Internet Giants: Law and Economics of Media Platforms by Randal Picker at the University of Chicago

In Section 107 of the Copyright Act, the question as to whether a particular use is fair turns on:

1) Purpose and character of the new work a. Transformative? b. Commercial? 2) The nature of the copyrighted work: fiction vs non-fiction 3) Amount / substantiality of what copyrighted work used 4) Effect on market / value of the original (Big picture: Is it transformative: does it substitute for original in the market?)

In Sony, the U.S. Supreme Court concluded that time shifting of recorded TV shows using a video cassette recorder:

1) Was allowed by some broadcasters which meant there were substantial non-infringing uses 2) Was considered to be an instance of fair use because it didn't threaten the broadcasters' profits.

What did Brin and Page say in their 1998 paper about the ability of outsiders to detect biases in search results?

1) we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers. 2) Search engines can bias things slightly in ways that are very difficult even for experts to evaluate. It's like a black box. This makes search engine bias particularly insidious.

CDs first accounted for 50% or more of total music industry revenues from selling music directly to consumers in:

1991

You are six years old and you ask your parents for an allowance: 1 cent in the first week of the year, 2 cents in the second week, 4 cents in the third week, 8 cents in the fourth, and so on doubling each week over the prior week. How much do they have to pay you in the week 26 of the year?

67,108,864 (exponential growth)

What is a standard essential patent?

A patent that is required in order to implement a standard.

The claim that the Google books project is transformative rests on the idea that:

A searchable database of books is a sufficiently different use of the content than just a paper and ink book.

The companies that came together to create the DVD format did so in the face of the understood history of the VCR. That history told them that:

A standards fight can be expensive and will leave a loser. Since the risk of being on the losing side is high, firms will don't want to be the first to innovate. Pooling patents can solve this problem and other collective action problems.

Public domain works are works that:

A work for which no exclusive intellectual property rights apply. Those rights may have expired,[1] been forfeited,[2] expressly waived, or may be inapplicable.[3] Not subject to copyright.

How did the 1956 AT&T final judgment to the 1949 U.S. government antitrust lawsuit shape the development of the computer industry?

AT&T was barred from Computer industry AT&T was required to generally license its patents: unleashed transistor and other patents

Why does Amazon advertise on Google when it knows that it will be the top organic search result on Google for a search on "amazon"?

Amazon doesn't want a competitor to steal its spot as top link when someone searches for Amazon.

At the time of the 1879 revision to U.S. copyright law, there was no public performance right for music compositions even though there was one for dramatic compositions. That meant that:

Anyone had the could perform music without permission from artist, but they couldn't perform dramatic composition without securing permission.

At the time of the launch of the iPad, Amazon had roughly a 90% share of the ebook market and Apple had zero percent and yet the U.S. Department of Justice brought an antitrust action against Apple and not Amazon. Why?

Because of the nature of their agreement with Publishers via MFN clause and assumption that other book sellers would move from wholesale to agency model, prices for eBooks on Amazon went up after iPad launch.

The 1844 report by the U.S. House of Representatives argued that the scope of the post office should be:

Blanket the entire US including far flung outposts so that every US citizen is a part of the national community. Has access to information and commerce.

In the 2005 situation involving Madison River, the firm was alleged to have impermissibly:

Blocked VOIP traffic over its network so as to protect the telephone aspect of its business.

The purpose of creating the U.S. Federal Radio Commission in 1927 was to:

Bring order to the airwaves so that signals can be sent without interference.

Compare early cable TV's business model with that of free broadcast TV:

CATV customers pay directly for viewing. Broadcast gets revenue through advertising.

In 1994, why did the U.S. government believe that the lump-sum and per-processor licenses were anti-competitive violations of Sherman Act Section 1?

Claim: Microsoft took used its market power to negotiate exclusionary and anticompetitive contracts that created artificial barriers to entry for competitors that further entrench its market power. • there are already natural barriers to entry for competitors in double sided platforms, they create artificial ones in addition. Lump Sum: OEM pays for the whole year and can use as much as they want Per Processor: OEM pays Microsoft an amount for Windows for every chip it ships, even if it doesn't ship Windows with that chip. These incentivized OEMs to use Windows on all computers shipped because they had "already paid for it"- in effect they would have to pay twice if they used a competitor OS. Remedy: Microsoft moves to per copy licenses

Does Google return the most relevant response to a shopping query?

Combines relevance with how much the vendor pays for advertisement. Classic Google is this crawl, index, rank. With shopping, they switch to a pay-for-play system. This way they have more access to the vendor's information, e.g. inventory.

According to the FCC, why was Comcast interfering with the delivery of BitTorrent packets:

Comcast monitored content (Deep Packet Inspection). Comcast's acceptable use policy was that you couldn't use its networks for illegal activity. BitTorrent content was presumed to be illegal copyrighted materials. Originally, claimed that it was a part of reasonable network management. Then it came out that they were targeting BitTorrent. FCC claimed that it was anti-competitive to block BitTorrent to protect its core business of cable television and its new business of Video on Demand. Substitution effect is driving it.

According to the FTC's complaint against Google relating to standard essential patents (SEPs), Google/Motorola Mobility inappropriately:

Committed unfair methods of competition. They agreed to the letter of assurance that they would charge RAND/FRAND for their SEPs. They then tried to charge unfair royalty rates and threatened licensees with exclusion orders to block them from the marketplace if they didn't pay. This gave them more bargaining leverage to negotiate higher royalty rates.

When digital audio taping (DAT) technology emerged, the content industry:

Content industry was worried that this technology would be used to copy CDs. They went to congress. They wanted legislation that: • copyright protections to be baked into the technology. • Built in royalty payments. Also, included provision allowing noncommercial copying.

Why was the transistor revolutionary?

Enabled stable and scalable switching of zeros and ones used in binary. Vacuum tubes were fragile and hard to make a lot work together.

The core idea of network externalities in communications networks is that:

Externality generally, is something one person does that effects someone else as a byproduct of your action. Aka "Spillovers". Network externality is that the value of a network to you increased when more users are on it. Other users benefit you by being on the network.

Microsoft's per-processor license was inherently harmful to consumers.

False: Software has zero-marginal cost. If you charge per copy, there is reduced utilization of the software because some people may value it lower than it is being offered for. This is bad because the actual cost to make is zero. So if our goal is to maximize use of software (i.e. social good, money made), we must decouple use from payment. Per processor does just that by giving Windows a zero-marginal price. And it also solves the piracy problem because it's easier to just track hardware created than copies of software.

In Napster, how did the Ninth Circuit find that the results of the Sony and Diamond Rio cases didn't apply to Napster?

Files are moving between peers. Not just copying for personal use. Also, Napster was directly facilitating the copyright infringement because traffic was routed through its central node which it could have restricted but doesn't. Ongoing power and control. Failure

What was so revolutionary about the Altair 8800?

First personal computer for sale to private individuals at an affordable price. Users could self-assemble the kit. Didn't have to buy from a behemoth that designed for enterprise.

What was the legal basis for the claim considered by the Federal Trade Commission in its 2002 search engine letter?

Given consumers' assumptions, combining paid links with organic results was a deceptive act/practice that FTC authority to address under Section 5 of FTC act (as amended in 1938).

The first-sale doctrine in U.S. copyright law paved the way for Netflix to start its business by:

Giving them permission to do with their copy what they pleased. In this case rent it out to customers.

Microsoft's strategy in response to Netscape Navigator turned on the idea of:

Goal: Fragment the browser middleware market so that developers would still choose to write apps for windows given that is the largest user base. Method: small subtle things like forcing OEMs to keep IE browser on the desktop which meant they wouldn't put Netscape too because confusing for consumers.

In the pre-Gutenberg era, copying was:

Had a high cost that was symmetrical between originator and copier. With Gutenberg it became low cost to make and asymmetrical With later copying technology it became low cost and symmetrical

The 1979 decision of the U.S. Supreme Court in Broadcast Music:

Held that blanket licenses issued by ASCAP and BMI did not necessarily constitute price fixing. The judgment, delivered by White J, was unanimous in holding that such practice should instead be examined under the rule of reason to determine if it is unlawful.

In the Internet Tidal Wave memo, Bill Gates expressed a concern about commodification of Microsoft Windows. That meant that:

If people wrote their software for web middleware, the underlying OS wouldn't really matter. The value of OSes in general will diminish as competitors come in and make cheaper versions.

The remedy implemented in the 2013 FTC Decision and Order against Google/Motorola Mobility regarding standard essential patents (SEPs):

In case of offending licensee: • Restricted them from injunctive relief/exclusion orders against licensees. • Google and licensee must enter mandatory arbitration to resolve dispute.

The key change between the first version of the Winner-Take-All model and the second version is that in the second version

In the first version, all of the value in the winner take all sector is captured by winner. In the second version, some is captured by winner and some is spread into the sure thing model. This is to mimic the way patent holders will capture some value while the rest will go to society.

In its 2002 ruling on cable ISPs, the FCC classified cable Internet service as:

Interstate Information services - a more lightly regulated category than Telecommunications services which were subject to common carrier regulation.

When Apple released the iPod in October, 2001:

It could store 1000 CD quality songs.

When Apple launched the iPhone in Jan, 2007, the iPhone App Store had how many apps?

It didn't exist. It was launched in 2008. That is when the iPhone became a platform.

The key design feature that separated the Amazon Kindle from prior ebook readers was that:

It had limited cellular access that allowed downloading books from anywhere.

The clever aspect of Google's 2008 settlement with the Authors Guild was that:

It would solve the orphan works problem for google by having an opt-out structure whereby authors would have to opt-out of letting Google use their works. If author is unknown, then they will not opt out.

The European Union believed that distributing Windows Media Player (WMP) with Windows violated EU competition laws. Why?

It's an example of tying wherein a monopolist in one market uses their power in that market to dominate another market.

In the property ownership/control model associated with the Android smartphone operating system:

It's an open source project, so core codebase of OS is open source, but very critical aspects of functionality users expect or that developers need is property of Google that requires contractual relationships to maintain.

When IBM originally approached Microsoft in connection with the launch of the IBM PC, IBM asked Microsoft to supply an operating system, but Microsoft sent IBM to another firm, Digital Research. Microsoft did that because:

Microsoft didn't have an OS. They just had BASIC. When IBM came back to them, saying they may have to cancel BASIC deal if they don't get an OS, Microsoft licenses the basic aspects of MS-DOS. This is then sold to IBM.

On the appeal in the Microsoft middleware case, the D.C. Circuit affirmed the lower court's ruling that Microsoft:

Microsoft had illegally attempted to maintain its monopoly. Reversed Dist Ct ruling on issue of tying and attempted monopolization of browser market. Remanded remedy.

Isn't the FCC's recent push for spectrum sharing flatly inconsistent with the core reason for regulating spectrum, which is to manage the interference problem?

No. Technology now allows for intelligent differentiation between signals that use the same spectrum.

The key lesson from Sony BMG's failed efforts to add digital rights management to CDs was:

Once consumers have an established pattern of use with a product it's very hard to restrict their usage. Especially if done in non-transparent ways.

Google's one-box search result implemented as part of its move to universal search:

Onebox doesn't just show you links to other websites that might answer your query. It shows you actual direct answers to your query. Goal is that you don't have to leave Google to find your answer. Example: If you search for weather it will show you the weather not just link to weatherchannel.com Anti-competitive Issues: • does google scrape to populate OneBox • Are they tying when they present their own vertical search results within their horizontal search

The typical Google response to a search in mid-2012:

Organic search results + ads + one box results + hardwired to google properties (maps, etc).

When Google was launched by Larry Page and Sergey Brin, what did it say its mission was?

Organize the world's information and make it universally accessible and useful.

In a simple model of allowing customers to pay for faster delivery:

Paid prioritization can be socially useful. It maximizes utility for each tier of users.

The movie studios said that they feared the video cassette recorder because:

People wouldn't view their ads.

As the 2007 U.S. Department of Justice letter to the IEEE made clear, the gap between the theory of standards and the actual implementation:

RAND and FRAND are ambiguous terms.

In the early 1940s, the U.S. Federal Communications Commission believed that the broadcast standard for television:

Should be determined by a centralized authority and not emerge through the market over time.

What is the heart of the pagerank algorithm described in Larry Page's 2006 patent (U.S. Patent No. 7,058,628)?

State of the art: Crawl and rank based on number of citations Innovation: Each page's rank is defined by number of citations coming respectively weighted by how important/trustworthy those citers are. And we determine how trustworthy/important an item is by how many are citing it. It's a recursive formulation.

The early 2000 merger between America Online and Time Warner:

The Merger was seen as ushering in the new Online Century era but ended up being a failure. Google had no presence at this time on the internet.

The fact that the Amazon Kindle is both a device and an ongoing service means that:

The device is always communicating users' activity with Amazon.

Why did the U.S. Congress regulate the radio spectrum?

The worry was anarchy in the sky. Multiple signals being broadcast on the same spectrum would just be noise and chaos.

In the Apple ebooks antitrust case, the evidence suggested that the book publishers were being paid by Amazon $13 for books that Amazon then sold for $9.99. Why were the book publishers unhappy with that outcome?

They believed it devalued hardcover books. Also, as Jobs suggests to Murdoch, it will only be a matter of time before this becomes the expected norm and then Amazon demands a lower wholesale price from publishers.

In its 2015 FCC Open Internet Order, the FCC based its authority for the order on:

They have authority to interpret ambiguous terms in the statutes that delegate power to them. It is ambiguous whether Cable modem services are Telecommunications services or Information services. So they have authority to revisit that classification. ISPs thus reclassified to be under FCC's Title II authority. They can call off certain aspects of the regulatory regime through their Forbearance authority. This undoes the outcome of Brand X.

If content producers can't rely on selling copies of work to consumers, then:

They may not be incentivized to produce more content; Decentralization of patronage: can get funded by many customers buying their work.

In Aereo, the majority opinion for the U.S. Supreme Court found that Aereo had:

Violated copyright act by essentially doing what CATV did, i.e. collecting and transmitting signal without paying a licensing fee. This had been addressed in a subsequent copyright act after the CATV court cases. The court took a technologically neutral posture saying that despite the fact that legally each antenna was used by each user on demand, Aereo was directly enabling the infringement.

The low adoption rates in Europe of the version of Windows without the media player meant that competition in music markets:

Wasn't effected by Microsoft's decision to include WMP in every copy of windows. [unsure of this answer]

In Steve Jobs's 2007 Thoughts on Music piece, he believed that digital rights management software (DRM):

Wasn't effective at stopping online piracy. Demanded by studios despite no DRM on physical CDs. Thought it should eventually be done away with. For the time being, he didn't think apple could successfully have a shared DRM system with other companies. Would create vulnerabilities and make it much harder to patch/update.

In the platform room example, why did the example lower the price below marginal cost to both the high-valued blue types and the low-valued blue types?

We can't know ahead of time which is high-value and which is low value blue so we have to charge them all the same price.

In the 2005 Brand X decision in the U.S. Supreme Court, the Court was faced with the question of:

Whether it was reasonable for FCC to classify Cable ISPs as information services. If reasonable, then under Chevron Deference principle, the court defers to the agency.

Media companies like Google face strong competition because users can always switch TV channels or run a search on different search engine like Bing.

[unsure of this answer] Competition is always a click away at a zero-cash price. To extract more money from consumer, company must increase advertising volume and/or intensity. Ad supported media degrades content. Market power exercised by showing more ads. But that is okay from an AT perspective Need to figure out a way to extract as much value from users as possible without turning them away by showing too many ads

In 1949, the Radio Corporation of America (RCA) ran an antenna service, where the firm would come to your house and, for a fee, install an antenna so that you the home owner could receive the TV signals that broadcasters were sending out. The best guess is that:

[unsure of this answer] RCA had to pay royalties to the broadcasters.

Restrictions on use of recorded music of the sort seen in 1917 in Victor v. Strauss and in 1940 in RCA v. Whiteman were likely directed at:

[unsure of this answer] Those who created the audio playing equipment that copyrighted material. I.e. not the users but the makers.

The classic ten-blue-links version of Google:

• Sponsored Links on top and sides, then ten blue links that weren't sponsored. • Anonymous search results. Not personalized per user. Customized by location.

The post office policy seen in The Postal Act of 1845 of pricing by a combination of distance and weight:

• Under 300 Miles: base price was 5 cents for half ounce • Over 300 Miles: base price 10 cents for half ounce • Newspapers and magazines heavily subsidized This was a dramatic reduction of categories / simplification of prior categorizations.