Oligopolistic America: anti-competitive, unequal, and deliberate


A brilliant, enraging op-ed in the Washington Post from analysts from the New America Foundation and the American Antitrust Institute shows how the Reagan-era policy of encouraging monopolistic corporate behavior has made America unequal and uncompetitive, creating a horror Gilded Age where the Congressional consensus is that laws cannot possibly put a check on bad corporate actors.

It's another look at the problems set out in Matt Taibbi's brilliant book The Divide, tracing the policies that created both the private prison industry and banks so big that even the most depraved criminality can't be punished lest the bank tremble and collapse on wider society.

Particularly galling and illuminating is a quote from a Goldman Sachs report that advises investors to seek out "oligopolistic market structure[s]" where there's "lower competitive intensity, greater stickiness and pricing power with customers due to reduced choice" as the ideal way to maximize your return on capital.

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FCC Chairman's competition promise means nothing


Cable lobbyist turned FCC Chairman Tom Wheeler has tried to "balance" his attempt to nuke Net Neutrality by promising to override state laws that prohibit cities from setting up their own broadband networks. But it's a largely meaningless gesture: practically every big city in America is locked into a decade-long contractual "franchise" arrangement with a big cable company.

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Frontier takes over Verizon's network, complaints fall by 68%

Since 2010, the lucky people of West Virginia have gotten their local phone/Internet service from Frontier Communications, who bought the business from noted shit-shovelers Verizon. In a mere four years, complaints about phone service have plummeted by 68 percent, and 88 percent of their customers now have access to broadband. The company has also installed a 2,600-mile-long fiber loop. There is nothing intrinsic about operating a phone network that makes your company into a horror-show, but once the telcos get big, they turn into some of the worst companies in the world. Cory 16

Toxic Avenger's brilliant rant about the importance of Net Neutrality

Lloyd Kaufman, cofounder of Troma Entertainment (the people who brought us such films as the Toxic Avenger) has a brilliant, profane, and stirring editorial in support of Net Neutrality on Techdirt. Kaufman explains how an open Internet is the only competitve hedge against the communications giants that own "cinemas, newspapers, T.V. stations, radio and even Broadway 'legitimate' theaters." Thanks to the failure of the FCC to give Net Neutrality their full protection, and the court ruling that gutted the FCC's weak protections, Net Neutrality is in real trouble. Kaufman's editorial a great arguments for its preservation.

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Hanes's threat to Hanes Hummus: people might mistake chickpeas for underwear!

Canada's Hanes Hummus has received a legal threat from Hanesbrands, Inc, who make underwear and other textiles, demanding that the four-person company change its name lest the public begin to tragically confuse chickpea paste with undergarments. Hanes Hummus's lawyer wrote a spirited and funny letter explaining why Hanesbrands shouldn't be worried about a separate Hanes trademark over dips and spreads, but given the relative size of the two parties, it seems likely that Hanes Hummus will lose its fight if Hanesbrands continues to play the bully.

"Hanes" is short for Yohannes. Hanes Hummus's founder is named Yohannes Petros. He filed for a trademark on "Hanes Hummus" in Canada and the US.

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Cyanogenmod installer removed from Google Play store

Two weeks ago, the one-click Cyanogenmod installer hit the Google Play store, making it possible to switch from the stock Android operating system to a more free, more open version without any special expertise. Yesterday, Google asked Cyanogenmod to remove the installer, because using it voids your device's warranty. I've downloaded other apps from the Play Store that root your device and void the warranty, so this seems like a very selective enforcement to me.

In any event, Cyanogenmod's installer can be "sideloaded" into your device without having to go through the Play Store (one of the advantages of Android is that it doesn't attempt to prevent you from installing unapproved software). Hundreds of thousands of people used the Play Store version, and we can hope that it remains in use, even without Google's official support.

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Dear airline execs: crowing about new fees and price hikes before your merger makes the DoJ mad

The DoJ has filed suit to block the merger of US Air and American Airlines, because they've noticed that while the airlines' executives publicly gave the reason for the merger as "synergies" and efficiency, they told the industry that the merger would allow them to jack up prices and charge more fees. Pictured to the right, Scott Kirby the US Air President who took to the podium at a conference to say it was "impossible to overstate the benefit" of the new fees he'd be able to charge after a merger.

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The Battle of $9.99: How Apple, Amazon, and the Big Six Publishers Changed the E-Book Business Overnight

Andrew Albanese, my editor at Publishers Weekly, has been tracking the antitrust action the DoJ brought against the big six publishers and Apple over price-fixing very carefully, and he's written a great-looking, DRM-free ebook about it called "The Battle of $9.99: How Apple, Amazon, and the Big Six Publishers Changed the E-Book Business Overnight." Here's what he had to say about it:

It is mostly about the backstory of the case, how publishers' antipathy to $9.99 led them to what turned out to be a pretty fateful decision. It is also available in all the major e-book stores, Sony, B&N, Apple, and Amazon. Amazingly, Amazon is featuring it on their Singles home page here in the U.S.

So one note that might be of interest to you, I was surprised to learn in writing this essay how little the publishers negotiated their initial e-book retail terms back when the e-book market was just beginning. And, more to the point, that the thought they did put into e-books was all related to the negative aspects of digital: how to stop piracy, DRM, controlling unauthorized use. This is kind of where this whole legal saga begins. When Amazon came to launch the Kindle in 2007, the publishers were so focused on the bad things that digital might bring that they never really considered, hey, what if this e-book thing really works? What if this Kindle thing takes off?

Remember, at the time Amazon launched the Kindle, the publishers were stumping for the Google Settlement, so their attention was focused more on stopping the digitization and indexing of long out-of-print books that were making money for no one. As a result, they barely negotiated their initial financial terms with Amazon. Amazon officials testified that, in some cases, they just accepted the financial terms publishers had already proposed for e-books, while publishers mostly sought to address DRM, and security concerns. No one apparently stopped to ask Amazon, “Oh, by the way, how much are you planning to charge consumers for our e-books?”

It is easy to say in hindsight, but the major publishers’ fear of digital piracy had kept them from considering the prospects of digital success. And, of course, all of this was exacerbated by the fact that the Kindle was a closed platform, so, the more successful the Kindle became, the more power the company had over the publishers' customer. As you once wrote, the DRM and security they'd insisted on became a whip to beat them with. Another interesting chapter in the way DRM has impacted the publishing industry.

The Battle of $9.99: How Apple, Amazon, and the Big Six Publishers Changed the E-Book Business Overnight

Rumor: Koch Brothers to buy 8 major newspapers, including LA Times


The Koch Brothers -- billionaire ultra-conservative puppet-masters and Tea Party funders -- are rumored to be in talks to buy eight newspapers, including the LA Times, Chicago Tribune, Baltimore Sun, Orlando Sentinel and Hartford Courant from the Tribune company, which is emerging from bankruptcy protection. Half of the LA Times's newsroom has threatened to quit if the Kochs take over.

One thing sure to happen if the Koch brothers take over the paper is a conservative agenda on the editorial page. As other newspapers have cut back on editorials and endorsements, the Times is now often the only LA news outlet that issues endorsements on political candidates and on ballot measures and initiatives. This is particularly crucial in California, where even the most educated voter is left clueless and confused -- or worse, tricked -- after reading the state propositions put on the ballot by Californians who simply gathered enough signatures to push a private agenda.

If the Times' editorial page is filled with the Koch brothers' libertarian opinions, other journalists in LA will need to step up and voice opposing views.

If Koch Brothers Buy LA Times, Half of Staff May Quit (VIDEO) [Kathleen Miles/HuffPo]

(via Reddit)

(Image: LA Times, a Creative Commons Attribution Share-Alike (2.0) image from 24293932@N00's photostream)

Brazil's music collecting societies convicted of forming an illegal cartel

Ronaldo Lemos sez,

The Competition Authority in Brazil (CADE) convicted om March 20th the country's six major collecting societies and their central office (ECAD) - responsible for the collection of music royalties for public performance in Brazil - of formation of cartel and abuse of dominant position in fixing prices. According CADE, the Ecad and its associations not only organized to abusively fix prices, but also created barriers of entry for new associations to join the entity.

All entities will have to pay a fine of R$38 million (approximately US$ 20 million) and will have to reorganize the whole collection system, both by offering arrangements beyond the "blanket license" model, the only license ECAD and their associations made available for the performance of music, and by allowing each association to compete for different prices.

The rapporteur of the Case, Elvino Mendonça, said after the conviction: "The behavior of cartel is visible. The current collection system prevents all forms of competition. ECAD and its associations abused their market power and fixed prices. The evidence is abundant."

Ecad é condenado por formação de cartel por órgão de defesa da concorrência (Thanks, Ronaldo!)

Indie booksellers sue Amazon and big publishers over DRM (but have no idea what "DRM" and "open source" mean)

A group of independent booksellers have filed a suit against Amazon and the major publishers for their use of DRM, which, the booksellers say, freezes them out of the ebook market:

Alyson Decker of Blecher & Collins PC, lead counsel acting for the bookstores, described DRM as "a problem that affects many independent bookstores." She said the complaint is still in the process of being served to Amazon and the publishers and declined to state how it came about or whether other bookstores had been approached to be party to the suit.

"We are seeking relief for independent brick-and-mortar bookstores so that they would be able to sell open-source and DRM-free books that could be used on the Kindle or other electronic ereaders," Decker explained to The Huffington Post by telephone.

Such a move would lead to a reduction in Amazon's dominant market position, and completely reshape the ebook marketplace.

A spokesman for Fiction Addiction declined to comment as legal proceedings are ongoing. The other plaintiffs and Amazon did not respond to a request for comment.

That sounds great, but when you read the complaint, you find that what they mean by "open source" has nothing to do with open source. For some reason, they're using "open source" as a synonym for "standardized" or "interoperable." Which is to say, these booksellers don't really care if the books are DRM-free, they just want them locked up using a DRM that the booksellers can also use.

There is no such thing as "open source" DRM -- in the sense of a DRM designed to run on platforms that can be freely modified by their users. If a DRM was implemented in modifiable form, then the owners of DRM devices will change the DRM in order to disable it. DRM systems, including so-called "open" DRM systems, are always designed with some licensable element -- a patent, a trademark, something (this is called "Hook IP") -- and in order to get the license you have to sign an agreement promising that your implementation will be "robust" (implemented so that its owners can't change it). This is pretty much the exact opposite of "open source."

It's a pity. I empathize with these booksellers. I hate DRM. But I wish they'd actually bothered to spend 15 minutes trying to understand how DRM works and what it is, and how open source works, and what it is, before they filed their lawsuit. Grossly misusing technical terms (and demanding a remedy that no customer wants -- there's no market for DRM among book-buyers) makes you look like fools and bodes poorly for the suit.

DRM Lawsuit Filed By Independent Bookstores Against Amazon, 'Big Six' Publishers [Andrew Losowsky/Huffington Post]

Petition to reverse ban on cellphone unlocking needs your sig!

Derek Khanna (the GOP staffer who got fired after penning an eminently sensible paper on copyright policy) sez, "The White House Petition to reverse the decision to ban unlocking cellphones is at 72,000 signatures, but it needs to get to 100,000 signatures by February 24, 2013. On Friday Representative DeFazio tweeted in favor of reform - read the article about new prohibition on unlocking your own cellphone here." Cory

Telcos lobby North Carolina to make community Internet illegal, then abandon the state to second-worst Internet in the country


Christopher sez,

A lot of people were frustrated in 2011 when the North Carolina General Assembly passed a bill written by Time Warner Cable to revoke local authority to build community-owned networks. A new report from the Institute for Local Self-Reliance and Common Cause explains how Time Warner Cable, AT&T, and CenturyLink bought their bill.

In the two years since, the big companies have refused to invest in better networks and AT&T just announced layoffs for some call center workers. Meanwhile, the state is tied with Mississippi for last place in the US in the number of households subscribing to at least a "basic broadband connection" according to the FCC. Perhaps these decisions should be made locally and not by corporate lobbyists?

The Empire Lobbies Back: Killing Broadband Competition in NC

New FCC rules will let a single company own a town's ISP, newspapers, 2 TV stations and 8 radio stations


Josh from Free Press sez, " FCC Chairman Julius Genachowski wants to gut existing rules that limit media consolidation. This is bad news for people who care about the effects of too much media in too few hands. Genachowski's proposed plan would make our media less diverse, create local media monopolies and ultimately mean less news. This rule would allow ONE company to own a daily newspaper, two TV stations and up to eight radio stations in your town. And that one company could be your Internet provider, too. Scary."

No More Media for Murdoch [Petition to FCC]

Counterpoint: algorithms are not free speech

In the New York Times, Tim Wu advances a fairly nuanced article about the risks of letting technology companies claim First Amendment protection for the product of their algorithms, something I discussed in a recent column. Tim worries that if an algorithm's product -- such as a page of search results -- are considered protected speech, then it will be more difficult to rein in anticompetitive or privacy-violating commercial activity:

The line can be easily drawn: as a general rule, nonhuman or automated choices should not be granted the full protection of the First Amendment, and often should not be considered “speech” at all. (Where a human does make a specific choice about specific content, the question is different.)

Defenders of Google’s position have argued that since humans programmed the computers that are “speaking,” the computers have speech rights as if by digital inheritance. But the fact that a programmer has the First Amendment right to program pretty much anything he likes doesn’t mean his creation is thereby endowed with his constitutional rights. Doctor Frankenstein’s monster could walk and talk, but that didn’t qualify him to vote in the doctor’s place.

Computers make trillions of invisible decisions each day; the possibility that each decision could be protected speech should give us pause. To Google’s credit, while it has claimed First Amendment rights for its search results, it has never formally asserted that it has the constitutional right to ignore privacy or antitrust laws. As a nation we must hesitate before allowing the higher principles of the Bill of Rights to become little more than lowly tools of commercial advantage. To give computers the rights intended for humans is to elevate our machines above ourselves.

I think that this is a valuable addition to the debate, but I don't wholly agree. There is clearly a difference between choosing what to say and designing an algorithm that speaks on your behalf, but programmers can and do make expressive choices when they write code. A camera isn't a human eye, but rather, a machine that translates the eye and the brain behind it into a mechanical object, and yet photos are still entitled to protection. A programmer sits down at a powerful machine and makes a bunch of choices that prefigure its output, and can, in so doing, design algorithms that express political messages (for example, algorithms that automatically parse elected officials' public utterances and rank them for subjective measures like clarity and truthfulness), artistic choices (algorithms that use human judgment to perform guided iterations through aesthetic options to produce beauty) and other forms of speech that are normally afforded the highest level of First Amendment protections.

That is not to say that algorithms can't produce illegal speech -- anticompetitive speech, fraudulent speech -- but I think the right way to address this is to punish the bad speech, not to deny that it is speech altogether.

And while we're on the subject, why shouldn't Frankenstein's Monster get a vote all on its own -- not a proxy for the doctor, but in its own right?

Free Speech for Computers? (via /.)

(Image: Frankenstein Face Vector, a Creative Commons Attribution (2.0) image from vectorportal's photostream)