The American economy rests on the ability of small businesses to innovate, invest and create jobs. In fact, small businesses created 65 percent of all new jobs in the country between 1993 and 2009. During periods of economic recovery following recessions and downturns, the U.S. counts on small businesses to generate nearly all the net new jobs. For that reason, it's critical to ensure that small businesses have the ability to reach their customers on the Internet. It is also important that their IP and innovations are protected. U.S. Senate hearings in September revealed a disturbing pattern in Google’s business practices. To that end, Senators Mike Lee (R-Utah) and Herb Kohl (D-Wisconsin) are asking the Federal Trade Commission (FTC) to further investigate Google and their dominant market position to determine if they have unfairly leveraged their power against smaller businesses.
(To read the letter, please visit: http://kohl.senate.gov/newsroom/upload/Google-FTC-Letter-12-19-11.pdf)
While SBE Council does not favor undue government regulation or excessive government intervention in the private marketplace, safeguards currently exist to ensure companies are not abusing the rules of a competitive marketplace. These are our nation’s antitrust laws – sometimes abused by those entrusted with enforcing them, and sometimes used correctly to address abusive marketplace practices.
Senators Lee and Kohl have pointed out inconsistencies in the testimony of Google Chairman Eric Schmidt when he came to testify in September followed by his written answers in response to further inquiry. Small businesses were represented at the hearing in September and testified first-hand about certain practices of Google where they used their dominant market positions to drive customers to their own sites causing harm to these businesses. Certainly, these allegations are not frivolous and affect the very livelihood of many consumers and entrepreneurs.
Perhaps further investigation into the business practices of Google by the FTC will clarify the inconsistencies that concerned Senators Lee and Kohl. In a Red State blog piece, Saul Anuzis notes his support of the FTC review because “antitrust enforcement strikes right at the heart of what defines a company: its property.”
Anuzi explains: “…Google has also built and maintained search on illegally copied content -- and it continues to demonstrate a reluctance to address this issue. At September’s Senate Antitrust Subcommittee hearing, Yelp CEO Jeremy Stoppelman detailed how Google had scraped (or in layman’s terms, “stolen”) Yelp’s content -- reviews of local businesses -- and put it on Google Places. Former Assistant U.S. Attorney General Thomas Barnett told a similar story about Trip Advisor content.”
Anuzi goes on to cite other examples, and concludes: “The common denominator of these concerns is not just unfair competition -- but unfair competition powered by property theft.”
Google welcomed the opportunity to answer questions at the Senate hearing in September. They may also have the opportunity clear up any confusion through an FTC inquiry, which would certainly help small businesses impacted by their actions better understand their business practices.
Karen Kerrigan, President & CEO
Showing posts with label antitrust. Show all posts
Showing posts with label antitrust. Show all posts
Tuesday, December 20, 2011
Thursday, September 01, 2011
DoJ's Action Against AT&T/T-Mobile Hurts Investment, Innovation, Quality Broadband Deployment
SBE Council issued the following statement in response to yesterday's U.S. Department of Justice decision to sue to stop the proposed merger between AT&T and T-Mobile.
SBE Council Chief Economist Raymond Keating said: "The Department of Justice's decision to sue to stop this merger is a glaring example of government deciding that it knows best how the wireless market should develop. Especially given the incredible dynamism, innovation and growth in the telecommunications arena, this is absurd. It's important to keep in mind what both the Federal Communications Commission and Government Accountability Office have reported about the wireless market, that is, that wireless access has expanded and prices have fallen dramatically over the past two decades. And that occurred amidst consolidation among wireless providers. In the end, the merits and efficacy of a merger between AT&T and T-Mobile should be left for consumers - including entrepreneurs, small businesses and their employees - to decide, not government political appointees."
SBE Council President & CEO Karen Kerrigan added: "It is unfathomable that the government has decided to block a merger that would bring high speed wireless access to many areas of the country that need such a tool to compete and survive in the challenging economy. It's hard to believe that DOJ decision-makers, as well as leaders at the Federal Communications Commission, still cling to an outdated view of competition when all the evidence demonstrates that innovation, lower prices, and vast choices are flourishing. This backward thinking by DOJ, and the other private-sector micromanagers in this Administration, is killing investment, jobs and opportunities for entrepreneurs."
According to SBE Council, technology is changing rapidly, far too rapidly for DOJ lawyers to decide which business models make sense and which do not in the marketplace. Advancements are creating new opportunities for entrepreneurs and business of all types and sizes as both providers and consumers of telecommunications services.
This most recent action by the federal government sends yet another signal to American business that Washington remains hostile to businesses of all sizes.
SBE Council Chief Economist Raymond Keating said: "The Department of Justice's decision to sue to stop this merger is a glaring example of government deciding that it knows best how the wireless market should develop. Especially given the incredible dynamism, innovation and growth in the telecommunications arena, this is absurd. It's important to keep in mind what both the Federal Communications Commission and Government Accountability Office have reported about the wireless market, that is, that wireless access has expanded and prices have fallen dramatically over the past two decades. And that occurred amidst consolidation among wireless providers. In the end, the merits and efficacy of a merger between AT&T and T-Mobile should be left for consumers - including entrepreneurs, small businesses and their employees - to decide, not government political appointees."
SBE Council President & CEO Karen Kerrigan added: "It is unfathomable that the government has decided to block a merger that would bring high speed wireless access to many areas of the country that need such a tool to compete and survive in the challenging economy. It's hard to believe that DOJ decision-makers, as well as leaders at the Federal Communications Commission, still cling to an outdated view of competition when all the evidence demonstrates that innovation, lower prices, and vast choices are flourishing. This backward thinking by DOJ, and the other private-sector micromanagers in this Administration, is killing investment, jobs and opportunities for entrepreneurs."
According to SBE Council, technology is changing rapidly, far too rapidly for DOJ lawyers to decide which business models make sense and which do not in the marketplace. Advancements are creating new opportunities for entrepreneurs and business of all types and sizes as both providers and consumers of telecommunications services.
This most recent action by the federal government sends yet another signal to American business that Washington remains hostile to businesses of all sizes.
Wednesday, August 31, 2011
Another Job-Stopper: Obama DOJ Opposes AT&T-T-Mobile Merger
The current Administration has shown few indications that it grasps how markets and business work. And despite overwhelming support from unions, entrepreneurs, politicians from all levels of government and the technology sector, the Obama Justice Department has decided to sue to stop the proposed merger between AT&T and T-Mobile.
According to Deputy Attorney General James M. Cole: “The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services.”
Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, added, “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”
How can anyone have that point of view given the vast dynamism and innovation in the technology and telecommunications sector?
Apparently, it’s not just the Obama Justice Department challenging this merger. Reuters reported: “The deal also would need the approval of the Federal Communications Commission, which regulates wireless telecommunications. On Wednesday, FCC Chairman Julius Genachowski said he is concerned about the deal’s impact on competition.”
In response, Wayne Watts, AT&T Senior Executive Vice President and General Counsel, noted that his firm intends to “to vigorously contest this matter in court.” Watts went on to highlight several benefits from the merger, including helping to “solve our nation's spectrum exhaust situation and improve wireless service for millions,” allowing “AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population,” and “billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.”
The Communications Workers of America (CWA) also challenged the Obama Justice Department. In a statement, the CWA declared: “In today's sinking economy, where millions of Americans are looking for work, the DOJ has filed suit to block a merger that will create as many as 96,000 quality jobs. In the U.S., where too many Americans, especially in rural areas, don't have access to the tools of Internet technology, the DOJ is looking to block a plan to build out high speed wireless access to 97 percent of the country should be opposed… Instead of acting to block this merger, our government should be looking to support companies that create, keep and return good jobs to the United States.”
The CWA is right on the mark.
In the end, the Department of Justice seems to be arguing that because T-Mobile has innovated in various areas, they cannot be allowed to merge with AT&T as innovation would then suffer. But do such assumptions have any basis in economic reality?
It’s again worth pointing out how the wireless market has developed in recent years. For example, the FCC noted in its 15th Annual Wireless Competition Report that wireless access has expanded and prices have fallen dramatically over the past 17 years. In addition, in July 2010, the U.S. Government Accountability Office found that the number of wireless subscribers increased from 3.5 million in 1989 to 285 million at the end of 2009; the percentage of wireless subscribers relative to the total U.S. population grew from 38% in 2000 to 91% in 2009, and “the average price for wireless service in 2009 was approximately 50 percent of the price in 1999.” And all of this investment and innovation occurred amidst enormous consolidation among wireless providers.
No sound economic reasons exist to believe that the merger AT&T and T-Mobile would somehow limit innovation and choices, or raise costs for consumers. The telecommunications market is far too dynamic to allow for such developments. However, it is quite reasonable to believe that new efficiencies, capital accumulation, and synergies could create gains in terms of investment, innovation, consumer benefits, and overall economic growth.
Technology is changing rapidly, far too rapidly for Department of Justice lawyers to decide which business models make sense and which do not in the marketplace. Advancements are creating new opportunities for entrepreneurs and business of all types and sizes as both providers and consumers of telecommunications services.
In the end, consumers should have the ultimate say, with this merger potentially resulting in improved service, lower prices, and services and products given the wider reach of broadband wireless.
_______________
Raymond J. Keating serves as chief economist for the Small Business & Entrepreneurship Council.
According to Deputy Attorney General James M. Cole: “The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services.”
Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, added, “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”
How can anyone have that point of view given the vast dynamism and innovation in the technology and telecommunications sector?
Apparently, it’s not just the Obama Justice Department challenging this merger. Reuters reported: “The deal also would need the approval of the Federal Communications Commission, which regulates wireless telecommunications. On Wednesday, FCC Chairman Julius Genachowski said he is concerned about the deal’s impact on competition.”
In response, Wayne Watts, AT&T Senior Executive Vice President and General Counsel, noted that his firm intends to “to vigorously contest this matter in court.” Watts went on to highlight several benefits from the merger, including helping to “solve our nation's spectrum exhaust situation and improve wireless service for millions,” allowing “AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population,” and “billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.”
The Communications Workers of America (CWA) also challenged the Obama Justice Department. In a statement, the CWA declared: “In today's sinking economy, where millions of Americans are looking for work, the DOJ has filed suit to block a merger that will create as many as 96,000 quality jobs. In the U.S., where too many Americans, especially in rural areas, don't have access to the tools of Internet technology, the DOJ is looking to block a plan to build out high speed wireless access to 97 percent of the country should be opposed… Instead of acting to block this merger, our government should be looking to support companies that create, keep and return good jobs to the United States.”
The CWA is right on the mark.
In the end, the Department of Justice seems to be arguing that because T-Mobile has innovated in various areas, they cannot be allowed to merge with AT&T as innovation would then suffer. But do such assumptions have any basis in economic reality?
It’s again worth pointing out how the wireless market has developed in recent years. For example, the FCC noted in its 15th Annual Wireless Competition Report that wireless access has expanded and prices have fallen dramatically over the past 17 years. In addition, in July 2010, the U.S. Government Accountability Office found that the number of wireless subscribers increased from 3.5 million in 1989 to 285 million at the end of 2009; the percentage of wireless subscribers relative to the total U.S. population grew from 38% in 2000 to 91% in 2009, and “the average price for wireless service in 2009 was approximately 50 percent of the price in 1999.” And all of this investment and innovation occurred amidst enormous consolidation among wireless providers.
No sound economic reasons exist to believe that the merger AT&T and T-Mobile would somehow limit innovation and choices, or raise costs for consumers. The telecommunications market is far too dynamic to allow for such developments. However, it is quite reasonable to believe that new efficiencies, capital accumulation, and synergies could create gains in terms of investment, innovation, consumer benefits, and overall economic growth.
Technology is changing rapidly, far too rapidly for Department of Justice lawyers to decide which business models make sense and which do not in the marketplace. Advancements are creating new opportunities for entrepreneurs and business of all types and sizes as both providers and consumers of telecommunications services.
In the end, consumers should have the ultimate say, with this merger potentially resulting in improved service, lower prices, and services and products given the wider reach of broadband wireless.
_______________
Raymond J. Keating serves as chief economist for the Small Business & Entrepreneurship Council.
Tuesday, July 07, 2009
Antitrust and Telecom
Apparently, consumers have little or no choice when it comes to telecommunications services and devices.
What’s that you ask? Am I crazy?
Not me. According to the July 7 Wall Street Journal, this is about the Justice Department's antitrust chief, Christine Varney. As the Journal reported:
Anyone even casually familiar with the industry would seem to understand that this is an odd – to say the least – inquiry. After all, there is more competition now in telecommunications than ever before in the history of the industry, including battles, for example, between cable and phone companies when it comes to broadband land lines, and a wealth of choices when it comes to wireless services.
So, what then is this about? To a significant degree, it is another example of an administration that believes the political process can do a better job allocating resources and can manage the economy, as opposed to leaving such matters to the private market, which, of course, is guided by competition and, ultimately, consumer decision-making.
In a May 21 Long Island Business News/Dolan Media Company column, I wrote:
Is this a good idea for business and the economy? Quite simply: No. It means that politicians and their appointees overrule the decisions made by consumers in the market.
In that earlier column, I concluded:
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
What’s that you ask? Am I crazy?
Not me. According to the July 7 Wall Street Journal, this is about the Justice Department's antitrust chief, Christine Varney. As the Journal reported:
The Department of Justice has begun looking into whether large U.S. telecommunications companies such as AT&T Inc. and Verizon Communications Inc. are abusing the market power they have amassed in recent years, according to people familiar with the matter…
The telecom review isn't a formal investigation of any specific company, and it isn't clear it will ever become one. The review is expected to cover all areas from landline voice and broadband service to wireless.
Anyone even casually familiar with the industry would seem to understand that this is an odd – to say the least – inquiry. After all, there is more competition now in telecommunications than ever before in the history of the industry, including battles, for example, between cable and phone companies when it comes to broadband land lines, and a wealth of choices when it comes to wireless services.
So, what then is this about? To a significant degree, it is another example of an administration that believes the political process can do a better job allocating resources and can manage the economy, as opposed to leaving such matters to the private market, which, of course, is guided by competition and, ultimately, consumer decision-making.
In a May 21 Long Island Business News/Dolan Media Company column, I wrote:
Antitrust enforcement just got a big jolt of life. On May 11, President Barack Obama’s antitrust chief, Christine Varney, essentially dissed the Bush administration for being too lax on antitrust enforcement. She promised to get tough.
Is this a good idea for business and the economy? Quite simply: No. It means that politicians and their appointees overrule the decisions made by consumers in the market.
In that earlier column, I concluded:
The notion that a true monopoly, able to raise prices without fear from current or future competitors, can emerge from the competitive marketplace is more economic fiction than fact. That’s especially the case in today’s dynamic, high-tech, global economy. Antitrust activism by Obama appointees, along with their European buddies, will only serve to overrule consumers, and hurt U.S. competitiveness.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Friday, December 28, 2007
European Union Price Fixing
It is understandable that many retailers do not like paying interchange fees when customers use credit or debit cards. In fact, there are lots of costs to complain about during the average business day. But that does not mean government intervention is the answer.
Interchange fees are charged for processing credit card (or debit card) transactions, including credit approvals and fund transfers. The fees tend to run, on average, less than 2% of transactions, and vary based on the industry, business, type of card, etc.
Some retailers have pushed for government to step in – either through the courts or through regulation – and rollback these fees. They seem to think that the government can intervene with a form of price controls, and make some costs of business simply disappear without any consequences.
That, of course, is silly. Nonetheless, the European Union has attempted just such a thing with antitrust regulators telling MasterCard to drop one of its fees. There, of course, are costs involved. A December 19 Bloomberg News report noted the following:
“MasterCard Inc.'s 40-year-old transaction fee paid by retailers was declared illegal by European Union regulators, who gave the company six months to devise a new system that doesn't harm consumers.
“MasterCard must revise the way it calculates the fee so that it ``contributes to technical and economic progress'' or face a daily penalty of as much as 3.5 percent of sales, the European Commission said in a statement. MasterCard said the ruling applies to about 5 percent of its transactions.
“Merchants argue that interchange fees -- paid between banks on each card transaction -- inflate prices for shoppers by as much as 13.5 billion euros ($19.4 billion) a year, according to the European Retail Round Table, a lobby group for 14 retailers. Australia's cap on the fees raised costs for cardholders and may do the same in Europe, said Craig Maurer, an analyst at Calyon Securities in New York.
“‘The consumer will be the ultimate loser, victim of a well- intentioned government acting on behalf of merchants, whose true motivation is improved margins, not consumer protection,'’ Maurer, who rates the company ‘buy,’ said today in a report…
“‘This decision fails to take adequate account of the benefits that retailers receive from the worldwide card payment system,’ said Edward Yingling, chief executive officer of the American Bankers Association, in a statement. ‘By accepting cards for payment, retailers get faster, guaranteed payments, enhanced security and protection against fraud.’”
There are always costs involved when government intervenes. But there certainly is no reason for government to intervene in this case, as the payments market offers a variety of options – from cash to checks to a mind-boggling array of credit cards.
Interchange fees are charged for processing credit card (or debit card) transactions, including credit approvals and fund transfers. The fees tend to run, on average, less than 2% of transactions, and vary based on the industry, business, type of card, etc.
Some retailers have pushed for government to step in – either through the courts or through regulation – and rollback these fees. They seem to think that the government can intervene with a form of price controls, and make some costs of business simply disappear without any consequences.
That, of course, is silly. Nonetheless, the European Union has attempted just such a thing with antitrust regulators telling MasterCard to drop one of its fees. There, of course, are costs involved. A December 19 Bloomberg News report noted the following:
“MasterCard Inc.'s 40-year-old transaction fee paid by retailers was declared illegal by European Union regulators, who gave the company six months to devise a new system that doesn't harm consumers.
“MasterCard must revise the way it calculates the fee so that it ``contributes to technical and economic progress'' or face a daily penalty of as much as 3.5 percent of sales, the European Commission said in a statement. MasterCard said the ruling applies to about 5 percent of its transactions.
“Merchants argue that interchange fees -- paid between banks on each card transaction -- inflate prices for shoppers by as much as 13.5 billion euros ($19.4 billion) a year, according to the European Retail Round Table, a lobby group for 14 retailers. Australia's cap on the fees raised costs for cardholders and may do the same in Europe, said Craig Maurer, an analyst at Calyon Securities in New York.
“‘The consumer will be the ultimate loser, victim of a well- intentioned government acting on behalf of merchants, whose true motivation is improved margins, not consumer protection,'’ Maurer, who rates the company ‘buy,’ said today in a report…
“‘This decision fails to take adequate account of the benefits that retailers receive from the worldwide card payment system,’ said Edward Yingling, chief executive officer of the American Bankers Association, in a statement. ‘By accepting cards for payment, retailers get faster, guaranteed payments, enhanced security and protection against fraud.’”
There are always costs involved when government intervenes. But there certainly is no reason for government to intervene in this case, as the payments market offers a variety of options – from cash to checks to a mind-boggling array of credit cards.
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