Digital

Latest round of online deplatforming shows why we need increased competition and decentralization

Another week means another politically-charged rampage of deplatforming of social media profiles and entire social media networks.

Following the storming of the U.S. Capitol by some of his supporters, President Trump was promptly suspended from Twitter and Facebook and later dozens of Internet services including Shopify and Twitch.

Even the image-sharing site Pinterest, famous for recipes and DIY project presentations, has banned Trump and any mention of contesting the 2020 Election. He’ll have to go without sourdough recipes and needlework templates once he’s out of office.

Beyond Trump, entire social media networks have also been put in the crosshairs following the troubling incursion on Capitol Hill. The conservative platform Parler, a refuge for social media dissidents, has since had its app pulled from the Google and Apple stores and had their hosting servers suspended by Amazon’s web service company AWS.

This pattern of removing unsavory profiles or websites isn’t just a 2021 phenomenon. The whistleblower website Wikileaks – whose founder Julian Assange remains in prison without bail in the UK awaiting extradition to the United States – was similarly removed from Amazon’s servers in 2012, as well as blacklisted by Visa, Mastercard, PayPal, and their DNS provider. Documents reveal both public and private pressure by then U.S. senator and Intelligence Committee Chairman Joe Lieberman was instrumental in choking Wikileaks off from these services.

Then it was politicians pressuring companies to silence a private organization. Now, it’s private organizations urging companies to silence politicians.

However the pendulum swings, it’s entirely reasonable for companies that provide services to consumers and institutions to respond quickly to avoid risk. Whether it’s due to governmental decree or public backlash, firms must respond to incentives that ensure their success and survival.

Whether it’s Facebook, Twitter, Gab, or Parler, they can only exist and thrive if they fulfill the wishes and demands of their users, and increasingly to the political and social pressures placed on them by a cacophony of powerful forces.

It’s an impossible tightrope.

It is clear that many of these companies have and will continue to make bad business decisions based on either politics or perception of bias. They are far from perfect.

The only true way we can ensure a healthy balance of information and services provided by these companies to their consumers is by promoting competition and decentralization.

Having diverse alternative services to host servers, provide social networks, and allow people to communicate remains in the best interest of all users and consumers.

Such a mantra is difficult to hold in today’s hostile ideological battleground inflated by Silicon Valley, Washington, and hostile actors in Bejing and Moscow, but it is necessary.

In the realm of policy, we should be wary of proposed solutions that aim to cut off some services at the expense of others.

Repealing Section 230 of the Communications Decency Act, for example, would be incredibly harmful to users and firms alike. If platforms become legally liable for user content, it would essentially turn innovative tech companies into risk-averting insurance companies that occasionally offer data services. That would be terrible for innovation and user experience.

And considering the politically charged nature of our current discourse, anyone could find a reason to cancel you or an organization you hold dear – meaning you’re more at risk for being deplatformed.

At the same time, axing Section 230 would empower large firms and institutions that already have the resources to manage content policing and legal issues at scale, locking out many start-ups and aspiring competitors who otherwise would have been able to thrive.

When we think of the towering power of Big Tech and Big Government, some things can be true all at the same time. It can be a bad idea to use antitrust law to break up tech firms as it will deprive consumers of choice, just as these companies are guilty of making bad business decisions that will hurt their user base. How we respond to that will determine how consumers will continue to be able to use online services going forward.

All the while, every individual Internet user and organization has it in their power to use competitive and diverse services. Anyone can start up an instance of Mastodon (as I have done), a decentralized micro-blogging service, host a private web server on a Raspberry Pi (coming soon), or accept Bitcoin rather than credit cards.

Thanks to competition and innovation, we have consumer choice. The question is, though, if we’re courageous enough to use them.

Yaël Ossowski is deputy director at the Consumer Choice Center.

New digital regulations: the good and the bad

Last month, the European Commission presented the Digital Services Act (DSA) and Digital Markets Act. The regulatory framework that has been long in the making aims to prevent and punish anti-competitive behaviours across digital platforms, in particular, those with at least 45 million users.

Although the introduction of these new regulations as such was a historic moment for EU digital policy, the very nature of this new approach is punitive and its unintended consequences might curb innovation instead of enhancing it.

The European Commission’s goal to keep big tech giants at bay has become obvious long ago when antitrust investigations into Facebook and Amazon started to build up. The witchhunt after anti-competitive actions has been the result of the European Union’s lack of knowledge about these new platforms and how their supply chains operate.

For example, using his Twitter account, Dutch MEP Paul Tang categorised the European Parliament’s vote against targeted advertising as a “win”, further adding that “We see that big tech continues to expand their market power by considering personal data as a commodity. In addition to interfering with our privacy, such a revenue model is unhealthy and sickening for the internet.” These policy remedies would end up being harmful to both consumers and small businesses, and dumb down the greatly innovative tech sector that provides value to users across Europe.

Digital Markets Act introduced a series of ex-ante restrictions that will tell big platforms on how to behave and by introducing a new competition tool.

Several factors need to be considered in order for these developments to be fair and less damaging than they have the potential to be. First, ex antre regulations should be limited to large online platforms that qualify as gatekeepers and shouldn’t discriminate between them. However, considering that the world of technology is constantly evolving and the economy as such is going to change, it is crucial that ex-ante regulations are concise and straightforward, and flexible.

A smart approach, and the one we advocate for, would be to strike a balance between the need to safeguard competition and remaining liberal enough to not block innovation. A code of conduct that would lay out specific blacklisted practices without making the costs of compliance excessively high for gatekeepers and preserving consumer choice might be as close as we can ever get to a compromise.

The European Union’s digital lag is well-known, and if we put even more brakes on our digital economy, we might find ourselves in the back of the queue for economic wellbeing. The key narrative of the EU digital reform shouldn’t be “let’s punish the big tech for its success” but rather “let’s create the favourable conditions for smaller enterprises”. Granting the Commission large-scale investigation powers would be an extremely dangerous move that will likely only increase the number of costly antitrust proceedings without boosting innovation.

Although transparency is equally important, its pursuits shouldn’t lead us beyond the pale. The very fact that digital platforms bring value to Europeans is a clear indication that they do something right, and that should be enough for the Commission to form its judgment. Unmatched demand for digital services, including those provided by the big tech, speaks for itself.

The best way to approach the newly presented digital framework is to be realistic about its unintended consequences. Our goal should be innovation, not punishment.

Originally published here.

Let’s be realistic about new digital regulations

Today, the European Commission will present a regulatory framework that will determine the future of the European digital economy for the years to come.

Both the Digital Services Act (DSA) and Digital Markets Act aim to prevent and punish anti-competitive behaviours across digital platforms, in particular, those with at least 45 million users. Although that is indeed a historic moment for EU digital policy, it is expected that the very nature of these new regulations will be punitive and its unintended consequences might curb innovation instead of enhancing it.

The European Commission’s goal to keep big tech giants at bay has become obvious long ago when antitrust investigations into Facebook and Amazon started to build up. The witchhunt after anti-competitive actions has been the result of the European Union’s lack of knowledge about these new platforms and how their supply chains operate.

Digital Markets Act will attempt to solve this problem through a series of ex-ante restrictions that will tell big platforms how to behave and by introducing a new competition tool.

Several factors need to be considered in order for these developments to be fair and less damaging than it seems at first glance. First, ex ante regulations should be limited to large online platforms that qualify as gatekeepers and shouldn’t discriminate between them. However, keeping in mind, that the world of technology is constantly evolving and the economy as such is going to change, it is crucial that ex-ante regulations are concise and straightforward, and flexible.

A smart approach would be to strike a balance between the need to safeguard competition and remaining liberal enough to not block innovation. A code of conduct that would lay out specific blacklisted practices without making the costs of compliance excessively high for gatekeepers and preserving consumer choice might be as close as we can ever get to a compromise.

The European Union’s digital lag is well-known, and if we put even more brakes on our digital economy, we might find ourselves in the back of the queue for economic wellbeing. The key narrative of the EU digital reform shouldn’t be “let’s punish the big tech for its success” but rather “let’s create the favourable conditions for smaller enterprises”. Granting the Commission large-scale investigation powers would be an extremely dangerous move that will likely only increase the number of costly antitrust proceedings without boosting innovation.

Contrary to widely spread belief, lock-ins are all too often a conscious choice made by consumers in the absence of a viable alternative. Therefore, we should make it easier for small business to enter and for the existing ones to operate on equal terms with the more successful ones. We need a digital single market that can meet the needs of
European consumers without any external interference.

Although transparency is equally important, its pursuits shouldn’t lead us beyond the pale and turn the Commission into an honesty tribunal. The very fact that digital platforms bring value to Europeans is a clear indication that they do something right,and that should be enough for the Commission to form its judgment. Unmatched demand for digital services, including those provided by the big tech, speaks for itself.

The best way to approach today’s presentation of the new digital framework is to be realistic about its unintended consequences. Our goal should be innovation, not punishment.

Originally published here.

Why Europe needs radical digital reform

EU attempts to curtail the influence of the world’s digital giants are stymying innovation, argues the Consumer Choice Center’s Maria Chaplia.

Amazon will soon face antitrust proceedings to address concerns raised by EU authorities regarding the company’s access and use of data. Specifically, they claim the American company can see sensitive commercial information on third-party products such as price or volume. Amazon’s actions would qualify as anti-competitive if the EU finds that it has been using this data to improve the ranking of its own products.

Regardless of the outcome of this investigation into abusive, monopolistic behaviour, the EU will come out as a loser if it does not undertake a radical digital reform to liberalise its digital single market. In the face of digital competitors from abroad, it has become convenient to pull out antitrust laws in response to every tech issue. But such an approach has neither made the EU more innovation-friendly nor more mindful of actual consumer needs.

Instead of letting digital services of all types develop at their own pace, the EU has relegated itself to passing legislation that is far from technology-neutral. According to EU Competition Commissioner Margrethe Vestager, the EU’s current regulations were put in place “when no one could have foreseen the situation we’re in today, that platforms would not just be channels, but full ecosystems where a lot of what is ongoing is monetised by the platform itself.” There was, of course, no way to predict what has happened, but it’s a poor justification for the EU’s digital lag.

Regulators, though with noble intentions, are simply unable to know ahead of time how far innovation can and will go. What they can do, instead, is create and sustain a framework that does not pick winners and losers, but safeguards intellectual property rights, keeps taxation low to encourage returns, limits barriers to entry, and makes investment easy.

In Europe, there are many outdated laws 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.

“If the EU succumbs once more to antitrust legislation, it will come at the expense of future innovation and risk cutting off millions of European consumers from vital digital services”

Another key issue concerns taxation. The EU has long considered levying a tax of between two and six percent on the local revenues of platform giants. The prospect of trade talks with the US has brought this topic back into the spotlight. However, an EU-wide digital tax would limit potential future innovation. Innovators should be able to choose between high-taxed and low-taxed locations, not be faced with a uniform unavoidable tax. Complicated issues – such as the EU’s digital lag – require complex solutions according to officials, but that’s not the case. Less intervention means more innovation. Antitrust lawsuits and actions are a great tool for tax collecting but they don’t solve the core problem. We need a digital market that has many different options to choose from, making it less likely that one company can gain a monopoly as it will be more preoccupied with actual competition, and thus seek to come up with innovative solutions for consumers.

If the EU engages once more in antitrust proceedings, it will come at the expense of future innovation and risk cutting off millions of European consumers from vital digital services. We need reform and liberalisation in order to better provide for both consumers and producers.

Originally published here.

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

Beware Those Coming After Your Delivery Apps

on-demand-food-app-fb

The pandemic has, for better or worse, forced us to live online. That has made internet retail, digital services and delivery apps a godsend for millions of us sequestered at home.

This entirely new sector of the economy has allowed us to safely buy and enjoy without the risk of coronavirus. At the press of a button, your favorite food and drinks are magically delivered to your door.

But as you bite into your meal delivered by Grubhub, Uber Eats or DoorDash, there is a movement afoot to make that even more difficult.

Getting in between you and your food delivery is a coalition of advocacy groups working around the country to regulate, limit and severely restrict companies that offer delivery via applications.

Dubbing themselves “Protect Our Restaurants,” this Washington-based coalition of social justice groups is calling on state and local government to cap the commissions on delivery service apps.

They have already been successful in the District of Columbia, Seattle and San Francisco, where commission rates for food deliveries are now capped at 15 percent. And there is a bevy of other city councils lining up to join them, some wanted an even lower cap at 5 percent.

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 hospitality industry is already on its last leg due to state-imposed lockdowns. Why would getting in the way between you and your next hot meal be the new issue of economic and social justice?

In July, it was projected by the NPD group that restaurant deliveries made up as much as 7 percent of food orders, 50 percent more than pre-pandemic. That number is underestimated, but it proves the rush is not yet over.

That means more customers are using food delivery apps to put meals on the table, sampling restaurants and kitchens so desperate for the income. And that service comes at a price.

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. This amount varies between 13.5 percent and 40 percent, depending on which options a restaurant agrees to when they sign up.

It is that variance in commission rates that so enrages activists in this space. Plenty of anecdotes have swarmed social media warning of high fees for conducting businesses through the apps.

And while these caps on commission are well intended, they are 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 apps will have to limit which businesses they accept. That would hurt restaurants, couriers and consumers who depend on these services.

This would end up hurting more people than it purports to help. That would be both anti-consumer and anti-innovation in the same fell swoop, which seems bonkers several months into a pandemic.

The other complaint mounted is antitrust concerns, similar to congressional hearings against Apple, Amazon, Facebook and Google earlier this month. Activists want to use the weapons of the Federal Trade Commission to break up the “monopoly power” of delivery services.

Most of these companies, however, are true American success stories. They have existed for less than 10 years, have pivoted multiple times, expanded their services, and found a good niche empowering restaurants to quickly and reliably get their food to delivery customers.

Thousands of delivery workers have quick and easy work, giving much-needed income to students, those between jobs, and people who want extra income. They often contract with multiple services, depending on which offers the highest commission per delivery, similar to rideshare drivers.

The benefits to restaurants are also clear: less money is spent on hiring a delivery driver or vehicle, commissions charged are transparent and partnering with a well-known app helps attracts more customers who would otherwise never order from that specific restaurant. Most of these restaurants likely never had delivery before they signed up for these apps. That is hardly a case for trustbusting.

If those 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 firms with the most capital and resources. This would lockout any potential new competition and do more to restrict consumer choice than enhance it.

The last few months have provided every 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.

Originally published here.


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

Beware Those Coming After Your Delivery Apps

Beware Those Coming After Your Delivery Apps

The pandemic has, for better or worse, forced us to live online. That has made internet retail, digital services and delivery apps a godsend for millions of us sequestered at home.

This entirely new sector of the economy has allowed us to safely buy and enjoy without the risk of coronavirus. At the press of a button, your favorite food and drinks are magically delivered to your door.

But as you bite into your meal delivered by Grubhub, Uber Eats or DoorDash, there is a movement afoot to make that even more difficult.

Getting in between you and your food delivery is a coalition of advocacy groups working around the country to regulate, limit and severely restrict companies that offer delivery via applications.

Dubbing themselves “Protect Our Restaurants,” this Washington-based coalition of social justice groups is calling on state and local government to cap the commissions on delivery service apps.

They have already been successful in the District of Columbia, Seattle and San Francisco, where commission rates for food deliveries are now capped at 15 percent. And there is a bevy of other city councils lining up to join them, some wanted an even lower cap at 5 percent.

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 hospitality industry is already on its last leg due to state-imposed lockdowns. Why would getting in the way between you and your next hot meal be the new issue of economic and social justice?

In July, it was projected by the NPD group that restaurant deliveries made up as much as 7 percent of food orders, 50 percent more than pre-pandemic. That number is underestimated, but it proves the rush is not yet over.

That means more customers are using food delivery apps to put meals on the table, sampling restaurants and kitchens so desperate for the income. And that service comes at a price.

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. This amount varies between 13.5 percent and 40 percent, depending on which options a restaurant agrees to when they sign up.

It is that variance in commission rates that so enrages activists in this space. Plenty of anecdotes have swarmed social media warning of high fees for conducting businesses through the apps.

And while these caps on commission are well intended, they are 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 apps will have to limit which businesses they accept. That would hurt restaurants, couriers and consumers who depend on these services.

This would end up hurting more people than it purports to help. That would be both anti-consumer and anti-innovation in the same fell swoop, which seems bonkers several months into a pandemic.

The other complaint mounted is antitrust concerns, similar to congressional hearings against Apple, Amazon, Facebook and Google earlier this month. Activists want to use the weapons of the Federal Trade Commission to break up the “monopoly power” of delivery services.

Most of these companies, however, are true American success stories. They have existed for less than 10 years, have pivoted multiple times, expanded their services, and found a good niche empowering restaurants to quickly and reliably get their food to delivery customers.

Thousands of delivery workers have quick and easy work, giving much-needed income to students, those between jobs, and people who want extra income. They often contract with multiple services, depending on which offers the highest commission per delivery, similar to rideshare drivers.

The benefits to restaurants are also clear: less money is spent on hiring a delivery driver or vehicle, commissions charged are transparent and partnering with a well-known app helps attracts more customers who would otherwise never order from that specific restaurant. Most of these restaurants likely never had delivery before they signed up for these apps. That is hardly a case for trustbusting.

If those 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 firms with the most capital and resources. This would lockout any potential new competition and do more to restrict consumer choice than enhance it.

The last few months have provided every 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.

Originally published here.


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

Argentina’s telecom price controls are economic masochism

BUENOS AIRES, Argentina – Last week, in a bid to ensure unrestricted access for everyone to telecommunication services, the Argentinian government decided to extend a price freeze for TV, internet and mobile services until the end of the year, deeming them “essential public services”.

Prices on these services have been frozen since May, and it was expected that the ban would be lifted at the end of this month.

In response, Luca Bertoletti, Senior European Affairs Manager at the Consumer Choice Center, criticises the move saying that such a policy was populist and economically illiterate, and will destroy Argentina’s relationship with the International Monetary Fund who has been supportive of the country’s – though unsuccessful so far – road to prosperity.

“The Covid-19 crisis has overburdened most economies in the world and Argentina is no different. In order to help the economy get back on track, the Argentinian government will finally need to implement pro-free market reforms instead of holding onto socialist policies such as price controls on telecom services,” said Maria Chaplia, European Affairs Associate at the Consumer Choice Center.

“Argentina’s government should pull itself together and start making the right decisions, instead of pushing the country further down. Argentina deserves better than a populist government that pretends to act in the interests of consumers by extending price controls of TV, internet and mobile services at the expense of future prosperity,” concluded Bertoletti.

Originally published here.


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

Análisis internacional: “Cómo los controles de precios en Argentina podrían tener consecuencia de gran alcance”

Luca Bertoletti y Maria Chaplia, Senior European Affairs y Asociada de Asuntos Europeos,en el Consumer Choice Center respectivamente, analizaron la decisión del Gobierno argentino de declarar “esenciales” a los servicios de telecomunicaciones y las consecuencias que traerá no sólo en el país, sino en el mundo.

Telecomunicaciones, Argentina

La semana pasada, en un intento por asegurar el acceso irrestricto de todos a los servicios de telecomunicaciones, el gobierno argentino decidió extender la congelación de precios de los servicios de TV, Internet y móviles hasta fin de año, por considerarlos “servicios públicos esenciales”. Los precios de estos servicios han estado congelados desde mayo, y se esperaba que la prohibición se levantara a finales de este mes.

Prohibir que las empresas de telecomunicaciones suban los precios puede parecer una política sensata, pero es todo lo contrario. Los controles de precios son una política económica desastrosa e irresponsable que solo conduce a una escasez de oferta, lo que priva a los consumidores de opciones, expulsa del mercado a las empresas que alguna vez tuvieron éxito y reduce la calidad de los servicios prestados.

La crisis de Covid-19 ha sobrecargado a la mayoría de las economías del mundo y Argentina no es diferente. El camino hacia la recuperación económica requerirá una gran inversión que requiere la certeza legislativa. Las empresas latinoamericanas a menudo tienen que recurrir al financiamiento externo y cuando surgen riesgos sin precedentes, como los controles de precios, el costo del financiamiento también aumenta, según Maryleana Méndez, secretaria general de la Asociación Interamericana de Empresas de Telecomunicaciones.

A primera vista, la decisión del gobierno argentino de extender los controles de precios puede verse como la que beneficia a los consumidores. La lógica detrás de dichos controles de precios es clara: asegurarse de que todos los consumidores argentinos, incluso los de bajos ingresos, puedan disfrutar de los servicios de televisión, Internet y móviles.

Si bien este enfoque tiene su origen en motivos nobles, lamentablemente está condenado al fracaso y, al final, las empresas perderán todos los incentivos para operar en el mercado. Si las empresas no tienen la libertad de fijar precios como deseen, teniendo en cuenta sus costos operativos, ¿cuál es la razón para continuar? Una solución es reducir la calidad de sus precios simplemente para mantenerse a flote. Por el contrario, los consumidores que pueden pagar más se quedan fuera y no se puede satisfacer su demanda.

La intromisión del gobierno argentino en las fuerzas del mercado es inaceptable y socialista en su esencia, y también empeorará la relación del país con el Fondo Monetario Internacional. Y aunque el gobierno del presidente Alberto Fernández (y sus predecesores) ha desconfiado ampliamente del FMI, Argentina es el principal cliente del FMI.

El país ha recibido más de 20 programas de ayuda financiera del FMI desde finales de la década de 1950. Argentina permanece constantemente al borde del colapso, por lo que ya es hora de que el país tome el camino de la liberalización económica y comience a tomar su relación con el FMI más en serio en lugar de llevar a cabo otra intervención dañina y populista. Los controles de precios son masoquismo económico.

Todo consumidor desea tener tantas opciones para elegir como sea posible y poder equilibrar razonablemente el precio y la calidad. Si no hay nadie que les proporcione estas opciones, todos pierden, especialmente a largo plazo. Al igual que con los derechos de propiedad intelectual, si las empresas no obtienen protección para sus invenciones, hay pocos incentivos para que innoven.

La sobreregulación de la industria de las telecomunicaciones es una política costosa que tendrá un impacto negativo en el clima de inversión de Argentina en el futuro, obstaculizando su recuperación económica y destruyendo su relación con el FMI. El gobierno de Argentina debería recuperarse y comenzar a tomar las decisiones correctas, en lugar de empujar al país más hacia abajo. Argentina se merece algo mejor que un gobierno populista que pretende actuar en interés de los consumidores ampliando los controles de precios de los servicios de televisión, internet y móviles a costa de la prosperidad futura.

Originally published here.


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

How price controls in Argentina could have far-reaching consequences

Last week, in a bid to ensure unrestricted access for everyone to telecommunication services, the Argentinian government decided to extend a price freeze for TV, internet and mobile services until the end of the year, deeming them “essential public services”. Prices on these services have been frozen since May, and it was expected that the ban would be lifted at the end of this month.

Banning telecommunications companies from raising prices might seem like a sensible policy, but the opposite is true. Price controls are a disastrous and irresponsible economic policy that only leads to a shortage of supply, thereby depriving consumers of choice, driving once-successful companies out of the market and reducing the quality of services provided.

The Covid-19 crisis has overburdened most economies in the world and Argentina is no different. The road to economic recovery will require a lot of investment that necessitates the need for legislative certainty. Latin American companies often have to resort to external financing and when unprecedented risks arise – such as price controls – the cost of financing goes up as well, according to Maryleana Mendez, general secretary of the Inter-American Association of Telecommunications Companies.

At first glance, the decision of the Argentinian government to extend price controls can be seen as the one that benefits consumers. The logic behind the said price controls is clear: to make sure that every Argentinian consumer – even those on low incomes – can enjoy TV, internet and mobile services.

While this approach stems from the noble motives, it is unfortunately doomed to fail and, in the end, companies will lose every incentive to operate in the market. If companies don’t have the freedom to set prices as they wish – keeping in mind their operational costs – what is the reason for them to carry on? One solution is to reduce the quality of their prices simply to keep afloat. Conversely, consumers who can afford to pay more are left out, and their demand cannot be met.

Argentina government’s meddling with the market forces is unacceptable and socialist ait its core, and will also worsen the country’s relationship with the International Monetary Fund. And while the government of President Alberto Fernandez (and his predecessors) has been widely distrustful of the IMF, Argentina is the IMF’s biggest client.

The country has received more than 20 financial aid programmes from the IMF since the late 1950s. Argentina constantly remains on the brink of collapse, so it’s high time the country took the path of economic liberalisation and started taking its relationship with the IMF more seriously instead of pulling off another harmful and populist intervention. Price controls are economic masochism.

Every consumer wants to have as many options to choose from as possible and to be able to reasonably balance out price and quality. If there is no one to provide these choices for them, everyone loses, especially in the long run. Similar to intellectual property rights, if companies don’t get protection for their inventions, there is little incentive for them to innovate.

The overregulation of the telecommunications industry is an expensive policy that will have a negative impact on Argentina’s investment climate in the future thereby hindering its economic recovery and destroying its relationship with the IMF. Argentina’s government should pull itself together and start making the right decisions, instead of pushing the country further down. Argentina deserves better than a populist government that pretends to act in the interests of consumers by extending price controls of TV, internet and mobile services at the expense of future prosperity.

Originally published here.


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

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