[governance] Re: reality check on economics

[Angela Daly]

I am a member of this list but rarely comment, however this whole
topic of the effectiveness of competition law/consumer protection is
precisely what I research on, so thought I would throw in my 2
pence/cents as well.

One of the problems in my opinion with these legal regimes is that
they were generally designed prior to the mass (commercial) use of the
Internet, and cannot always deal well with the problems users in
particular may face as a result of economic dominance or
concentration.

Competition law is highly neoclassically economics-based, and does not
do well with e.g. the 'non-economic' consequences of an accumulation
of private corporate power online, which can equate to the censorship
of information, repressing of the user's free expression and misuse of
user data. If there is a mono/oligopoly (as is the case in various
online sectors for the reasons already mentioned, network effects
etc), then if users do not like the service for whatever reason, they
may not be able to find a real alternative. Furthermore, for
competition law actually to come into play, there cannot just be an
accumulation of market power, there must also be an abuse. The above
'non-economic' consequences in themselves would generally not count as
an abuse.

Furthermore, neither regime handles well the fact that consumers are
now users, also with the ability to produce and disseminate
information and not just passive recipients of it. When
conceptualising consumer welfare or consumer protection, a graduation
is needed to thinking about what these mean for users as opposed to
traditional consumers.

Angela

On 18 May 2012 19:39, Jeremy Malcolm <jeremy at ciroap.org> wrote:
> On 19/05/2012, at 12:51 AM, Milton L Mueller wrote:
>
> Monopolies aren't the only firms who act against the global public
> interest(s),
>
> so too do run-of-the-mill firms in a competitive market.
>
>
> Typically, a competitive market means that consumers can avoid or punish
> such firms by abandoning them because of their bad practices.
>
>
> s/Typically/Theoretically/
>
> Moreover, I do not see run-of-the-mill firms and run of the mill consumer
> protection issues being targeted in these sweeping statements calling for
> "democratic" governance of the internet - I see specific leading companies
> being called monopolies.
>
>
> Sure, I agree with you that that is inaccurate.  But I think all that is
> meant, in non-specialist terms, is that those leading companies have
> dominant market power, so that what competition exists is ineffective.
>  Sometimes this market power is first mover advantage, sometimes dumb luck,
> usually network effects.  I'm not convinced that Skype has the best VoIP
> service, Facebook the best social networking platform or Twitter the best
> microblog.  But because they are so entrenched, Microsoft can add
> interception capability to Skype (see
> http://skype-open-source.blogspot.com/), Facebook can encroach further and
> further upon our privacy, and Twitter can... do bad stuff that thankfully
> they haven't tried yet.
>
> would have to include the US here. For example, the use of lengthy and
>
> legalistic terms and conditions that detract from consumer rights is rife
>
> online, and this is something that US law explicitly allows. In other
>
>
> Indeed, that is a continuing point of controversy. But there is an
> additional burden of proof: at what political level is it best to alter such
> things?
> There is a robust culture and tradition of consumer activism in the US. What
> makes you think consumers will get a better deal at a global level?
>
>
> We (by which I mean, the stakeholders collectively at the global level)
> might want to be able to agree on some set of principles for online
> businesses that operate across borders, that would set minimum standards for
> consumer protection that may exceed those in the country from which the
> business operates.  If the business doesn't want to adhere to those
> standards, it can still operate domestically.  In practice this already
> happens to some extent, eg. with EU privacy law and the safe harbor, but
> what about the rest of the world?
>
> jurisdictions, there is regulation of unfair contract terms, recognising the
>
> fictitious nature of freedom of contract between consumers and large firms.
>
> But the dominance of US online businesses effectively trumps these
>
> protections elsewhere in the world.
>
>
> But if these markets are competitive then no one is requiring consumers to
> use those online businesses, no? So we are back to the problem of monopoly
>
>
> Not all of the abuses of their market power affect competition in the
> marketplace; they may "just" affect consumer or broader human rights, so
> competition law does not come into play.
>
> On 19/05/2012, at 12:11 AM, McTim wrote:
>
> On Fri, May 18, 2012 at 9:41 AM, Jeremy Malcolm <jeremy at ciroap.org> wrote:
>
> Monopolies aren't the only firms who act against the global public
> interest(s), so too do run-of-the-mill firms in a competitive market.
>
>
> both monopolies and "run of the mill" firms are also end-users in the
> sense that they are allowed to run their networks and set their ToS as
> they wish.
>
>
> To the extent that they are allowed to do so.  What constraints are placed
> upon them doing so is a policy decision.
>
> Not all of their abuses are checked by competition law.
>
>
> Not all are abusive.
>
>
> Not all abuses are abusive?  My mind is spinning.
>
> --
>
> Dr Jeremy Malcolm
> Senior Policy Officer
> Consumers International
> Kuala Lumpur Office for Asia-Pacific and the Middle East
> Lot 5-1 Wisma WIM, 7 Jalan Abang Haji Openg, TTDI, 60000 Kuala Lumpur,
> Malaysia
> Tel: +60 3 7726 1599
>
> Follow @ConsumersInt
>
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>
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>
>
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