In Case You Missed It: 7 Highlights From The FTC Hearings This Week
In case you missed the latest FTC hearings on competition and consumer welfare, we’ve amassed the 7 best highlights from experts. Quotes are below with the video linked.
1. Josh Wright, George Mason University Antonin Scalia Law School: Compared to the E.U., the U.S. relies on empirical evidence of actual harm, not suspicion over potential harm.
“I think there’s more reticence in the U.S., and we can talk about whether this is a good or bad thing, but some reticence to use models that are commonly invoked in the theoretical IO literature, but less often substantiated with empirical evidence. I think there is more reluctance. I think there are certainly, and Nicolas [Petit]’s comments to start with emphasized this, I think there is certainly more of a requirement in the U.S. to show actual effects and a little bit more of a suspicion over likelihood effects.”
2. Howard Shelanski, Georgetown University Law Center: The fact that some people stick with defaults is not a competitive issue so long as other options and ease of switching exist.
“People actually want the simplicity of signing up for a service and not having to select everything and do the brain twisting exercise deciding which setting is best for them.”
“I at least, as a fairly lazy person when it comes to these technology things, appreciate the defaults until they start to bug me. And then, what I want is two things: Options, that’s where interoperability come in, and ease of switching.”
“What I have observed, at least with my students, is, they are more than happy to go through the challenge of downloading an app in which, it takes a minute or less, and to figure out very quickly how that app works as a way around something or to do something we’re doing interactively in the classroom. I think it’s an empirical question and a behavioral question, but I don’t think that the mere fact that some people like me are too lazy to do that for long periods of time should necessarily be viewed as a significant competitive issue if it is easy and if the options are there through interoperability.”
3. David Evans, Global Economics Group: We can’t presume long-term durability of leading firms.
“I agree absolutely with Howard’s [Shelanski] point concerning the durability of these platforms. I don’t think I agree with Howard that we can’t look at the failure of some platforms and read into that: that all existing platforms could fail as well. But it should also make us very careful about assuming that just because someone is successful now, they will be in the future. All the points that Howard raised about, ‘well, maybe the current platforms are durable.’ You go back in time and the same arguments were made about previous platforms. That’s not to say that some of the platforms today won’t be durable and might very well be around for the next hundred years, but we just need to be a little bit cautious of reading too much into sort of where things are currently.”
4. Simon Constantine, Competition and Markets Authority: Not every issue can (or should) be solved by extending antitrust law.
“What’s the role for antitrust, then, in these areas? I think it’s right to say that antitrust shouldn’t make up for failings in other laws. Whether it be data protection law or consumer protection law, if there are issues with those laws, then your starting point should be to address those issues rather than somehow seeking to extend antitrust law to areas where it shouldn’t really tread, as it were.”
5. Nicolas Petit, University of Liege School of Law: Poor market definitions can misleadingly suggest there is a lack of competition, like how the exclusion of Apple from the EU’s Android case affected the outcome.
“The question is, what is the platform you’re talking about? So for instance, if you take the Google Android case, you could say, well, the platform is search and there’s not enough competition, because Google has between 90 and 100 percent market share. But at the same time, you can only come to that reasoning if you’ve excluded from your analysis Apple and its closed ecosystem from the analysis. And you could say, Apple’s siloed ecosystem is also a platform which competes with the platform of Google, which is search plus Android. So it is the first question to ask. It’s not an easy question. Sometimes I think the tool of antitrust, like market def[initions], can be misleading in that assessment.”
6. Catherine Tucker, Massachusetts Institute of Technology Sloan School of Management: Tucker’s analysis suggests the volume of data alone does not appear guarantee quality, echoing research that it’s analysis and innovations with data, not simply amassing data, that create competitive gains.
“We were looking to see how changes in European regulation about how much data you have stored about search results, whether it affected the quality of search results. We measured that by bounceback rate, whether someone had to search again, or refine their search. We found actually no change, whether you had six months of data, three months of data, nine months of data. It’s one of those oh moments. We presented it, actually, here. And all these engineers just mocked us for this result. They said, ‘It’s very obvious, do you know how many searches are unique and how current they are and you don’t understand anything about search advertising if you think that data six months old is at all valuable.‘”
7. John Yun, George Mason University Antonin Scalia Law School: Big data, in and of itself, does not represent a barrier to entry for nascent competitors.
“We should really view it as how the participants in an industry use data in a market, and is this a scarce good, and are entrants really in need of this? And they can obtain it. And what is the history of the market? So for example, you look at something like search engines, something like Google, it’s inevitably going to be brought up that Google and Facebook have big data and that sort of creates and enforces their market power. And then the question is, is how is data being used? Is it just the existence of data, or is it part of a larger production function along with other inputs? And that those inputs are — maybe big data is a big part of it — but those other inputs are as well, including the algorithm, the quality of the employees, and the other technologies that evolve around that data. Certainly data is important, and you need it, but there’s a real question of how much you need it. For example, the nascent competitive threat story: If you need big data to be competitive, why are we ever talking about nascent competitive threats? They would never be a threat, they’d never have big data. They’re all nascent, they’re small. How could they grow up to be competitive? I reject that, I think we all would reject that story, so I think we have to be consistent and reject the story that big data, in of itself, insulates big firms from competition. And I think history has shown, and I won’t go through the boring examples that everyone brings out of MySpace and Friendster, which no one uses anymore. And then — but iTunes and Spotify, a more recent example.”