CPI(7)1

The focus of much of this issue concerns digital media and communications, but first we introduce CPI’s new publishing technology with two audio interviews with leading competition authorities. Then we look at the interplay among online communications platforms, consumer privacy, and consumer protection. We examine what import a price of zero has for antitrust, ask “Is the Web Dead,” provide an analytical history of search engines, and take a retrospective look at Baidu. On a different track, we investigate interchange fees, how to analyze mergers in innovation markets, survey aftermarkets, and answer “Is antitrust enforcement irrelevant?” The Classic is the Jeff Rohlfs’ 1974 article that modernized network effects analysis and, as Richard Schmalensee describes in his introduction, provided an prescient model of Facebook.

Letter From the Editor

David Evans, May 20, 2011

Letter From the Editor-Spring 2011

Fitting with this adventure into new media the substantive focus of much of this issue concerns digital media and communications. David Evans (CPI)

Interviews with Antitrust Leaders

Joaquin Almunia, David Evans, Jon Leibowitz, May 19, 2011

Conversations with Jon Leibowitz and Joaquin Almunia

Competition authority leaders are assuming increasing responsibilities and wearing many hats”not only as regulators but also as advocates of markets.

Media and Communications

Julie Brill, May 20, 2011

The Intersection of Consumer Protection and Competition in the New World of Privacy

How should the FTC balance the consumer protection concerns arising in the context of privacy with competition issues? Julie Brill (FTC)

Andrea Coscelli, Claudio Pollack, May 20, 2011

Ofcom’s Approach and Priorities for Consumer Protection & Empowerment

Regulatory action designed to improve consumer outcomes does so by seeking to enhance the ability of the market to deliver good outcomes for consumers. Andrea Coscelli & Claudio Pollack (OfCom)

Michael Hammock, Paul Rubin, May 20, 2011

Applications Want to be Free: Privacy Against Information

It may not pay for consumers to understand the costs and benefits of reduced information use. Michael Hammock (Middle Tenn. State Univ.) & Paul Rubin (Emory Univ.)

Oliver Bethell, Matthew Bye, May 17, 2011

Journalism, Competition, and the Digital Transition

Antitrust exemptions are rarely good for consumer welfare and are simply not necessary given the innovative business models that are emerging to facilitate digital transition in the news industry. Matthew Bye & Oliver Bethell (Google)

Antitrust Analysis for the Web Economy

David Evans, May 20, 2011

The Antitrust Economics of Free

Businesses often offer a product for free because it increases the overall profits they can earn from selling the free product and a companion product to either the same customer or different customers. David Evans (Global Economics Group)

Hanno Kaiser, May 20, 2011

Are Closed Systems an Antitrust Problem?

Closed systems should not be put in an antitrust suspect class. Hanno Kaiser (Latham & Watkins)

Manish Agarwal, David Round, May 20, 2011

Emergence of Global Search Engines: Trends in History and Competition

Given the dynamic nature of the web search engine market, it is clear that a player’s dominance depends on its innovation activity relative to others. Manish Agarwal & David Round (Univ. of South Australia)

Selected Essays on Antitrust

Jean Tirole, May 20, 2011

Payment Card Regulation and the Use of Economic Analysis in Antitrust

Regarding regulated fees, some broadly contemplated regulatory methodologies bear only limited resemblance with economically sound precepts. Jean Tirole (Univ. of Toulouse)

Kent Bernard, May 20, 2011

Innovation Market Theory and Practice: An Analysis and Proposal for Reform

Intervention in mergers of innovation companies may not only have been not beneficial, it may have dampened innovation by reducing the potential reward while ignoring the risks that any innovator is being asked to run. Kent Bernard (Fordham Law)

John Temple Lang, May 20, 2011

Practical Aspects of Aftermarkets in European Competition Law

Genuine cases of dominance, and therefore of possible abuse of dominance, are not likely to arise in those aftermarkets either in EU or in U.S. law unless the company in question is dominant in the primary market. John Temple Lang (Cleary Gottlieb, Trinity College)

From the Authorities

Bruno Lasserre, May 20, 2011

Antitrust: A Good Deal for All in Times of Globalization and Recession

The number one priority of citizens is to get their fair share of the market economy that they are asked to support. Bruno Lasserre (French Autorité de la concurrence)

Case Study

Angela Zhang, May 20, 2011

Using a Sledgehammer to Crack a Nut: Why China’s Anti-Monopoly Law was Inapproriate for Renren v. Baidu

Consumer protection law rather than antitrust law would have been a better tool for tackling abuses like those alleged by Renren in this case. Angela Huyue Zhang (Cleary Gottlieb)

The Classics

Richard Schmalensee, May 17, 2011

Jeffrey Rohlfs 1974 Model of Facebook: An Introduction and Reprint

Rohlfs presents a model that seems better suited to analysis of new Internet-based businesses that rely on network effects, like Facebook and YouTube. Richard Schmalensee (MIT)

From Editor