Category Archives: Antitrust

The Antitrust Attack on Big Technology – New for Harvard Business Review

My co-author Blair Levin and I are pleased to announce the publication of our latest article for Harvard Business Review.

In the last few months, the U.S. federal government has brought two major antitrust cases: one to block Microsoft’s acquisition of game developer Activision, and another against Google aimed at forcing the company to divest some of its advertising businesses. Along with the Federal Trade Commission’s failed effort to stop Meta’s acquisition of a virtual reality startup, an earlier federal case against Google regarding search, multiple ongoing state-level cases against the company, and reports the FTC will soon bring an action against Amazon, it appears that hunting season for large technology companies is in full swing.

For those hoping to close deals in the future, we offer five essential rules to avoid running afoul of regulators.

Check out the article here:

https://hbr.org/2023/02/microsoft-google-and-a-new-era-of-antitrust

Why All Companies Need a “Political Strategy” – New in MIT Sloan Management Review

My co-author Blair Levin and I are pleased to announce the publication of our latest article for MIT Sloan Management Review, which will also appear in the upcoming Winter issue.

The article reviews growing clashes between companies embracing stakeholder values and roiling political waters at home and abroad.  Many enterprises have been caught off-guard, leading to damaging PR crises and ad hoc responses.

We propose the creation of a comprehensive political strategy, and offer five guiding principles that successful companies have already embraced.

Check out the article here (registration required):

https://sloanreview.mit.edu/article/every-company-needs-a-political-strategy-today/

How will Biden regulate tech? Carefully.

This week in MIT Sloan Management Review, Larry proposed a series of solutions to looming crises in the regulation of disruptive innovation. The article, “How Should the Biden Administration Approach Tech Regulation? With Great Care,” proposed five principles lawmakers have traditionally followed in regulating emerging technologies, but which have fallen out of favor in the last decade as the pace of technological change continues to accelerate. Larry argues that the relative slowness of law favors less, not more, intervention.

Larry also participated in a lively debate with SMR editor in chief Paul Michelman about his proposal. You can listen to in on the SMR website.

A Measured Approach to Regulating Tech

harvard-business-review-1-logo-png | ReSci

Today for Harvard Business Review, Larry cautions regulators of potentially transformative technologies to consider likely benefits as well as potential costs, and try to find a balance between the two. With so much of the tech-related news focused on harms, many of them unquantified or carefully studied, we risk losing out on some of the most important breakthroughs still to come from the digital revolution.

Debating tech regulation, this week in The Economist

All this week, Larry is participating in a spirited on-line debate for The Economist, taking the “no” side of the question “Should the tech giants be more heavily regulated?”  Taking “yes” is author Andrew Keen, whose new book, “How to Fix the Future,” Larry reviewed earlier for The Washington Post.

Voting, which has so far heavily favored the “yes” side, continues through May 6th.

Trust (but verify) the engineers

 

Last week, I participated in a program co-sponsored by the Progressive Policy Institute, the Lisbon Council, and the Georgetown Center for Business and Public Policy on “Growing the Transatlantic Digital Economy.” The complete program, including keynote remarks from EU VP Neelie Kroes and U.S. Under Secretary of State Catherine A. Novelli, is available below.

My remarks reviewed worrying signs of old-style interventionist trade practices creeping into the digital economy in new guises, and urged traditional governments to stay the course (or correct it) on leaving the Internet ecosystem largely to its own organic forms of regulation and market correctives:

Vice President Kroes’s comments underscore an important reality about innovation and regulation. Innovation, thanks to exponential technological trends including Moore’s Law and Metcalfe’s Law, gets faster and more disruptive all the time, a phenomenon my co-author and I have coined “Big Bang Disruption.”

Regulation, on the other hand, happens at the same pace (at best). Even the most well-intentioned regulators, and I certainly include Vice President Kroes in that list, find in retrospect that interventions aimed at heading off possible competitive problems and potential consumer harms rarely achieve their objectives, and, indeed, generate more harmful unintended consequences.

This is not a failure of government. The clock speeds of innovation and regulation are simply different, and diverging faster all the time. The Internet economy has been governed from its inception by the engineering-driven multistakeholder process embodied in the task forces and standards groups that operate under the umbrella of the Internet Society. Innovation, for better or for worse, is regulated more by Moore’s Law than traditional law.

I happen to think the answer is “for better,” but I am not one of those who take that to the extreme in arguing that there is no place for traditional governments in the digital economy. Governments have and continue to play an essential part in laying the legal foundations for the remarkable growth of that economy and in providing incentives if not funding for basic research that might not otherwise find investors. And when genuine market failures appear, traditional regulators can and should step in to correct them as efficiently and narrowly as they can.

Sometimes this has happened. Sometimes it has not. Where in particular I think regulatory intervention is least effective and most dangerous is in regulating ahead of problems—in enacting what the FCC calls “prophylactic rules.” The effort to create legally sound Open Internet regulations in the U.S. has faltered repeatedly, yet in the interim investment in both infrastructure and applications continues at a rapid pace—far outstripping the rest of the world.

The results speak for themselves. U.S. companies dominate the digital economy, and, as Prof. Christopher Yoo has definitively demonstrated, U.S. consumers overall enjoy the best wired and mobile infrastructure in the world at competitive prices. At the same time, those who continue to pursue interventionist regulation in this area often have hidden agendas. Let me give three examples:

1. As we saw earlier this month at the Internet Governance Forum, which I attended along with Vice President Kroes and 2,500 other delegates, representatives of the developing world were told by so-called consumer advocates from the U.S. and the EU that they must reject so-called “zero rated” services, in which mobile network operators partner with service providers including Facebook, Twitter and Wikimedia to provide their popular services to new Internet users without use applying to data costs.

Zero rating is an extremely popular tool for helping the 2/3 of the world’s population not currently on the Internet get connected and, likely, from these services to many others. But such services violate the “principle” of neutrality that has mutated from an engineering concept to a nearly-religious conviction. And so zero rating must be sacrificed, along with users who are too poor to otherwise join the digital economy.

2. Closer to home, we see the wildly successful Netflix service making a play to hijack the Open Internet debate into one about back-end interconnection, peering, and transit—engineering features that work so well that 99% of the agreements involved between networks, according to the OECD, aren’t even written down.

3. And in Europe, there are other efforts to turn the neutrality principle on its head, using it as a hammer not to regulate ISPs but to slow the progress of leading content and service providers, including Apple, Amazon and Google, who have what the French Digital Council and others refer to as non-neutral “platform monopolies” which must be broken.

To me, these are in fact new faces on very old strategies—colonialism, rent-seeking, and protectionist trade warfare respectively. My hope is that Internet users—an increasingly powerful and independent source of regulatory discipline in the Internet economy—will see these efforts for what they truly are…and reject them resoundingly.

The more we trust (but also verify) the engineers, the faster the Internet economy will grow, both in the U.S. and Europe, and the greater our trade in digital goods and services will strengthen the ties between our traditional economies. It’s worked brilliantly for almost two decades.

The alternatives, not so much.