US Internet Policy’s Anticompetitive Asymmetric Accountability - DOJ Filing

Note: this post summarizes a Precursor LLC presentation filing for the record of the U.S. DOJ Antitrust Division’s 3-14-18 Roundtable on Antitrust Exemptions & Immunities. See the presentation/filing here.

Presentation Title:

“A Market Divided: U.S. Internet Policy Creates Anticompetitive Asymmetric Accountability.”
Government exemptions and immunities overwhelmingly favor regulatory arbitrage over free market competition. Accountability arbitrage harms: consumer welfare; free market forces; the process of competition; and economic growth.

Executive Summary:

DOJ Antitrust Division concerns about government exemptions and immunities undermining “a well-functioning free-market economy” and “the unrestrained interaction of competitive forces [that] yields the best allocation of economic resources” – are well founded. 

America’s twenty-year-old, Internet-first Industrial-policy has exempted and immunized Internet platforms from most law, regulation, and accountability that their competitors must obey. This exceptional distortion of America’s free market competition, has resulted in the upside-down antitrust outcome, where the distribution networks with the most scale, scope, reach, network effects, market power, and competition complaints in modern history, appear to be enjoying minimal antitrust scrutiny currently from the DOJ and FTC.

This DOJ filing spotlights the problem of anticompetitive asymmetric accountability, where only Internet companies are exempted from: all U.S. communications law, regulation, and public responsibilities; most Federal and State regulation; and most civil liability for whatever happens on their platforms.

Regulating similar distribution networks oppositely, massively favors regulatory arbitrage strategies over free market competition. This is especially problematic because arbitrage is generally unproductive, speculative, or parasitic activity, and not generally economic investment or real value creation.

What’s innovative here is a first-of-its-kind causation model for asymmetric accountability. It shows how asymmetric game rules and playing field incents arbitrage and generates unfair predetermined winners and losers. The causation model also shows how arbitrage distorts the process of competition and depresses growth.

Next are the effects of encouraging regulatory arbitrage, i.e. harms to: 1) consumer welfare; 2) free market forces; 3) the process of competition from Google, Facebook, and Amazon’s bottleneck distribution control over offline supply and online demand; and 4) economic growth.   

Finally, the recommended solution is new legislation that ensures equal accountability under the law,with one consumer centric, and technology-neutral, communications standard and one equal accountability policy; and one antitrust enforcement policy that ensures no real or implied antitrust immunity for Internet platforms. 

Important:

We know inputs drive outputs. What most people don’t know is that extremely-asymmetric, online-offline, accountability inputs, are overwhelmingly causing extreme accountability arbitrage, that predictively is resulting in extremely anticompetitive and economically-destructive outputs. Bad inputs cause bad outputs. This is not smart, sound, or productive U.S. policy.

So, for those seeking predictive clarity-of-thought into the core problem here, and its predictable cause and effects, please don’t miss the first-of-its-kind causation model for asymmetric accountability in this presentation. Hopefully, it can help policymakers put first things first.

Forewarned is forearmed. 

***

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an internetization consultancy specializing in how the Internet affects competition, markets, the economy, and policy, for Fortune 500 companies, some of which are Internet platform competitors. He is also Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. Cleland has testified seven times before the Senate and House Antitrust Subcommittees on antitrust matters. Overall, eight different congressional subcommittees have sought his expert testimony a total of sixteen times. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.”

Asymmetric Accountability Harms Series:

Part 1:   The Internet Association Proves Extreme U.S. Internet Market Concentration [6-15-17]

Part 2:   Why US Antitrust Non-Enforcement Produces Online Winner-Take-All Platforms [6-22-17]

Part 3:   Why Aren’t Google Amazon & Facebook’s Winner-Take-All Networks Neutral? [7-11-17]

Part 4:   How the Google-Facebook Ad Cartel Harms Advertisers, Publishers & Consumers [7-20-17]

Part 5:   Why Amazon and Google Are Two Peas from the Same Monopolist Pod [7-25-17]

Part 6:   Google-Facebook Ad Cartel’s Collusion Crushing Competition Comprehensively [8-1-17]

Part 7:   How the Internet Cartel Won the Internet and The Internet Competition Myth [8-9-17]

Part 8:   Debunking Edge Competition Myth Predicate in FCC Title II Broadband Order [8-21-17]

Part 9:   The Power of Facebook, Google & Amazon Is an Issue for Left & Right; BuzzFeed Op-Ed[9-7-17]

Part 10: Google Amazon & Facebook’s Section 230 Immunity Destructive Double Standard [9-18-17]

Part 11: Online-Offline Asymmetric Regulation Is Winner-Take-All Government Policy [9-22-17] 

Part 12: CDA Section 230’s Asymmetric Accountability Produces Predictable Problems [10-3-17]

Part 13: Asymmetric Absurdity in Communications Law & Regulation [10-12-17]  

Part 14: Google’s Government Influence Nixed Competition for Winner-Take All Results[10-25-17]

Part 15: Google Amazon & Facebook are Standard Monopoly Distribution Networks [11-10-17]

Part 16: Net Neutrality’s Masters of Misdirection[11-28-17]

Part 17: America’s Antitrust Enforcement Credibility Crisis – White Paper [12-12-17]

Part 18: The U.S. Internet Isn’t a Free Market or Competitive It’s Industrial Policy [1-4-18]

Part 19: Remedy for the Government-Sanctioned Monopolies: Google Facebook & Amazon [1-17-18]

Part 20: America Needs a Consumer-First Internet Policy, Not Tech-First[1-24-18]

Part 21: How U.S. Internet Policy Sabotages America’s National Security [2-9-18]

Part 22: Google’s Chrome Ad Blocker Shows Why the Ungoverned Shouldn’t Govern Others [2-21-18]

Part 23: The Beginning of the End of America’s Bad “No Rules” Internet Policy [3-2-18]

Part 24: Unregulated Google Facebook Amazon Want Their Competitors Utility Regulated [3-7-18]