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Internet
The long-awaited collaboration of Microsoft and Yahoo on search has the tech business community abuzz. CEI analysts Wayne Crews and Ryan Young made their original statements here. Media outlets immediately took note, as seen in this Investor’s Business Daily story (posted, fitting enough, at Yahoo Finance) from yesterday:
Ryan Young, a fellow of regulatory studies at the Competitive Enterprise Institute, says the deal should be approved.
“It will make Google stay on its toes,” he said. “Bing and Yahoo should improve from the proposed partnership. This is how a competitive, contestable market works.”
We also got some love from Erika Morphy at E-commerce Times in her story today:
The Obama Administration is taking a harder line on antitrust issues than in the past, which could prove to be a wild card, noted Ryan Radia, information policy analyst with the Competitive Enterprise Institute, although he’s also convinced that the deal will go through.
“Antitrust administrators are looking to make headlines now,” Radia told the E-Commerce Times, pointing to investigations he dubbed “dubious,” such as the probe into the Google book deal or the inquiry into Silicon Valley employment practices.
“The latest line of attack is that lack of regulation and enforcement is behind the recession,” he said.
[...]
Microsoft has been battling EU antitrust charges for years, CEI’s Radia noted, with the most recent involving accusations that it violated EU antitrust law by bundling Internet Explorer with its Windows operating system.
“It is going to be more of a problem over there than with U.S. regulatory authorities,” he predicted.
National Journal’s Tech Daily Dose also noted our advice to regulators to keep their snouts out of the deal:
“Our subcommittee is concerned about competition issues in these markets because of the potentially far-reaching consequences for consumers and advertisers, and our concern about dampening the innovation we have come to expect from a competitive high-tech industry,” [Senate Judiciary Antitrust Subcommittee Chairman Herb] Kohl said in a statement. Senate Judiciary Antitrust Subcommittee ranking member Orrin Hatch, R-Utah, said he did not see “any immediate yellow flags” from an antitrust front. Competitive Enterprise Institute argued regulators “can best serve consumer interests by leaving well enough alone.”
Who knows where we’ll pop up next!
Statements of Ryan Young and Wayne Crews
Washington, D.C., July 29, 2009 – Today, Microsoft and Yahoo announced a ten-year partnership of their search businesses in order to better compete against Google. The Department of Justice, citing antitrust concerns, is likely to investigate the deal before allowing it to go through. Competitive Enterprise Institute technology policy experts Wayne Crews and Ryan Young argue that regulators can best serve consumer interests by leaving well enough alone.
Ryan Young, Fellow in Regulatory Studies:
“What is there to investigate? Microsoft and Yahoo are trying to outcompete Google. To succeed, they will need to put together the best search engine they can. The firms believe their announced partnership will help them achieve that goal. They should be allowed to try – their own money is at stake if they fail. Either way, Internet users stand to benefit. Bing and Yahoo Search should improve from the proposed partnership, which will also force Google to make its own search engine better, lest it be left behind. This is how a competitive, contestable market works. The goal of antitrust policy is to benefit consumer welfare, but there is nothing regulators can do to make an already fiercely competitive market even more so.”
Wayne Crews, Vice President for Policy and Director of Technology Studies:
“This administration is already suspicious of allegedly ‘dominant’ firms in the high tech sector – but consumers are better off when regulators let markets evolve naturally, rather than guiding them from above. The Microsoft-Yahoo alliance has the potential to offer great value to consumers. The dangers of arbitrarily blocking such voluntary business arrangements, or needlessly delaying them, are severe. Regulatory intervention in the high-tech sector thwarts the natural evolution of the market. Worse, it distorts the response of competitors. Antitrust investigations steer the market in unnatural directions, creating instabilities in entire industry sectors.
“Consumers have more to fear from government bureaucracies that have the power to stop progress cold than they do from free enterprise looking to create the next big thing. Should the Microsoft-Yahoo partnership not pan out, rivals, partners, consumers, investors, advertisers, and even global competitors are perfectly capable of dealing with any challenges to competition. Consumers stand to lose if Washington gets involved.”
CEI Information Policy Analyst Ryan Radia responds to Jonathan Zittrain’s “Lost in the Cloud” in today’s New York Times. Read it here or see below.
To the Editor:
In discussing the privacy risks that have accompanied the growth of the Internet, Prof. Jonathan Zittrain rightly bemoans the willingness of governments to violate individuals’ privacy rights. Unfortunately, he proposes new legal restrictions that would stifle online innovation while doing little to enhance consumer privacy.
Mr. Zittrain proposes a “fair practices law” that would require companies to release personal data back to users upon request. Such a rule may sound workable, but purging specific data across globally dispersed server farms is no simple endeavor. Who is to pay for the implementation of such privacy procedures – especially for free services like Facebook or Twitter that have yet to turn a profit?
A better approach to online privacy is to educate users on safeguarding personal information. Ultimately, however, the only foolproof approach to protecting sensitive data online is to simply not disclose it.
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.
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.
Back in 1999 and 2000, a fierce debate raged as to whether digital networks and devices increase or decrease electricity consumption and emissions. Does the growth of the digital economy jeopardize the Kyoto agenda by increasing emissions? Or is the Internet a “green” force reducing our energy and carbon intensity?
On one side of the debate, researchers at the Lawrence Berkeley National Laboratory argued that the Internet could help reduce emissions by, for example, promoting telecommuting, online shopping, and efficient supply-chain management. On the other side, technology analyst Mark Mills and co-author Peter Huber argued that the rapid proliferation of digital devices and networks was increasing demand for high-quality (largely coal-based) power.
The Berkeley Lab researchers directed a lot of fire at Mills’s ”ballpark” estimate that Internet-based equipment and networks already accounted for 8% of U.S. electricity demand. I won’t try to settle that part of the controversy.
However, a just-published study by the International Energy Agency (IEA) shows that Mills was right about the big picture. Climatewire (subscription required) gives the gist of the study in its headline: “Soaring electricity use by new electronic devices imperils climate change efforts.” Herewith a few highlights:
- Efforts by countries worldwide to reduce greenhouse gas emissions and increase energy security are in trouble if nothing is done to check the energy gobbled by both information and communication technologies and consumer electronics.
- Energy used by computers and consumer electronics will double by 2022 and increase threefold by 2030.
- The projected increase is equivalent to the current combined total residential electricity consumption of the United States and Japan.
- To operate these new devices, households around the world will spend around $200 billion in electricity bills and require the addition of approximately 280 Gigawatts (GW) of new generating capacity between now and 2030.
- The number of people using PCs will exceed 1 billion over the next seven months, and nearly 2 billion television sets are in use worldwide, averaging more than 1.3 sets per each household with access to electricity.
- More than 3.5 billion people will be mobile phone subscribers by 2010.
- In many households in OECD countries, electronic devices–a category that includes televisions, desktop computers, laptops, DVD players and recorders, modems, printers, set-top boxes, portable telephones, answering machines, game consoles, audio equipment, clocks, battery chargers, mobile phones and children’s games–consume more electricity than do traditional large appliances.
- Household use of electronic devices is the major reason that residential electricity consumption is increasing in most countries.
- Computers, related equipment and consumer electronics are responsible for close to 15 percent of total residential electricity consumption today, a share similar to that of other major appliance categories such as water heating or refrigeration.
- Even with improvements foreseen in energy efficiency, consumption by electronics in the residential sector is set to increase by 250 percent by 2030.
- “The share of electricity consumption by these appliances is therefore increasing to the extent that they will most likely comprise the largest end-use category in many countries before 2020, unless effective steps are taken,” said IEA Executive Director Nobuo Tanaka in a press release.
- “These estimates suggest that total residential electricity consumption will increase more than many previous forecasts, and therefore pose a serious challenge to all governments with policy ambitions to increase energy security and economic development, and to mitigate climate change,” states the report.
Criticism of Huber and Mills got pretty nasty at times. But, as the old adage says: He who laughs last, laughs best.
Back in January I wrote about several advertising industry trade associations coming together to impose self-regulation in an attempt to deter federal regulation of behavioral advertising under the Obama administration. I pointed out that the Federal Trade Commission had advised the advertising industry back in December 2007 that it were pushing the envelope on what the FTC considered to be reasonable behavioral advertising. It seems as though the industry may have viewed this as an idle threat under the Bush administration, but got wind that the new administration would be looking at the issue with renewed vigor.
Last week, the FTC released its Staff Report on the issue entitled FTC STAFF REPORT: Self-Regulatory Principles For Online Behavorial Advertising. The report succinctly defines the issues at hand and examines the stakes of all sides. Importantly, the FTC has refined its Principles for Behavioral Advertising self-regulation within the document.
These Principles, a summary of the issues and concerns surrounding behavioral advertising, are divided up into four key points:
1) Transparency and Consumer Control
2) Reasonable Security, and Limited Data Retention, for Consumer Data
3) Affirmative Express Consent for Material Changes to Existing Privacy Promises
4) Affirmative Express Consent to (or Prohibition Against) Using Sensitive Data for Behavioral Advertising
In other words, these are the concerns that need to be addressed in self-regulation. The FTC concludes its report by saying that the Commission staff will monitor efforts of the industry to self-regulate over the next year keeping an open dialogue with all parties involved.
Bloomberg is reporting that an agreement on a stimulus package has been reached in the Senate. Included in the compromise was the decision to strip $2 billion in broadband funding for rural areas. The Senate version of the bill originally included $9 billion in funding for broadband expansion in unserved and underserved areas. The key here is that Bloomberg refers to the removed $2 billion as funding to “promote broadband.” So it is still entirely unclear what remains in the bill regarding broadband. It’s entirely possible that $7 billion remains in the bill for broadband infrastructure, and the $2 billion removed was simply for marketing and education regarding broadband expansion.
More to follow as the details emerge…
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