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FDA Regulation of Internet Drug Advertising

by Greg Conko on August 20, 2009 · 1 comment

in Healthcare, Legal, Personal Liberty, Precaution & Risk, Regulation, Tech & Telecom

Today, CEI filed comments (link to PDF format) on a draft FDA guidance document advising prescription drug manufacturers on how to comply with regulations requiring the presentation of risk information in drug and medical device advertisements.  Although we disagree in principle with the current regulatory regime that requires almost encyclopedic presentation of risk information any time a manufacturer communicates the name of a drug and any mention of benefits in promotional materials, these comments focused on the FDA’s failure to treat the Internet and other new media as unique forms of communication that permit advertisers to present complete risk and benefit information in novel ways.

For example, in April, the FDA sent Notices of Violation to 14 drug manufacturers, informing them that their use of “sponsored links” to advertise prescription drugs on search engines such as Google were unlawful because the 70-character links did not present the same complete risk information required in conventional print advertisements.   But, due to constraints of the medium, sponsored links cannot accommodate all the required information, which in any event is accessible “one click” away on the landing page of the URL to which the sponsored link directs the searcher.

Ironically, the draft guidance document goes to great lengths to explain that FDA will examine the overall context of an ad’s presentation of information and the ‘net impression’ that reasonable consumers would get from an ad in order to ensure that the risk information is displayed in the appropriate way.  But, reasonable consumers don’t stop reading when they get search engine results.  Finding the landing page, where they’ll see the complete information FDA requires, is precisely what an Internet key word search is all about.  Consequently, we urged FDA reconsider this 1960s approach to drug ad regulation and bring its regime into the 21st Century.

You can read the press release here, and the entire comments document in PDF format here.

LibertyWeek 55: The Health Care Mob Is Coming!

by Richard Morrison on August 11, 2009

in CEI Projects, Podcast, Zeitgeist

Your host Richard Morrison welcomes back returning guest co-host Jeremy Lott and distinguished special guest David Mark of the Politico for Episode 55 of the LibertyWeek podcast. We start with reports of unrest over health care in the provinces, the U.S. Postal Service’s death spiral and the globe trotting ways of members of Congress. We continue with some sadly familiar antitrust murmurs regarding Apple and Google, a classic union corruption scandal out of New York City and some inspiring and heroic Paralympic News.

Fred Smith comments on Hillel’s piece

by Gary Howard on July 23, 2009

in Economy, Legal, Tech & Telecom

Below see CEI President Fred Smith’s comments on Jonathan Hillel’s piece in the San Jose Mercury News:

Hillel’s piece raises the very interesting question of whether the use of copyrighted materials must forever remain out of reach of most people.  The vast majority of creative works disappear from public view within a very short time of their release.   Few books or records are best sellers, many magazines (especially specialized magazines and journals) go out of existence in a decade or so.  Yet, the information and enjoyment value of these works might enrich millions of people in our new e-world.  Currently, the length of copyright and the reluctance of any one to devote the resources to bring them back into view mean they’ve been taken from the world’s “library” and “record/CD/DVD” shelves.

One way to think through this topic is to consider how real (as opposed to intellectual) property that has been “abandoned” is treated.  Land, for example, remains in the hands of the original owners unless (as is very often the case) no one has paid the property taxes for a number of years (in political jurisdictions without property taxes – there must be some – I have no idea what is done) and then these lands are sold to compensate the jurisdictions for the unpaid taxes.   In another case, individuals may open a financial account in some institutions and then for some reason (death, forgetfulness, small balance) simply abandon it.  Since some costs are incurred in maintaining such accounts, some private institutions will simply close the account and absorb whatever assets are in that account (airline loyalty programs, for example) although generally an effort is made to warn the user that such action is imminent.  Banks, being regulated and subsidized, take various approaches to what, in that context, are called “dormant accounts.”  After a period of inactivity, the banks post notices and, if no response is received, any funds (less management fees) are generally transferred to the state in which that account exists.  (Depending on state law, one may be able to recover the funds even after this transfer if adequate documentation can be provided.)  In some jurisdictions, however, the financial institution simply retains the funds and uses them as part of their reserves, while still honoring the obligation to repatriate the funds (perhaps with interest) if a qualified owner eventually turns up.

Whether the shift of “orphan” copyrights to the state or a creative party and, in either case, what obligations should exist if the owner does appear after some period of time, is an interesting question.  The Google “answer” seems both equitable and fair.

Hillel: Justice Department’s fear of Google book publishing is misplaced

by Gary Howard on July 23, 2009

in Economy, Features, Legal, Tech & Telecom, Zeitgeist

In yesterday’s San Jose Mercury News, CEI Policy Fellow Jonathan Hillel talks about the Justice Department’s antitrust investigation into the Google Search Settlement. Read it here.

Afraid of Google taking over the world? The Justice Department seems to be. It recently confirmed its antitrust investigation into the Google Book Search Settlement, citing “public comments expressing concern” as impetus for the inquiry. European Union officials have also started sniffing around.

These concerns are misguided, and outmoded antitrust regulation will stunt the growth of the emerging book search market.

Your Interests Are My Interests

by Cord Blomquist on March 11, 2009 · 2 comments

in Features, Regulation, Tech & Telecom, Zeitgeist

If you’re a fan of professional print journalism, you may be a little worried as of late.  Denver’s Rocky Mountain News just closed its doors after nearly 150 years in the news game.  Meanwhile the San Francisco Chronicle and the Seattle Post-Intelligencer are both on life support.  Even the New York Times, the largest newspaper in America, has cut its dividend and mortgaged its headquarters for $225 million.

It seems clear that the age of broadsheet newspapers is coming to an end, yet the web hasn’t come to its rescue.  Partially this is because ad rates from the old world of print were inflated to reflect the size of the total audience of the paper.  Online ads, by contrast, are micro-targeted at just those folks who advertisers believe are most likely to buy their products or services.  This makes sense, but the numbers involved are still staggering.

Consider that the New York Times online as of 2007 had about 13 million unique users.  Compare that to its weekday circulation of 1.1 million and its weekend circulation of about 1.6 million.  The Grey Lady’s web presence had tenfold the reach of the paper, yet online revenue made up only about 10% of the Times total revenue.  That means that a product with ten times the reach is getting only 1/10th of its old-school equivalent.

Long story short: the industry needs all the help it can get.

This is where Google comes in.  Along with being a giant in the search industry, Google is empowering a network of publishers to the tune of $4.2 billion in revenue passed to them in 2007—according to members of Google’s DC office, the 2008 numbers are even larger.  In fact, Google knows it is better to give than to receive—it gives more money out to its publisher network than it keeps for itself in profits.

Now this giant of monetization is introducing an even better advertising mechanism, Google’s “Interest Based Advertising” program.  IBA works by collecting information whenever a user visits a site that features a Google AdSense network ad.  This information is turned into a sort of a profile that helps to focus ads on a per-user basis, rather than just basing that ad on the content of the web page alone.

This means that advertisers will have a more effective means of getting their message out online—news that should be music to the faltering print news industry’s ears, not to mention their loyal readers.

Understandably, this news sounds ominous to many.  Tracking your browsing?  And we were worried about the Bush administration tapping our phones!

However, unlike when dealing with government looky lous, you have the choice to tell Google to mind their own business.  Also, Google is telling consumers about the program.  Folks concerned with privacy issues call these elements “notice” and “choice.”

The notice comes in the form of clear labels on all Google-based ads, something the company already does with the exception of some of their print ads.  Currently, all ads served by Google feature their name, but some don’t feature the name of company paying for the ad spot.  Now that will change.  Users will know that Google is serving the ad and who’s paying them to do so.

Additionally, Google is allowing users to choose—this is the control part—how they’re classified by the new program.  Their Ads Preferences Manager will let users view, delete, or add interest categories associated with their browser so that the advertising they see will at least be relevant to them.

Finally, Google is also giving consumers the ultimate control over the program in the form of a set of tools to permanently opt-out.  They have even designed plug-ins for browsers that will maintain your opt-out choice.

It remains to be seen how this program—and others started much earlier by Yahoo! and other Google competitors—will increase revenues for publishers.  However, since all of these systems are designed to serve more relevant ads to consumers, it would seem that all parties involved stand to benefit.

Yet, there is sometimes no satisfying the privacy alarmists. The AP relayed this comment from EPIC’s Marc Rotenberg:

“This is a very serious development,” said Marc Rotenberg, executive director of the Electronic Privacy Information Center. “I don’t think the world’s largest search engine should be in the business of profiling people.”

Yet, with all Google is doing to allow users to opt-out of this system, one wonders if Mr. Rosenberg and those who share his opinion believe there should be any innovation whatsoever in online advertising, or if the industry should simply come to a stand-still.

Criticism of Google’s plan seems especially dubious given the alternatives offered.  Mr. Rotenberg believes that the FTC should reexamine Google’s merger with DoubleClick.  Translation: consumers are too dumb to manage their privacy, so the FTC should do it for them by tearing apart business deals that are deemed unsavory.

The appropriate level of privacy in our lives can’t be set by the government. It can only be set by free people able to explore the full range of choices offered in the marketplace.  When you consider not only Google’s consumer-friendly ad program, but other products like pre-paid cell phones, nameless debit accounts, proxy servers, anonymous email accounts, and the like, privacy seems to be out there for those who want it.

The best advice for those who want privacy: don’t go online.  The Internet is the modern public square, no more a private retreat than is a public park.  Technologies can help to mask your identity, but ultimately much can be found out about who you are online.  The only thing stopping that now is the free market’s respect for contracts and the choices of consumers.  Attacking that very freedom to choose is no way to secure great privacy in the future.

LibertyWeek 33: Drinking Our Way to Economic Health

by Richard Morrison on March 10, 2009

in CEI Projects, Podcast

Welcome to Episode 33 of the LibertyWeek podcast, with your hosts Richard Morrison and Cord Blomquist and technical producer (and this week’s special guest) Ryan Young. After bidding our friend Thor Halvorssen a very happy birthday, we get a fresh recap from Ryan Young on the events of the Free State Project’s recent Liberty Forum in Nashua, New Hampshire (photos). Google’s CEO spurns Twitter (transcript via TechCrunch) in Technology News, John McCain and Richard Shelby say that the government should end the bailouts and let poorly-managed banks go bankrupt, and brewers pin their hopes on robust St. Patrick’s Day sales in this week’s edition of Beer News. Next, we go abroad for Scandal Watch where the Chinese government is cracking down on sub-optimal milk quality and finally back home to America for Olympic News, where the head of the U.S. Olympic Committee is calling it quits.

The honor of Tweet of the Week™ goes to dan_hayes of Reason.tv!

“Net Neutrality,” RIP? Well, One Can Hope

by Wayne Crews on December 15, 2008 · 4 comments

in Bailout Watch, Economy, Privacy, Regulation, Tech & Telecom

Net neutrality has long been a threat to Internet users. Despite the rhetoric and appeals to “openness,” it was always an anti-consumer enterprise, irretrievably and irrevocably set against the concept of infrastructure wealth creation (as if content and infrastructure companies in free markets were somehow sworn enemies). It smacked of “infrastructure socialism.”

Now Google, neutrality’s chief proponent in Washington, FCC and policy circles, wants to secure for itself its own “fast track” on the Web, in conjunction with telecom and cable companies.

It should do so as rapidly as possible; so should everyone else. Only Washington can screw up this new elevation of the Web’s capabilities.

Neutrality advocates always invoke the sanctity of “dumb pipes,” But it requires government force to keep pipes dumb. It’s more appropriate to embrace a competitive dimension upholding the possibility of the “genius” of pipes. Price and service differentiation, such as paying less for non-vital transmissions and more for critical ones, will become increasingly critical to tomorrow’s online experience. So will the fusion of content and infrastructure companies.

The handwringers worry: “For computer users, it could mean that Web sites by companies not able to strike fast-lane deals will respond more slowly than those by companies able to pay.”

But such “discrimination” is not only perfectly consistent with vastly greater openness and speed than we enjoy now, it’s probably a pre-requisite for it; nothing about fostering smart pipes is incompatible with retaining “dumb” ones as consumers desire.

Indeed, the “background hum” of the Net is always rising; few of us use dialup anymore, and we didn’t need neutrality to escape it. Special deals like Google’s, as well as future proprietary services that use Internet technology, but may or may not ride the same pipes as the “capital-I” Internet, increase the Net’s overall functionality. Policy should not discourage the possible emergence of such a “Splinternet” by catering to the old-school model of infrastructure socialism and sleepy-headed “openness.”

Fostering infrastructure wealth—of both the proprietary and open kinds—is the only valid public policy goal, the only avenue to a constant escalation in the basic capabilities of the Internet as a whole. Neutrality is the enemy of this challenge.

So far, Google and the infrastructure firms are scared of regulators and are “reluctant so far to strike a deal because of concern it might violate Federal Communications Commission guidelines on network neutrality…’If we did this, Washington would be on fire,’” one insider said.

But FCC’s own guidelines are anti-consumer and anti-infrastructure; later we’ll explore more reasons why.

Is the DoJ Killing Yahoo?

by Ryan Lynch on October 31, 2008 · 1 comment

in Precaution & Risk, Tech & Telecom

The Yahoo-Google ad deal looks like it’s dead.  The deal announced in June, would have allowed Google ads to appear on Yahoo search results.  Yahoo estimated an $800 million profit during the frist year of the Google ad partnership and would have allowed Yahoo to continue its transion from search to content provider, making it a much more competitive company.

What has likely killed the deal?  As stated in a Reuters article:

The two Internet companies have so far failed to reach an agreement with the U.S. Department of Justice on implementing their search advertising partnership.

Why doesn’t the DoJ approve the non-exclusive agreement?  Becuase of concerns over competition, that this will reduce competition in the internet marketplace.  Anyone following Yahoo, however, knows that Yahoo is becoming less and less competitive as a search provider, but it’s attempts to become more competitive and focus on providing content, something it is much better at than google, are being stymied by government regulation.

LibertyWeek 14: Conviction Spooktacular

by Richard Morrison on October 29, 2008 · 1 comment

in Podcast

Prepare yourself for the latest episode of the best free market podcast around, LibertyWeek.

Your hosts Richard Morrison and Cord Blomquist discuss the looming presidential election, Halloween, the conviction of Alaska Sen. Ted Stevens, the continuing economic unease, tough times for the U.S. Postal Service, American companies react to Internet censorship abroad, Cox’s new wireless service, Microsoft’s new web-based OS Azure, and all the finest Olympic News.

Listen now!

Stopping “Badvertising” at Yahoogle.

by Wayne Crews on October 15, 2008 · 1 comment

in Economy, Privacy, Tech & Telecom

As an indicator of how perverse wealth-draining antitrust policy has become, have a look at the “concessions” being squeezed out of Google and Yahoo on their proposed advertising collaboration.

In the communications realm, it used to be that the heavy-metal infrastructure companies were regarded as monopolistic or potentially so. Then, wise regulators feared the Windows desktop surely was an essential facility to which competitors deserved access. Now, “mere” content companies are the monopolies.

Think about it; websites–code!!–are being regarded as something regulators must oversee, as if our left-mouse-button no longer works should the ads we’re served up by Yahoogle seem stilted.

The end result of concessions here, as in satellite mergers and elsewhere, is that we end up with entities that increasingly do not resemble what would exist in a free market. Kind of like banks in a world in which central bankers have controlled money and credit for decades, but that’s another story.

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