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Safeguarding IP rights is key to defeating COVID-19
COVID-19 has exposed our unpreparedness for a crisis of global scope. As much as globalisation is partly to blame for the virus’ speedy expansion, it is also thanks to the interconnectedness of our world that we have been able to preserve international trade – despite a bundle of constraints and cries for protectionism – during these tough times. In particular, that has to do with exports of essential medical devices such as masks, ventilators, personal protective equipment. The shortages experienced by many countries have triggered an intergovernmental discussion on the scope of compulsory licencing and IP protection covered by The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
As a global consumer advocacy group, we at the Consumer Choice Center are hereby sharing our perspective on the matter in the hope to contribute to this timely debate.
The TRIPS agreement is an integral part of the World Trade Organisation’s intellectual property legal base. Among other things, the agreement whose primary aim is to safeguard intellectual property rights, also includes provisions on compulsory licencing, or use of subject matter of a patent without the authorisation of the right holder (Article 31). Essentially, this means that “in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use,” a Member government may allow someone else to produce a patented product or process without the consent of the patent owner.
Whereas, under normal circumstances, the person or company applying for a licence must have first attempted, unsuccessfully, to obtain a voluntary licence from the right holder on reasonable commercial terms (Article 31b). However, there is no need to try for a voluntary licence first under TRIPS flexibilities.
TRIPS flexibilities, therefore, allow countries to override global IP rules to mitigate the damage caused by an emergency and have been mainly applied where pharmaceuticals have been concerned.
In July, South Africa issued a communication titled “Beyond Access to Medicines and Medical Technologies Towards a More Holistic Approach to TRIPS Flexibilities.” It was pointed out that the COVID-19 response required looking beyond patents towards a more “integrated approach to TRIPS flexibilities that include other various types of intellectual property (IP) rights including copyrights, industrial designs and trade secrets” (IP/C/W/666). As such, the recommendations submitted by South Africa are cross-field as they also touch upon the production and distribution of essential medical devices such as masks, ventilators, personal protective equipment.
Though proposed out of the noble motives, South African communication is ignorant of the need to protect IP rights instead of eroding them. Opponents of intellectual property rights often make the mistake of taking innovation for granted thereby turning a blind eye to the driving force of every kind of entrepreneurship: economic incentives. Patents and various other forms of intellectual property are not biased towards the inventor. On the contrary, they ensure that companies can continue to innovate and deliver on their products to consumers.
The short-term result of eroding intellectual property rights would be increased access to innovations, but in the long-term, there would be no innovation. With the second wave of coronavirus on the way putting brakes on the economic recovery, it is not something we can afford.
In fact, we need to stay as firm as ever in our defence of intellectual property rights if we want to defeat coronavirus and many more diseases. Patients who may one day be diagnosed with incurable diseases such as Alzheimer’s, Cystic Fibrosis, Diabetes, or HIV/AIDS should benefit from the chance that a cure will become available, and protecting IP is the only way to give them that chance. If we act boldly now and weaken intellectual property rights even further – and expand the scope of TRIPS flexibilities – we will cause the damage that will be hardly reversible, and the post-pandemic world will have to foot the bill.
As the former Czech Prime Minister, Jan Fischer pointed out, “Patents and other intellectual property protections enshrine the incentives that compel drug companies to take such extraordinary risks. By temporarily barring copycat products, the rules give innovators an opportunity to try and recoup their huge development costs. A substantial portion of the revenues achieved from the sale of those innovative drugs are dedicated to fund new projects, and enable the pursuit of path-breaking R&D in the first place.”
If we want more prosperity for all, we need to protect intellectual property rights. TRIPS flexibilities, and the call to extend their scope beyond patens, in particular, are an attempt to erode IP, and should be seen for what they really are: a threat to our economic recovery from COVID-19 and future innovation.
By Maria Chaplia, European Affairs Associate at the Consumer Choice Center
Implementing Virtual Affidavits
Manitoba’s Law Reform Commission Recommends Implementing Virtual Affidavits
After working closely with the Attorney General’s office in Ontario to bring forward virtual commissioning of legal documents via tele-conference, the CCC’s David Clement was asked to consult with Manitoba’s Law Reform Commission.
Specifically, Manitoba was looking for guidance on how they could modernize their legal system and enact similar changes.
On August 31st, the Law Reform Commission released their report, where they made the suggestion that Manitoba should in fact move forward with modernizing their legal system by allowing affidavits to be taken virtually via video-conference.
The Commission acknowledged the CCC in the following way:
The Commission gratefully acknowledges the following individuals for providing valuable feedback on this project: David Clement, North American Affairs Manager- Consumer Choice Center
The Commission officially made the following recommendation:
The Commission recommends that section 64(1) of The Manitoba Evidence Act be amended to remove the requirement that an oath, affirmation or statutory declaration be taken only in the presence of a person and to enable affidavits to be taken remotely using video-conferencing technology. (p 15)
Removing Sales Tax From Medical Cannabis
BC’s Finance Committee Recommends Removing Sales Tax From Medical Cannabis
Earlier this year our North American Affairs Manager David Clement appeared before British Columbia’s Select Standing Committee on Finance and Government Services to discuss cannabis taxation. In his presentation David explained that medical cannabis should be exempt from provincial sales taxes, for the following reasons:
- Other prescription medicines are exempt from sales taxes. Removing the sales tax from medical cannabis would simply be treating medical cannabis like the prescription medicine it is.
- Taxing medicine is cruel, given that many medical cannabis patients are chronically ill and have limited incomes.
In late August the Committee released their official report to the legislature, which includes a recommendation that BC remove the provincial sales tax from medical cannabis purchases.
The committee acknowledged the CCC with the following statement:
“The Committee also received recommendations to remove the PST on medical cannabis from several organizations, including Consumer Choice Center, Medical Cannabis Canada, and Aurora Cannabis Inc. They described the application of the PST as a barrier for most British Columbians who use medical cannabis, noting that many pay out-of-pocket as Pharmacare and many private insurers do not cover medical cannabis. The Arthritis Society, BC and Yukon Division shared that many individuals with arthritis use medical cannabis for pain management and that the cost barriers could lead individuals to the illicit market.”
The report officially made the following recommendation:
“Examine mechanisms in the taxation system to remove or rebate the PST for medical cannabis.”
Note to the European Commission: no need for a new competition tool
As the European Commission is seeking to introduce a new competition tool to better handle market issues surrounding digital platforms, there is an urgent need to provide a pro-consumer and a pro-innovation perspective on the matter. We, at the Consumer Choice Center, believe that amending the existing antitrust legislation – articles 101 and 102 of the EU Treaty – shouldn’t be seen as the goal in itself. Instead, the Commission should consider the underlying issues affecting the conditions leading up to the anticompetitive behaviour in the digital market.
For the market to ensure the most efficient outcome, competition has to be fair so that all respective parties can compete under fair conditions. While antitrust laws play an important role in safeguarding competition, they shouldn’t be seen as a panacea. Instead, the goal should be to create and sustain a framework that doesn’t pick winners and losers, but safeguards intellectual property rights, keep taxation low to encourage returns, limit barrier of entry and make investment easy.
There are many outdated laws in the EU that make it burdensome to create new and innovative digital services before they ever hit the market. One example is the lack of a European-wide license for audiovisual services, forcing service providers to apply in every Member State if they want to show their content. It is the same for most other digital services in the EU, including music streaming or news collection.
Anti-competitive monopolisation where one market player may rapidly acquire market shares due to its capacity to put competitors at a disadvantage in the market unfairly is probably one of the most important factors hindering competition. However, what is crucial here isn’t the dominance of one player but the fact that they resort to unfair competition practices to impact the behaviour of other players. One issue that requires more attention on the side of regulators is that the notion of “unfair competition” provides a lot of discretion which often leads to misleading assessment and unjustified antitrust proceedings. The mechanisms for determining what is “unfair competition” have to be more specific.
In terms of highly concentrated markets where only one or few players are present, which allows to align their market behaviour, the solution is once again to liberalise the digital market so such a situation doesn’t occur in the first place.
In our opinion, non-structural remedies such as an obligation to abstain from certain commercial behaviour would be most effective. An obligation to abstain from using unfair trading practices, especially those leading to anti-competitive monopolisation is crucial. Businesses should be made aware of the consequences of engaging in unfair practices and obliged to comply, The notion of obligation is linked to personal or business responsibility whereas bans have a preventive and prohibiting nature. Bans would alter the behaviour of businesses: they would be primarily incentivised to avoid the penalty instead of complying with the rules.
The existing antitrust rules do not discriminate between various sectors of the economy, and there is no need to come with rules specific to the digital market. The antitrust rules should be the same for all sectors of the economy to be effective. Sector-specific antitrust legislation will unfortunately only add more confusion, and make it harder for new businesses to get their head around new regulations. It is very hard to draw a clear line between all sectors, not least because the future of innovation is uncertain, and we simply cannot predict what new business will emerge. In the spirit of the rule of law, rules have to be unified.
In conclusion, there is no need for a new competition tool. Antitrust proceedings are costly and drive businesses out of the market. Instead, we should liberalise the European digital single market to make it easier for small business to enter and for the existing ones to operate on equal terms with the more successful ones, and that will ensure that there is no possibility for a single player to monopolise the supply of digital services.
By Maria Chaplia, European Affairs Associate at the Consumer Choice Center
ECJ Privacy Ruling Has Huge Costs
In July, the European Court of Justice struck down the Privacy Shield Agreement, used by companies to transfer data between the EU and the United States.
Now They’re Coming After Your Delivery Apps
Throughout the course of the pandemic, the world of commerce has shifted primarily online. That’s made online retail, digital services, and delivery apps a godsend for millions of us sequestered in our homes.
This entirely new sector of the economy has allowed us to safely buy, enjoy, and use goods and services without the risk of coronavirus. Now it’s possible to enjoy the best drinks and food in just a few minutes, delivered by courier straight to your door.
Finally, a silver lining!
Alas, no: a group of organizations is looking to upend and halt those deliveries of restaurant meals to your home.
A new coalition calling itself Protect Our Restaurants is calling on state and local government to cap the commissions allowed on delivery service apps, and for the FTC to take action against delivery companies like Grubhub, Uber Eats, Postmates, and Doordash.
That would severely affect your ability to hit up a delivery app for a hot meal at your convenience. What gives?
The coalition is made up of organizations such as The American Sustainable Business Association, The American Economic Liberties Project, and the Institute for Local Self-Reliance, with the stated goal of “persuading policymakers to regulate food delivery apps so they can’t use their market power to exploit restaurants and take money out of our local economies.”
They claim delivery companies, the same ones that have empowered consumers, given vast new capabilities to restaurants, and provided good income to couriers, are “exploiting” each of these groups in pursuit of the almighty dollar.
The same claims were made in a class-action lawsuit filed earlier this year by consumers in New York who claimed these companies “prevent competition, limit consumer choice and force restaurants to agree to illegal contracts”. We’re no strangers to lawsuit abuse.
There are more than a few reasons to believe they’re wrong.
COMMISSION
Earlier this year, pre-pandemic, the NPD group estimated delivery orders in the United States to represent just 3% of all restaurant orders, and it’s risen as high as 7% in July 2020. Likely more now.
That means more and more customers are using food delivery apps to get the food they once ordered in restaurants, but to their homes.
Even before then, a prime complaint area of the coalition mentioned above and similar parties is the commission charged by these various food delivery apps as a fee for delivery and all other services they provide.
For orders placed through a delivery app to a restaurant, the app charges either a flat or percentage-based fee as a commission, which funds the logistics, the courier’s pay, and marketing costs associated with being in the app. This amount varies between 13.5% and 40%, depending on which options a restaurant agrees to when they sign up.
It’s that variance in commission rates that so enrages activists in this space. In one highly-circulated Facebook post, one restaurant owner claimed Grubhub collected more than 60% in commission (another look reveals the owner also paid for promotions and discounts on the app, and also had several cancellations and adjustments that would account for the larger share in commissions charged by Grubhub). Add to that plenty more anecdotes of high fees circulating social media.
In response, the cities of Washington, D.C., Seattle, and San Francisco have already capped commission rates at 15%, and a bevy of other city councils are lining up to join them. Many activists are now calling on more cities to do the same, and even lower the cap down to 5%.
While these caps on commission are well intended, they are actually counter-productive.
It will mean fewer order volumes that can be processed, less money will be available to couriers who sign up to deliver for the app, and higher prices to compensate for lost income. That would hurt restaurants, couriers, and consumers themselves who depend on these services.
And considering these apps offer quality marketing services as well as delivery for the restaurants on these services, there will likely be fewer resources available there as well. If you don’t have the capital to brand a Grubhub or Uber Eats, how can you expect to draw in customers?
Overall, a sweeping restriction on commission rates would degrade the quality and quantity of the delivery services, and end up hurting more people than it purports to help. That would be both anti-consumer and anti-innovation in the same fell swoop.
ANTITRUST
Much like the Congressional hearings against Apple, Amazon, Facebook, and Google some weeks ago, this coalition wants to use the weapons of the federal government through the Federal Trade Commission to break up the “monopoly power” of delivery services, mainly Grubhub, Uber Eats, Postmates, and Doordash.
With the exception of Grubhub, each of these companies (or subsidiaries in the case of Uber) has existed for less than 10 years. They’ve pivoted multiple times, expanded their services, and finally found a good niche empowering restaurants to quickly and reliably get their food to delivery customers.
At the same time, thousands of delivery workers have been able to get quick and easy work through the apps, giving needed income to students, those between jobs, and people who want extra income. These couriers often contract with multiple services, depending on whichever company offers the highest commission per delivery, similar to rideshare drivers.
Because every restaurant is free to contract its own delivery service or operate their own as was the case for many years, it’s hard to argue that a monopoly exists –– especially if there are more than four dominant players who provide delivery. That’s far from requiring antitrust intervention.
The benefits to restaurants seem clear: less money is spent on hiring a dedicated delivery driver or vehicle, commissions charged are consistent and transparent (whatever their amount), and partnering with a well-known app helps attracts more users who otherwise would never order from that specific restaurant.
Add to that, most of these restaurants likely never had delivery before they signed up for these apps, meaning they went from $0 profit to much more in just a few clicks.
If those costs weren’t worth it to restaurants, they’d start their own delivery services independent of these companies. That was the status quo before any of these companies arrived on the scene, we should remember.
Beyond that, if any of these companies have engaged in any illegal activity, such as promoting fraudulent websites or phone numbers, as the coalition alleges, then this should, of course, be investigated. But that falls outside of the domain of using antitrust laws to break up delivery companies that are providing valuable services to both consumers and restaurants.
If parties are aiming to regulate food delivery companies and are successful in doing so, they’ll set up a paradox of their own making: the only companies that will be able to comply with the regulations and caps will be the delivery firms with the most capital and resources. This would lock out any potential new competition and do more to restrict consumer choice than enhance it.
The last few months have provided each and every worker and consumer with plenty of uncertainty. Being able to order products right to our door, though, has been a blessing. Intervening in the market to undermine the choice of consumers and business contracts with restaurants would make that process arguably worse, and not better.
The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.
The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org
In Kamala Harris, do consumers have an ally or a foe?
This week, Democratic presidential candidate Joe Biden revealed Sen. Kamala Harris of California as his running mate for the November general election against President Donald Trump.
Because Harris’ influence on the Biden campaign will loom large, and be important to whomever American voters choose in the fall, it’s worth looking at some of her ideas and policies and how they would have an impact on consumers.
Let’s take a dip, shall we?
HEALTHCARE
On her original presidential campaign website and throughout the Democratic primary debates, Harris was adamant about banning private healthcare insurance in favor of a Medicare For All plan. She later backed out once she was questioned by party activists.
With that in mind, considering Biden was nominated to be his party’s candidate on a platform of not seeking Medicare For All, a plan to expand the government health insurance program to seniors to the entire population, it seems there may be healthy disagreement on this point.
As I’ve written in a few outlets, the idea of a Medicare For All health insurance system would rob consumers of competition and choice, and likely lead to less quality of healthcare than we actually receive. It would mean that healthcare decisions would be placed in a complex hierarchy of bureaucratic agencies immune from market forces. That would inevitably lead to higher costs overall – no matter who foots the bill.
Harris being on the ticket doesn’t mean M4All is now on the docket for the Democratic Party, but it does mean that ideas about the government reorganizing health insurance will certainly be a part of a potential Biden Administration in the future. That’ll be something to keep an eye on.
TECH
As we covered during the debates in 2019, Sen. Harris petitioned Twitter to remove President Donald Trump from its service. Those calls weren’t central to her rhetoric on tech regulations, but they at least revealed her mindset regarding content on social media platforms, and who should be allowed to have an account. In some speeches, she’s come out as more hawkish on online censorship, which should good everyone worry.
Unlike some of her past primary opponents, she was rather soft on the question of antitrust and whether the tech giants in Silicon Valley should be broken up, which is a relief for consumers.
Most of the animus against tech companies has very little to do with concern for consumers, and much more to do with the new generation of gatekeepers using technology and innovation to provide better services. Most consumers prefer these new innovations and want them to thrive, not be broken up.
For some observers, her political career in California and proximity to tech firms mean she’ll be an asset rather than a liability on future tech regulation. The outlet Marketwatch dubbed her a “friend, not a foe, of Big Tech” and the Wall Street Journal similarly gave her praise, though with some caution.
VAPING
What isn’t a surprise to listeners of Consumer Choice Radio is that Sen. Harris is no friend of vaping and harm-reducing innovations.
She penned a letter last year accusing the FDA of being soft on vaping and for not banning all vaping products outright. That would have been disastrous for the former smokers who rely on these products.
She took it a step further by linking legal nicotine vaping products to the bootleg THC vaping devices that caused lung injuries throughout 2019, which we’ve debunked in our own work at the Consumer Choice Center.
If Harris’ worldview remains the same, vapers won’t have a friend in the potential future VP.
CANNABIS
And lastly, we come to cannabis, a favorite topic of those who dub Harris “The Cop Who Wants to be (Vice) President,” like Elizabeth Nolan Brown of Reason.
During Harris’ time as a prosecutor in California, her reputation as an anti-cannabis voice was well-known.
But as our friends at Marijuana Moment mention, she’s changed her mind over the years, from being a staunch opponent to advocate:
Though she coauthored an official voter guide argument opposing a California cannabis legalization measure as a prosecutor in 2010 and laughed in the face of a reporter who asked her about the issue in 2014, she went on to sponsor legislation to federally deschedule marijuana in 2019.
Where Vice Presidential Candidate Kamala Harris Stands On Marijuana
Since dropping her campaign to be president, she’s become more vocal, making the argument for legalizing cannabis at the federal level, though she’s
Overall, there’s a lot to digest on a potential Kamala Harris Vice Presidency. On behalf of consumers, let’s hope there’s more good than bad.
Think of the children! How to find cures for rare and children diseases.
The European Commission just published a working document assessing the EU’s orphan and pediatric drug strategies. Read here why incentives for research are key to extending patients’ lives:
A rare disease is a medical condition that meets the criteria defined in Article 3 of Regulation (EC) No 141/2000; a life-threatening or chronically debilitating condition affecting no more than 5 in 10,000 persons in the EU. Although so-called rare diseases affect a limited number of people per disease, collectively they affect one person in every 17 people within Europe. There are over 7,000 different rare diseases patients suffer from.
Regulators see an ‘imbalance of risk and reward’ for the industry to find cures and treatments for those diseases. Hence US, Japanese and EU regulators increased options for longer market exclusivity for drugs tackling diseases in children and rare diseases. In 2000, Regulation (EC) No 141/2000 and 2006 Regulation (EC) No 1901/2006 were adopted by the European Commission. The ‘standard’ incentives provided by the general legislative framework for pharmaceuticals in the EU are 10 years of market protection and 20 years of patent protection. For pediatric and orphan drugs manufacturers can apply for extended market exclusivity.
The purpose of this strategy is to improve and expedite patients’ access to safe and affordable medicines and to support innovation in the EU pharmaceutical industry. Adding prolonged exclusivity worked: A massive increase in orphan drugs could be seen in the last 20 years! Between 2012 and 2017 over three times as many orphan drugs entered the EU compared to 2000-2005. The EU Commission estimated that between 200,000 and 440,000 additional quality-adjusted life years were gained thanks to more incentives for these drugs.
Voices who call now for less protection of orphan and pediatric drugs want to undo the successes of the last two decades. The 142 orphan medicines authorized between 2000 and 2017 have helped up to 6.3 million patients in the EU to either cure or cope with their health conditions.
But there are still millions of patients waiting for a breakthrough that can help to treat their rare or pediatric disease – For this, we need to have incentives and not populism. Intellectual property is key in allowing the inventor and her investors to reward them for their massive risk they undertook in trying to find a cure or treatment for a rare disease. The EU’s approach to orphan and pediatric drugs by increasing incentives for inventors and manufacturers has worked. The successes of the past 20 years should not be undermined by populist calls to nationalize research and IP. If we care about patients with rare diseases, we should not question the importance of protecting intellectual property but see it as a precondition for future innovations.
To sum it up: Think of the children and allow medical innovation to take place!
Antitrust tech hearings dig for consumer harm but come up short
Armed with face masks and fresh customer complaints, members of the House Subcommittee on Antitrust, Commercial, and Administrative Law convened both virtually and in-person on Thursday, for the first of many hearings on competition in the tech sector.
It was a six-hour marathon of gobbledygook legal turns of phrase and static-prone troubleshooting for lawmakers.
The witnesses were CEOs from some of the four largest companies in America: Jeff Bezos of Amazon, Mark Zuckerberg of Facebook, Tim Cook of Apple, and Sundar Pichai of Google.
Together, these companies serve billions of global consumers for a variety of needs, and have become very rich by doing so. They employ millions of people, make up big portions of the American economy, and have been the trailblazers for innovation in virtually every free nation.
It is also true that they’ve made many mistakes, errors in judgment, and have made it easy to be bashed by all sides.
Despite that, these companies are true American success stories. And that’s not even considering the industrious biographies of their CEOs on the witness stand: an immigrant from India; the son of a teenage mother and immigrant stepfather; a college dropout; and a gay southern man shunned by the Ivy League. Each of them is a self-made millionaire or billionaire in their own right.
But in the context of this hearing, they were America’s villains.
The potshots in the hearing came from both Democrat and Republican congressmen, each using their bully pulpits to reel out various accusations and grievances on the representatives from Big Tech. But lost in all of this was the consumer.
The scene was analogous to George Orwell’s Two Minute Hate on repeat, the face of Emmanuel Goldstein replaced by a WebEx video call on full screen with smiling CEOs surrounded by the furniture in their home offices.
For Democrats, these companies have grown far too large using unscrupulous business practices, beating competitors with lower prices, better service, speed, and slick branding – allowing them to purchase or bully their competition.
For Republicans, it’s all about the bias against conservatives online, facilitated by the thorny content moderation that selectively edits which social media posts are allowed to stand.
What’s missing from this story so far? American consumers.
The justification of the hearing was to determine whether these companies have abused the trust of the public and whether consumers have been harmed as a result of their actions.
But more often than not, questions from committee members hinged on the and “business acumen” of decisions taken within the company, classifying rudimentary strategy decisions as illegal and hostile moves.
Platforms Opening to Third-Party Sellers
An example is Rep. Pramila Jayapal, of Washington State. She represents the district where Amazon was founded by Jeff Bezos. She condemned Amazon for collecting data on third-party sellers who are able to use Amazon’s website to sell products.
“You have access to data that your competitors do not have. So you might allow third-party sellers onto your platform, but if you’re continuously monitoring the data to make sure that they’re never going to get big enough to compete with you, that is the concern that the committee actually has,” said Jayapal.
Here, we’re talking about Amazon’s online platform, which sells millions of goods. Two decades ago, Amazon opened up its platform to merchants for a small fee. It was a win for sellers, who could now have easier access to customers, and it was a win for customers who now can buy more products on Amazon, regardless of who the seller was.
When Amazon sees that certain product categories are very popular, they will sometimes make their own, knowing they have the infrastructure to deliver products at high satisfaction. This brand is called Amazon Basics, encompassing everything from audio cables to coolers and batteries.
Rep. Jayapal says that by collecting data on those merchants in their store, Amazon is effectively stealing information…that sellers voluntarily give in exchange for using Amazon’s storefront.
However, the end result of the competition between Amazon’s third-party sellers and Amazon’s own products (on Amazon’s platform) is something that is better for the consumer: there is more competition, more choice, and more high-quality options to choose from. This elevates the experience for a consumer and helps save them money. This is far from harm.
The same can be said of Apple and its App Store, which came under fire from the chairman of the committee, Rep. David Cicilline. He said Apple was charging developers who use the App Store “exorbitant rents” that veered toward “highway robbery”.
Apple CEO Tim Cook was quick to retort by pointing out that the App Store is a platform for its own apps, but it also allows third-party developers to use that store for a fee. This is an entirely new market space that never existed before Apple opened it, and thus is a net gain for any developer who uses the store, and benefits consumers who click and download even more.
Business As Usual
Throughout the hearing, public officials pointed to internal documents as proof of the malfeasance of the tech firms. The documents were unearthed by the committee and contained emails and memos on mergers, acquisitions, and business practices from all four tech firms.
The Financial Times classified these documents as evidence that the companies “chased dominance and sought to protect it.”
Rep. Jared Nadler of New York chased down Mark Zuckerberg for his decision to purchase the photo-app Instagram back in 2012, calling the move “outright illegal” because he believed Facebook bought it to “essentially put them out of business.”
Today, Instagram is an incredibly popular app that has grown to half a billion users, thanks to Facebook’s investments, talent, and integration. It’s made consumers very happy, and has become an attractive product for advertisers as well. Again, no harm for the consumer.
Pro-Consumer, not Pro or Anti-business
One of the most astute lines from the hearing came from the sole representative from North Dakota.
“Usually in our quest to regulate big companies, we end up hurting small companies more,” said Rep. Kelly Armstrong. Indeed.
And add to that the eventual scenario whereby only the highly connected and vastly wealthy tech companies will be able to comply with stringent regulation from Washington. That’s not what consumers want, and it’s not what Americans want either.
If Congress aims to use antitrust power to break up or heavily regulate the enterprises built by Google, Amazon, Facebook, or Apple, it won’t be done lightly. It would likely leave a lot of damage in its wake for small and medium-sized businesses, many of whom rely on these major firms to conduct their business. In turn, consumers rely on those companies for products and services.
Each of these companies represent a case study in innovation, entrepreneurship, and giving the people what they want to create a huge network of consumers. There’s a lot to learn there.
Instead of using the law to break up companies, what if we learned from their success to empower more consumers?