The University of Chicago Law School Faculty Blog

Microsoft and the Browser Ballot

The newspapers reported Saturday that Microsoft and the European Union are edging toward a browser ballot deal. Both the EU and Microsoft have confirmed that they are in discussions over this. Microsoft has yet to release details on this, but the basic notion is that Windows users in Europe would be presented with a screen, presumably on first use of Internet Explorer, to help them install competing browsers. The details on this matter enormously, but without those in hand, we should focus on the big picture.

I confess to mixed feelings. On the one hand, this is precisely the remedy that I proposed in a 2005 paper. I called this remedy adding rather than subtracting. If Windows really was the best distribution platform on the planet, you might come closest to restoring ex ante competition in browsers by insisting that Microsoft itself distribute competing browsers. Yes, we can all just download more browsers—I current have four on my desktop—but the behavior of industry insiders suggests that they think that there are competitive advantages to being preinstalled in some fashion. Of course, it isn’t clear that the browser ballot will do that, hence the need for details.

But it sounds as if I should claim victory and leave the field, so why the mixed feelings? The computer market has changed dramatically in the intervening years. The emergence of Google, netbooks and smartphones have changed the core competitive landscape for computing. That change was precisely what Microsoft feared from Netscape and what Bill Gates described in his Internet Tidal Wave memo, but it is really happening now.

That means that a remedy that may have made perfect sense in 2005—I couldn’t have been wrong then certainly?—may no longer make sense in mid-2009. I haven’t thought that through yet. Of course, the empiricist within me is eager to see the browser ballot test run in Europe, but presumably our regulators aren’t running the world just to provide data to lawyers and social scientists.

Student Blogger - Summer WIP: Eric Posner Attacks Feasibility Analysis

Cost-Benefit Analysis (CBA) is the dominant mechanism for weighing the utility of proposed regulation, but it is not without its critics. One major alternative is so-called "feasibility analysis". Eric Posner presented today his current paper (co-authored with fellow Chicago professor Jonathan Masur) which provides the first sustained, comprehensive attack on feasibility analysis. They conclude that feasibility analysis is unacceptably vague and has no substantial normative foundation justifying its use as an alternative to CBA.

Feasibility analysis proceeds in three steps. First, the regulatory agency identifies a risk. Second, it identifies the relevant industry that it will seek to reduce the risk in. And third, it tries to reduce the risk to the greatest degree possible, consistent with two restraints: technological, and economic. Because one of the main justifications for using feasibility analysis is that it can better account for concentrated harms, the sort of economic result that would render a proposed regulation "unfeasible" is often one that causes entire plants to close (as opposed to industry-wide layoffs scattered across every factor). Alternatively, OSHA has adopted a standard which says a regulation cannot cause more than either a 1% drop in revenue or 10% drop in profits.

Student Blogger - Summer WIP: Rowell Presents on the Timing of Preferences

Arden Rowell was the first Bigelow Fellow of the summer to present a work in progress with her article, "The Cost of Time.” In a host of risk-regulation contexts, regulators look at how much money people are willing to pay to reduce certain risks.  Unfortunately, regulators haven’t been paying attention to the question of when those risks occur—or when participants in the studies think they will occur.  As a result, the numbers regulators use are what Rowell calls “time-indeterminate”—they don’t have any particular timing attached to them. 

Rowell argued that time-indeterminacy is a problem wherever we care about preferences, but it’s particularly a problem when we use money to measure things.  That’s because money has a time-value—people would rather have a dollar today than a dollar a year from now. So asking how much people are willing to pay for a good (like a risk reduction), without pinning down when they think they’ll get the good, doesn’t actually tell regulators or anyone else very much that’s useful. 

The Kindle Fiasco?

The deletion yesterday by Amazon of e-books versions of George Orwell’s 1984 and Animal Farm is a shocking and depressing example of ... law enforcement? Almost all of the commentary is genuinely shocked and appalled at what Amazon has done (try here, here and here),while only Peter N. Glaskowsky at CNET focuses on the importance of copyright enforcement and understands what Amazon was doing in that framework.

The Kindle is Amazon’s e-book reader and is by far and away the leading version of what I have called mediated books. In a recent paper, I discuss the ongoing control that Amazon can exert over the Kindle and the books that it has already distributed. We saw this once before when Amazon turned off the read aloud function in the face of contentions by the Authors Guild that that impermissibly created derivative works. My focus in the paper is more on how mediated books change the advertising opportunities associated with books—actual in-book advertising—given the print-on-demand nature of e-books. Two Amazon patent applications subsequently came to light making clear that Amazon is heading down this path.

Control at a distance isn’t a new issue either. I talked about it in my 2005 paper “Rewinding Sony: The Evolving Product, Phoning Home and the Duty of Ongoing Design” which focused on exactly these issues of copyright infringement for networked products. The rule that we might apply to the Sony Betamax—a locked-down product that can’t evolve in place—might be very different from the rules that we would apply to products such as Napster and Grokster that can be designed in an ongoing fashion and that can exercise control at a distance.

Here is what seems to have happened with 1984. Amazon allows firms to upload e-books for distribution on the Kindle platform. It appears one of its publishers uploaded versions of 1984 and Animal Farm that violated American copyrights in those works. Once Amazon learned that it had distributed infringing works, it recalled those works, meaning that it reached out and deleted those books from the Kindle sitting in your house. Amazon refunded the money for those purchases and there are other e-book versions of 1984 available on the Kindle, but anyone who had annotated the pirated 1984 e-book version probably lost those annotations.

This is a question of designing remedies for copyright infringement. I have made this point in posts here before: Do we want low-cost readily enforceable versions of our laws—including the copyright laws—or do we instead prefer versions that can only be enforced through an expensive typically court-based system? High cost or low cost?

To be sure, there is something genuinely Orwellian about what Amazon has done; that is the great irony of the situation apparent to all. Amazon has announced that it won’t do this anymore, meaning I take it that it isn’t going to take copyright infringement of this sort seriously anymore. Presumably Amazon will invest more in ex-ante screening to ferret out copyright infringement and will rely less or not at all on ex-post deleting as a solution to copyright infringement.

Nonetheless, the central question of enforcement strategy remains and will become increasingly important as we move to an always-connected cloud architecture. But Amazon clearly has the ability to design a system that allows it to engage in ex-post copyright enforcement. The precise point of my 2005 paper was about the circumstances under which the legal system should take into account the ability of system builders to design in copyright enforcement in their products and making sure that they had the right incentives to do so.

Student Blogger - Summer WIP: Levmore Presents on Interest Groups and Incrementalism

The old saying tells us you have to walk before you run. In American politics, there is a strong bias in favor of incremental change -- taking small steps to learn what works and what doesn't rather than attempting to enact radical reforms in one fell swoop. In his latest paper, however, Dean Saul Levmore suggests that there might be some hidden dangers to the incrementalist model. Not always a cautious avenue towards prudent changes, incrementalism can act as a cover for powerful interest groups to achieve socially disoptimal outcomes through divide and conquer strategies.

Before Dean Levmore makes the bulk of his argument, though, he takes aim at the core mythos that gives incrementalism its positive aura: that it is a valuable teaching tool that allows us to feel our way gradually to the optimal social outcome. Certainly, sometimes incremental changes have this effect. But there is no reason to think that, as a general rule, incremental change is always a superior teacher than alternatives, such as a brief experiment with a dramatic change, or drastically different regulatory schemes across jurisdiction. A month where smoking was prohibited everywhere may well give society more useful information in planning future regulations than an "incremental" prohibition on smoking in restaurants.

Google on Offense, Google on Defense

Google and Microsoft are all over the news yesterday and today (I get confused: does the news happen on the day it happens or on the next day when my paper newspaper shows up on my stoop?). Three quick stories.

1. Google announced that it is going into the operating system business. In May, 1995, Bill Gates wrote his famous Internet Tidal Wave Memo. What scared Gates?: “One scary possibility being discussed by Internet fans is whether they should get together and create something far less expensive than a PC which is powerful enough for Web browsing.” Of course, now this is about more than just surfing the Internet; it is about moving the functionality of the desktop and more into the browser.

2. David Pogue likes Bing, Microsoft’s new search engine. I go each day for the pretty picture—even Baltimore looks good on Bing—but Pogue likes it as a search engine.

3. Google is getting bounced around over how transparent it is over its efforts in targeted advertising. Google apparently has been giving a presentation in Washington on its approach to what it calls “interest-based advertising.” The presentation is labeled Google Confidential, even though it consists mainly of screen shots from Google websites. Google has rethought that approach and has now released the presentation generally. I guess information really does want to be free.

My most recent draft article, Online Advertising, Identity and Privacy (abstract here and you can download from there) addresses exactly these issues. It is very much a work in progress, so if you have comments, please email them to me.

Student Blogger - Summer WIP: Posner, Landes, and Epstein on Supreme Court Questioning

The Posner/Landes machine rolled into the summer WIP Thursday, as they presented their latest project (also co-authored by Northwestern University's Lee Epstein, who was not present but whom both effusively praised as having compiled every judicial dataset conceivable to humanity): Inferring the Winning Party in the Supreme Court from the Pattern of Questioning at Oral Argument. Court observers such as Linda Greenhouse had long suspected there was an important relationship between the number of questions asked and the ultimate outcome of the case, but nobody had done the empirical work to figure out exactly what it was. Posner, Landes & Epstein looked at the effect the raw quantity of questions (and total words in questions) had on the probability a given side would win their case before the Court s using data tabulated from all arguments for all cases decided in the 1979 to 2007 period . They found a consistent correlation: Whether measured by total questions asked or total words in questions, more is less. The more queries a given side received by the justices, the less likely they were to emerge victorious. For example, petitioners win about 62 percent of the cases before the court but if the petitioner is asked fewer questions than the respondent, that probability increases to 71 percent. On the other hand, if the petitioner is asked more questions than the respondent, the probability that the respondent will win increases from 38 to 50 percent.