAlbrecht) May 16, 2023

Interested in the recently reintroduced Kids Online Safety Act? The First Amendment? The law and economics of speech? Want to read almost 4000 words on it? Look no further than my latest @TOTMblog
https://t.co/WtYnIopO54

— Ben Sperry (@RBenSperry) May 12, 2023

Join us next May 18 for our last session of this semester Digital Finance Seminar Series with @MBarczentewicz to discuss about the tension between #cryptocurrencies and #DeFi with financial surveillance regulation in the EU. Registration link: https://t.co/QLQi4a6h6Y. https://t.co/GFcZnu7zew

— Andres Chomczyk (@achomczyk) May 12, 2023

The EU DMA is in force: it's now key to ensure that it will be interpreted to protect privacy and security of end users. However, parts of the DMA inherently pose dangers to user privacy and security, so this will not be an easy task—but it must be done, as EU law requires it. ?

— Miko?aj Barczentewicz (@MBarczentewicz) May 12, 2023

If you want to understand how preventing side-loading and rival App Stores has enabled iOS to become so secure, look no further.

Really well made.

However, I do think the piece underestimates the importance of the 30% fee model.https://t.co/K5jlZj3CtU

— Dirk Auer (@AuerDirk) May 9, 2023

@ThomasSowell is one of the most well-known economists alive. And yet @artcarden and I argue he is still under-appreciated by economists.

Sowell has made seminal contributions across several fields.

Read us, then read Sowell!https://t.co/oO6F5IlyDd pic.twitter.com/KuLB8MamXX

— Brian Albrecht (@BrianCAlbrecht) May 3, 2023

In advance of today's @JudiciaryDems/@SenJudiciaryGOP hearing on Competition in the Digital Advertising Ecosystem (at which he will be testifying), a new "tl;dr" from Academic Affiliate M. Todd Henderson summarizing his recent @LawEconCenter white paper.https://t.co/8SjQYiES76

— Int'l Ctr Law & Econ (@LawEconCenter) May 3, 2023

New op-ed today: Florida’s Senate Bill 262 will harm consumers and small businesses online

While it bills itself a “Digital Bill of Rights,” SB 262 would harm consumers and businesses online by substantially raising the costs of targeted advertisinghttps://t.co/rRlGHqDWUB

— Ben Sperry (@RBenSperry) May 1, 2023

When some of us say existing case law is unlikely to sustain claims the FTC has substantive UMC rulemaking authority under 6(g) of the FTC Act, the Loper Bright case, just taken up by the Court, is why. Today's Court isn't going to support that claim. A short ? 1/ https://t.co/d6pI6P9993

— Geoffrey Manne (@geoffmanne) May 1, 2023