But as Matt Asay at Cnet.com pointed out this week, competition is alive in well in the database market. Amazon recently announced that it will launch its own version of the MySQL software, proving that the EC’s probe is a dead-end. By gaining MySQL, Oracle would gain a foothold in a new market of database users (web-based and small businesses). Asay’s conclusion:

Oracle’s bid for Sun/MySQL, in other words, isn’t about squelching competition, but rather about enhancing it. Amazon’s RDS proves that strong, viable competitors to MySQL can arise from within the MySQL community, which disproves the EC’s argument that Oracle’s control of MySQL will somehow crush competition.

Clearly, the case against the Sun-Oracle deal is without merit. The EC needs to quit targeting American’s most innovative companies.

Intel gives them money and rebates to use Intel chips. Think about that; they don’t have to pay as much, and get paid themselves, to use Intel chips rather than AMD ones.

I like it when I get rebates and cash, myself, but I’m just crazy.

Let’s remember what abusive monopoly power is supposed to mean: reduced quantity sold, higher prices, suffering consumers. They’re “suffering” all right, with a plethora of wildly popular sub-$400 netbooks, thanks to a complex and efficient marketplace in which Intel plays an important role, along with all its business partners.

Intel does not enjoy government protection of its market share, nor does it operate in a vacuum, immune from discipline if if its rebates and “bribes” (note the language used by enforcers!) are somehow bad deals for consumers or computer makers. Intel has upstream suppliers, and downstream business customers that can revolt against and thereby discipline any monopolistic behavior, or exclusive arrangements that are unsatisfactory. If the downstream partner doesn’t make a sale, neither does Intel. If the downstream partner’s hardward sales suffer because of Intel, it can retaliate. Thus as far as abusive behavior is concerned, the market is self policing. The only thing that could prevent computer makers themselves from ganging up against Intel abuses would be the antitrust laws themselves.

Antitrust, more often than a consumer-protection phenomenon, is often protectionism. In this case, government bodies are deciding we have to buy from AMD and not Intel, and AMD gets protected from the ravages of competition. Consumers lose.

As far as competing chipmakers are concerned, they of course have no fundamental right to Intel’s customers. However they do have a right to make their own deals with computer makers more satisfactory than Intel’s. Opportunities abound in PCs, laptops, and netbooks; and moreso in handhelds that are gaining appeal and yet don’t rely on Intel.

Furthermore, why should AMD be the beneficiary of antitrust interference? Most chips are not found in PCs at all, but in vehicles and in appliances and handheld devices and gadgets of all sorts. You’ll find chips in new automobiles, coffeemakers, rice cookers, cell phones, watches, calculators, the pump at the gas station. They flush the toilet for you at the airport and turn on the sink; you don’t have to touch a thing thanks to the microchip. These might want a piece of the PC action; it’s a rhetorical and nonsense question, but why not forbid AMD from getting the market share and give it to these guys?

As particle physicist Michio Kaku noted in his remarkable book Visions, “By 2020, microprocessors will likely be as cheap and plentiful as scrap paper, scattered by the millions into the environment, allowing us to place intelligent systems everywhere.” Chips in “Wintel” desktop computers increasingly constitute just one subset of a vast semiconductor market. And guess what; fewer and fewer of the chips in non-PC devices are Intel’s. The trajectory of the marketplace is hyper-competitive, and there is no need for this antitrust action to warp things.

Some of us might be more impressed if Cuomo presented a thoughtful critique of governmental licensing and protection in his own legal industry, so that paralegals and other professionals could compete with monopoly lawyers. Now there is a realm of genuine monopoly power.

Now, if the antitrust lawyers are correct, and the CPU market is uncompetitive and needs government intervention, then there must be some barriers to entry that are keeping other competitors out of the market, allowing Intel to reap outrageous profits. However, if Nvidia can and does enter the processor market and supply an alternative processor product line, where would that leave the antitrust argument?

It would seem fair to speculate that file sharing, contrary to the both the MPAA’s and the RIAA’s earlier claim, has actually helped to drive the growth of the internet, although that’s beside the point. While it’s great to see a big content industry on our side of the Net Neut debate, the MPAA’s stand is little more than a thinly-veiled attempt at regulatory capture. The MPAA’s history of rallying against new technology (”the VCR will destroy the industry!”) is evidence enough of their insincerity. Unfortunately, there are real arguments to be made against government regulation of the pipes and the airwaves, and the phony arguments put forth by the film and music studios will only cause Neutrality supporters to conflate economic reasoning with sheer nonsense.

The new client also has a feature that will enable users to stop all downloads if they approach a certain gigabyte limit (allowing users whose ISPs impose monthly bandwidth caps to avoid expensive overage charges). BitTorrent creator Bram Cohen made the following statement in a 2007 interview with TorrentFreak:

“ISPs have to invest in making their networks better and faster rather than stifling applications which consumers use and love. That’s just bad marketing and customer service, especially given the competition which exists in the broadband industry and consumer focus on network neutrality.”

Mr. Cohen’s statement, taken along with his actions, serves as a clarion voice of reason in a debate full of utter insanity. The Net Neutrality Debate of 2009 has thus far been rife with doublespeak, corporate giants taking potshots at each other, and über-elite technophiles and their sanctimonious ideas of what Americans ought to want, (as well as a few tangentially relevant arguments on behalf of women and minorities). BitTorrent has instead chosen to take the proactive path and work with the ISPs to solve the problem of congested networks and provide a better experience for its users. Net Neutrality advocates should note that no government bureaucrat forced them to make any changes. Instead, BitTorrent is leading by example, doing what the other content and network companies ought to be doing. A system that promotes voluntary cooperation between companies is vastly preferable to an inflexible government regulatory regime.

Two weeks later, the SSA sent a letter to CMS saying that Studnitz had in fact passed the background check, and that an “unspecified” computer error caused the false report. Unfortunately, CMS is under no legal obligation to re-hire her. In this tight labor market, she’s been having a rough time finding employment and has fallen behind on her mortgage payment.

A spokesperson for the FBI said that they have no idea how often such mistakes are made, because they don’t keep track of their error rate. Is it so unreasonable to expect that a government agency charged with collecting and maintaining data about its citizens keeps track of metrics like accuracy and error rate? Any responsible private company or nonprofit outfit would want to know these sort of performance statistics.

Government failure is nothing new; it’s been well-documented on OpenMarket before. Instances of public sector incompetence like this should have everyone worried as the government gets ready to take over the health care sector. If the government can’t accurately keep track of its own criminal data, why on earth would we want to trust them with private health data? When dealing with matters of life and death, or aggressive treatment vs. palliative care, this kind of “unspecified” error could have serious consequences. How will we hold governmental data-keepers accountable?

Economists have known for a long time that when you tax something, you get less of it. Apparently some state legislators want less commerce in their states.

“The internet is the last truly open public marketplace. Its openness is the key to its efficiency and success. Not all public spaces need to be regulated spaces. Indeed, federal regulation has a long history of making the market less efficient.”

Rep. Blackburn’s choice to use word “open” is a little confusing, given the meaning of the term in the net neut debate. In this context, “open” should probably be taken to mean “unregulated” or “free of government.” But other than that, I couldn’t have said it better myself. An open (non-discriminating) internet architecture may or may not be the best model. Either way, it should be consumers and the network providers making that decision, not unelected government officials. The FCC needs to back off and let the internet continue to evolve free of regulatory constraints.

With Google joining the ranks of Nokia, Research-in-Motion, Apple, and Microsoft developing in mobile phone operating systems, the big four wireless carriers signing on to offer Android phones within the coming year, the deployment of 4G networks slated to take place in 2010, mounting consumer anticipation for Motorola’s soon-to-be-released Droid, and reported rumors that Apple is about to end its exclusive distribution deal with AT&T, it’s difficult to take seriously critics’ claims that a lack of competition and carrier-device exclusivity contracts are restricting consumer choice and keeping prices prohibitively high.

Today I’m pleased to introduce ‘The Internet Freedom Act of 2009’ that will keep the Internet free from government control and regulation. It will allow for continued innovation that will in turn create more high-paying jobs for the millions of Americans who are out of work or seeking new employment. Keeping businesses free from oppressive regulations is the best stimulus for the current economy.

Sen. McCain’s efforts to keep the government’s hands off the ‘net are a breath of fresh air in this period of massive government expansion. Yet I can’t help but wish that such a bill might carry more weight if the its sponsor this didn’t already have a reputation for being technologically illiterate.

For further reading, check out CEI’s take on the FCC’s proposed Net Neutrality rules.

OK seriously, read our critique of yesterday’s FCC vote to impose what is “not neutrality” by any stretch of the imagination.

The guidelines require people to disclose online if they have what the FTC vaguely defines as “material connections” with the sellers of a product or service. This could include getting free samples on which they base comments or reviews. Bloggerl objected to the double standard that exempts traditional media from the rules - many newspapers, magazines and broadcasters accept free books and other products for their reviewers.

The FTC’s aim is to go after advertisers, but its vague definitions don’t offer much clarity. Further complicating the issue is the FTC’s intention to handle violations on a selective, case-by-case basis. Laws ought to be clear and enforcable, not ambiguous and imposed at the whim of some unelected government regulator. Either all bloggers who break the rules are criminals, or none of them are.

Netizens should recognize how unnecessary these regulations are. Bloggers who care about their reputations already practice honesty and transparency. Bloggers who don’t disclose their commercial ties risk alienating their readers and losing traffic. This relationship between content creators and users is what makes social media self-regulating. Citizens don’t need the government to clean up the Internet’s garbage.

Commissioner Julia Levin claims the ban “will actually save consumers money and help the California economy grow and create new clean, sustainable jobs.”

It is easy to imagine the ban costing tv manufacturing jobs; less so the jobs that would take their place.

Fortunately, the ban isn’t terribly enforceable. Consumers can just drive to Arizona, Nevada, or Oregon to get the kind of tv they want.

A final point on semantics: what does “sustainable” even mean, anyway? It is a meaningless buzz term, right up there with “synergy” and “paradigm.” This decade’s equivalent of “social justice.”

If anything, use of the word “sustainable” signals that a person knows not of what they speak. If you’re unable to defend a proposal on the merits, just use fashionable buzz words that poll well.

This marks the third time in the last sixty years that IBM has had the antitrust dogs on its trail. In 1956 the government forced the company to begin selling (rather than leasing) its tabulating machines, as well as separate its data processing services into a subsidiary company. Then, in the late 1960s, the company was investigated again for allegedly attempting to monopolize the market for business computing, a charge that was dropped in 1983. Today, IBM is accused of anticompetitive business practices within the mainframe market. T3, a rival company that until recently resold used mainframe computers, filed a civil suit against IBM for refusing to license its newest version of its software to customers using competitors’ hardware.

The problem with government antitrust action in the tech industry is that it’s difficult to forecast the future of computing in the next ten or twenty years. The DOJ’s prior efforts against IBM couldn’t foresee that by the 1990s, IBM would become a company struggling to stay afloat. When computing shifted to a more distributed client/server model, demand for desktop computers took off while demand for mainframes shriveled, and IBM suffered unprecedented financial losses. After some restructuring, the company moved in a new direction in the last decade, focusing on software and business IT consulting. Currently, mainframe computers and service still accounts for about a quarter of their revenue.

Today, parallel processing systems are being adopted by more businesses for their computing needs. While server farms aren’t yet a perfect substitute for the large reliable mainframe computers, they are increasingly becoming a popular alternative. Software designed to emulate mainframe functionality is another option that’s gaining support in the marketplace. Meanwhile, IBM has been the leader in innovation for mainframe technology, having invested a lot of its resources into next-generation chips and software. It seems that the DOJ is less interested in IBM’s competitive practices, and more interested in its market share.

As Wayne Crews and I explain in the The American Spectator, it could prevent retailers from competing with each other on non-price grounds, such as customer service, product demonstrations, and advertising.

Some products, such as televisions or cars, have high information costs. Customers want to know a lot about these products before they commit to a purchase. They want to know what they’re getting. Try before they buy.

By forcing retailers to compete against each other to give customers more and better information and service, minimum price agreements can help consumers get what they want and boost sales at the same time.

This has implications for everything from Intel’s EU antitrust battle to newspapers’ free speech rights.

September 22, 2009

Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281

To the Editor:

Your article “Bad News for Broadband” (editorial, Sept. 22) hints at, but does not make, a key point: net neutrality proposals are driving a wedge between service providers like AT&T and content providers like Google.

Strange, is it not? Their interests are actually closely aligned. If AT&T upgrades its network, Google benefits from the increased bandwidth. If Google improves its products, AT&T benefits from increased demand for broadband.

Net neutrality proposals give companies the incentive to seek rents at each other’s expense when they could be benefitting from each other’s innovations instead. This must be music to the ears of lobbyists, but how sad for consumers.

Ryan Young
Fellow in Regulatory Studies
Competitive Enterprise Institute
Washington, D.C.

While it’s true that the actual speed a user experiences is often a fraction of the advertised speed, this isn’t secret knowledge. Internet companies oversubscribe their networks - that is, they put more people on one connection than what the router could handle at one time. Because, on average, not all customers will be requesting downloads from the network at the same time, ISPs are able to maximize efficiency and minimize the cost to consumers this way. When this pricing/advertising scheme became standard practice, the most common services were web browsing and email, two activities that do not rely on constant data downloading. Today we live in the era of online video games, streamable video, and internet telephony. However, most ISP’s already provide dedicated video and voice services (i.e. cable TV and phone). Online gamers are among the most technoligically-savvy consumers; presumably, they know what grade of internet access will suit their needs. While most consumers don’t know the exact data rate that they’re getting, they do know that 50 Mbits/second is faster and costs more than 2 Mbits/second, which is faster and generally more expensive than 784 Kbits/second. For less knowledgeable  users, “Broadband” is fast internet. Above a certain limit, it’s becomes difficult for humans to perceive the difference between “fast” and “faster.”

NAF’s demands for the disclosure of certain technical aspects are also unnecessary. Minimum reliability is problematic because some broadband technologies are less reliable than others. For example, satellite internet connections are known to be affected by interference from weather and other unpredictable environmental conditions. Maximum latency can be affected by many different factors, enough that giving a “maximum” amount of time (even if it only occurs 1% of the time) could force companies to cast their own service not in a “realistic” light, but in a poor light. A service guarantee would mean that an ISP would refund customers for any amount of time that their connection is disrupted. In my personal experience, home broadband connections aren’t usually out for more than a few hours. A three-hour outage on a $49.99/month internet service would equal roughly a $0.21 refund per consumer.

The folks at NAF may mean well, but you know what they say about good intentions. Government micromanagement of ISPs’ advertising practices is another small step in the erosion of the real free nature of the ‘net.