A while back I wrote about the European Commission’s competition investigation into the Android operating system (OS) and today’s mobile platform competition. The main argument of my previous post was that competition in the mobile economy is best conceived as competition between mobile ecosystems with Android and iOS being by far the two most popular which, in my opinion, stand in clear competition with each other. All mobile OSs have to serve and balance the interests of a variety of parties to keep them attractive (or even alive) — that is the nature of a multi-sided platform like a mobile OS. The ‘Apple factor’ should be part of the Commission’s investigation into Android at the stages of determining dominance as well as potential abuse. It is very hard to imagine that Google can act ‘independently’, in the competition law sense of the word, of Apple in the market for mobile OSs. In that sense the Commission’s market definition of licensable smart mobile operating systems, which leaves Apple’s iOS outside that market, appears peculiar (you can read more on that point in my previous post). MORE »
Many observers, including me, predicted that the 2014 decision of the U.S. Court of Appeals for the Federal Circuit (“CAFC”) in Oracle America v. Google would provoke a new wave of litigation concerning copyright and interoperability. In particular, we worried that the decision would encourage dominant vendors to bring copyright claims against competitors that replicated interface specifications for the purpose of interoperating with the dominant vendors’ products. We were right.
Sure enough, Oracle America has factored into at least four cases so far. One of these cases settled, one is on appeal, and the other two likely will be appealed in the near future. The latter two cases also involve patent claims, so appeals will be heard by the CAFC. (The CAFC has nearly exclusive appellate jurisdiction over cases with patent claims.) One can assume that the plaintiffs added the patent claims to ensure CAFC jurisdiction.
GDC v. Dolby Laboratories
This is the case that settled. Dolby Laboratories provides advanced motion picture theatre sound systems. GDC Technology develops software and hardware that interoperates with the Dolby systems. Dolby facilitated this interoperability by making its interface specifications available to GDC. It appears that Dolby stopped providing this information after it acquired Doremi, a media server manufacturer. Evidently, this acquisition made GDC a more direct competitor. Emboldened by the CAFC’s Oracle America decision, Dolby demanded that GDC stop using Dolby interface specifications to interoperate with Dolby products. Furthermore, Dolby insisted that GDC cease telling customers that GDC had the right to use this interfaces information to interoperate with Dolby products.MORE »
Earlier this week, I discussed how the Copyright Office’s report on Software-Enabled Consumer Products did not adequately address the adverse impact of software licenses on noninfringing conduct. However, I commended the report’s discussion of interoperability. This post examines the report’s treatment of copyright and interoperability in more detail.
The report considered “whether the copyright law furthers or hinders development of interoperable products and services and competition in the arena of software-enabled products.” (The Copyright Office viewed software-enabled consumer products as consumer-grade devices in which software is embedded, such as kitchen appliances, cars, and wireless phones.) The Copyright Office stated that it “recognizes the importance of preserving the ability to develop products and services that can interoperate with the goal of preserving competition in the marketplace.” It concluded that existing law, properly applied, preserves the twin principles of interoperability and competition.
The U.S. Copyright Office’s report on the role of copyright in the development and use of software-enabled consumer products, released last week, represents a missed opportunity to start an important discussion about the constraints software licenses can place on otherwise lawful activities. While the report acknowledges the existence of these constraints, it concludes that resolving the problems they may cause is beyond the scope of the report. (The Copyright Office views software-enabled consumer products as consumer-grade devices in which software is embedded, such as kitchen appliances, cars, and wireless phones.)
The report examines the impact of copyright law on four core activities relating to software-enabled consumer products, including resale, repair, security research, and interoperability. In each case, the report ultimately concludes that “faithful application of existing copyright law doctrines should provide no barrier to legitimate uses.” To reach this conclusion, however, the report minimizes or avoids the adverse impact of software license terms prohibiting these activities.
Earlier this week, Hollywood veteran Jonathan Taplin’s misleading op-ed in the New York Times did us the favor of compiling the most common misconceptions about online competition in one convoluted package. Unfortunately, Mr. Taplin’s piece tracks with recent zeitgeist, as some commentators and armchair economists increasingly reach for the “monopoly” label when beginning an analysis of Internet companies, rather than upon concluding it.
Commentators like Mr. Taplin are wont to pick a major Internet company (or all of them), apply the monopoly label, and call for antitrust regulators to right some perceived wrong – never mind that the complaint often has nothing to do with competition law.
This isn’t competition law; it’s industrial policy. In Mr. Taplin’s case, the evil that industrial policy must address is the alleged, unjust transfer of wealth from traditional content companies to “free-riding” Silicon Valley firms that do nothing for society (except being the leaders in research and development spending, which is a key driver of productivity and job creation). And judging by the hyperbolic title of his forthcoming book, he appears to blame them for destroying culture and democracy as well. Very subtle.
The Finnish Foundation for Cultural Policy Research (Cupore), at the request of the Finnish Ministry of Education and Culture, has developed a methodology for assessing the operation of copyright and related rights systems. While the methodology on its own will not provide policymakers with a tool to make specific copyright policy choices (e.g., whether to adopt a particular exception), it does tell policymakers what questions they should be asking and what factors they should be considering. Moreover, the methodology recognizes the importance of balancing the interests of diverse stakeholders in order to achieve the goals of the copyright system. As such, it is an extremely useful contribution to the copyright policy field.
The methodology is likely to gain traction at the World Intellectual Property Organization not only because of its subtlety and sophistication, but also because of its chief sponsor, Jukka Liedes, the former Director of the Finnish Ministry of Education and Culture. Liedes was chairman of the WIPO Standing Committee on Copyright and Related Rights for many years, and helped develop the methodology WIPO adopted for assessing the contribution of copyright industries to national economies.
The main purpose of the methodology is to support national governments when they are designing new measures for improving the operation of the copyright system. The handbook describing the methodology states that it is designed to help “build a profound understanding of the copyright system, its different elements and different aspects of its operation, therefore serving as a tool in the formulation of copyright policies and strategies.” (p. 12)
The handbook recognizes the methodology’s limitations. It provides “an understanding of the current state of a copyright system,” but “it does not focus on the possible future impacts of policy proposals.” (p. 39) Accordingly, the methodology would need to be complemented by impact assessment studies when changes in the law are contemplated.
Further, with respect to the indicators the methodology highlights, the handbook acknowledges that it “can be challenging to distinguish the effects of the copyright system from those of other forces influencing the markets. In many cases, in-depth analysis is needed to understand the potentially complex causal chains.” (p. 40) Although the handbook concedes that the methodology has “many descriptive elements,” it urges that the methodology be used to discover “the effects of the system’s operation on different stakeholders.” (Id.)
Is uberPOP a transport service? Are Airbnb or booking.com hotel operators? Is Skype a telecoms service? The answer to these three questions is: no, no and no. These services, and many more that can be accessed on the Internet, are officially categorised under European law as information society services. As is often pointed out, they do not own and operate cars, hotels or telecoms networks.
This has not stopped some people from claiming that they should be regulated like taxi companies, hotels or telecoms companies, a claim that is not correct and does little to advance Europe’s economic and technological ambitions. Such claims illustrate, firstly, a reluctance to adapt and to invest and, secondly, a lack of imagination and understanding about how the world is changing.
This debate will be on show at the Court of Justice of the European Union (CJEU) on 29th November when it will hear arguments on a case that has been referred from Spain. The case is about whether ‘uberPOP’ is an information society service or a transport service.
‘uberPOP’ is one of the tiers of service available via the Uber application (several types of service are available via the Uber app from ordering a black cab in London, pooling with others to reduce costs, or even ordering food with UberEATS).
It is clear to me and to other commentators such as Damien Geradin that not only is uberPOP an information society service, but so are all its online intermediation activities. However, that does not mean that no rules and regulations apply, or that none should apply in the future.
Next time you are queuing to pay at the supermarket, and possibly cursing why the queue is so long and there aren’t more tills open, remember that it could be much worse: much, much worse.
What if the queue wasn’t two people with full trolleys in front of you, but five; that you need to wait not for six minutes, but fifteen. To make matters worse, when you finally get to the checkout half of the items in your trolley are not recognised by the scanner and you have to leave them in the shop. Imagine that this all happens in the busy shopping weeks before Christmas. The chances are that you might run screaming from the shop never to return.
If the problem were confined just to one shop then you could avoid that shop.
But what if someone sitting deep in the basement of a grey building made this happen in ALL shops? You would have no way of avoiding this hell. That would put off even those who are enthusiastic about shopping.
The reason I am torturing you in this way is that an obscure new rule being devised by the the European Commission, the European Banking Authority (EBA) and the European Central Bank (ECB) might be about to turn your online shopping experience into exactly this type of hell.
The people involved are all well-intentioned, of course. They want to protect consumers from fraudsters, and that is a good thing. But design by bureaucracy is almost never the way to find an effective solution for the real world.
Imagine a directive which had resulted in a massive growth in cross-border services in the EU; which had delivered an explosion of choice for European citizens; and which a consultation had found to be widely supported by regulators and other stakeholders.
You might think the Commission would regard this as a triumph of the single market, to be nurtured – but you would be wrong.
The regulation in question is the AudioVisual Media Services Directive (the AVMSD), and in particular its ‘country of origin’ (COO) principle. COO says that providers of video services (broadcasters, or VOD – video on demand providers) operating in the European Union are only regulated by the Member State in which they are based.
The Commission is now proposing to move away from this simple and effective principle, by allowing the country of destination (the COD) to also regulate cross border services. In particular, CODs would be allowed to raise levies on VOD providers (though not on broadcasters). Further, the Commission is proposing to take this step, despite not having consulted on this option.
And what is the rationale for this change to a system that is already working well? The ‘level playing field’ – the idea that traditional broadcasters are unfairly disadvantaged versus the VOD providers.
However, there is certainly no general requirement that competing services be subject to the same regulation. Think about short-haul flights and railways for instance – trains are not required to have life-jackets under their seats.
In our new study (commissioned by CCIA), we argue that the level playing field argument is particularly weak in the context of AVMS.
The EU has in recent years used trade agreements as a venue for promotion of human rights, notably freedom of speech. Yet, as trade negotiators seek to wrap up trade negotiations on the Trade in Services Agreement (TiSA), the EU seems to have abandoned its promotion of freedom of expression.
The European Union (EU) has repeatedly heralded trade agreements as an opportunity to promote human rights. The EU’s recent “Trade For All” strategy reiterated that: “The EU Treaties demand that the EU promote its values … and respect for human rights, around the world.”
In the Internet era, one of the most frequently exercised human rights is free expression. But exercising this right requires online services. Within the EU, the e-Commerce Directive has for over fifteen years afforded internet intermediaries strong protection from liability for third party content and communications. This model works because intermediaries can host interactions without being held liable for the vast amounts of user content generated during these interactions. The alternative model, which is present in several countries that lack the EU’s human rights tradition, is to force intermediaries to determine what is or is not lawful on their own without notice — with obvious risks to over-takedown, online censorship, and user privacy. Europe’s safeguards for intermediaries have enabled a flourishing European internet economy and promoted users’ rights to freedom of expression, freedom of association, and privacy, while enabling the launch of many European telecommunications and content services.