Pfizer Dinged For Antitrust Activities In Trying To Block Generic Drug Competition In Italy

from the ah,-patents dept

Italy only established patents for pharmaceuticals in 1978. Prior to that, it had a thriving pharmaceutical business with a ton of companies. The country was a net exporter of drugs. While many of the firms there did focus on making generics, there was significant drug discovery and R&D happening in Italy at the time as well. However, due in large part to pressure from the big international pharmaceutical firms, Italy eventually established patent protection for drugs as well. Following that, there was massive consolidation in the Italian pharmaceutical market. The country went from being a leader to just another player, and the big international pharma companies took over and to this day dominate the Italian market.

That's a bit of interesting background for the fact that the Italian antitrust authority recently found drug giant Pfizer guilty of abusing antitrust law in the country to try to delay or block competition from generic drugs. According to the report linked here, Pfizer was specifically called out on two points:

1. the artificial extension of the Xalatan patent in Italy by means of: a) the application of a divisional patent; b) the validation of the divisional patent in Italy; c) the application for an SPC in Italy; d) the application for pediatric extension; and

2. the start of litigations aimed at discouraging or increasing the costs for the marketing of latanoprost generic products in Italy.

Pfizer is expected to appeal, and the blog post linked here (from law firm DLA Piper) suggests that it has a decent chance of having the original ruling reversed. But, really, that's quite a change in just a few decades. From being a leader in the market -- often by building on the ability to produce generics -- to one where cheaper generics (which help keep people healthy in a more affordable way) are aggressively blocked from the market by activities of giant multinational pharma companies.

Filed Under: antitrust, italy, pharmaceutical
Companies: pfizer

Is Comcast A Threat To The Internet?

from the competition-is-the-thing dept

Tim Lee has written a long, detailed and really thought-provoking article for National Affairs Magazine, all about what it takes to keep the internet competitive. Lee, who has a reputation for being generally skeptical of regulation without real evidence that it's needed, actually comes down on the side of suggesting that certain key regulations probably make sense to keep the internet competitive, with a specific focus on limiting Comcast's power to directly impact the market, and to effectively disrupt the internet's decentralized nature. It's a persuasive piece that doesn't shy away from the fact that telecom regulations are incredibly complex, and anyone who argues that any change to the existing market is putting regulations where none existed before is delusional, since the whole space is already highly regulated -- it's just a question of how that regulation might shift around.

The key point in all of this is that the guiding star of anyone trying to keep the internet vibrant should be making the market truly competitive with no dominant power able to make significant shifts in the core underpinnings of what makes the internet work. Lee uses the Comcast/Level3 dispute from a few years ago to suggest that Comcast is potentially shifting the traditional contours of the internet's competitive market:

Comcast's large share of the broadband market, along with the fact that most of its customers have few if any comparable alternatives, gives Comcast significant leverage in negotiating with backbone ISPs. Comcast has traditionally been a customer of Level 3, one of the largest internet backbone providers. When a Comcast user exchanged data with a network that was not directly connected to Comcast's own network, Comcast paid Level 3 to carry that traffic.

But in November 2010, the two firms became locked in a bitter dispute. Level 3 had just won a contract to deliver content for Netflix, one of the internet's largest video services. Anticipating that Netflix would generate more traffic than the existing links between the Comcast and Level 3 networks could accommodate, Level 3 proposed installing additional links between the networks. Ordinarily, Comcast, as a Level 3 customer, would gladly accept what was essentially a free upgrade. Instead, Comcast refused to accept the new connections unless Level 3 agreed to pay Comcast for the additional traffic. And Level 3, after voicing strong objections, paid up.

There's a lot more to this -- and Lee highlights some of the more detailed nuances as well, so don't just go on this brief summary -- but he argues it's a sign of the power that Comcast has been building up. I highly recommend reading the full thing if you're thinking at all about the issue of regulations on broadband service providers, and the future of the internet.

Filed Under: antitrust, internet, monopolies, reguations, rights of way
Companies: comcast

SoundExchange & A2IM Sued For Antitrust Violations By Sirius

from the sirius-charges dept

Well, well. Last fall, we discussed how Sirius XM was aiming to cut out SoundExchange and try to do deals directly with labels for performance rights. There's some history here. SoundExchange was set up and spun out of the RIAA specifically to collect performance royalties from Sirius XM and emerging internet streaming offerings. Radio doesn't pay performance rights to musicians (they just pay mechanicals to songwriters/publishers), and while the RIAA has wanted that to change for years, it used the "newness" of satellite and the internet to suddenly claim that this extra tax must be paid there, and then set up SoundExchange to collect it. The "rate" was a statutory rate set by the Copyright Royalty Board (CRB), which involved a huge fight, with SoundExchange basically demanding a significant cut of everyone's revenue. The CRB eventually agreed to a sliding rate starting at 6% and moving up to 8% over time -- much, much lower than what SoundExchange wanted (there was an even more intense fight over internet rates, but that is a separate issue).

Even with this "lower" rate, Sirius XM provides a huge chunk of SoundExchange's revenue -- around $200 million last year alone. Realizing that the deal that set up SoundExchange noted that it was "nonexclusive," Sirius sought to cut SoundExchange out of the loop and go direct to labels. Obviously, Sirius's goal is to pay less in royalties, and that led some to wonder why a label would want to do it, since the royalty rate would be lower. Except, it's a little more complex than that.

Sirius notes that in cutting out the middleman, you avoid SoundExchange's (hefty) administrative fee, as well as its notoriously opaque payment process which has left many labels scratching their heads. SoundExchange provides little information as to why artists get paid what they're paid, leaving open significant concerns that the money is not being accounted for properly. Similarly, SoundExchange has been notorious for having "difficulty" finding artists -- though I will say that they've definitely been improving a lot on that front, and really have made a huge effort to reach out to artists. Still, there certainly could be benefits for labels to go direct. Cutting out the middleman, having more relevant and accurate data, as well as more timely payments could certainly be worth it. In fact, Jeff Price at TuneCore explained how indie artists who were their own labels would almost certainly benefit by going direct.

However, the wider industry flipped out and closed ranks, with SoundExchange, the RIAA and A2IM (like the RIAA but for indie labels) all urging labels not to have anything to do with direct deals. Sirius XM looked at all of this and saw a clear antitrust violation as it certainly feels like the entire industry colluding against it. To that end, it has sued SoundExchange and A2IM for antitrust violations -- and even gone so far as to ask for SoundExchange to be "dissolved and unwound." While the actions of other music industry trade groups -- including the RIAA, NARAS, AFRTA and AFM -- are mentioned in the lawsuit, they are not listed as defendants (yet). The focus is very much on SoundExchange and A2IM, whose boss, Rich Bengloff, sits on the board of SoundExchange (along with a bunch of RIAA folks).

In the filing (embedded below), Sirius reports on multiple attempts it made to sign deals with indie labels, in which it was repeatedly rebuffed with claims about how Rich or A2IM had urged them not to do direct deals.

For example, Sirius XM's direct license outreach to independent label Bandit Records was short-circuited when a representative of Bandit Records told Sirius XM that "[w]e're members of A21M and Merlin. I think that prevents a direct license." Upon information and belief, one or both Defendants communicated with Bandit Records (or through its representative Merlin Network) and pressured them to refuse a direct license.

O. Sirius XM's effort to engage in direct license discussions with independent label Unitedlnterests was similarly derailed when, on August 30, 2011, a representative of Unitedlnterests wrote: "I heard that XM was making these requests. I will look at the license, but will also confer with A2IM and other indies." Upon information and belief, UnitedInterests pursued those discussions and therefore agreed with A2IM and/or other record companies not to enter into a direct license.

Sirius XM's approach to independent label CA Management was stopped in its tracks when, on October 27, 2011, a representative of CA Management told Sirius XM that he was "getting mixed reviews about the best way to handle" the direct license offer. Several weeks later, on November 15, 2011, he told Sirius XM that "the RIAA has asked everyone to hold off." CA Management never entered into a direct license with Sirius XM because, upon information and belief, after CA Management communicated with RIAA, it agreed to participate in the industry boycott.

There are more, similar, examples in the filing. There's also a discussion of some indie labels who did sign on, but then backed out, claiming pressure from A2IM. From the filing:

Defendants' unlawful efforts have also extended to extracting agreements from labels that have already signed direct licenses to attempt to back out of them. By way of example. on November 28. 2011. Sirius XM entered into a direct license with Paracadute, TMB Productions, Michael Doughtv. and Michael Viola. On February 9, 2012, Paracadute and TMB Productions requested that they be released from the deal. Surprised by this request, Sirius XM's agent asked Darren Paltrowitz, the person with whom they had negotiated the deal, for an explanation. Mr. Paltrowitz's, response was an e-mail with talking points strikingly similar to the Defendants' press release, which Mr. Paltrowitz indicated were supplied by the bands' business manager. That business manager is Perry Resnick, an artist manager with RZO LLC, and a longtime member of the SoundExchange Board. After further discussions, on February 22, 2012, Mr. Paltrowitz wrote that he "relayed [Sirius XM's] feedback to RZO, and they -- per conversations with A2IM and other folks beyond SoundExehange -- stand their ground about wanting us to opt out" of the direct license. That same day. Mr. Paltrowity cut and pasted an email he received from Mr. Resinick that stated: "I know for a fact that Rich Bengloff, the head of A2IM ... is against this. Rich and I have had this exact conversation, and are both in agreement that SoundExchange is the better way to go."

Of course, there are a few reasons why SoundExchange and its board members would be so against this. As noted earlier, they still think that the royalty rates should be much higher, and have indicated multiple times that in the next round of ratesetting at the CRB, they are going to push for royalty rates double to triple of what Sirius XM is already paying. That's certainly part of why Sirius would like to cut them out of the picture. But, as some have noted, doing direct deals outside of SoundExchange doesn't just let Sirius avoid whatever crazy rates the judges at the CRB choose out of thin air, but it allows them to argue that the actual market rate is lower. You see... the way the CRB works is that it's supposed to try to set a statutory rate that is effectively what the market would choose on its own. Historically, since there were no market-based deals, it had nothing concrete to base its decision on, other than what SoundExchange or Sirius told the judges. However, if Sirius is able to cut direct deals (and do them at an even lower rate) then when the CRB hearing comes around, Sirius now has empirical evidence of a lower market rate. That's a pretty big deal.

Honestly, I'm not sure either side in this fight comes out looking good. It's really just a fight about who pays how much, and who gets a cut. This is the kind of messy thing that happens when a clueless Congress decides that a clueless judicial board should magically "set rates" based on nothing in particular. Sirius XM is hardly an angel in this fight, but based on some of the quotes in the filing, there may be something of a case here -- though proving full on antitrust violations are not easy.

The real issue, it seems, is that groups like A2IM are supposed to represent the industry, but are not supposed to be a central point of collusion for the industry, driving policy decisions back to the labels. That's coordinated effort among competitors that could very well cross the line. The close-knit nature of the SoundExchange board makes all of this even more complicated (and again raises serious questions why Congress ever allowed SoundExchange to be birthed from the RIAA, rather than being truly independent in the first place). I can't image a court would actually dissolve SoundExchange, but if it turns out that this lawsuit has legs, things could get very, very messy in the industry (and it certainly could shake up A2IM in a big way as well). This is one worth paying attention to.

Filed Under: antitrust, collusion, copyright, direct license, performance rights, rich bengloff, royalties, satellite radio
Companies: a2im, riaa, sirius xm, soundexchange

Our Gift To The Author's Guild: An Ad For Brick & Mortar Book Stores

from the community-service dept

Not long ago, Tim Cushing wrote about Author's Guild president Scott Turow's curious assertion that brick-and-mortar book stores are the future of the industry. I didn't think that sounded very likely, but I like a good book store as much as the next person-over-20, so I thought I'd join forces with Tim to give Turow some help in his campaign. We put our heads together and produced this period-appropriate advertisement, for Turow and anyone else to use in advancing the cause of brick-and-mortar. Enjoy!

Embed This:
<a href="https://www.techdirt.com/articles/20120321/17385918193/our-gift-to-authors-guild-ad-brick-mortar-book-stores.shtml"><img src="https://i.imgur.com/655w8.png" title="Brick And Mortar Bookshops by Leigh Beadon for techdirt.com" width="560" /></a>

Filed Under: antitrust, authors, brick and mortar, ebooks, price fixing, scott turow, whimsy

Why Hollywood's Six Strike Plan Should Be Investigated For Antitrust Violations

from the good-points dept

With there being renewed interest in the questionable deal between the RIAA/MPAA and the US's largest ISPs to set up a "six strikes" graduated response plan to cause trouble for those accused (not convicted) of file sharing, some are beginning to realize that the whole plan deserves serious antitrust scrutiny. After all, you have the representatives of two major industries getting together in a room to collude on a plan that will make internet access more expensive for users.

On top of that, since it's based on mere accusations (not convictions) -- and those accusations will come from a company with a terrible track record for accuracy -- you'll have to pay to challenge a strike and (most ridiculous of all) if you do challenge it, you are limited to just six defenses -- significantly less than are allowed under copyright law. That is, if the work is in the public domain, but published after 1923, you have no official defense under the plan. In other words, not only does the plan involve collusion among multiple big industries, but at the outset it assumes guilt before innocence, makes you pay to claim you're innocent, and won't even let you use basic defenses afforded to you under existing copyright law.

All of that seems of questionable legality. It also makes the White House's direct involvement in brokering this plan look even worse. And, once again, it makes us wonder why the real stakeholders, internet users, weren't given a seat at the table. If they were, perhaps this would have been avoided.

Of course, given the White House's involvement in brokering the deal, there doesn't seem much likelihood that the Attorney General will bother to scrutinize the agreement, since it would effectively be challenging his own boss.

That said, the article linked above suggesting that an antitrust inquiry seems necessary is written by Sean Flaim, and is based on his even more thorough research paper detailing why this program needs to be reviewed for antitrust violations. Unfortunately, the chances of that actually happening are still pretty slim.

Filed Under: antitrust, collusion, five strikes, graduated response, isps, six strikes
Companies: mpaa, riaa

Author's Guild Boss On E-Book Price Fixing Allegations: But... But... Brick-And-Mortar!

from the you-rarely-find-so-much-'wrong'-all-in-one-place dept

No sooner had the Department of Justice announced its plan to investigate Apple and five of the Big Six publishers for e-book price-fixing than a representative of those benefiting most from this (alleged) collusion boldly stepped into the fray. Scott Turow, bestselling author and president of the Author's Guild, has issued one of the most profoundly self-serving and wrongheaded statements ever to grace the pages of a legacy industry's website. There's a ton to unpack here, so let's get right to it.

Scott Turow's statement is presumably issued on behalf of the Author's Guild, although there's no indication that any author other than Scott Turow was consulted. (You may remember the Author's Guild as the cheery people whose fear of technology led them to a successful claim that e-books utilizing text-to-speech violated a never-heard-of-before "audio right", in essence stating that reading purchased e-books aloud is illegal.)

Turow's burns through a whole lot of words to arrive at three basic conclusions:

1. Apple is good.
2. Amazon is evil.
3. The future of books is brick-and-mortar.

Let's take a look:

Yesterday's report that the Justice Department may be near filing an antitrust lawsuit against five large trade book publishers and Apple is grim news for everyone who cherishes a rich literary culture.

Obviously, the emphasis is on "rich." Rarely do resellers and publishers collude to lower prices. There are many out there who believe a rich culture can be synonymous with low-priced books, music, and other media, but obviously our opinions don't matter because we haven't written and sold enough books. (No, seriously. Read the comment thread on Turow's post.) Thankfully Barry Eisler and Joe Konrath, who have worked in the business and sold plenty of books, also completely dismantle Turow's arguments, especially his abuse of the word "culture."

Shouldn't those who cherish a rich literary culture prefer books at reasonable prices which allow that rich literary culture to be read by more people? All I can get from Turow's statement is: "the public must prefer their books to be more expensive." In what world is it "grim news" that our "rich literary culture" should be getting cheaper?

We have no way of knowing whether publishers colluded in adopting the agency model for e-book pricing. We do know that collusion wasn't necessary: given the chance, any rational publisher would have leapt at Apple's offer and clung to it like a life raft. Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open.

You might have no way of "knowing," but the conclusions drawn by the DOJ don't look too pretty. Secondly, if "collusion wasn't necessary," then why do we have the appearance of collusion? Did the publishers not have anything better to do with their downtime than push prices around, mainly in an upward direction? Point the third: I thought it was Amazon who used deep discounts on physical books to kill off physical bookstores like Borders, and Barnes and Noble, who in turn killed off independent bookstores, or so the narrative goes. Now all of a sudden it's re-killing off physical bookstores with digital goods?

Just before Amazon introduced the Kindle, it convinced major publishers to break old practices and release books in digital form at the same time they released them as hardcovers.

Because windowing is stupid. Especially in a digital world.

Then Amazon dropped its bombshell: as it announced the launch of the Kindle, publishers learned that Amazon would be selling countless frontlist e-books at a loss... Amazon's predatory pricing would shield it from e-book competitors that lacked Amazon's deep pockets.

Selling something as a loss-leader isn't new, it isn't "predatory", and it certainly isn't exclusive to Amazon. Retailers have been doing this for a long as retail has existed. It's no different than the local grocery store selling ultra-cheap cases of soda during the summer, in the hopes that you'll stock up on hamburgers, hot dogs, buns, chips, beer, etc. while you're there. Amazon selling e-books at a loss was a way to entice customers to purchase a fully-marked-up Kindle.

Critically, it also undermined the hardcover market that brick-and-mortar stores depend on. It was as if Netflix announced that it would stream new movies the same weekend they opened in theaters.

If your business is dependent on a product whose popularity has taken a nosedive over the past few years, perhaps it's time to rethink your product line rather than blame the market leader's foresight. And since when is it Amazon's job to prop up brick-and-mortar stores?

Amazon quickly captured the e-book market as well, bringing customers into its proprietary device-and-format walled garden (Sony, the prior e-book device leader, uses the open ePub format).

Oh, for the love of... Really? You hail Apple as the savior of the sinking USS Publishing Industry, and you somehow think you can still bash someone else's "walled garden" and "proprietary device-and-format?" Isn't it worth pointing out that one of the reasons Amazon has a closed, proprietary device-and-format is because the publishers demanded a locked up system for fear of "piracy"?

Two years after it introduced the Kindle, Amazon continued to take losses on a deep list of e-book titles, undercutting hardcover sales of the most popular frontlist titles at its brick and mortar competitors. Those losses paid huge dividends. By the end of 2009, Amazon held an estimated 90% of the rapidly growing e-book market.

Well, looks like you should have gotten in on the ground floor, rather than ruefully envying a market that you seemed to want no part of.

Enter Steve Jobs. Two years ago January, one month after B&N shipped its first Nook, Jobs introduced Apple's iPad, with its proven iTunes-and-apps agency model for digital content. Five of the largest publishers jumped on with Apple's model, even though it meant those publishers would make less money on every e-book they sold.

Enter Steve Jobs, creator of walled gardens and proprietary devices and formats. And look, the publishers jumped right in even though they were giving up a bigger chunk to the walled gardener. Wait. What are we arguing about? Oh, yeah. Amazon being more evil than price-fixing publishers. Got it.

Publishers had no real choice: it was seize the agency model or watch Amazon's discounting destroy their physical distribution chain. That's why we publicly backed Macmillan when Amazon tried to use its online print book dominance to enforce its preferred e-book sales terms, even though Apple's agency model also meant lower royalties for authors.

I'm sorry. You lost me, Turow. You want to discuss e-book pricing and yet we keep finding ourselves wandering the musty aisles of brick-and-mortar. And I'm sure your lower-tier guild members are thankful to you for ensuring that they receive less money in your preferred walled garden, while simultaneously sabotaging their future sales by using inflated e-book pricing to protect hardcover margins.

Our concern about bookstores isn't rooted in sentiment: bookstores are critical to modern bookselling. Marketing studies consistently show that readers are far more adventurous in their choice of books when in a bookstore than when shopping online. In bookstores, readers are open to trying new genres and new authors: it's by far the best way for new works to be discovered.

No. Your concern is rooted in unsustainable profit margins. And would it kill you to link to these "marketing studies" that "consistently" back up your rose-colored vision of bookstores as far as the eye can see?

Publishing shouldn't have to choose between bricks and clicks.

It rhymes! And it's a false dichotomy! Publishing doesn't have to choose between those options. It can still have both. What it can't have is a return to the days of pre-digital book sales and the lush markups of first-run hardcovers. If you're looking to increase sales, it helps if you don't price yourself out of the market, via "collusion" or "agency pricing" or just flat-out refusing to align your e-book prices with reality.

A robust book marketplace demands both bookstore showrooms to properly display new titles and online distribution for the convenience of customers.

Does it? If the marketplace you have now (you know, the one that seems light on bricks and/or mortar) isn't a result of "demand," than what is it? When you say "robust market", what you're really saying is "a market that favors major publishers". It has nothing to do with the actual robust market we have today, with millions of titles and hundreds of options for both customers and writers.

Apple thrives on this very model: a strong retail presence to display its high-touch products coupled with vigorous online distribution. While bookstores close, Apple has been busy opening more than 300 stores.

So... if Amazon just opened a few retail outlets to sell its Kindle and deeply-discounted e-books, everything would be cool? Is that it? The retail world needs more brick-and-mortar foisted upon it simply because The Prices Are Too Damn Low?

Like rock bands from the pre-Napster era, established authors can still draw a crowd, if not to a stadium, at least to a virtual shopping cart.

And this week's winner of the Godwin Achievement Award (Content Industries Edition) is Scott Turow! Between this and the gratuitious Netflix reference (the killer of brick-and-mortar movie rentals), Turow is only one dodgy metaphor away from sweeping the category!

For new authors, however, a difficult profession is poised to become much more difficult. The high royalties of direct publishing, for most, are more than offset by drastically smaller markets. And publishers won't risk capital where there's no reasonable prospect for reward. They will necessarily focus their capital on what works in an online environment: familiar works by familiar authors.

Yeahyeahyeah. This argument. "Now things will suck for the lower tier of creators because no one will know or care that they've made anything, least of all those in the business of curating and selling creative content. Woe is everybody, especially those that find themselves handcuffed to a disinterested publisher who won't promote their latest and won't allow them access to their own back catalog." This thing that you think only works in an "online environment," Scott? "Familar works by familiar authors?" That's the same thing that the major publishers have been doing for years. This isn't an unfortunate side effect of the digital era. Mainstream publishers push mainstream offerings.

The indies and the self-published are where the new, exciting things will happen. And they'll do it all without your precious walled-garden-of-choice, the one with the letter "i" in front of everything, crafted entirely out of brick, mortar and windows. They'll do it on their own. Or they'll find a few like-minded writers and start their own publishing house with strippers and blackjack! And they won't need your "protection" or "author's guild" or lousy pricing or ridiculous windows to do it. Hell, some of them might even find a way to rake in hundreds of thousands of dollars while never pricing anything above a "predatory" $2.99. Weird, I know. But these things do happen. And they happen without the "power" of the major publishing houses behind them.

Any final words, Scott?

Let's hope the reports are wrong, or that the Justice Department reconsiders. The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition.

This would be tragic for all of us who value books, and the culture they support.

I can't even parse that sentence. Are you implying that price fixing is "real competition?" Or are you saying that windows, e-books at hardcover prices and walled gardens are the "real competition" and any entity working outside those self-imposed confines is only offering the "appearance of competition?" Or does "real competition" only include those that are looking to see how high they can price their offerings? And anyone who fails to price accordingly should be investigated for "predatory pricing." Is that about the size of it?

Let me FTFY:

That would be tragic for THOSE OF US who OVERVALUE our LEGACY, CULTURE BE DAMNED.

Valuing something doesn't mean paying top dollar for it. Does the person who owns 30 hardback books purchased at full retail respect culture more than the person who has 30 lower-priced e-books on their reader? If you believe that, you've got to let it go. Trying to convince the rest of the world that the only way to "value" culture is to pay top-dollar isn't going dispel that aura of entitlement that seems to surround every legacy industry.

Everyone values books and supports culture in their own way. What you want, Scott, is control over all of it. You want to be able to set the prices, timetable and delivery system. Unfortunately, you no longer have that option. Whether or not the DOJ finds evidence of collusion is largely unimportant in the overall scheme of things. If it does, prices will fall to market levels faster and windowed releases will become rarities. Even if the DOJ clears Apple and the publishing houses of any wrongdoing, prices will fall and windowed releases will become rarities. It's already happening. The future belongs to other people and businesses who move faster, respond to change quicker and are free of the fears that have held legacy industries back. This "statement" of yours is nothing more than the bitter noise of someone waist deep in water, cursing the incoming tide.

Filed Under: antitrust, authors, brick and mortar, ebooks, price fixing, scott turow
Companies: amazon, apple, authors guild

US Government Finally Realizes That Publishers & Apple Conspiring To Raise eBook Prices Is Price Fixing

from the well,-duh... dept

Almost exactly two years ago, when the big publishers, along with Apple, effectively forced Amazon to allow the publishers to jack up prices on ebooks, I noted that this looked like a classic case of price fixing. Apparently, the US government agrees -- and found enough evidence to go after the publishers and Apple for price fixing. There are settlement talks ongoing, but if they fall through, the government is likely to sue. This probably means that we'll start seeing some lower prices on ebooks. Of course, the stupid thing is that these super high ebook prices have probably hurt the market more than helped. Lots of indie authors have experimented with ebook pricing, and found that the sweet spot for maximizing revenue is often under $5. So while big publishers may have been getting more per sale, it seems likely they were leaving a ton of money on the table by limiting the size of their ebook market with prices that were just too high.

Filed Under: agency model, antitrust, ebooks, price fixing, pricing, wholesale
Companies: amazon, apple

Why Search Engines Can't Just 'Fix' Search Results The Way The MPAA/RIAA Want

from the not-that-simple dept

It's become clear in the past year or so that one key "target" in the legacy entertainment industry's game plan is to force Google to change its search results to have "good sites" rise up and "bad sites" be pushed down. They've been putting pressure on search engines for quite some time now, and have even considered suing Google for not giving it the results they want. Late last year, the RIAA even put out a "report card" in which it complained that Google won't let them program Google's results for everyone else.

This whole focus is a dumb idea for a few reasons. Mostly it's dumb because it (again) misdiagnoses the problem. It assumes, for example, that the reason that people go to file sharing sites is because the results top Google. But that's rarely the case. In fact, if you do searches for various tracks or movies, you'll almost always find legitimate results at the top already. The "issue" comes up when people do those searches in combination with "free" or something along those lines. But, by that point (in most, but not all, cases) the industry has already lost those folks. At that point it's likely that they know they're looking for an unauthorized version, so seeing a more "legitimate" result at the top of the results isn't likely to make much of a difference.

Even if we assume that the industry's theory that Google is magically driving total rubes to unauthorized sites when they really wanted expensive, inconvenient, DRM-laden, limited pay sites, the simple fact is that it's not as easy as they think to "fix" the search results. In many ways this is similar (or perhaps it's just another version of the same exact thing) of the industry talking about how it's "easy" for ISPs, online service providers and everyone else to "just know" when a song or video is infringing -- but then are so confused that they sue over videos they themselves uploaded. Knowing whether or not something is infringing is not as easy as the industry insists.

Similarly, knowing what's a "good" site and a "bad" site isn't so easy either. How would you approach it?

• You could just take a list from the RIAA & MPAA of "good sites" and "bad sites." That raises a bunch of problems. Let's just start with antitrust. Two trade associations representing the biggest record labels (who've had antitrust problems in the past) and Hollywood studios giving Google (already under antitrust scrutiny) a list of winners and losers? Er... DOJ on lines one, two and three. No way is that legal.
• Even if it was legal, not everyone agrees who is "good" and "bad." It's easy for the RIAA and the MPAA to insist that Megaupload -- for example -- is unquestionably "bad." But... then you have major label artists and super successful indie artists speaking out against the shutdown, pointing out that there were plenty of good things about the service. Why does the RIAA get to decide when some of its own artists feel otherwise?
• The RIAA and MPAA don't have a very good history of recognizing a "good" new thing when they see it. In fact, they seem to scream bloody murder (sometimes literally in the case of the VCR) when new useful tools show up. Letting them program Google's search results seems fraught with problems.
• If search engines let the RIAA and MPAA program their results to point to "good sites" and suppress "bad sites," where does it stop? For years we've seen lawsuits against Google from companies that don't like how they show up in the search results. Why don't they get to reprogram Google's results too? Or pick any random industry out of a hat. Car dealers? I'm sure when you do a search on a car they want results to point to a "good" local dealer, rather than a "bad" site that tells you how to get a better deal on a car. Imagine having to do that at scale where every industry has its own interpretation. And then what happens when those interpretations conflict?
• Okay, so if they don't just give Google a list, how does it "know" the "good" sites from the "bad" sites? Again, remember with Megaupload, we've seen plenty of artists say they like the site or its offerings which actually help them make money. Can Google just assume? How? That's not how Google works. If you have any sense of the scale under which any search engine works you know that's an impossible task. There's no way to just know -- especially since sites that are "downgraded" are likely to just set up shop somewhere new and start again. So at scale, the problem becomes even trickier.
• What if there was a "proxy"? Ok. Like what? DMCA notices? If a site gets lots of DMCA notices, it must be bad, right? Okay, so look at ChillingEffects... and you realize that the sites that get the most DMCA takedowns are sites like Google, Facebook and Twitter. It does't seem like a very good proxy, because sites that are popular get lots of takedowns. It doesn't mean they're "bad."
• An "independent" third party? Who is the third party? How do they take into account the issues above? And, again, if you're doing that for one industry, you'd have to do it for all. And that simply doesn't work at scale.

In the end, I can't actually see any way that Google can do what the industry wants. I know that someone in the comments below will link to some random site and say something to the effect of "how can Google say this site is legit?!?!" but that ignores how Google actually works. It's an algorithm. It doesn't look at sites like a human does. At scale there's simply no way that Google can have a human check each of the sites in its index.

The problem is that Google isn't designed to prop up the entertainment industry's old business model. It's designed to provide people results for what they're searching for. Those may be two different things. Google's algorithm does try to give users the "best" result for what they're looking for, and quite frequently that is the legitimate, authorized offering, but it's not always so easy there. iTunes sales are mostly done through iTunes' software, rather than on the web, which makes it difficult for Google to track link popularity there. Amazon music and movie sales often initiate from Amazon's own search, rather than Google -- so, again, Google has less data to work with.

Furthermore, if someone does a search for the name of a movie plus "download" when that movie isn't available for download, what is Google supposed to do, exactly? If the movie industry weren't so obsessed with release windows, Google could point people to the authorized download. But without that, how is it supposed to do that? If there is no authorized download, it's going to try its best, and sometimes that's going to be to an unauthorized source.

In the end, for those who keep insisting that this is somehow an obvious solution, and complaining that Google isn't helping, I'm wondering if you can actually explain how it can do a better job, because the more I think through it, the less I think it's even remotely possible for Google to do what the industry wants.

Filed Under: antitrust, bad sites, copyright, fix, good sites, results, search
Companies: google, mpaa, riaa

Microsoft Hires Key Anti-Google FTC Lawyer To Be Its New Chief Anti-Google Lobbyist

from the paying-a-little-too-much-attention-to-the-competition dept

There's something a little... disturbing about how gleefully Microsoft seems to want to sic antitrust regulators on Google. Given that the company went through its own long antitrust battle, you'd think that it would know better than to continually invoke the government's antitrust legal beagles against others. Instead, it seems to have taken the position that if it had to go through the antitrust rollers for so long, why shouldn't other successful companies. We've noted in the past Microsoft's fingerprints showing up on bizarre and silly antitrust claims against Google -- which have so far gone nowhere -- but Microsoft seems really intent on saddling Google with a long and costly antitrust battle. I guess Microsoft thinks it's easier to fight Google that way than, you know, actually innovating and competing in the marketplace. It's pretty sad just how anti-innovation these efforts are.

Either way, Microsoft appears to be stepping up its "saddle Google with antitrust charges" battle by hiring Randall Long from the FTC. Long was the key "anti-Google" lawyer within the FTC, who led multiple antitrust investigations into Google, and recommended that the FTC block Google's acquisition of AdMob (something he was outvoted on). Microsoft doesn't even seem to want to hide the fact that his role will be to lobby politicians in DC to hit Google with antitrust charges. The WSJ's report on the hiring is pretty explicit:

As part of his new job, Mr. Long will likely continue those efforts before the FTC and other agencies, a person familiar with the matter said.

Of course, if Long actually follows the rules, he shouldn't be allowed to do anything concerning any FTC investigations into Google for quite some time. The ethics rules are pretty clear -- even barring "behind-the-scenes" help on such investigations:

Except as provided in this section, or otherwise specifically authorized by the Commission, no former member or employee (“former employee” or “employee”) of the Commission may communicate to or appear before the Commission, as attorney or counsel, or otherwise assist or advise behind-the-scenes, regarding a formal or informal proceeding or investigation...

That certainly suggests that Long cannot and should not "continue those efforts before the FTC" for some time. Either way, it's yet another example of the questionable revolving door between government and the private sector, where ex-government officials end up in roles that have a very close connection to their former government role (or vice versa). Even assuming that Long follows all the rules, as I'm sure he intends to do, this kind of thing just looks really bad.

Filed Under: antitrust, ethics, ftc, lobbyists, randall long
Companies: google, microsoft