“The Internet Is Not Special”

3 Questions to Hosuk Lee-Makiyama, Director ECIPE

The internet tends to create very strong players dominatiing particular niches like search, social networking, auctions etc. The combinations of network effects, economies of scale and transnational services makes this a challenge for governments to tackle. The EU Commission’s anti-trust case against Google is one attempt, but are existing tools enough? In a recent opinion in The Guardian, law professor Frank Pasquale, University of Maryland, makes the case for a ”European digital regulator”. Netopia asked ECIPE-director and international trade expert Hosuk Lee-Makiyama for his view on competition regulation online.

Per Strömbäck: Professor Frank Pasquale calls for a European digital regulator, what do you think about this idea?

Hosuk Lee-Makiyama: One should be very careful about exempting one particular sector from existing body of law or principles. We can see for example in the US how putting the telecom sector under a special authority of FCC has not led to stellar results for market concentration and competition. The argument that “internet is special” and must have special rules on antitrust, consumer protection or free expression, is the only argument that both net evangelists and Chinese state censors are agreed on.

PS: But digital change happens fast, can trade law keep up?

HLM: Probably not. Some trade lawyers are still divided whether a software sold on a floppy disk is a physical commodity or a service – you can’t even buy floppy disks anymore! Current system of trade rules are obsolete – the problem is that the majority of international trade has moved online – entertainment, banking, shops, logistics, refrigerators and cars … they all depend on openness of data. What trade negotiators don’t understand is that unless they start to catch up, all the trade liberalisation they have negotiated the last two decades in traditional sectors can easily be reversed by shutting off the data.

PS: In the DSM proposal, the Commission opens the door to intermediary liabililty.

HLM: I wish them luck.