In light of the DOJ's case against Apple: Does a product's popularity immunize it from the antitrust laws? No. But it is pretty darned important as a legal matter.

Right in the DNA of American-style economic regulation (including antitrust) is the principle that we do not punish firms who achieve their position (even monopoly position) by innovating and meeting (or creating!) consumer demand.

This is hard-wired into American antitrust law. And that engineering choice has been the target of much criticism. Let's start by understanding it. (1/x) Verizon v Trinko (2003) is a great example of this principle at work -- in rejecting a refusal to deal claim under Section 2 of the Sherman Act the Court observes in a now famous passage:

"The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system."

This is a simple, and powerful principle. Be they Neo-Brandeisian or progressive or conservatives who desire to weaponize antitrust against large tech firms, demand to undo this core feature of American antitrust law runs high. See, e.g. various calls to reverse Trinko from Lina Khan's House report to antitrust scholars, etc. (2/x)

Five big picture observations on the proposed HMGS:

1. They are a step backwards on the role of economics in merger analysis. They would be the first HMGs to increase the role market structure relative to economic effects. This is the point obviously. But worth noting.(1/x) 2. They are, as many feared, a return to the 1960s in many ways. On the econ side, structure, "trends" in shares, and vertical integration become ends in themselves, not inputs into economic analysis. (2/x)

A lot of talk today about Commissioner Wilson's impending resignation from the FTC. There will be plenty to say about that I am sure. But I wanted to do a short thread on and what, if any, practical implications for the agency in the near term. Here goes: (1/x) First, SCOTUS and lower courts are entertaining constitutional challenges to the FTC *right now.* The last time SCOTUS discussed the constitutionality of the FTC was ... all the way back in 2020. (2/x)

OK, I've had time to digest. Here are a few thoughts on the new FTC Policy Statement on Unfair Methods of Competition.

TL;DR: it holds plenty of symbolic value for the FTC in replacing the bipartisan 2015 Statement with, but will hurt more than help in court. (1/x) To start, the UMC has failed - despite its centrality to the FTC DNA - to become an important part of its enforcement framework for several reasons. The first is that "unfair" -- as everyone who has or has met a 5 year old knows -- doesn't have a precise meaning. (2/x)

These FTC staff survey results are truly problematic. The spin from Chair Khan's supporters that "this is just staff upset with aggressive leadership" is neither accurate nor helping her cause. A few thoughts: (1/x)

https://twitter.com/CSWilsonFTC/status/1519786949476761601

1. FTC staff are, on average, in the non-ideological to political left range. It might be hard for someone with my views to be a popular FTC chair among staff. But not for current leadership. Incentives are aligned. They want to bring cases! And win them. So what gives? (2/x)

I have a bit of experience upsetting FTC staff. Usually because I dissented or did not vote in favor of bringing an enforcement action. I am sympathetic to the view that the optimal amount of Commission-staff conflict is not zero.

But I think this is a bad move. (1/x)

https://twitter.com/leah_nylen/status/1412541406728630274

It is a bad move on the merits because it treats professional FTC lawyers and economists who believe in the agency mission like children not like professional public servants, eg ("You cannot speak AND you must tell people, even if false, it is because you are too busy"). (2/x)

Now that the time has come and gone without any last-minute stay of execution, @linakhanFTC's FTC has killed the UMC policy statement today.

In lieu of a formal obituary, I offer the following thread:
(1/10) “The Statement of Enforcement Principles Regarding ‘Unfair Methods of Competition’ Under Section 5 of the FTC Act” (it’s full baptismal name) was born in 2013, out of a desire to bring the UMC into the family of antitrust law with the discipline and rigor that entails.

(2/10)

I think we agree more than this suggests.

Let me expand a little bit. Getting all revenue is good in fraud cases BC the incremental gains are all consumer harm (i.e. product has no value such as weight loss scams, etc.). (1/6)

https://twitter.com/JustinBrookman/status/1385614290636492802

The problem has been the all revenue approach is in cases where a deceptive/ unfair practice causes some harm but consumer also receives real value, e.g. a deceptive claim increases what I pay for an otherwise valuable product. (2/6)

I, for one, think the Supreme Court ruled 9-0 against the FTC because "permanent injunctions" does not mean retrospective monetary belief, not because SCOTUS loves fraud. (1/x)

https://twitter.com/FTC/status/1385262746212704260

Truth of the matter is the signs that this was coming have been around a long time and have been largely ignored inside the agency. Guardrails were put up around the fraud program to restrict the use of this authority to a narrow subset of cases. (2/x)

I am briefly interrupting my Shark Week to share a few thoughts on FTC v. Qualcomm.

First, I’m flattered to have 3 articles relied upon by the court. This highlights my special skill of picking fantastic co-authors, including @geoffmanne @lmedwards_ & Judge Ginsburg. (1/x) Second, please go read @geoffmanne and @randypicker as well as more critical threads from @ErikHovenkamp and @marklemley. There are a few others that view the decision as *checks notes* the end of the world. You can find those on your own. (2/x)

If you ignore the silly but parts about me inventing law and economics, optimal deterrence, or harm-based penalties at the FTC -- hold your breath dear readers -- but @matthewstoller has a point here. Yeah, I think that requires a THREAD. (1/x)

https://twitter.com/matthewstoller/status/1155868962846060551

Optimal deterrence is the core of economic theory regarding penalties, Becker (1968). The fundamental idea is that if the expected value of unlawful behavior net of legal sanctions is positive, then the market will produce it. (2/x)

Hi, former FTC Commissioner here. And a conservative.

A conservative Senator (@HawleyMO) has proposed that the FTC — a group political appointees at a federal regulatory agency — regulate internet speech.

But first, a thread. The bill asks the FTC to determine when social media platform moderation decisions are “designed to” or intend” to negatively impact a political party. Or when they have a “disproportionate impact” on a party.

Really LONG thread coming on vertical mergers responding to @TomValletti and @geoffmanne exchange --- which refers to me and to @GAI_GMU and questions my credentials as an economist at some point. But never quite finds a way to @ me or @GAI_GMU. First...a short version. (1/x) TL; DR:
@TomValletti: the evidence is vertical mergers = bad.
@geoffmanne: Nope; see Lafontaine & Slade & @GAI_GMU.
@GAI_GMU: Most VI studies don't show net harm.
Valletti: GAI are not econs! They are bad. I am good. They are old.
Also Valletti:*most studies don’t show net harm.*

LONG THREAD.

Here's a really unpopular opinion about the FTC skaters, organist, & piano teacher cases. They are heavily criticized as a symbol of the agency being out of touch or misallocating resources.

But these are good cases. The FTC was right to bring them. (1/x) DISCLOSURE: I voted in favor of bringing these cases.

To be clear --- my claim is that they are socially valuable cases and belong in the AT agency portfolio; it is not that they should be the only cases. We will get to the agency resource arguments shortly. (2/x)