Monthly Archives: December 2018

Tim Wu’s top ten antitrust targets

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He writes:

If antitrust is due for a revival, just what should the antitrust law be doing? What are its most obvious targets? Compiled here (in alphabetical order) , and based on discussions with other antitrust experts, is a collection of the law’s most wanted — the firms or industries that are ripe for investigation.

Amazon
Investigation questions: Does Amazon have buying power in the employee markets in some areas of the country? Does it have market power? Is it improperly favoring its own products over marketplace competitors?

AT&T/WarnerMedia
Investigation question: In light of this, was the trial court’s approval of the AT&T and Time Warner merger clearly in error?

Big Agriculture
Over the last five years, the agricultural seed, fertilizer, and chemical industry has consolidated into four global giants: BASF, Bayer, DowDuPont, and ChemChina. According to the U.S. Department of Agriculture, seed prices have tripled since the 1990s, and since the mergers, fertilizer prices are up as well.
Investigation question: Were these mergers wrongly approved in the United States and Europe?

Big Pharma
The pharmaceutical industry has a long track record of anticompetitive and extortionary practices, including the abuse of patent rights for anticompetitive purposes and various forms of price gouging.
Investigation and legislative questions: Are there abuses of the patent system that are still ripe for investigation? Can something be done about pharmaceutical price gouging on drugs that are out of patent or, perhaps more broadly, the extortionate increases in the prices of prescription drugs?

Facebook
Having acquired competitors Instagram and WhatsApp in the 2010s in mergers that were arguably illegal, it has repeatedly increased its advertising load, incurred repeat violations of privacy laws, and failed to secure its networks against foreign manipulation while also dealing suspicious blows to competitor Snapchat. No obvious inefficiencies attend its dissolution.
Investigation questions: Should the Instagram and WhatsApp mergers be retroactively dissolved (effectively breaking up the company)? Did Facebook use its market power and control of Instagram and Instagram Stories to illegally diminish Snapchat from 2016–2018?

Google
Investigation question: Has Google anticompetitively excluded its rivals?

Ticketmaster/Live Nation
Investigation questions: Has Live Nation used its power as a promoter to protect Ticketmaster’s monopoly on sales? Was Songkick the victim of an illegal exclusion campaign? Should the Ticketmaster/Live Nation union be dissolved?

T-Mobile/Sprint
Investigation question: Would the merger between T-Mobile and Sprint likely yield higher prices and easier coordination among the three remaining firms?

U.S. Airline Industry
The U.S. airline industry is the exemplar of failed merger review.
Investigation and regulatory questions: Should one or more of the major mergers be reconsidered in light of new evidence? Alternatively, given the return to previous levels of concentration, should firmer regulation be imposed, including baggage and change-fee caps, minimum seat sizes, and other measures?

U.S. Hospitals
Legislative question: Should Congress or the states impose higher levels of scrutiny for health care and hospital mergers?
Investigation question: In light of this, was the trial court’s approval of the AT&T and Time Warner merger clearly in error?

Was the Referendum vote skewed by illegal funding?

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This is the question that the British political establishment — of all stripes — has been tip-toeing around. It’s now clear that the Leave campaign broke the laws on campaign spending. The campaign may also have had funding — illegally — from abroad. If the referendum had been a by-election, then there would have been a re-run of the election. But because it’s all about “the will of the people” that option has up to now been treated as the Thing Nobody Talks About.

But now things are moving. According to [The Independent(https://www.independent.co.uk/news/uk/politics/vote-leave-referendum-overspending-high-court-brexit-legal-challenge-void-oxford-professor-a8668771.html),

It is “very likely” that the UK voted for Brexit because of illegal overspending by the Vote Leave campaign, according to an Oxford professor’s evidence to the High Court.

An exhaustive analysis of the campaign’s digital strategy concludes it reached “tens of millions of people” in its last crucial days, after its spending limit had been breached – enough to change the outcome.

The evidence will be put to the High Court on Friday, in a landmark case that is poised to rule within weeks whether the referendum result should be declared void because the law was broken.

The research was carried out by Professor Philip Howard, director of the Oxford Internet Institute. “My professional opinion”, he told the High Court, “is that it is very likely that the excessive spending by Vote Leave altered the result of the referendum.”

”A swing of just 634,751 people would have been enough to secure victory for Remain. Given the scale of the online advertising achieved with the excess spending, combined with conservative estimates on voter modelling, I estimate that Vote Leave converted the voting intentions of over 800,000 voters in the final days of the campaign as a result of the overspend.”

That may well be true, but proving it will be impossible, I think. The connection between a voter seeing a message and how s/he votes has been one of the great mysteries of political science for as long as I can remember. So the key question for the court is whether the illegal spending (evidence for which seems solid) is enough to rule that the Referendum result is invalid.

Facebook’s role in anti-Macron disruption

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From Buzzfeed:

But what’s happening right now in France isn’t happening in a vacuum. The Yellow Jackets movement — named for the protesters’ brightly colored safety vests — is a beast born almost entirely from Facebook. And it’s only getting more popular. Recent polls indicate the majority of France now supports the protesters. The Yellow Jackets communicate almost entirely on small, decentralized Facebook pages. They coordinate via memes and viral videos. Whatever gets shared the most becomes part of their platform.

Due to the way algorithm changes made earlier this year interacted with the fierce devotion in France to local and regional identity, the country is now facing some of the worst riots in many years — and in Paris, the worst in half a century.

This isn’t the first time real-life violence has followed a viral Facebook storm and it certainly won’t be the last. Much has already been written about the anti-Muslim Facebook riots in Myanmar and Sri Lanka and the WhatsApp lynchings in Brazil and India. Well, the same process is happening in Europe now, on a massive scale. Here’s how Facebook tore France apart.

Interesting. The conventional wisdom used to be that this kind of thing happened only in unsophisticated countries. Experience in the US and UK in 2016 rather undermined that complacent conclusion. And now France… Where’s next?

The really sobering thing about this is that the unrest can (Buzzfeed argues, and I see no reason to disagree with them) be attributed to the way Facebook changed its Newsfeed algorithm as a response to the uproar over its exploitation by political actors in 2016. “These pages weren’t exploding in popularity by coincidence“, it says,

The same month that Nogueira set up his first group, Mark Zuckerberg announced an algorithm change to Facebook’s News Feed that would “prioritize news that is trustworthy, informative, and local.” The updates were meant to combat sensationalism, misinformation, and political polarization by emphasizing local networks over publisher pages.

“In Groups, people often interact around public content,” Adam Mosseri, the head of News Feed at the time, explained in a subsequent blog post. Facebook, by all indication, plans to continue emphasizing local content. It announced plans this month to expand the feature to create local news hubs in 400 test cities. BuzzFeed News has contacted Facebook for comment.

So, Facebook tweaked its algorithm to try to fix one problem. And it then creates another.

Decline and Fall?

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I liked this para in an otherwise fairly predictable rant:

It’s the public outrage that should be most worrying to Facebook. Other tech giants have managed to escape the opprobrium directed at Facebook because they have obviously useful services. Amazon delivers things to your house. Google helps you find things online. Apple sells actual objects. Facebook … helps you get into fights? Delivers your old classmates’ political opinions to your brain?

“Decline”, certainly. “Fall”? Doubtful. 2.24B users don’t just melt away.

Brexit and the realities of power

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Nice Guardian column by Rafael Behr:

We conspired to hold a referendum on leaving the EU without a serious conversation about what the EU even is, let alone what it does. Then, a year later, we got through a general election campaign with little mention of Europe at all. Another year has passed and, despite the urgency of the article 50 clock running out, politics still manages to distract itself with arguments other than the only one worth having, which is this: given what we now know about Brexit that we didn’t know then, should we still do it?

That is not the question on which May and Corbyn would dwell in a televised debate (regardless of the channel). It isn’t a question that troubles hardline Tory backbenchers running up and down Westminster corridors in pursuit of letters of no confidence in their leader. It isn’t a question that can be answered by publication of the attorney general’s legal advice on the withdrawal agreement, prised piecemeal by opposition parties from the clenched fist of government. That isn’t to say these things are unimportant. It matters if Geoffrey Cox QC advises that the Irish “backstop” is a trapdoor to perpetual regulatory subordination. But it matters only as confirmation of a structural downside to Brexit that we know already – the imbalance of power between a bloc of 27 states and one quitter.

Apple, the App Store and monopoly

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This morning’s Observer column:

Because Apple has always specialised in control freakery and doesn’t allow anybody else to use its iOS platform without prior approval, the App Store was from the beginning owned and controlled by Apple. If you wanted to create an app for the iPhone (and later the iPad), it had to be approved by Apple and sold on the App Store. And if a developer wanted to charge for the app, then Apple took a 30% cut on the price.

So, in relation to the App Store, Apple is definitely a monopolist. The question underlying the supreme court hearing was: is it an abusive monopolist? And if so, are customers of the App Store entitled to damages? Does the operation of the store give rise to consumer harm and thereby trigger redress under US antitrust law?

The case goes back to 2011…

Read on

Clarity on Brexit

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Interesting Bloomberg column Clive Cook:

The crucial point is straightforward. Britain needed to seek a compromise that traded off degrees of access to Europe’s single market against degrees of effective sovereignty and democratic accountability. Remaining in the EU involves close-to-frictionless trade with the other members combined with seriously diminished democratic self-government. A clean Brexit, leaving the U.K.’s relationship with Europe akin to Canada’s with the U.S., involves short- and possibly long-term economic losses combined with a stronger form of self-government.

Reasonable people can disagree about where to be on that spectrum. A deal of the form May first had in mind — a middle point between a narrow free-trade agreement and full access to the single market — could well have worked. But the final form of May’s exit agreement finds no such point of balance.

Compared with remaining in the EU, it entails substantial economic losses and diminished, not enhanced, democratic accountability. The only significant policy question over which Britain gains new control is immigration. On almost every other issue where the EU has competence, Britain, thanks to the so-called backstop on Northern Ireland, will be indefinitely hemmed in –- while losing any say in what the EU chooses to do. On a scrupulously unzealous assessment, this is less self-government than Britain currently has as a member of the EU. It isn’t a compromise, it’s a capitulation.