Archive for the ‘Antitrust’ Category
“Kicking the Tires” is not “Looking Under the Hood”
posted by Frank Pasquale
Celebrated in the tech press only a week ago, the FTC inaction (and non-explanation of its inaction) with respect to search bias concerns is already starting to curdle. The FT ran a front page headline titled “Europe Takes Tough Stance on Google.” Another story included this striking comment from the EU’s competition chief:
Almunia insists that the Federal Trade Commission decision will be “neither an obstacle [for the European Commission] nor an advantage [for Google]. You can also think, well, this European authority, the commission, has received a gift from the American authorities, given that now every result they will get will be much better than the conclusions of the FTC,” he said with playful confidence. “Google people know very well that they need to provide results and real remedies, not arguments or comparisons with what happened on the other side [of the Atlantic].”
In response to allegations of search bias, Google has essentially said, “Trust us.” And at the end of its investigation into the potential bias, the FTC has essentially said the same. One public interest group has already put in a FOIA request for communications between Google and the FTC. Consumer Watchdog has requested a staff report that was reported to have recommended more robust action. Will Google, an advocate of openness in government and the internet generally, hold firm to its professed principles and commend those requests?
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January 11, 2013 at 10:28 am
Posted in: Antitrust, Cyberlaw, Google & Search Engines, Government Secrecy, Political Economy, Privacy (Electronic Surveillance), Technology
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Google Antitrust: the FTC Folds
posted by Frank Pasquale
Both Eric Goldman and James Grimmelmann have the details on the FTC’s rather extraordinary capitulation today. It is a big win for Google. Still, a few questions remain. I have the following:
1) Commissioner Rosch included this intriguing footnote in his concurrence/dissent:
I . . . have concerns that insofar as Google has monopoly or near-monopoly power in the search advertising market and this power is due in whole or in part to its power over searches generally, nothing in this “settlement” prevents Google from telling “half-truths”–for example, that its gathering of information about the characteristics of a consumer is done solely for the consumer’s benefit, instead of also to maintain a monopoly or near-monopoly position. . . .That is a genuine cause for “strong concern.”
Did Google ever say that it was gathering data purely for consumers’ benefit? That would seem to be an odd representation for a for-profit company to make.
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January 3, 2013 at 9:51 pm
Posted in: Antitrust, Consumer Protection Law, Google & Search Engines, Technology
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My Brand Journey, Part II (and a conference)
posted by Deven Desai
After the genericism piece, brands were on my mind and luckily some friends knew it. My brand project was the focus of my work at Princeton’s Center for Information Technology. Brett Frischmann knew that Spencer Waller was thinking about brands as was I. Spencer and I connected, and Brands, Competition and the Law was born. We argued that brands do much more than trademark or antitrust law recognizes. Brands indicate more than source and quality, enable non-price factors to differentiate products, and drive consumption for non-functional reasons. Furthermore, as business and marketing folks know, brands allow for rent extraction. Brands allow prices to remain high even in markets where one might expect them to converge. Brands “ensconce[e] price dispersion, … instead of a competitive market that brings prices down, prices remain dispersed above marginal cost.” Michael Baye and John Morgan’s work shows this for an online market no less. We turned to antitrust and found that antitrust law simply does not account for brands well. Market definition is odd here. For a strong brand is in a way its own market. Glynn Lunney’s work on Trademark Monopolies (no ssrn that I saw) was most helpful there. Price discrimination might signal a change in how one defines the market. Brands allow such actions but are ignored. There’s more on how understanding brands would change the way anti-trust might run. But I leave those interested to read the paper OR there is this offer.
The work led to a conference at University College London hosted by Ioannis Lianos where our abstract framed the day’s discussion.
Now, if you like, the follow up conference is in the U.S.
It will be in Chicago on October 19, 2012. Registration is here.
September 22, 2012 at 4:13 pm
Posted in: Antitrust, Intellectual Property
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Stanford Law Review Online: The Obama Justice Department’s Merger Enforcement Record
posted by Stanford Law Review
Continuing our dialog on antitrust enforcement, the Stanford Law Review Online has just published an Essay by Daniel A. Crane entitled The Obama Justice Department’s Merger Enforcement Record. Professor Crane responds to Carl Shapiro and Jonathan Baker’s criticism of his response to his earlier Essay:
My recent Essay, Has the Obama Justice Department Reinvigorated Antitrust Enforcement?, examined the three major areas of antitrust enforcement—cartels, mergers, and civil non-merger—and argued that, contrary to some popular impressions, the Obama Justice Department has not “reinvigorated” antitrust enforcement. Jonathan Baker and Carl Shapiro have published a response, which focuses solely on merger enforcement. Baker and Shapiro’s argument that the Obama Justice Department actually did reinvigorate merger enforcement is unconvincing.
He concludes:
Jon Baker and Carl Shapiro are smart, effective economists for whom I have great respect. I have few quarrels with how they or the Obama Administration in general conduct antitrust enforcement. The point of my essay was that antitrust enforcement has become largely technocratic and independent of political ideology. I have heard nothing that dissuades me from that view.
Read the full article, The Obama Justice Department’s Merger Enforcement Record by Daniel A. Crane, at the Stanford Law Review Online.
September 6, 2012 at 3:03 pm
Tags: Antitrust, merger enforcemenet, mergers, Obama administration, Policy
Posted in: Antitrust, Corporate Law, Current Events, Empirical Analysis of Law, Law Rev (Stanford), Politics
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FTC Agonistes: From the Nader Report to the Wired Report
posted by Frank Pasquale
In 1968, a group of law student researchers helped Ralph Nader publish a highly critical report on the Federal Trade Commission. They concluded that the FTC failed to “detect violations systematically,” to “establish efficient priorities for its enforcement energy,” to “enforce the powers it has with energy and speed,” and to “seek sufficient statutory authority to make its work effective.” As Tim Muris notes, the report “lambast[ed] the agency and characteriz[ed] its overall performance as ‘shockingly poor.’”
The FTC has taken many important initiatives to respond to concerns identified in the report. But we must now reconsider agency’s record, as the digital world changes kaleidoscopically and budget restraints hamstring even the best-intentioned FTC staff.
About the closest thing we’re likely to get to another “Nader Report” was Peter Maass’s expose in Wired on challenges facing privacy enforcement and consumer protection in the digital age. Here’s one of the many issues he identifies:
The mismatch between FTC aspirations and abilities is exemplified by its Mobile Technology Unit, created earlier this year to oversee the exploding mobile phone sector. The six-person unit consists of a paralegal, a program specialist, two attorneys, a technologist and its director, Patricia Poss. For the FTC, the unit represents an important allocation of resources to protect the privacy rights of more than 100 million smartphone owners in America. For Silicon Valley, a six-person team is barely a garage startup. Earlier this year, the unit issued a highly publicized report on mobile apps for kids; its conclusion was reflected in the subtitle, “Current Privacy Disclosures Are Disappointing.” It was a thin report, however. Rather than actually checking the personal data accessed by the report’s sampling of 400 apps, the [17 page] report just looked at whether the apps disclose, on the sites where they are sold, the types of personal data that would be accessed and what the data would be used for.
As Maass notes, “The agency can take companies to court, but its overworked lawyers don’t really have the time to go the distance against the bottomless legal staffs in Silicon Valley.” Like an SEC pushed by budget constraints to pursue mere “cost of doing business” settlements, the FTC too often has to capitulate to symbolic penalties with dubious deterrent effect.
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August 23, 2012 at 9:25 am
Posted in: Antitrust, Consumer Protection Law, Cyberlaw
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Stanford Law Review Online: Evaluating Merger Enforcement During the Obama Administration
posted by Stanford Law Review
The Stanford Law Review Online has just published an Essay by Jonathan Baker and Carl Shapiro entitled Evaluating Merger Enforcement During the Obama Administration. Professors Baker and Shapiro take issue with Daniel Crane’s assertions in his Essay of July 18:
We recently concluded that government merger enforcement statistics “provide clear evidence that the Obama Administration reinvigorated merger enforcement, as it set out to do.” Three weeks later, in an article published in the Stanford Law Review Online, Professor Daniel A. Crane reached the opposite conclusion, claiming that “[t]he merger statistics do not evidence ‘reinvigoration’ of merger enforcement under Obama.”
Crane is simply wrong. The data regarding merger enforcement unambiguously support our conclusion and cannot reasonably be read to support Crane’s assertions. Crane’s conclusion regarding merger enforcement is inaccurate because he relies upon flawed metrics and overlooks or misinterprets other important evidence.
They conclude:
Our analysis of merger enforcement at the DOJ during the George W. Bush Administration—based on the enforcement statistics and more—showed that it was unusually lax and in need of reinvigoration. It is too early to reach a comparably definitive conclusion about merger enforcement at the DOJ during the Obama Administration, but nothing in Daniel Crane’s article seriously challenges our interpretation of the preliminary data as demonstrating that the necessary reinvigoration has taken place.
Read the full article, Evaluating Merger Enforcement During the Obama Administration by Jonathan Baker and Carl Shapiro, at the Stanford Law Review Online.
August 21, 2012 at 9:30 am
Tags: Antitrust, bush administration, executive branch, FTC, merger enforcement, mergers, Obama administration, Politics
Posted in: Antitrust, Empirical Analysis of Law, Law Rev (Stanford), Politics
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Has the Obama Justice Department Reinvigorated Antitrust Enforcement?
posted by Stanford Law Review
The Stanford Law Review Online has just published an Essay by Daniel Crane entitled Has the Obama Justice Department Reinvigorated Antitrust Enforcement?. Professor Crane assesses antitrust enforcement in the Obama and Bush administrations using several empirical measures:
The Justice Department’s recently filed antitrust case against Apple and several major book publishers over e-book pricing, which comes on the heels of the Justice Department’s successful challenge to the proposed merger of AT&T and T-Mobile, has contributed to the perception that the Obama Administration is reinvigorating antitrust enforcement from its recent stupor. As a candidate for President, then-Senator Obama criticized the Bush Administration as having the “weakest record of antitrust enforcement of any administration in the last half century” and vowed to step up enforcement. Early in the Obama Administration, Justice Department officials furthered this perception by withdrawing the Bush Administration’s report on monopolization offenses and suggesting that the fault for the financial crisis might lie at the feet of lax antitrust enforcement. Even before the AT&T and Apple cases, media reports frequently suggested that antitrust enforcement is significantly tougher under President Obama.
For better or worse, the Administration’s enforcement record does not bear out this impression. With only a few exceptions, current enforcement looks much like enforcement under the Bush Administration. Antitrust enforcement in the modern era is a technical and technocratic enterprise. Although there will be tweaks at the margin from administration to administration, the core of antitrust enforcement has been practiced in a relatively nonideological and nonpartisan way over the last several decades.
He concludes:
Two points stressed earlier should be stressed again: (1) statistical measures of antitrust enforcement are an incomplete way of understanding the overall level of enforcement; and (2) to say that the Obama Administration’s record of enforcement is not materially different than the Bush Administration’s is not to chide Obama for weak enforcement. Rather, it is to debunk the claims that antitrust enforcement is strongly dependent on politics.
This examination of the “reinvigoration” claim should not be understood as acceptance that tougher antitrust enforcement is always better. Certainly, there have been occasions when an administration would be wise to ease off the gas pedal. At present, however, there is a high degree of continuity from one administration to the next.
Read the full article, Has the Obama Justice Department Reinvigorated Antitrust Enforcement? by Daniel Crane, at the Stanford Law Review Online.
July 18, 2012 at 10:15 am
Tags: Antitrust, Corporate Law, law enforcement, Obama administration
Posted in: Antitrust, Empirical Analysis of Law, Law Rev (Stanford), Politics
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Automated Arrangement of Information: Speech, Conduct, and Power
posted by Frank Pasquale
Tim Wu’s opinion piece on speech and computers has attracted a lot of attention. Wu’s position is a useful counterpoint to Eugene Volokh’s sweeping claims about 1st Amendment protection for automated arrangements of information. However, neither Wu nor Volokh can cut the Gordian knot of digital freedom of expression with maxims like “search is speech” or “computers can’t have free speech rights.” Any court that respects extant doctrine, and the normative complexity of the new speech environment, will need to take nuanced positions on a case-by-case basis.
Digital Opinions
Wu states that “The argument that machines speak was first made in the context of Internet search,” pointing to cases like Langdon v. Google, Kinderstart, and SearchKing. In each scenario, Google successfully argued to a federal district court that it could not be liable in tort for faulty or misleading results 1) because it “spoke” the offending arrangement of information and 2) the arrangement was Google’s “opinion,” and could not be proven factually wrong (a sine qua non for liability).
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June 25, 2012 at 12:40 pm
Posted in: Antitrust, Constitutional Law, Consumer Protection Law, First Amendment, Google & Search Engines, Google and Search Engines, Privacy, Technology
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Network Non-Discrimination and Quality of Service
posted by Barbara van Schewick
Over the past ten years, the debate over “network neutrality” has remained one of the central debates in Internet policy. Governments all over the world have been investigating whether legislative or regulatory action is needed to limit the ability of providers of Internet access services to interfere with the applications, content and services on their networks.
In addition to rules that forbid network providers from blocking applications, content and services, rules that forbid discrimination are a key component of any network neutrality regime. Non-discrimination rules apply to any form of differential treatment that falls short of blocking. Policy makers who consider adopting network neutrality rules need to decide which, if any, forms of differential treatment should be banned. These decisions determine, for example, whether a network provider is allowed to provide low-delay service only to its own streaming video application, but not to competing video applications; whether network providers can count only traffic from unaffiliated video applications, but not their own Internet video applications towards users’ monthly bandwidth cap; or whether network providers can charge different Internet access charges depending on the application used, independent of the amount of traffic created by the application.
June 13, 2012 at 4:03 pm
Tags: network neutrality, Open Internet rules, quality of service
Posted in: Antitrust, Cyberlaw, Innovation, Uncategorized
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Academic Biases (Regarding Google, and Beyond)
posted by Frank Pasquale
Yesterday a vice president of the European Commission announced preliminary conclusions regarding the EU’s antitrust investigation into Google. The EC has warned Google to “change or face fines,” as Alex Barker puts it, noting “possible antitrust problems in how Google favours its own products in search results.” I cannot predict exactly how far US cases will go, or if the EC’s efforts to guide the development of the search market will succeed. (I have offered some preliminary thoughts at Danny Sokol’s excellent symposium on Google at the Antitrust & Competition Law Blog.) However, I applaud the EC for its attention to the matter.
After attending the “Regulating Search” conference in 2005, I spent some of my early academic career trying to understand whether complaints about Google had merit. I was publishing on the matter in 2006, and have continued to do so. When I started writing about this topic, some established scholars mocked my interest in it. After I published Federal Search Commission? with a co-author, one IP professor loudly scoffed that “maybe we need a federal map commission” at a conference where the restaurant location was unclear. Establishment voices who have fought for net neutrality looked with disdain or bored incomprehension at someone who dared to question a Silicon Valley darling. One scholar even threw a draft of mine on the table at a faculty talk, loudly muttered “This is not scholarship!,” and boldly predicted that Google’s dominance of search couldn’t last for more than a few years. (That was in 2008.)
I don’t know whether the EU’s actions today will lead these skeptics to a different view of my work, or to condemnations of creeping socialism. But I do think the EU has now confirmed that it was appropriate for a legal scholar to raise the types of questions I have posed over the past six years. They deserved to be part of the agenda of internet law.
This is a somewhat roundabout (and hopefully not too self-pitying) response to Frank Bowman’s earlier post on the role of outside funding in academic research (and particularly Eugene Volokh’s intervention regarding First Amendment protection for search results). Like Bowman, I worry about the effect of outside money on research. However, I think it is often the academy’s own biases and presumptions that most threaten independent thought.
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May 22, 2012 at 10:16 am
Posted in: Antitrust, Google & Search Engines, Law and Inequality
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The Right to Data Portability (RDP) as a Per Se Anti-tying Rule
posted by Peter Swire
Yesterday I gave a presentation on “The Right to Data Portability: Privacy and Antitrust Analysis” at a conference at the George Mason Law School. In an earlier post here, I asked whether the proposed EU right to data portability violates antitrust law.
I think the presentation helped sharpen the antitrust concern. The presentation first develops the intuition that consumers should want a right to data portability (RDP), which is proposed in Article 18 of the EU Data Protection Regulation. RDP seems attractive, at least initially, because it might prevent consumers getting locked in to a software platform, and because it advances the existing EU right of access to one’s own data.
Turning to antitrust law, I asked how antitrust law would consider a rule that, say, prohibits an operating system from being integrated with software for a browser. We saw those facts, of course, in the Microsoft case decided by the DC Circuit over a decade ago. Plaintiffs asserted an illegal “tying” arrangement between Windows and IE. The court rejected a per se rule against tying of software, because integration of software can have many benefits and innovation in software relies on developers finding new ways to put things together. The court instead held that the rule of reason applies.
RDP, however, amounts to a per se rule against tying of software. Suppose a social network offers a networking service and integrates that with software that has various features for exporting or not exporting data in various formats. We have the tying product (social network) and the tied product (module for export or not of data). US antitrust law has rejected a per se rule here. The EU proposed regulation essentially adopts a per se rule against that sort of tying arrangement.
Modern US and EU antitrust law seek to enhance “consumer welfare.” If the Microsoft case is correct, then a per se rule of the sort in the Regulation quite plausibly reduces consumer welfare. There may be other reasons to adopt RDP, as discussed in the slides (and I hope in my future writing). RDP might advance human rights to access. It might enhance openness more generally on the Internet. But it quite possibly reduces consumer welfare, and that deserves careful attention.
May 17, 2012 at 3:56 pm
Tags: Antitrust, Privacy, right to data portability
Posted in: Administrative Law, Antitrust, Cyberlaw, Economic Analysis of Law, Privacy (Consumer Privacy), Web 2.0
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Introduction: Symposium on Infrastructure: the Social Value of Shared Resources
posted by Brett Frischmann
I am incredibly grateful to Danielle, Deven, and Frank for putting this symposium together, to Concurring Opinions for hosting, and to all of the participants for their time and engagement. It is an incredible honor to have my book discussed by such an esteemed group of experts.
The book is described here (OUP site) and here (Amazon). The Introduction and Table of Contents are available here.
Abstract:
Shared infrastructures shape our lives, our relationships with each other, the opportunities we enjoy, and the environment we share. Think for a moment about the basic supporting infrastructures that you rely on daily. Some obvious examples are roads, the Internet, water systems, and the electric power grid, to name just a few. In fact, there are many less obvious examples, such as our shared languages, legal institutions, ideas, and even the atmosphere. We depend heavily on shared infrastructures, yet it is difficult to appreciate how much these resources contribute to our lives because infrastructures are complex and the benefits provided are typically indirect.
The book devotes much-needed attention to understanding how society benefits from infrastructure resources and how management decisions affect a wide variety of private and public interests. It links infrastructure, a particular set of resources defined in terms of the manner in which they create value, with commons, a resource management principle by which a resource is shared within a community.
Infrastructure commons are ubiquitous and essential to our social and economic systems. Yet we take them for granted, and frankly, we are paying the price for our lack of vision and understanding. Our shared infrastructures—the lifeblood of our economy and modern society—are crumbling. We need a more systematic, long-term vision that better accounts for how infrastructure commons contribute to social welfare.
In this book, I try to provide such a vision. The first half of the book is general and not focused on any particular infrastructure resource. It cuts across different resource systems and develops a framework for understanding societal demand for infrastructure resources and the advantages and disadvantages of commons management (by which I mean, managing the infrastructure resource in manner that does not discriminate based on the identity of the user or use). The second half of the book applies the theoretical framework to different types of infrastructure—e.g., transportation, communications, environmental, and intellectual resources—and examines different institutional regimes that implement commons management. It then wades deeply into the contentious “network neutrality” debate and ends with a brief discussion of some other modern debates.
Throughout, I raise a host of ideas and arguments that probably deserve/require more sustained attention, but at 436 pages, I had to exercise some restraint, right? Many of the book’s ideas and arguments are bound to be controversial, and I hope some will inspire others. I look forward to your comments, criticisms, and questions.
April 24, 2012 at 3:05 pm
Posted in: Administrative Law, Antitrust, Bright Ideas, Cyberlaw, Economic Analysis of Law, First Amendment, Google & Search Engines, Infrastructure Symposium, Innovation, Intellectual Property, Legal Theory, Media Law, Property Law, Technology, Uncategorized
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Stanford Law Review Online: The 2011 Basketball Lockout
posted by Stanford Law Review
The Stanford Law Review Online has just published an Essay by William B. Gould IV entitled The 2011 Basketball Lockout: The Union Lives to Fight Another Day—Just Barely. Gould, a former chairman of the National Labor Relations Board, provides a succinct postmortem on the 2011 lockout:
The backdrop for the 2011 negotiations was the economic weapon once regarded as a dirty word in the lexicon of American labor-management relations—the lockout. This economic weaponry, endorsed by the Supreme Court since 1965, became the flavor of the two prior decades; baseball flirted with it in 1990, basketball in 1995 and 1999. One of hockey’s lockouts even resulted in the cancellation of the entire 2004-05 season. The lockout again was utilized in 2011 by recently peaceable football as well as by basketball. The owners gravitated towards the lockout tactic because in the event of strike (protesting changes in conditions in employment, which proved ineffective), players who crossed the union picket line could play and still sue in antitrust simultaneously. The lockout put more pressure on the players to settle. . . . The union now was represented by David Boies, who had only a few months before represented the NFL and successfully deprived that union of its only effective antitrust remedy—i.e., an injunction against the lockout, which would have required the owners to open the camps in early summer. Thus the basketball union now would not pursue the injunction remedy, notwithstanding the persuasiveness of Judge Bye’s dissenting opinion in the football case. Of course, Boies would have met himself coming around the corner if he argued for it in basketball.
He concludes:
Nonetheless, even though the union was stripped of its most effective antitrust remedy, litigation seems to have moved the parties together. It most certainly called the NBA’s bluff, in that the league’s regressive or inferior option was quickly forgotten. True, the NBA obtained givebacks that are estimated to be worth more than $300 million. Not only did it win on revenue sharing with the players—the players will possess between 49% and 51% as opposed to 57%—but more stringent luxury tax penalties for violators also have been instituted. As National Basketball Players Association Executive Director Billy Hunter said, the latter element constitutes the “harshest element of the new system.” At the same time, guaranteed contracts were preserved, restricted free agents will benefit from the reduction of the so-called “match period” when teams may match competing offers from seven to three days, which may encourage bidding on these players. The cap remains soft in that the so-called incumbent “Bird” players (named for Celtics superstar Larry Bird) may exceed the cap and have more expansive increases and lengths of contracts than other players. A so-called “amnesty” for bad contracts was permitted, in that even though the contracts must be paid, a player on each club may be waived and his salary not counted towards his team’s cap. What appeared to be a rout of the players in November emerged as a reasonable face-saving compromise.
Read the full article, The 2011 Basketball Lockout: The Union Lives to Fight Another Day—Just Barely by William B. Gould IV, at the Stanford Law Review Online.
Note: Updated quotation.
January 25, 2012 at 1:34 pm
Tags: Antitrust, labor law, lockout, NBA, professional sports, strike, unions
Posted in: Antitrust, Current Events, Law Rev (Stanford), Supreme Court
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Expensive Glasses: Monopol-eye?
posted by Frank Pasquale
Why are eyeglasses so expensive? Take a listen to this podcast. If you’re like me, you’ll learn a lot about how to save on your next pair. And there’s a lesson or two about the failures of contemporary antitrust law. Finally, it mentioned a company called WarbyParker.com, which apparently not only has reasonable prices, but also gives away a free pair to the needy for every pair it sells.
September 23, 2011 at 9:56 am
Posted in: Antitrust
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Health Reform and Accountable Care Organizations
posted by Frank Pasquale
Critics of the ACA have frequently complained that the legislation does not do enough to improve quality or to cut costs. However, the Act did create incentives for new alliances of hospitals and doctors, known as “Accountable Care Organizations.” Now provider lobbies are demanding some pretty dramatic changes to health care regulation in order to implement ACOs. In this post, I want to explain what ACOs are, and why they challenge traditional health care regulatory models.
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November 22, 2010 at 12:28 pm
Posted in: Administrative Law, Antitrust, Health Law
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Future of the Internet Symposium: Preserving Open Space for User Innovation
posted by Salil Mehra
First off, thanks to Concurring Opinions and Danielle Citron for hosting this online symposium on Jonathan Zittrain’s The Future of the Internet – and How to Stop it. Before I launch into my own thoughts, I want to add my own version of the praise that the book has already won. It is an immensely readable work that succeeds in showing us where we’ve been, how we got to where we are, and the steps to take to avoid going where we’d rather not be.
I have three brief points, involving a comparison with Japan, some thoughts about competition, consumer protection and innovation, and finally, a somewhat different take on the lessons of Wikipedia.
This symposium is incredibly timely, particularly given the concern in recent weeks about the Google/Verizon agreement. In TFOTI, Zittrain highlights the risks that threaten the Internet’s future, and explains how the net neutrality debate is in some ways a mismatch for those risks. For example, he points out that the migration from the Internet to, in his words, tethered appliances like the iPhone and TiVo, ultimately provide an end-run around net neutrality on the Internet (pp. 177-185). Accordingly, he argues that preserving generativity is a better-tailored principle.
The lead in The Economist this week also takes on the Google/Verizon agreement, and critiques net neutrality from a different angle calling America’s “vitriolic net-neutrality debate” “a reflection of the lack of competition in broadband access.” If you’re reading this symposium, you probably already know, possibly because you read this, that in many other industrialized countries incumbent telcos were forced years ago – and not just in a superficial way – to open up wholesale broadband to competitors.
I’m in Tokyo this academic year thanks to Temple’s long reach across the globe and to my gracious hosts at Keio University Law School. I’ve been travelling to Japan repeatedly since the late 1980s, and one of the changes I’ve been struck by is how a country that in the 1990s was generally held to be well behind the U.S. in telecommunications now seems ahead in broadband and mobile Internet. Read the rest of this post »
September 7, 2010 at 7:32 pm
Posted in: Antitrust, Consumer Protection Law, Cyberlaw, Intellectual Property, Symposium (Future of Internet), Wiki
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On the Colloquy: The Credit Crisis, Refusal-to-Deal, Procreation & the Constitution, and Open Records vs. Death-Related Privacy Rights
posted by Northwestern University Law Review
This summer started off with a three part series from Professor Olufunmilayo B. Arewa looking at the credit crisis and possible changes that would focus on averting future market failures, rather than continuing to create regulations that only address past ones. Part I of Prof. Arewa’s looks at the failure of risk management within the financial industry. Part II analyzes the regulatory failures that contributed to the credit crisis as well as potential reforms. Part III concludes by addressing recent legislation and whether it will actually help solve these very real problems.
Next, Professors Alan Devlin and Michael Jacobs take on an issue at the “heart of a highly divisive, international debate over the proper application of antitrust laws” – what should be done when a dominant firm refuses to share its intellectual property, even at monopoly prices.
Professor Carter Dillard then discussed the circumstances in which it may be morally permissible, and possibly even legally permissible, for a state to intervene and prohibit procreation.
Rounding out the summer was Professor Clay Calvert’s article looking at journalists’ use of open record laws and death-related privacy rights. Calvert questions whether journalists have a responsibility beyond simply reporting dying words and graphic images. He concludes that, at the very least, journalists should listen to the impact their reporting has on surviving family members.
September 5, 2010 at 1:15 pm
Tags: Antitrust, Constitutional Law, copyright, discrimination, financial crisis, free speech, Intellectual Property, Privacy, trademark
Posted in: Antitrust, Bioethics, Civil Rights, Constitutional Law, Corporate Finance, First Amendment, Intellectual Property, Privacy, Securities, Securities Regulation
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Here Comes FinReg
posted by Frank Pasquale
Via Ezra Klein’s Wonkbook (definitely one of my favorite morning emails), a variety of takes on what’s in the financial reform bill:
1. From Deloitte’s 12-page summary:
Because the new U.S. law is complex, it can be helpful to remind ourselves that its underlying purpose is relatively simple and has two powerful strands: 1. ‘De-risk’ the financial system by constraining individual organizations’ risk-taking activities and capturing a broader set of organizations’, including the so-called “shadow” banking system, in the regulatory net 2. Enhance consumer protections. . . .For example, the need for “arm’s-length” swap desk affiliates combined with the move from over- the-counter to exchange trading for derivatives, tighter constraints on leverage and risk-taking, and higher liquidity requirements imply lower profit margins in future from those activities.
Some estimates I’ve seen have estimated the profit margins might be around 15% lower.
2. Simon Johnson on the Kanjorski Amendment as a “new kind of antitrust:”
Effective size caps on banks were imposed by the banking reforms of the 1930’s, and there was an effort to maintain such restrictions in the Riegle-Neal Act of 1994. But all of these limitations fell by the wayside during the wholesale deregulation of the past 15 years. Now, however, a new form of antitrust arrives – in the form of the Kanjorski Amendment, whose language was embedded in the Dodd-Frank bill. Once the bill becomes law, federal regulators will have the right and the responsibility to limit the scope of big banks and, as necessary, break them up when they pose a “grave risk” to financial stability.
July 15, 2010 at 9:42 am
Posted in: Antitrust, Consumer Protection Law, Corporate Finance, Corruption, Current Events, Economic Analysis of Law, Securities, Securities Regulation
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Breaking Up Behemoth Banks
posted by Lawrence Cunningham
Thanks to banking industry mistakes and government’s orchestration of its rescue, the country now has ten banks that together command some $10 trillion in assets, roughly equal to nearly 70% of the country’s gross domestic product. Pending legislation would break those up into a total of about 36, each still commanding about $285 billion in assets apiece—larger than the next largest bank is now.
That break up would eliminate the continuing threat to the US economic and political system posed by banks deemed so big that government lavishes trillions in aid to avoid letting them fail—at enormous cost to ordinary citizens and the real economy. It is by far the cleanest and most reliable solution to the manifest havoc massive banks wreak, not addressable by any pending technocratic tinkering like better regulation or capital requirements.
The break-up idea is not as radical as it is controversial, due to foes of ex ante legal constraints on private power. All passage of the legislation would mean is substantially a return to the scale and distribution of the US banking system as of the mid-1990s, when no bank commanded assets exceeding more than a few percent of GDP. In important part, as the lists below suggest, the conglomerate mergers of the past two decades that caused this massive concentration of economic and political power would be reversed. Read the rest of this post »
May 5, 2010 at 1:49 pm
Posted in: Antitrust, Consumer Protection Law, Corporate Finance, Current Events
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Banks, Bankers, and the New Political Economy
posted by Frank Pasquale
As post-mortems of the financial crisis proliferate, it’s helpful to keep an eye on some foundational causes. Michael Lewis recently commented that “the people who squandered the most money paid themselves the most”—and continue to do so. We’ve all heard about agency problems, but rarely are they as crisply illustrated as in this post by James Kwak:
[The hedge fund] Magnetar made the Wall Street banks look like chumps. [In] one deal . . . Magnetar put up $10 million in equity and then shorted $1 billion of AAA-rated bonds issued by the CDO. It turned out that in this deal, JPMorgan Chase, the investment bank, actually held onto those AAA-rated bonds and eventually took a loss of $880 million. This was in exchange for about $20 million in up-front fees it earned.
But who’s the chump? Sure, JPMorgan Chase the bank lost $880 million. But of that $20 million in fees, about $10 million was paid out in compensation (investment banks pay out about half of their net revenues as compensation), much of it to the bankers who did the deal. JPMorgan’s bankers did just fine, despite having placed a ticking time bomb on their own bank’s balance sheet. Here’s the second lesson: the idea that bankers’ pay is based on their performance is also hogwash. (The idea that their pay is based on their net contribution to society is even more absurd.)
I was recently at a conference on “Too Big to Fail” banks organized by Zephyr Teachout, and several experts explained how the tail of massive compensation was wagging the dog of societal capital allocation. William K. Black‘s theory of “control fraud” is one of many efforts to illuminate the persistent conflicts of interest between banks, bankers, and investors, but one needn’t designate any of these conflicts “fraudulent” in order to see how socially destructive they have become. Rather, pulling back to see the big picture—from the lens of political economy—illuminates the key drivers of the crisis. As Kwak notes, “the crisis was no accident: it was the result of the financial sector’s ability to use its political power to engineer a favorable regulatory environment for itself.” Thinkers across the political spectrum—from Kling to Kuttner—can recognize the critical role of political connectedness in driving bankers’ compensation.
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April 13, 2010 at 11:42 pm
Posted in: Antitrust, Corporate Finance, Current Events, Economic Analysis of Law, Philosophy of Social Science, Politics
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