Author: Kimberlee Josephson

Lina Khan’s Anti-Progress Paradox

Federal Trade Commission Chair Lina Khan has it out for Amazon, and it is a fight she’s been preparing for since grad school. Six years ago, in 2017, Khan amassed attention with the publication of her academic article criticizing Amazon’s eCommerce dominance. Khan was 29 years old, just a year older than Amazon is today.

Thanks in part to the notoriety Khan achieved from that publication, the Biden Administration appointed her to the FTC, and she has been eager to put Amazon in the hot seat ever since.

Khan’s article, “Amazon’s Antitrust Paradox” featured in The Yale Law Journal, notes how Amazon’s “sheer scale and breadth…may pose hazards” to our economic system and “the potential social costs of Amazon’s dominance” is worrisome. However, just one page prior to these assertions, Khan notes how customers “universally seem to love the company” and that “close to half of all online buyers go directly to Amazon first to search for products.” 

Khan’s article, and the attention it received, signals a scary level of evasion within our culture. There is a strong desire to bash big business and vilify the success of billionaires, yet much of their wealth was derived through the power of our own pocketbooks. Our Starbucks coffee, use of smartphone capabilities, and online shopping sprees weren’t brought on by force — they were choices. And to a large extent, we are better off because of them.

This is not to say that marketers haven’t improved their ability to appeal to our interests, incentivize our purchase decisions, and persuade us with readily available buy-it-now buttons. But being coaxed is not the same as being coerced.

Over 200 million people across the globe have opted to use Prime, and even government agencies (too many in the US to name) have readily signed on for Amazon Web Services (AWS). The launch of AWS in 2006 has been a huge benefit to organizations of all shapes and sizes, and the sheer scope of offerings that Amazon has developed over time for helping small businesses is truly remarkable. 

Currently, more than 60 percent of sales in Amazon’s stores are derived from small and medium-sized businesses, and Amazon has gone to great lengths to incentivize various forms of entrepreneurship.

Amazon offers educational assistance to those looking to leverage its platform through programs like Seller University and Small Business Academy, and it enables sellers to differentiate and appeal to consumers according to what region they are in or communities they represent.

The value derived from using Amazon’s logistics and promotional strategies is undeniable given that it has resulted in the creation of entire agencies whose sole purpose is to help other firms maximize their use of Amazon. 

Indeed, despite the FTC’s aversion to Bezos’s business, Amazon is an American brand to be proud of. Over the years, it has earned many awards and accolades for its customer-centric approach and Amazon is often referenced in business courses to reiterate best practices for business growth.

People love the Amazon brand – so much so that it was ranked higher than the US military in the Harvard CAPs Harris Poll and achieved top positions in both the Morning Consult list and the Axios Harris Poll for its favorable status and reputation. And yet, little appreciation is granted by Khan or her FTC colleagues for how Amazon improves efficiencies for small and medium-sized businesses or caters to customers who may have limited means

If Amazon can be sued by the FTC for the success it has achieved in catering to customers and enabling the sales of third-party sellers, what chance does a small business have for crafting its own strategies and having autonomy over its own operations and distribution networks? Industrial liberty is being hampered by government power more than it is via corporate power, and all members of the business community should be concerned about this fact. 

A society can’t progress when an economic system is subject to bureaucratic bullying or when the dynamics of market mechanisms are distorted by political pressures. 

Antitrust laws, as being applied by Lina Khan, are truly anti-progress.

Originally published here

Why does Ted Cruz want to empower Biden’s radical FTC?

Data privacy is an increasing concern for consumers and tech advocates alike. Lawmakers from both the Republican and Democratic parties know this, and it’s why the Informing Consumers about Smart Devices Act, being championed by Sen. Ted Cruz (R-TX), is receiving bipartisan support.

Cruz says this bill would “inform” consumers about smart devices with “spying” capabilities, but it is just another opportunity for politicians to expand their ever-growing paternalistic role in our daily lives.

Sure, users value their privacy, but only to a certain degree. Case in point: the smartphones that roughly 310 million people voluntarily keep on their person 24/7, even while they’re in the bathroom. Does it really matter if a smart refrigerator is equipped with the same technology as the smartphone present in your pocket (especially when the refrigerator has the added bonus of assisting with food management)?

Despite what Cruz may think, consumers aren’t dumb when it comes to smart products. We don’t need a warning label for the presence of audio-video software or internet-enabled capabilities. If a device needs to connect to WiFi or an app to function, clearly it is internet-enabled. If lights, thermostats, or music can be controlled by voice commands, then of course these devices have a listening function.

Many of us have come to accept the trade-off of data collection by companies we trust in order to use certain products, services, or websites. For some time now, internet surfers and online shoppers have become acquainted with pop-ups asking to enable cookies on their browsers. Digital cookies were always there, but what changed was the notification of them due to policy pressures. Have the cookie notifications really changed online activities? I doubt it. Have more pop-ups in the name of transparency improved online experiences? Also doubtful.

Organizations gather data to know their consumer base, not to stalk us and discover our dirty secrets. In fact, I’d appreciate it if my tech-enabled Traeger grill was “spying” on me — that way, I might receive some coupons based on my grilling history or suggestions on how to improve my barbecuing skills.

Firms are well aware that their reputation hinges on the comfort level of consumers when it comes to tech use and data collection: If consumers feel a company is infringing too much upon their privacy, backlash will surely ensue. As such, government deliberation over this matter is simply unnecessary.

If passed, the proposed bill will, at best, require warning labels to be affixed to the packaging of smart products and, at worst, place the Federal Trade Commission in charge of establishing disclosure guidelines and enforcement mechanisms. Any cost a company incurs related to regulatory compliance deemed necessary by the FTC will be felt in the marketplace, and manufacturers will take into account the potential for fines from the FTC when establishing their price points.

The expense of FTC interference will be borne by all taxpayers, and the cost to companies for new packaging and labels will spill over into higher prices for consumers.

It is unclear why members of the Republican Party would want to expand the regulatory mandate of the FTC, given that Chairwoman Lina Khan has proven her position as an anti-business ideologue ever since she was appointed by President Joe Biden. Our independent purchase decisions do not need to create an economic burden for all taxpayers nor serve as a means for furthering the FTC’s inquisition against corporate America.

At the end of the day, it is important to remember that every individual consumer has authority over what tech products are used within his or her home. Rather than increase the power of the regulatory state over our consumption habits, consumers concerned about their appliances having spyware capabilities should simply shop accordingly, and any nefarious activities should be handled by the court system.

The “Internet of Things” is meant to predict wants, persuade actions, and improve consumer experiences. Some in-home smart devices can even be literal lifesavers. Thanks to advancements in wearable tech and telehealth, real-time assessments can be transmitted to healthcare providers to allow for independent living at home. Take WalkWise, a smart mobility aid attachment benefiting those in need of senior care. Devices such as these shouldn’t be bogged down by FTC interference or government oversight.

Products that advance our well-being, and that we buy according to our preferences with our own money, should not be vilified by politicians and used to grow the nanny state. Although Cruz claims this bill to be “common sense legislation,” that assumes you (the consumer) have no common sense of your own.

Originally published here

Outdated rules create inflated costs for consumers at DCA

It’s not a great time to fly. According to the consumer price index for airfare, ticket prices are at an all-time high after jumping 25% this summer. Airlines are grappling with fuel price hikes (up 150%), staffing shortages, increases in labor expenses (up 19%), and burdensome debt accrued during the pandemic — all of which have a negative spillover effect on price points for passengers.

Although demand for air travel has come back strong, airlines are finding it difficult to meet the needs of consumers when it comes to flight costs and destination spots. Removing any unnecessary added expense or barrier to flying is more important now than ever.

Consumers should have access to the airports most conducive to their pocketbooks and travel plans, and it is for these reasons that the Direct Capital Access Act is being proposed for Ronald Reagan Washington National Airport.

DCA is the only airport that is required to abide by what’s known as the “perimeter rule,” which limits inbound and outbound nonstop flights to a 1,250-mile radius. DCA must also adhere to a “slot rule,” which only two other airports, LaGuardia Airport and John F. Kennedy International Airport, must follow. The slot rule requires flights to have a reservation for takeoff or landing, and “slots” at DCA are capped at just 60 per hour. 

The Direct Capital Access Act aims to eliminate these rules, and below are some considerations for why.

Irrelevant rules

DCA has been operating since 1941, and in those early years, both the perimeter and slot rules made perfect sense. Airplanes required more runway space, they had significantly longer takeoff and landing times, and the noise was of concern to surrounding neighborhoods. That’s in part why Dulles International Airport was established in 1962, to alleviate air traffic to DCA and accommodate international aircraft flying greater distances.

Throughout the 1960s, the perimeter and slot rules for DCA served a purpose from an operational standpoint and had the added benefit of helping to develop a market for the newly established Dulles option.

Times change, and so has the business of air travel. According to a recent analysis by the American Action Forum, density concerns and flight capabilities have evolved and improved dramatically since then, so consumers should be able to capitalize on these advancements.

Passenger preference

Instead of being able to fly into DCA, many consumers must fly to Dulles or Baltimore-Washington International Thurgood Marshall Airport and spend extra time and expense for ground transport to get to where they really want to go. As for those able to secure a DCA direct flight, upfront costs for tickets are high due to supply and demand pressures.

The added expense for DCA, however, is competitively countered by airport convenience. DCA offers quick and easy access to ground transportation from the gates and is in an optimal location for heading to Capitol Hill or downtown Washington. Yet only those with the financial means to do so can take advantage of the benefits of DCA has to offer.

Airline arguments

Removing the perimeter and slot rules for DCA is not only of interest to consumers but also to airlines. Delta Air Lines is a proponent of the bill, asserting that it would meet the needs of consumers, and other advocates for the bill claim it would increase competition, reduce ticket costs, and generate new job opportunities for the metropolitan region.

In opposition to Delta’s stance is United Airlines. United has a vested interest in passengers being directed to Dulles because it unofficially owns that airport. Dulles is referred to as a “fortress hub” for United flights since United controls 70% of the gates.

Not to be left out of the DCA debate is American Airlines. American has preestablished designated slots at DCA, and given that there is a “use it or lose it” approach to reservations, some of American’s connecting flights are routed to DCA simply to safeguard slots.

If the slot and perimeter rules were to be removed, it is likely that passengers flying into DCA would actually be staying in the metropolitan region and flight patterns could be used more efficiently.

As rightly noted by Stephen Kent at the Consumer Choice Center, “Travel can be stressful enough as it is for consumers without artificially imposed barriers to efficiency and competition in the Washington, D.C. market.”

Washington, D.C., is the most expensive location for domestic flights. By removing the pernicious perimeter rule, consumers could save substantially on flight costs, and by scrapping the slot rule, our nation’s capital could become a more accessible destination rather than a pit stop for connecting flights.

We’ve come a long way since the first flight in 1903, and if aircraft can advance as rapidly as it has, so too should the operations and stipulations of the airports that serve those taking to the skies.

Originally published here

The 1983 Video Game Crash and a History Lesson for Lina KhanCoke won’t give you cancer

The youngest chair in FTC history should familiarize herself with how the video game industry has survived and thrived since its inception instead of blocking mergers that would benefit consumers.

The video game industry is getting a lot of attention lately thanks to both exciting tech advancements and unprecedented interference by the Federal Trade Commission (FTC). The sector has witnessed substantial growth in recent years, which is why antitrust concerns are being raised by Federal Trade Commission (FTC) Chair, Lina Khan. It can often feel like ancient history, but video gaming’s future hasn’t always been so bright in the U.S. In fact, it was almost “game over” for the business at the start of the 1980s.

The 1983 Video Game Crash, as it is known today by industry insiders, left the market for video games with no clear path to recovery. A primary culprit for the industry’s downfall was third party publishers, who were flooding the market with subpar products. Up until this time, Activision was a primary provider of video games, and with interest in gaming growing fast, other opportunistic firms sought to get in on the action by offering lower-priced, lower-quality games to consumers.

Parents would scoop up a handful of these off-brand games for the price of one Activision video game, assuming that their kids would be thrilled. They quickly learn this was not the case.

User reviews didn’t exist at this time and since parents weren’t consulting other children for feedback on the games being sold, it was hard to be clued in on what was worth buying.

Trust in the gaming market dropped, and increasingly risk-averse consumers were hesitant to buy the top-shelf games for fear of being duped again.

It wasn’t until Nintendo released the Nintendo Entertainment System in 1985 that interest in gaming rebounded. Super Mario Bros, along with other addictive games like Tetris, Atari’s Gauntlet, and Sega’s OutRun, restored interest and faith in gaming products. Since then, the industry has grown at an impressive rate.

Access and options for gamers have dramatically improved thanks to techinnovations in mobile gaming, as well as the surge of engagement duringthe COVID-19 lockdowns. Consumers were particularly eager for novel in-home entertainment, and multiplayer as well as online-based gaming allowed them to connect and create affinity networks like never before. And though the pandemic was a nightmare for millions of Americans, gaming has been credited as “a positive force in the field of mental health.”

Today gaming is big business, on track to be worth $321 billion by 2026, which is why Lina Khan and the FTC have their sights set on the sector. Since her appointment as FTC Chair by President Joe Biden, Khan has made clear her negative view of corporate growth, which is unfortunate, given that US gaming firms have yet to catch up with the likes of Japan’s Sony Interactive Entertainment Studios.

The Japanese juggernaut’s long march toward market dominancesolidified in 2020 when Sony released the Playstation 5 (PS5), which quicklybecame the global favorite for next-generation gaming consoles.

In response, Microsoft’s US-based Xbox Games Studios went on defense,announcing its plan to purchase Activision-Blizzard in January 2022. The merger brought Guitar Hero, World of Warcraft, Call of Duty, Diablo, and Candy Crush Saga all under one roof. Microsoft’s interest, therefore, is unsurprising, but this mutually beneficial business transaction between Microsoft and Activision-Blizzard was enough to draw the attention and legal might of Lina Khan’s FTC.

Instead of allowing Microsoft to improve its competitive stance against Sony, the FTC sought to block the merger. The legal battle turned out to be a huge waste of time and resources at taxpayers expense. What is particularly puzzling is the fact that other jurisdictions around the world were already greenlighting the deal, and yet our own government opposed an American firm’s advancement against a foreign entity with 70 percent market share.

Fortunately for Microsoft, Khan’s claims against the merger carried little weight in court. Unfortunately for Khan, her failed filing has led many to call into question her understanding of business and antitrust law. For instance, the FTC asserted that the merger could result in Microsoft restricting Activision-Blizzard games only to Xbox consoles, an unconvincing claim given Microsoft’s standing commitment to maintain the distribution status quo with Sony.

The hypocrisy was clear to gamers watching the case play out in court, who are most all aware that Sony’s popular title, The Last of Us, is only available on PlayStation consoles. And who is to say there is anything wrong with exclusivity in the first place?

The role of the FTC is to ensure consumer welfare in the marketplace, and right now it seems Khan is willfully overstepping her authority. It’s unclear who exactly she thinks the FTC is protecting in slowing down Microsoft. The FTC’s interference is delaying opportunities for gamers and developers at a time when creativity for gaming content is really taking off. Although the 2020 lockdowns surged interest in gaming users, the ability for developers to collaborate and curate new games has been hampered by remote work and other hardships brought on by the pandemic.

If we have learned any lessons from the Video Game Crash of 1983, it should be that improvements in gaming access and quality should be encouraged, not derailed. Today’s gamers have high expectations for new and innovative experiences, and FTC interference only gets in the way of content development and distribution.

Though the great gaming crash occurred just before Lina Khan was born, the FTC’s youngest chair in its history should familiarize herself with how this industry has survived and thrived since its inception. Gamers call the shots, and like other consumers, they’re the most powerful source of accountability for an industry supported by their hard-earned dollars.

The FTC stepped far outside its lane at the expense of taxpayers, and one can only hope that a lesson was learned.

Originally published here

Government Interference in Energy, Gaming Is Harming PA

Small businesses throughout Pennsylvania have faced many hardships over the past few years, ranging from supply-chain bottlenecks to overbearing bureaucratic mandates. And the toll has not gone unnoticed, as evidenced by President Joe Biden’s visit to the state shortly after taking office. 

During his March 2021 visit, President Biden noted that some 400,000 businesses in the state were facing closure. His policies, however, have not helped: the administration’s 2023 budget proposal does little to alleviate burdens for Pennsylvania business owners. 

In fact, the Biden administration has called for increasing taxes on residents and businesses even though Pennsylvanians already pay one of the nation’s highest tax ratesHigher gasoline prices are also likely, given that Biden is pushing new energy regulations that will inhibit alternative energy supply. Gas prices in Pennsylvania are already among the highest in the U.S., and state residents’ home heating billshit record highs at the end of last year.

All of this explains why the state’s natural gas reserves should be leveraged. A recent Wall Street Journal article credits natural gas for keeping energy bills manageable during this hot summer; and for Pennsylvania residents, natural gas is beneficial not only for lowering energy costs but also for driving economic growth. Pennsylvania’s total natural gas storage capacity is the fourth-largest in the nation, at about 763 billion cubic feet, and fracking generates substantial economic spillover effects, providing jobs and investment opportunities.

In addition to infringing upon energy supply, the Biden administration is also interfering with private business deals – most recently within the gaming sector, another important industry for Pennsylvania. 

Recently, Biden’s Federal Trade Commission chair, Lina Kahn, sought to block Microsoft’s acquisition of game developer Activision-Blizzard. Fortunately, the FTC’s case fell short in court, and Microsoft’s Xbox users can look forward to better options when subscribing to its Game Pass plans.

The Microsoft-Activision deal improves gaming choices for consumers and also helps elevate Microsoft’s status in the global gaming market. Tencent, headquartered in China, and Sony, based in Japan, presently dominate the gaming realm.

Microsoft’s acquisition of Activision-Blizzard is an important step for Pennsylvania’s economy since, according to Fortune magazine, Pennsylvania is one of the top 10 states for video-game development. The state’s gaming sector is thought to be worth over $80 million locally. It is alarming that Khan and the Biden administration sought to stifle America’s competitiveness in this sector, especially when international jurisdictions greenlighted the transaction. When the EU is a better champion for an American firm’s aspirations than our own federal government, something is clearly amiss.

Thanks in part to such restrictive economic policies, Pennsylvania now ranks 44 out of 50 in business environment for economic growth. And, according to the 2023 State Business Tax Climate Index, the state ranks 42 out of 50 for corporate taxes and 33 out of 50 for tax rates overall. Heading into the 2024 presidential election, the Biden administration should recognize Pennsylvania’s political importance and ease regulatory restrictions to allow the state’s residents to prosper.

Originally published here

Some tips for graduates on getting their first job 

A paycheck can be a powerful tool for those who know how to manage it properly – particularly in today’s state of economic uncertainty. But for those who recently secured their first full-time position post-graduation and are feeling uncertain as to where to start when it comes to maximizing their incoming income, here are a few tips for getting started.

First and foremost, it is good practice to think of your earnings as needing to fill three separate buckets. One for savings, one for spending, and one for living. This is where the 50/30/20 rule comes into play. The 50/30/20 rule is a simple and straightforward budgeting strategy that can be applied to your earnings right away. Essentially, this rule claims that half of your after-tax earnings (50%) should be allocated for needs and living expenses, while the other half should cover wants-related expenditures (30%) along with savings and investments (20%).

Although following the 50/30/20 rule sounds easy enough, keeping your savings secure and purchases purposeful does require deliberate decision-making and dedication.

Read the full text here

The Gas-Powered Banning Bandwagon: Why Politicians Should Leave Leaf Blowers Alone

According to studies on motivation, autonomy, mastery, and purpose are key driversof human behavior. And those embodying an entrepreneurial mindset will capitalize on their desire to create by leveraging networks and opportunities as they arise from the marketplace.

Consumer interests and consumption patterns serve as powerful signals regarding what is of value, and economic pressures ensure that what is pursued is worth producing.

Unfortunately, some innovations are being demanded by politicians, not markets. Take, for example, advancements in electric and battery-powered tools. Such machinery has been gaining significant traction over the past few decades, as iterations and adjustments have occurred through learning by doing.

Major benefits of battery-powered equipment include reduced noise and reduced emissions. As such, for landscapers, battery-powered leaf blowers seem to be an intriguing option. These types of blowers improve working conditions (no need for ear protection or concerns for breathing gas fumes all day), improve workflow (no concerns with disturbances at odd hours), and appease customers who are environmentally conscious.

The disadvantages, however, still outweigh the positives, given that battery blowers are less effective and rather costly compared to those that are gas-powered. For the time being, battery blowers only make sense for homeowners with light maintenance needs.

Be that as it may, industry interests and product improvements are creating incentives for battery options to become the standard choice over time, but government officials are demanding that the time for change is now.

It’s been a little over a year since the District of Columbia phased out gas blowers due to both noise and air pollution. Cities and states have gotten into the act too, banning gas-powered leaf blowers despite the fact that battery-powered blowers increase costs to both landscapers and their customers. Moreover, inefficient leaf cleanup can also create environmental costs due to storm water management matters.

Read the full text here

Online Security Concerns Shouldn’t Enable a Surveillance State

At the 2012 London Olympics, Sir Tim Berners-Lee, creator of the World Wide Web, crafted the message “This Is For Everyone.” And at that time digitized opportunities felt limitless. Now, a little more than a decade later, that message might read “This is for Everyone – Pending Oversight and Approval.”

Indeed, tech accountability proposals and high profile hearings with Silicon’s finest were plentiful last year and this year shows no signs of slowing down. Governmental officials of both parties have proven to have a never-ending interest in meddling in online anonymity, as the recently proposed RESTRICT Act shows.

RESTRICT stands for Restricting the Emergence of Security Threats that Risk Information and Communication Technology – the name says it all. 

Essentially, this act grants the Department of Commerce the authority to interfere with any data of any user and prosecute any activity based on any possibility of a threat – and any disapproval for interference derived from Congress can only be brought forth after the fact. If this sounds out of proportion, read it for yourself.

While other proposed bills, such as Section 230, have (wrongly) placed service providers and social media networks as the target for regulation, the RESTRICT Act applies to everyone.

Under the RESTRICT Act, all internet-based interactions and transactions would be subject to surveillance and scrutiny, which is why some have dubbed the RESTRICT Act to be ‘the Patriot Act 2.0.’ Such an assertion, however, is too kind, since the ‘sneak and peek’ approaches that were allowed under the Patriot Act pale in comparison to the constant oversight of online affairs that the RESTRICT Act would enable.

It is also worth noting that the Patriot Act was set to expire in 2005 but, like many government programs, it has been preserved and currently lives on under the USA Freedom Act of 2015. And although the USA Freedom Act had a planned expiration date set for 2020, it is also still hanging on.

It seems unlikely the RESTRICT Act will gain any real traction given its extreme nature, but proposals like these act as prototypes or concept tests for what might come next – and stranger things have happened.

It was just a little over a year ago, for example, when the Biden Administration launched the Disinformation Governance Board, aka the ‘Ministry of Truth.’ Nina Jankowicz, the appointed ‘disinformation czar,’ went viral on TikTok with a revamped (and ridiculed) rendition of ‘Supercalifragilisticexpialidocious,’ and backlash quickly ensued as the board was evidently too Orwellian for the American public to stomach. 

The states are getting in on the act too. Take for example the Arkansas legislature’s recent passing of an “online youth safety” bill, which itself mirrors a law which Utah passed last month. 

Arkansas’s Social Media Safety Act, signed by Gov. Sanders, requires all online users to prove whether they are age-appropriate for certain platforms and content, which thereby necessitates the collection of biometric and personal data for ID verification. 

Any online anonymity or semblance of data privacy has been revoked by the state in the name of safeguarding children. Yaël Ossowski, deputy director of the consumer advocacy group Consumer Choice Center, rightly asserts that the government is now poised to be “the final arbiter of whether young people access the Internet at all.” 

Parental ability (and responsibility) to play a part in the digital lives of their children is being delegated to government bureaucrats, and it won’t be long until other state legislatures follow suit. Connecticut looks to be next.

What is truly disturbing about these laws is that they enable government overreach in places that the market has already been providing solutions for online child safety. Concerns over data management and data access have resulted in cyber security’s being one of the fastest growing markets, with lucrative positions for those studying to be information analysts and data scientists. 

As it so happens, none other than Sir Tim Berners-Lee has launched a decentralization project to tackle data rights management. His is one of many initiatives that should be incentivised by user interests and left unencumbered by political interference

Historical and empirical evidence proves that a decentralized economy leads to progress and prosperity, so we should enable our digital economy with the same approach. 

Originally published here

An Illustration of Why Section 230 Should Be Preserved, Not Scrapped

Removing Section 230 would stifle engagement and interaction in the online realm.

Section 230 of the 1996 Communications Decency Act is currently being called into question by lawmakers, and this raises red flags for both producers and consumers within the online realm.

Section 230 states “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

If the granting of this protection were to be removed, any online sharing site (ranging from food blogs to Facebook pages to search engines to simulation games) could be held accountable for the online activity of users and affiliates.

For example, the current questionable image from Jaimie Lee Curtis’ account would hold Instagram as liable for the contested offensive or artistic picture featured in the post.

And while Big Tech may be able to bulk up capacity to counter claims for such cases, social media startups and casual content creators better beware.

It is not a matter of whether online activity should be moderated, but rather who does the moderating. If Section 230 protections were to be removed, this would discourage the creation of new social networking sites and create a mandate for an online surveillance state.

So, since some political officials believe online service providers should be held liable for suggestions, search results, and social feeds, and given that hearings on the Hill have exposed an ineptitude for most things tech related, here is an illustration of how Section 230 plays out in an offline scenario.

Read the full text here

Reputation Works Better Than Regulation: Why Demand Should Determine Prices

Dynamic pricing is receiving a lot of attention, given the media storm surrounding the recent sale of Taylor Swift’s concert tickets. Problems with pre-sale pricing and ticket availability for Swift’s “Eras” tour frustrated fans and prompted politicians to cry foul concerning Ticketmaster’s sales strategy. 

Alexandria Ocasio-Cortez was among the the first to assert that Ticketmaster’s supposed monopoly status should be “reigned in,” while other members of Congress such as Amy KlobucharIlhan Omar, Richard BlumenthalDavid Cicilline, and Bill Pascrell also felt it necessary to denounce the dominant status of Ticketmaster. 

This isn’t the first concert that had fans fans demonizing Ticketmaster for its dynamic pricing policy, and this isn’t the first time government officials vowed to intervene in the live entertainment sector. In light of recent events, let’s clarify what dynamic pricing is, why it is a worthwhile strategy for firms to pursue. Politicians should refrain from playing referee, particularly since a firm’s reputation, rather than regulation, plays a greater role in remedying consumer concerns. In fact, in under a month’s time, Ticketmaster has not only apologized to fans for the debacle but has already started the process of making amends by announcing that Verified Fans will have a second chance to purchase tickets for the coveted concert. That response rate is unheard of in the halls of Congress.

Why Demand Levels Should Determine Prices

Dynamic pricing has been around in some form or other for centuries. It is a pricing policy that allows for variations rather than one that is fixed. During the 1950s, however, price adjustments were beginning to be harnessed as a strategic matter in relation to demand conditions. Nobel Laureate William Vikrey proposed that prices should increase for public transport systems at peak periods to lessen congestion. His discovery that a change in price could influence use and consumption patterns by either stimulating or suppressing demand appealed to the interests of the private sector. 

Under a dynamic pricing policy, prices shift according to market conditions, consumer interest, and competitive pressures. Thanks to technological advancements that can assess changes in these factors, companies can better determine demand levels, and pivot their prices, in near-real time.

With dynamic pricing, last-minute tickets to a show can either be a steal if there are unsold seats, or can cost a small fortune if those seats remain in high demand. A Tik Tok influencer demonstrated this by spending $10,000 on two tickets to a Harry Styles concert. 

Dynamic pricing happens all around us, and anyone who has rushed to a restaurant to take advantage of happy hour deals knows all too well how crucial it is that their server input the order before the hour is up. Those who prefer to dine late must forgo the happy-hour price perks. This illustrates an important benefit of dynamic pricing: it furthers opportunities for price discrimination. Despite the negative connotation, price discrimination can be a strategic move. Different markets are charged different prices for the same offering, as in the classic example of granting student or senior discounts for movie tickets when other ticket buyers (seeing the same film in the same theater at the same time) pay full-price. 

Why Both Companies and Customers Leverage Dynamic Pricing

Another important aspect of a flexible pricing approach is that it can create opportunities for cross-subsidization within a firm. Charging a higher price to a market who is willing and able to pay for it allows a firm to offer the product at a lower price to a market with limited purchasing power. Price differentials and price adjustments should be harnessed in a dynamic and interconnected marketplace, and indeed it is common practice.

Price adjustments occur not only across the globe, but also across the street. Retailers like Target will adjust their in-store and online prices in relation to local economic factors, and its savviest shoppers know to adjust their preferred store zip codes and clear their caches to take advantage of price match policies when they are in their favor. Just as technology has enabled firms to track trends and pivot prices, it has also enabled consumers to compare prices in real time, submit requests for returns, and vocalize concerns.

Prices can rise or fall under a dynamic pricing policy, and such an approach works best if the perception of consumer surplus is kept intact, meaning consumers believe they are receiving something of greater value as compared to the price. 

Why The Consumer Remains King In A Free Market

When done well, dynamic pricing adapts to consumers; when done poorly it is seen as taking advantage of them. Yet, it is important to bear in mind that the consumer is never truly captive. If a price is too high, because demand is too great or supply is too scarce, consumers are not forced to buy. For this reason, businesses should take care regarding consumer interests, and charge what they can when they can. 

Ticketmaster has the right to charge what it wants, as it has assumed the rights to the seats at the venue where Taylor Swift performs. And Swifties have the right to refuse purchasing those seats if the show is not worth it to them. Moreover, Taylor Swift has the right to establish her own ticket distribution system if she is unhappy with Ticketmaster’s functionality as an intermediary between her shows and her fanbase.

Over 14 million users flocked to Ticketmaster’s website to make a purchase during the pre-sale release and, according to Ticketmaster, to meet that level of demand “Taylor would need to perform over 900 stadium shows (almost 20x the number of shows she is doing)…that’s a stadium show every single night for the next 2.5 years.” 

It seems it is not Ticketmaster pushing up prices, but rather fans’ demand. 

As consumers, we must remember that in a market-based system, consumers determine what is of value, what is demanded, and what is consumed. To maintain such authority, we would be wise to use our wallets, rather than Washington cronies, to curtail costs.

Originally published here

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