Day: July 11, 2023

The FTC has lost their bid to kill the Microsoft-Activision/Blizzard deal

It’s a great day for consumer choice worldwide, as a ruling has been issued out of the United States District Court for the Northern District of California from Judge Jacqueline Scott Corley, denying the Federal Trade Commission’s request for a preliminary injunction to halt the acquisition of Activision-Blizzard by Microsoft. 

“The FTC set out it seems, to protect the business interests of Sony’s PlayStation, completely ignoring their duty to regulate in the interest of American consumers. Judge Corley called out the FTC on it during the hearings and has delivered a sharp ruling here that will allow the deal to go forward,” said Stephen Kent, Media Director for the Consumer Choice Center. “President Biden should be taking note of how poor FTC Chair Lina Khan has been at her job, and how far she’s strayed from the mission of consumer protection.” 

<< Read: The Federal Trade Commission’s embarrassing antitrust crusade | by Stephen Kent of the Consumer Choice Center (The Hill) >>

After five days of hearings involving the FTC, Microsoft, Activision-Blizzard, Sony, and Nintendo, Judge Corley pointed out on the final day that the FTC had fallen short of providing a consumer interest to justify blocking the deal, saying “This is about harms to the consumer, not to Sony.”

“The Consumer Choice Center is excited to see gamers win this case brought by the FTC, because they are indeed the real winners in Microsoft coming together with a top-notch game developer like Activision-Blizzard,” added Kent. 

The deal has one more hurdle to clear in the UK’s Competition and Markets Authority, and we have confidence that they too will join the rest of the world’s consumer protection agencies in letting the acquisition deal close by its July 18th deadline.

Read the ruling here

Government fiddles with tobacco as SA burns

Nearly 2,000 years ago, a six-day fire devastated Rome, leaving half the city’s population homeless and destroying 70% of its buildings. As panic set in, rumours spread that the emperor, Nero Claudius Caesar Augustus Germanicus, had played the fiddle while he watched the city burn. 

In SA today the neglect of our electricity infrastructure has led to unprecedented levels of load-shedding. A cholera outbreak is threatening municipal water supplies in five provinces, and has already claimed more than 40 lives. 

Babies born prematurely in one state hospital are placed in cardboard boxes as there are no incubators available — emblematic of the chaos and corruption that prevails throughout our healthcare system. Unemployment continues to rise, with no end in sight. Investor and consumer confidence in the economy is collapsing, in no small part thanks to the government’s foreign policy blunders.

The government is fiddling while big issues burn the country. For instance, our legislators feel now is the right time to introduce new lifestyle regulations such as the Tobacco Products & Electronic Delivery Systems Control Bill. Rather than deal with the multitude of real crises that threaten South Africans’ lives and livelihoods, parliament and its health portfolio committee are fine-tuning a law that seeks to ban smoking and vaping in private premises — including our own homes. 

Another analogy is that of shuffling the deckchairs on the Titanic. But in many ways this is worse. That parliament should choose to focus on such an issue in SA’s current circumstances is like ordering the Titanic’s helmsman to leave his station and go clean the toilets when the iceberg has already been spotted on the horizon.

SA’s public policy agenda should be focused on the big issues that are wrecking our nation, not on nibbling away at consumer choice. As our defence and foreign affairs ministers tank the value of the rand by playing nice with Vladimir Putin, the health minister has resurrected Vladimir Lenin from the dead to write the Tobacco Bill. 

Read the full text here

Birds and Bees, Beware: New York’s Anti-Pesticide Bill Will Backfire 

Through recently passed legislation, the New York state legislature aims to abolish certain insecticides in defense of the “birds and bees.” 

The chemicals in question, called neonicotinoids, are commonly used in crop production to shield crops from undesired insects — including aphids, which spread the beet yellows virus. 

Lawmakers have been convinced by environmental activist groups that these products kill large swaths of pollinators, and should thus be banned for use by farmers in the state. 

Yet they’ve been misled. If the Birds and Bees Protection Act is signed into law by Governor Hochul, the effects on farmers will be severe, and pesticide use in the Empire State will only increase.

Like most poor public policy, the Birds and Bees Protection Act is built on faulty premises and a feel-good name. The statistics on pollinator decline and colony collapse disorder have long been falsely associated with the use of insecticides. 

Before insecticides were blamed for “killing the bees,” it used to be bioengineered food that was in the crosshairs of activists. 

This assumption was never backed up by evidence, and administrations on both sides of the aisle have come to recognize the incredible climate mitigation and efficiency opportunities associated with genetically engineered food. 

Bees are mostly affected by viruses and habitat loss. While it is possible for regional declines to occur, it is important to note that the honeybee population is well managed, and in no way threatened by extinction. 

The size of the honeybee population is one of the causes of threats to other bee species, and has researchers frustrated by the misguided attention brought solely onto neonics. Effects on non-managed — or wild — bees are harder to count because they are… wild, and thus hard to count. 

Significant problems exist with the methodology applied to identify declines in wild bees. The same flawed methods have been applied to prove a broader insect decline, which also have also been consistently debunked.

It’s impossible to ignore the demography behind legislation like the so-called Birds and Bees Protection Act. 

City-dwelling liberals have a rather romanticized understanding of food production and ecosystem management based on their knack for beekeeping in relatively small backyard gardens. 

Rural communities who produce and manage New York’s food supply, as well as its vital relationship to pollinators, do in fact know better. We’ve already seen how this plays out based on neonics bans in Europe which backfired on farmers, consumers and pollinators alike.

In the European Union, several countries implemented exemptions on neonic bans after they were close to ruining local farmers. The European exemption policy is not just nerve-wracking for all involved actors, it also gives farmers no certainty for the future. 

The Birds and Bees Protection Act circumvents regulatory agencies by banning the products outright, then requires those agencies to make lengthy determinations on appropriate emergency use. It is a cumbersome process that isn’t fair to farmers.

Cutting out regulatory agencies from the process was notably why Governor Newsom of California vetoed a bill that would have similarly banned neonics for non-agricultural use late last year.

Advocates for pollinators mean well, but don’t understand agriculture. One of the known effects of neonics bans in Europe has been that farmers turn to alternative types of chemicals to shield their crops. It has been shown that the use of substitute products reduces their yield and increases insect resistance — all factors that end up being worse for the environment and biodiversity. 

Are we telling farmers that they should acquire more land to account for crop losses, or use products that are sometimes ill-equipped to adequately protect their fields? 

That would be grim news for the over 25,000 farm employees in New York State, who rely on stable yields and a toolbox of reliable methods to protect their farms from invasive species. 

If yields aren’t guaranteed, then we could — as happened in France — expect rising prices in the crop production sector. For New Yorkers already eating the cost of rapid inflation, agricultural regulation of this sort is not responsible. 

Legislation should require more than a noble sounding name and good intentions to become law, and the Birds and Bees Protection Act offers nothing more than that. 

Originally published here

The EU’s ‘regulate first, innovate later’ mantra will sink U.S. tech firms

Last week, a bespeckled white-haired Frenchman strolled the streets of San Francisco in between high-profile meetings and uncomfortable photo ops.

With his horn-rimmed round glasses, wavy hair, and tailored suit, as well as a full entourage of slickly-dressed Europeans, the European Union Commissioner for the Internal Market, Thierry Breton, made his rounds in Silicon Valley.

Breton’s powerful role within the EU’s executive body is to oversee trade in Europe’s single market system, comprising nearly 500 million consumers and citizens. It makes him tremendously powerful. What other European politician could secure meetings with Elon Musk, Mark Zuckerberg, and Sam Altman in just one day?

While the mandate for Breton’s role is rather large — everything from broadband to online platforms, and climate change — his goal in San Francisco was to meet with US tech titans and CEOs to prepare them for the imminent enforcement of the Digital Services Act (DSA), an all-encompassing EU law intended to create a “safer digital space” for Europeans.

The law will come into force at the end of August and lay dozens of new obligations on internet companies that wish to serve users in the European bloc.

The DSA could best be described as Europe’s regulatory model for Big Tech and the Internet. The only problem? Only a sliver of the companies the Digital Services Act targets for restrictions or regulations are even based in the EU.

Out of the 17 companies designated “Very Large Online Platforms” by the law — meaning they will be held to the highest burden of regulation and rules — only one is based somewhere in Europe: Zalando, an online fashion retailer.

The rest are from…you guessed it…the United States. This includes firms such as Meta, Twitter, Google, Snapchat, and Amazon, but also Chinese firms such as TikTok and Alibaba.

The DSA enforces a litany of expansive restrictions and rules that go far beyond any US regulation: severe limits on targeted advertising, more diligent content moderation to remove what the EU deems “illegal” content, protocols for weeding out “disinformation”, and more.

Considering how much Big Tech has been forced to censor users to appease regulators in the free speech haven of the US, it will only get worse overseas.

While the principal aims of the DSA are well-intended — safeguarding consumer privacy and protecting minors — how these provisions are enforced or interpreted should concern all of us who believe in an open web.

To begin, there is platform liability attached to both disinformation and illegal content. In the US, we have Section 230, which exempts platforms from being liable for users’ posts. In Europe, every major online platform would be forced to instantly police its users or face severe penalties while still being weighed down by impossible questions.

Do platforms decide what is disinformation or will governments provide examples? What if a government gets it wrong, like in the early days of COVID? Or has more malicious intent like in unfree surveillance societies?

With no First Amendment-like protections for speech on the European continent, we know the censorious demands of European officials will soon swallow entire budgets of tech firms in order to comply, money that would otherwise be used to deliver value for users. Will it all be worth it?

We know that each platform has the ability to moderate or censor as they see fit, but this is usually done by internal policies and codes that users voluntarily accept, not reaction to a policeman holding the regulatory baton. Rather than focusing on restricting and limiting American tech firms, the Europeans should be doing everything possible to change their own rules in order to foster the innovation that Silicon Valley has been able to provide for decades.

The mindset promulgated from Brussels is “regulate first, innovate later,” in hopes that the talent and ideas will spring from a stable, regulated environment. If that were the case, we’d have dozens of European tech unicorns vying for global dominance. Instead, there are barely any. Or they’ve been bought up by an American company.

Europe has chosen to forgo becoming the world’s test market for innovative products and services, opting instead to be the ultimate playground of bureaucratic and legal restrictions. While some American politicians and regulators may look over with a gleeful eye, it is clear that consumers and creators are getting left behind on the Old Continent, and American users will soon be in the crosshairs.

Originally published here

The Federal Trade Commission’s embarrassing antitrust crusade

Lina Khan is one of the most radical chairs of the Federal Trade Commission (FTC) the United States has ever seen. Luckily for consumers, Khan has not been very successful. The latest evidence comes from San Francisco, where Judge Jacqueline Scott Corley of the United States District Court for the Northern District of California is presiding over the FTC v. Microsoft & Activision Blizzard’s preliminary injunction hearing.

The suit was brought on by the FTC over its expressed antitrust concerns for the burgeoning cloud video gaming industry. It’s not going well, and it’s because Khan is not guided by the traditional metrics of consumer protection and welfare that have long characterized the FTC’s approach to antitrust enforcement.

Coming off a predictable defeat in court against Meta over its bid to acquire the virtual-reality fitness company Within, President Biden’s antitrust warrior appears to have learned little. The FTC chair’s approach to blocking Meta’s purchase was to harken to an ominous “campaign to conquer VR” by Mark Zuckerberg, based on his previous acquisition of Oculus for the purpose of developing Meta’s capacity for VR headsets.

Where most see these tech acquisition deals as a simple matter of comparative advantage for companies looking to serve consumers better products at better prices, Lina Khan appears to see only the phantom of Standard Oil magnate John D. Rockefeller. It’s why her agency has adopted a more radical posture around antitrust policy, expanding its view of what constitutes unfair competition in a 2022 policy statement to include Yale-worthy buzzwords “exploitative, collusive, abusive” in its framework for identifying antitrust violations. The vagueness is the point.

In the minds of progressives like Khan who romanticize the antitrust battlesof the early 20th century, they’re carrying the banner against predatory price schemes and corporate monopolies. However, in nearly every fight Khan’s FTC has picked with big business (Amazon, Meta, Microsoft) since 2021, Khan has demonstrated what she wrote in the Yale Law Journal in 2017, that, “Animating these critiques is not a concern about harms to consumer welfare, but the broader set of ills and hazards that a lack of competition breeds.”

Khan fears corporate expansion (“powers we oppose”) of all kinds and believes it is the role of the federal government to erect obstacles and throw stones to slow their efforts, even when consumers are voting enthusiastically with their dollars for exactly what the tech sector is offering.

In the case of FTC v. Microsoft & Activision BlizzardKhan’s first week in court has been an embarrassment. At issue is whether or not Microsoft absorbing Activision-Blizzard presents a unique threat to competition within the cloud gaming space. Some video game companies keep their licensed games within the walled gardens of their console, such as Nintendo with access to Mario Kart or The Legend of Zelda. Others license their games cross-platform, such as Activision and their top hit, Call of Duty. For reasons unknown, the FTC has made it their mission to ensure that PlayStation, a Japanese company, has ready access to Call of Duty for its users.

Microsoft has offered a number of long-term licensing deals during this process to display good faith and disinterest in cutting off Sony from its major titles. It’s bad business for both parties. At the outset of the hearings, it was revealed via internal emails from within Sony, the unquestioned global leader in video game consoles and chief advocate of the FTC’s crusade, that they didn’t really care much at all about Call of Duty. In the words of Sony CEO Jim Ryan about Microsoft-Activision, “I don’t want a new Call of Duty deal. I just want to block your merger.”

Sony is who the FTC is working to protect, and American consumers should wonder why.

If the federal government is trying to block a company from being acquired, typically that company’s stock price doesn’t go up — but Activision’s has. That’s because, for almost everyone watching, it has become clear that Lina Khan’s FTC is not bringing a case to protect American consumers from corporate predation or an uncompetitive marketplace, but instead to merely make their presence known.

This is how chaperons act on a school field trip or middle school dance; they just want you to know they see you. Only in this case, “being seen” means millions in legal fees for all parties involved, including the public, who foots the bill for proceedings. 

It’s trolling on a multimillion-dollar government budget, and while it’s beneath the dignity of an institution dedicated to a level playing field for businesses and consumers alike, it’s very much on brand for Lina Khan.

Originally published here

Orban Is Running Out of Other People’s Money

There once was a time when foreign investors regarded Hungary as the tax haven of the European Union. Boasting a low corporate tax rate, a new flat tax, and most importantly for many investors massive subsidies from the Hungarian government to “create jobs,” this was Hungary’s claim to fame. But this is no badge of honor. The Hungarian government has been providing all this at the expense of EU taxpayers. In the past decade, Hungary became the second-biggest net beneficiary of EU funds, with most of those funds landing in the pockets of oligarchs and well-connected cronies.

Recently, the unexpected happened, as the EU opted to withhold funds so long as specific criteria around the rule of laware being violated. The vote passed just before Christmas of 2022, with the European Commission effectively freezing €22 billion in cohesion funds that Hungary was supposed to receive. At issue is Hungary’s increasing lack of judicial independence and academic freedom, alongside the runaway corruption that has come to define the Orban government.

In other words, the other EU members had had enough of Hungary mishandling their cash. Margaret Thatcher said it best when she noted that governments eventually “run out of other people’s money.” This is the textbook example we see now in the case of Viktor Orban’s regime, which thought it could play the “maverick” in the EU and still get away with systemic graft. No longer.

So what does the strongman of Central Europe do in response? Orban is looking for new partners outside the EU (China and the Gulf countries) to finance his gig and has begun taxing the Hungarian people and industry like never before.

Just last week, Orban used his power to rule by decree, passing several laws overnight. As the country muddles through the highest inflation rate in the European Union in addition to soaring food prices, the government is looking for new ways to raise revenue. It seems it’s settled on going after people’s savings by levying an additional 13% tax—called a “social contribution”—atop interest gains on Hungarians’ investments. Taken together with a 15% income tax previously in place, the overall tax rate on investments sits at a ghastly 28%. Most forms of savings for ordinary people have been affected. The government now encourages citizens to buy state bonds that promise a good return. Toward that end, the state is now forcing banks to inform consumers how much they would lose if they chose a bank investment over state bonds.

As a result, bizarre as it may seem, Hungarians are discouraged from saving money at a time when there is too much of it circulating in the economy.

The budget must be in terrible shape, and the Hungarian government desperately needs new means of taxing corporations. For example, retailers that have already been hard hit by the government’s price caps have also been burdened by an added revenue tax. The result is in plain sight: frighteningly high food prices, shortages, and many shops closing down permanently.

The pharmaceutical sector, which is already suffering due to the punitive nature of Orban’s taxes, has been dealt yet another blow. Their industry must now pay more tax after the cost of some medicine has increased by up to 40%. The unexpected move is forcing pharmaceutical companies to shift their strategy around the availability of certain products. Due to the fact that the Hungarian market is relatively small, facing such a significant rise in taxes could nudge pharma companies toward withdrawing from the country altogether, suspending their operations, and halting the sale of certain products. Consider how in California, U.S. insurance providers looked at the rising cost of doing business, both environmental and regulatory, and simply opted to pull out. This is the reality of how markets work, whether populists like it or not.

The result is that Hungarian consumers will suffer shortages in their pharmacies. The more dire consequences can only be known once it is too late.

If you’re wondering how the Hungarian government gets away with this chicanery in the name of deficit reduction, the answer is simple: the Orban government has been using its propaganda machinery very efficiently to persuade the public that these measures are necessary to counteract financial blackmail from Brussels. The regime asserts that the EU is withholding funds to which Hungary is entitled and that there are “greedy” sectors of big business that should contribute more.

What of the fact that these actions bear no evidence of helping to lower record-high inflation and food prices, or that they will not ease supply shortages? The past decade has seen Hungarian government propaganda become highly efficient in persuading its people. Enormous amounts of money have been spent to convince the people that all the ills Hungary faces are caused by the West, George Soros, banks, and multinational companies. The government goes so far as to claim that the chief rival of the nation is Brussels. The very same people who once suffered under Soviet rule now praise the likes of Vladimir Putin and Xi’s China while reaping the benefits of NATO and EU membership. Propaganda is working, and dissent within Hungary’s legislature is increasingly difficult to find. Facts have long lost their meaning in a country where there is always someone else to blame.

Originally published here

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