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, 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.
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.
The Hollywood Reporter recently hosted a roundtable with five “TV Titans” concerning the challenges facing the television industry. Copyright infringement was not mentioned even once. Nor was the FCC’s proposed rule opening up the standards for cable set-top boxes. Listening to the narrative in Washington DC, however, would lead you to think these are TV’s greatest challenges.
Instead, the television executives focused on the challenge of adapting to an increasingly competitive landscape with evolving technology and consumer demand. They acknowledge that streaming technology has led to what the industry refers to as Peak TV, the current boom of 400-plus scripted series discussed in my DisCo post here. Netflix’s Ted Sarandos described this as a “golden age of TV.”
But all these programs mean that TV producers need to figure out “how to stand out in that cluttered TV universe.” As Sarandos explained, “everything exists in perpetuity now, so every time we put on a new show, we are competing with everything ever made.”
Last week the European Commission issued a supplementary Statement of Objections (SSO) to Google. The SSO is intended to support the Commission’s preliminary finding that Google abused a dominant position in the market for general search services by systematically placing its own comparison shopping service at or near the top of its search results. It is the next step in an antitrust investigation which started in 2009 and comes in response to Google’s substantial reply to the Commission’s initial Statement of Objections (SO) from April 2015.
Commissioner Vestager stated that the SSO makes the case stronger by adding new evidence and data. While no one except the parties to the case has access to that new evidence, Vestager’s comments revealed that it relates to both the economic impact of Google’s alleged anti-competitive practice as well as to a clearer definition of markets in the e-commerce space.
Maybe the single most puzzling finding relates to the latter. Put as a short headline, Vestager stated that successful e-commerce companies like Amazon and eBay do not compete with Google Shopping. According to the Commission, merchant platforms compete in a different market than comparison shopping websites. In economic terms, it means that merchant platforms cannot be considered as substitutes for comparison shopping services. It is a curious finding given that there are thousands of merchants on online marketplaces which allow consumers to quickly compare products and prices. It strains credulity to think that consumers who would like to compare product prices would use a comparison shopping service and consciously refrain from comparing offers on other e-commerce websites such as Amazon. There are many routes to compare prices and products on the Internet, and they all clearly compete with one another for consumers’ attention and merchants’ product listings.
The internet has already fundamentally changed the way we work. The fact that I’m sitting at home in my pyjamas drinking green tea, at work, is a very basic proof of the concept. But scaled up, it has done everything from create a range of new jobs that simply didn’t exist before to transforming the hours we work and where we put them in. That’s a lot to tackle in one column — and even more for society to manage.
For a start, the office has changed completely. I’ve recently been reading Jilly Cooper’s ‘How to Survive from Nine to Five,’ because as a freelancer finding out what the Queen of bonkbusters has to say about working office life is officially part of my job. Written in 1970, it explains how to slack off in the typing pool, smoke distractingly in meetings and manage multiple affairs.
This is what people did to waste time at work before they had cat videos and Twitter. Although social media may not be the giant time sink your boss thinks it is: according to a Microsoft/Ipsos poll, 53% of 18-24 year-olds think using social tools makes them more productive at work. Microsoft certainly has a long and noble history of providing such toys: for much of my generation, using MSN Messenger while writing university essays taught us to balance old-school pre-internet book-based research and the immediate gratification of using emojis (or smileys, as we called them) in realtime chat.
This afternoon, U.S. Government antitrust policies will come under the microscope as a Senate Judiciary subcommittee holds an antitrust oversight hearing, with testimony from Assistant Attorney General William Baer from the Department of Justice’s Antitrust Division and Federal Trade Commission Chairwoman Edith Ramirez.
The Administration is coming into the hearing fresh off a highly publicized win over Apple, as the Supreme Court refused Monday to hear Apple’s effort to overturn rulings that it engaged in unlawful e-book price-fixing with major publishers (DisCo coverage of DOJ’s win here.) With that issue put to bed, attention may turn to other antitrust priorities. For example, just in the area of technology, a number of major DOJ and FTC merger reviews and enforcement actions have recently concluded, and the FTC has had a long-running review of dubious practices by patent assertion entities.
Another issue that may appear on the antitrust radar is the ongoing DOJ review of consent decrees governing collusive practices by performing rights organizations (PROs) licensing of musical compositions. The consent decrees – the product of antitrust suits against music publishers and rightsholders – are credited with enabling the development of new lawful music delivery services, even if transparency concerns persist. Exactly one year ago today, DisCo covered a previous Senate hearing on PRO practices under these rules, noting that DOJ’s review of PRO practices has the potential to increase transparency in the notoriously opaque music licensing landscape. Currently, licensing uncertainty and gridlock are some of the most significant barriers to a robust and viable music marketplace. Courts have previously found that this uncertainty has been weaponized for use in licensing negotiations.
Likely in response to findings of licensing misconduct in private litigation, DOJ’s attention turned to the problem of so-called “fractional licensing” by PROs and their constituent publishers. Fractional licensing deals with the question of when multiple parties hold an interest in a copyrighted work. How many co-owners’ permission must one obtain? (I.e., If nine co-owners agree to license a work and the 10th says ‘no,’ can the licensee proceed?) Conventional copyright law says yes, and the authorizing owners have a duty to account for profits to remaining owners. One co-owner can’t hold up all the others. Music industry practices attempt to reverse this rule, however, such that everyone can say ‘no,’ but no one rightsholder can unilaterally authorize a licensed use of a work. The rationale for challenging this practice is that it magnifies market share in an already concentrated market. With just a 10% interest in a work, a rightsholder can dictate usage of the entire work. Although the practice is a prescription for gridlock, the possibility that the Justice Department might weigh in on this particular practice nevertheless produced much “unhappiness” in the music publishing industry, as Mike Godwin wrote last year for Techdirt.
PRO oversight is not necessarily the top issue on the Judiciary committee’s agenda, and it may not receive sufficient attention in the hearing. Nevertheless, the outcome of DOJ’s investigation into PRO practices under the consent decrees will have a significant impact on music delivery services nationwide.
Fans of European competition policy will know that ‘state aid’ rules are a key pillar of ensuring European markets remain open and competitive and are not distorted by government subsidy. Some of the most recent developments in state aid investigations concern whether European government tax rulings for multinationals might constitute state aid, and provide an unfair advantage.
People are speculating about the wider impact from the recent rulings on state aid by Competition Commissioner Margrethe Vestager. Apart from the tax arrangements between Luxembourg and Fiat, and between the Netherlands and Starbucks, do they affect anyone else?
It seems likely these rulings will have a much wider impact on tax and investment policies in Europe, between Europe and its trading partners, and on the business climate. But what might those impacts be?
The first concern is the uncertainty about Europe as a place to invest and do business. Companies may fear retroactive decisions coming back to haunt them years later. After all, no company expects a fresh tax demand of up to €30m years that contradicts what the taxman previously told them to pay.
These rulings also drive straight at the heart of one of the most jealously guarded competences of European Union member states: tax policy.MORE »
There’s no sense in beating around the bush: Robert Reich’s NYT editorial on Friday, “Big Tech Has Become Way Too Powerful” indicates that when it comes to intellectual property (IP) and antitrust law, he doesn’t know what he’s talking about. This isn’t a normative critique of Reich’s antitrust views, but rather an objective assessment of Reich’s limited grasp of the basic facts and law here.
The thrust of Reich’s argument is that large Internet platforms are misusing intellectual property rights to maintain unfair advantages in the marketplace, and this needs to be reined in. He begins with the premise that the “most contested policy issue” in regulating Internet platforms is intellectual property, and that “information and ideas are the most valuable forms of property.”
Quite simply, Reich doesn’t know what intellectual property is. Neither information nor ideas are — in themselves — IP. Ideas have to be “reduced to practice,” which may earn you a patent, or expressed in a work of authorship, which will get you a copyright. Mere ‘information’ doesn’t qualify for either. (Closely held information might rise to acquire trade secret protection, but Reich doesn’t consider that.) More to the point, Reich incorrectly states “without government decisions over what [intellectual property] is, and who can own it and on what terms, the new economy could not exist.”
While Reich is correct that governments define the boundaries of intellectual property, the relationship between IP and the new economy is not what Reich thinks. He suggests that the temporary monopolies granted by the U.S. Government in the form of IP rights are the secret to U.S. Internet platforms’ historic success. They’re not. If there’s any lesson to take away from Internet competition, it is that openness, not exclusion, characterizes the historic successes of the Internet. The growth of the Internet is often attributed to the fact that Internet pioneers made conscious decisions not to claim IP rights in their respective contributions. Today, anyone can enter an Internet market, and competition is always a click away. Highly successful Internet platforms aren’t maintaining their market positions by enforcing their government-granted rights to exclude the competition. Instead, they’re providing compelling services open to all, upon which others may build and innovate, which are in many cases free to the user.
In fact, anyone following intellectual property politics for the last 10 years would know that the Internet industry has been at the forefront of efforts to reform a widely criticized, out-of-control patent system and an imbalanced copyright system — with limited success due to entrenched opposition from more politically seasoned sectors like Hollywood and Pharma. On many days, headlines in the New York Times will frame the relationship between IP and the Internet sectors as a fractious, often adversarial one. Yet reading Reich would leave you thinking that Internet platforms are in the Church of St. Patent, praying the rosary to Our Lady of Perpetual Copyright Term Extension. MORE »