Month: April 2020

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T-Mobile-Sprint: Pro-competitive results despite a facially anticompetitive merger?

Posted on by tacairo

Written By: Chase Westin Laurent

With more than two-thirds of American households accessing the internet on mobile devices, wireless service providers are constantly looking for ways to remain competitive. [1] This has created a battle between major cell phone carriers to acquire competitors when feasible. Courts have blocked some of these previous merger attempts on the grounds that they violated Section 7 of the Clayton Act and decreased competition. [2] In contrast with previous rulings, on February 10, 2020, the United States District Court for the Southern District of New York approved the merger between two of the nation’s largest wireless carriers: T-Mobile and Sprint. [3]

Section 7 of the Clayton Act deems a merger anticompetitive and unlawful when it substantially lessens competition in “any line of commerce . . . in any section of the country.” [4] A prior case found a merger anticompetitive when it led to a market share exceeding thirty percent or when using an alternate measure of market concentration, a Herfindahl-Hirschman Index (“HHI”) increase of 200 points amounting to over 2,500 points. [5] Accordingly, thirteen states and the District of Columbia were able to establish a prima facie case, with T-Mobile expected to hold 37.8 percent of the market’s subscribers and increase its national HHI by 679 points to a total of 3186 points. [6] However, Sprint’s demise as a competitor, T-Mobile’s branding as the “disruptive Un-Carrier,” and DISH’s entry into the market led the court to rule in favor of the T-Mobile-Sprint combination. [6]

As a direct competitor, Sprint’s merger with T-Mobile would on its face decrease competition. [7] But, T-Mobile and Sprint’s management team, presented evidence that Sprint’s standing as a national competitor was soon to be gone. [8] Wireless carriers are constantly challenged with not only maintaining but also improving their network quality by way of either investments or cost-cutting. [9] Sprint’s history of eleven straight years of losses until 2017 and its current $37 billion dollars in debt disabled it from funding improvements by way of investments. [10] Thus, Sprint has turned to cost-cutting, leading to increased complaints regarding network quality, while AT&T, Verizon, and T-Mobile have shifted towards innovation and 5G. [11] This left Sprint with little chance at financial success in the future as customers  move towards the companies on top. [12]

In contrast, T-Mobile has seen almost a decade of successful rebranding and strategizing, which has attracted customers from its competitors. [13] Chief Executive Officer, John Legere, and his team implemented an innovative strategy: identifying and excluding features consumers disliked, such as two-year service contracts, fees for international roaming, and limits on data usage. [14] At prices lower than its competitors, T-Mobile began offering service plans without these undesirable features, greatly challenging AT&T and Verizon to similarly provide “pro-consumer packages.” [15] T-Mobile used the strategy as evidence that it seeks to further its image as the “Un-Carrier” with the merger and not to raise prices or curtail further innovation. [16]

Finally, T-Mobile argued that DISH’s entry into the market of wireless carriers, with nationwide 5G coverage expected by 2023, diminishes any effects of the 4-to-3 merger. [17] Merger Guidelines, though not binding upon the courts, require that a competitor’s entry into the market be timely, or “rapid enough to make unprofitable overall” anticompetitive practices, such as a merger. [18] The court ultimately found DISH’s entry into the market by 2023 timely when considering T-Mobile’s interest in remaining competitive during these three years by not raising prices for the sake of its brand and its consumers. [19]

As a result of the T-Mobile-Sprint merger, the “New T-Mobile” is set to compete with AT&T and Verizon. Whether consumers see the benefits of this merger in the coming years will likely depend on competitors enacting pro-consumer changes, DISH successfully entering the market, and T-Mobile continuing its successful brand strategy. Presuming these all take place, cell phone users will see increased network speeds and quality, more advanced technology, and ultimately lower prices in the near future. The merger’s approval, despite previous contentious rulings, might just work to benefit consumers and increase competition in contrast to its seemingly anticompetitive nature.

 

[1] Kurt Bauman, New Survey Questions Do a Better Job Capturing Mobile Use, UNITED STATES CENSUS (Aug. 8, 2018), https://www.census.gov/library/stories/2018/08/internet-access.html [https://perma.cc/DS43-DLNK].

[2] See, e.g., United States v. AT&T Inc., 541 F. Supp. 2d 2 (D.D.C. 2008); United States v. Phila. Nat’l Bank, 374 U.S. 321(1963).

[3] New York v. Deutsche Telekom AG, 2020 U.S. Dist. LEXIS 23716 (S.D.N.Y. Feb. 10, 2020).

[4] 15 U.S.C.S. § 18 (2019).

[5] Phila. Nat’l Bank, 374 U.S. at 364-66. See also Consol. Gold Fields PLC v. Minorco, S.A., 871 F.2d 252, 260 (2d Cir. 1989).

[6] Deutsche Telekom AG, 2020 U.S. Dist. LEXIS 23716 at *16-17.

[7] Id. at *60-61.

[8] Id. at *174.

[9] Id. at *99.

[10] Id. at *101-02.

[11] Id. at *99.

[12] Id. at *102.

[13] Id. at *29.

[14] Id. at *146.

[15] Id.

[16] Id. at *172-73.

[17] Id. at *145.

[18] Federal Trade Commission, Horizontal Merger Guidelines § 9.1 (Aug. 19, 2010).

[19] Deutsche Telekom AG, 2020 U.S. Dist. LEXIS 23716, at *136.

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Blackbox: Online voting in the 2020 elections

Posted on by tacairo

Written By: Michael Walsh

A Byte of Online Voting

Sorry, you cannot vote online in the primaries or in presidential elections this year. That is, unless you have been selected to participate in one of the few small-scale pilot programs, such as the DemocracyLive system in Seattle, Washington, the Voatz platform in West Virginia, or most recently, the Shadow voting tool used for the 2020 Iowa caucuses just a few weeks ago. [1] These voting tools use blockchain technology to generate a unique hash for each vote. [2] To mitigate the risk of election tampering, the votes are submitted, but not counted electronically. [3] Each electronic submission is verified with a printed version of the ballot, then the printed ballots are tallied to calculate the total number of votes. [4] These electronic systems are usually deployed in areas in which voter turnouts are low or voting is only possible by remote means. [5][6] Ideally, these types of services may help improve voter turnout in the United states—a country in which less than 56% of voting-age adults participated in the 2016 presidential election. [7]

There is little federal oversight for online voting infrastructure, but Congress allocated an additional $380 million for voting infrastructure and security improvements [8], and 85% of those funds are estimated by the U.S. Elections Assistance Commission to be used by states before the 2020 election. [9][10][11] Ideally, those funds will help to alleviate problems in areas with intermittent or low bandwidth internet connections, such as some of the precincts that experienced problems with the Shadow voting app during the 2020 Iowa caucuses. [12][13][14] Additionally, a slew of other bills has been introduced to help secure elections from (predominantly foreign) interference. [15] One amendment to the Help America Vote Act (“HAVA”) of 2002, passed in December 2019, allocated an additional $400 million to help secure voting infrastructure. [16][17] However, some experts indicate that modernizing and securitizing current voting infrastructure would cost nearly $2.5 billion, not considering recurring maintenance costs. [18] To modernize Pennsylvania’s infrastructure alone is estimated to cost upwards of $150 million, which accounts for nearly half of the total HAVA funds allotted from Congress. [19]

Election Security Concerns and the 2016 Election

The costs to establish secure voting infrastructure do not seem so exorbitant when considering voter trust. The year 2016 marked the first year in which Russian interference influenced the presidential elections. [20][21][22] This foreign interference happened not by meddling with voter infrastructure (which now usually verifies electronically submitted votes with paper ballots), but by alternative means such as phishing, distributed denial-of-service (“DDoS”), and denial-of-service (“DoS”) attacks. [23][24][25] Such interference in 2016 will certainly not be the last. [26][27] In a recent national survey that asked politicians about cybersecurity risks, “[f]orty percent said they’ve had an account compromised in a phishing attack. And 60% said they haven’t significantly updated the security of their accounts since 2016.” [28] Even without direct interference with voter infrastructure, threat actors can make a meaningful difference in the outcome of elections with phishing, DDoS and DoS attacks on other vectors including campaign email accounts or insecure servers used by political groups. In response, Microsoft and Google (the companies that provide the most popular email services in the nation) have been implementing security measures to prevent these attacks. Most countermeasures focus on implementing typical information security protections, such as multi-factor authentication, tokenization, and software-based mitigation techniques, such as spoofing and phishing detection. [29][30]

Experts still have many questions about the security and privacy of electronic voting systems, most particularly those that are completely paperless. [31][32][33][34][35] Nevertheless, some voting this year will be done in select states by phone or PC through the Voatz system (but with paper ballot verification). [36] Voatz uses blockchain technology paired with biometric data from users’ phones, such as face scans and fingerprints. Although this version of multi-factor authentication may alleviate fraudulent voting, it poses serious privacy concerns [37] and does not address other salient security risks of online voting, such as phishing, DDoS, and DoS attacks. Regardless, the future of voting is likely to be a digital one, as a recent study from University of Chicago found. The survey estimated that voter turnout could increase by several percentage points [38][39], a figure that could compound with the help of universally compatible voting technology.

 

[1] Emily S. Rueb, Voting by Phone Gets a Big Test, but There Are Concerns, THE NEW YORK TIMES (Jan. 23, 2020), https://www.nytimes.com/2020/01/23/us/politics/mobile-voting-washington.html [https://perma.cc/B2SR-NF88].

[2] Voatz, Frequently Asked Questions, https://voatz.com/faq.html [https://perma.cc/9RBS-6BK5].

[3] Id.

[4] Id.

[5] Emily Dreyfuss, Smartphone Voting Is Happening, but No One Knows if It’s Safe, WIRED (Aug. 9, 2018), https://www.wired.com/story/smartphone-voting-is-happening-west-virginia/ [https://perma.cc/JC2B-SYWF].

[6] Rueb, supra note 1.

[7] Drew Desilver, U.S. Trails Most Developed Countries in Voter Turnout, PEW RESEARCH CENTER (May, 21 2018), https://www.pewresearch.org/fact-tank/2018/05/21/u-s-voter-turnout-trails-most-developed-countries/ [https://perma.cc/4T3C-4JD4].

[8] The Impact of HAVA Funding on the 2018 Elections, U.S. ELECTION ASSISTANCE COMMISSION (2019), https://www.eac.gov/sites/default/files/paymentgrants/TheImpactofHAVAFundingonthe2018Elections_EAC.pdf [https://perma.cc/6KDW-RNEJ].

[9] Id.

[10] U.S Senate Committee on Rules and Administration Oversight of the Election Assistance Commission, U.S ELECTION ASSISTANCE COMMISSION (May 15, 2019), https://www.rules.senate.gov/imo/media/doc/EAC_Testimony.pdf [https://perma.cc/95VB-NA4H].

[11] Elizabeth Howard, Defending Elections: Federal Funding Needs for State Election Security, THE BRENNAN CENTER (July 18th, 2019), https://www.brennancenter.org/our-work/research-reports/defending-elections-federal-funding-needs-state-election-security [https://perma.cc/P7UC-8ZW4].

[12] Kevin Roose, The Only Safe Election is A Low-Tech Election, THE NEW YORK TIMES (Feb. 4, 2020), https://www.nytimes.com/2020/02/04/technology/election-tech.html, [https://perma.cc/2C8W-982G].

[13] Nick Corasaniti, Sheera Frenkel & Nicole Perlroth, App Used to Tabulate Votes is Said to Have Been Inadequately Tested, THE NEW YORK TIMES (Feb. 3, 2020), https://www.nytimes.com/2020/02/03/us/politics/iowa-caucus-app.html [https://perma.cc/B7TG-YJ2P].

[14] Keith Collins, Denise Lu & Charlie Smart, We Checked the Iowa Caucus Math. Here’s Where it Didn’t Add Up, THE NEW YORK TIMES (Feb. 14 2020), https://www.nytimes.com/interactive/2020/02/14/us/politics/iowa-caucus-results-mistakes.html [https://perma.cc/HH8N-DURV].

[15] S. 2669, 116th Cong. (2019); H.R. 1946, 116th Cong. (2019); H.R. 4990, 116th Cong. (2019).

[16] U.S. Election Assistance Commission, How Can The States Use the Funds?, U.S. ELECTION ASSISTANCE COMMISSION (Jan. 6, 2020)  https://www.eac.gov/how-can-states-use-funds-0 [https://perma.cc/79W6-WHYA].

[17] H.R. 1158 § 501, 116th Cong. (2019).

[18] Lawrence Norden and Edgardo Cortez, What Does Election Security Cost?, THE BRENNAN CENTER (Aug. 15, 2019), https://www.brennancenter.org/our-work/analysis-opinion/what-does-election-security-cost [ https://perma.cc/TL69-YCU2].

[19] Howard, supra note 11.

[20] U.S. Senate Committee 116th Congress, Report of the Select Committee on Intelligence United States Senate on Russian Active Measures Campaigns and Interference in the 2016 U.S. Election Volume 1: Russian Efforts Against Election Infrastructure With Additional Views, https://www.intelligence.senate.gov/sites/default/files/documents/Report_Volume1.pdf [https://perma.cc/CZ47-7XLY].

[21] Andy Greenberg, Feds’ Damning Report on Russian Election Hack Won’t Convince Skeptics, WIRED (Jan. 6, 2017), https://www.wired.com/2017/01/feds-damning-report-russian-election-hack-wont-convince-skeptics/ [https://perma.cc/2T8Q-YZR9].

[22] David E. Sanger and Catie Edmonson, Russia Targeted Election Systems in All 50 States, Report Finds, THE NEW YORK TIMES (July 25, 2019), https://www.nytimes.com/2019/07/25/us/politics/russian-hacking-elections.html [https://perma.cc/78SM-YVZ4].

[23] Andy Greenberg, Everything We Know About Russia’s Election-Hacking Playbook, WIRED (June 9, 2017), https://www.wired.com/story/russia-election-hacking-playbook/ [https://perma.cc/EAZ8-W5Z4].

[24] Shannon Bond, 2020 Political Campaigns Are Trying To Avoid A 2016-Style Hack, NAT’L PUB. RADIO (Jan. 28, 2020), https://www.npr.org/2020/01/28/799062773/2020-political-campaigns-are-trying-to-avoid-a-2016-style-hack [https://perma.cc/T2ER-KQ9U].

[25] Jeremey Ashkenas, Was It a 400-Pound, 14-Year-Old Hacker, or Russia? Here’s Some of the Evidence, THE NEW YORK TIMES (Jan. 26, 2017), https://www.nytimes.com/interactive/2017/01/06/us/russian-hack-evidence.html [https://perma.cc/U9CX-N829].

[26] Miles Parks, Russian Hackers Targeted The Most Vulnerable Part Of U.S. Elections Again, NAT’L PUB. RADIO (July 28, 2018), https://www.npr.org/2018/07/28/633056819/russian-hackers-targeted-the-most-vulnerable-part-of-u-s-elections-again [https://perma.cc/MR8E-3H3Q].

[27] Shannon Bond, Microsoft Says Iranians Tried To Hack U.S. Presidential Campaign, NAT’L PUB. RADIO(Oct. 4, 2019), https://www.npr.org/2019/10/04/767274042/microsoft-says-iranians-tried-to-hack-u-s-presidential-campaign [https://perma.cc/K9ST-T55N].

[28] Bond, supra note 24.

[29] Tom Burt, Protecting Democracy with Microsoft AccountGuard, MICROSOFT BLOG (August 20, 2018), https://blogs.microsoft.com/on-the-issues/2018/08/20/protecting-democracy-with-microsoft-accountguard/ [https://perma.cc/7MGY-MW5X].

[30] Lily Hay Newman, Google’s Giving Out Security Keys to Help Protect Campaigns, WIRED (Feb. 11, 2020), https://www.wired.com/story/google-free-security-keys-campaigns/ [https://perma.cc/4TN7-9SQ2].

[31] David Jefferson et al., What We Don’t Know About the Voatz “Blockchain” Internet Voting System (May 1, 2019), https://cse.sc.edu/~buell/blockchain papers/documents/WhatWeDontKnowAbouttheVoatz_Blockchain_.pdf [https://perma.cc/62H2-MQN4].

[32] Michael A. Specter et al., The Ballot is Busted Before the Blockchain: A Security Analysis of Voatz, the First Internet Voting Application Used in U.S. Federal Elections, Mass.  Inst. of Tech., https://internetpolicy.mit.edu/wp-content/uploads/2020/02/SecurityAnalysisOfVoatz_Public.pdf [https://perma.cc/89H7-XLP2].

[33] Abby Abazorius, MIT Researchers Identify Security Vulnerabilities in Voting App, MIT NEWS (Feb. 13, 2020), http://news.mit.edu/2020/voting-voatz-app-hack-issues-0213 [https://perma.cc/AA49-97FS].

[34] Robby Mook et al., Cybersecurity Campaign Playbook, HARV. KENNEDY SCHOOL BELFER CENTER (Nov. 2017), https://www.belfercenter.org/CyberPlaybook [https://perma.cc/82NN-KA57].

[35] Miles Parks, In 2020, Some Americans Will Vote On Their Phones. Is That The Future?, NAT’L PUB. RADIO (Nov 7, 2019), https://www.npr.org/2019/11/07/776403310/in-2020-some-americans-will-vote-on-their-phones-is-that-the-future [https://perma.cc/4W62-9TLS].

[36] Voatz, supra note 2.

[37] Jefferson et al., supra note 31.

[38] David Stone, West Virginia Was the First State to Use Mobile Voting. Should others follow? UCHICAGO NEWS (July 30, 2019), https://news.uchicago.edu/story/voting-mobile-devices-increases-election-turnout [https://perma.cc/NAF9-69B5].

[39] Anthony Fowler, Promises and Perils of Mobile Voting, U. OF CHI. (June 2019), https://cpb-us-w2.wpmucdn.com/web.sas.upenn.edu/dist/7/538/files/2019/06/Fowler_MobileVoting.pdf [https://perma.cc/6N8C-VQGZ].

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Who is responsible for fixing the e-commerce problem surrounding counterfeit products?

Posted on by tacairo

Written By: Laura Odujinrin

The Rise of E-commerce

E-commerce sites, like Amazon, eBay, and Etsy, provide huge opportunities for small and medium business (“SMB”) owners to reach customers and grow business in a way that would be nearly impossible with traditional brick and mortar. These e-commerce sites also allow consumers to choose from a much larger pool of products and producers to find exactly the product they are looking for.

In 2018, Amazon, the world’s largest e-commerce platform, [1] had nearly two million SMBs using its e-commerce marketplace platform to reach and sell to customers. [2] Those SMBs sold nearly 4,000 products per minute, [3] totaling $160 billion dollars in sales. [4] The e-commerce industry is only continuing to grow, with sales expected to reach nearly 15 percent of total retail spending and more than $4 trillion dollars in spending in 2020.” [5] But, with increased access, growth, and opportunity for business owners and consumers alike, comes a challenge: counterfeit products.

The Rise of Counterfeit Products

A counterfeit product is a product “made in imitation of something else with intent to deceive.” [6] In 2018, U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement seized 33,810 counterfeit products that violated intellectual property rights and were worth an estimated $1.4 billion dollars. [7] The number of seized counterfeit products has more than doubled since 2009, and the retail price of seized products has continued to increase year after year. [8]

Many counterfeiters advertise their counterfeit products using language [9] and images copied directly from the original product’s page, [10] leading to many consumers unknowingly purchasing counterfeit goods. To make matters worse, counterfeit goods, unlike authentic goods, often do not adhere to any health or safety regulations, which can lead to the purchase of potentially dangerous and life-threatening products. [11] For example, a CNN investigation found that a counterfeit version of a popular car seat sold on Amazon “broke into pieces in a 30-mph crash test …, failing to meet the basic standards set by U.S. regulators.” [12]

To make matters worse, the burden of finding and reporting counterfeit products currently falls on the small business owners themselves, costing them precious time and money. [13] While a few of the e-commerce sites, like Amazon, offer services to help manage counterfeit products, fighting the counterfeit problem is akin to a never-ending game of “Whack-a-Mole” for many business owners, who successfully get one counterfeit product taken down only to find a new one pop up days or weeks later. [14]

Government Action

E-commerce sites have largely avoided legal liability by claiming that because the copyright products are sold by third party sellers and not by the site itself, the site is protected because it is not the seller of the counterfeit product, but merely a marketplace provider. [15]

In early March of 2020, the House proposed a bi-partisan bill, the Shop Safe Act, which aimed at “address[ing] the problem of the sale of unsafe counterfeit goods by incentivizing [e-commerce] platforms to engage in a set of best practices for screening and vetting sellers and goods, penalizing repeat offenders, and ensuring that consumers have the best (and most accurate) information available to them when they make their online purchases.” [16] The statute would provide clarity where case law has remained obscure, namely addressing the question of “when a platform can be held contributorily liable,” [17] by ensuring that e-commerce platforms who follow the Shop Safe Act’s best practices will not be held legally liable.

Problem Solved?

The Shop Safe Act is a great step in fighting the counterfeit products problem, but since it only pertains to “goods that have a health or safety impact … on consumers,” [18] it leaves many SMB owners, like  artists, creators, and designers whose products do not pose a threat to consumer health or safety, left to grapple with the problem on their own. Whether the Shop Safe Act or other programs developed by the e-commerce sites themselves will help is left to be seen. If all the stakeholders, like the government, e-commerce platforms, business owners, and consumers, can work together to combat the problem, a solution to this ever-growing problem can hopefully be found.

 

[1] Pamela Boykoff & Clare Sebastian, Fake and dangerous kids products are turning up for sale on Amazon, CNN BUSINESS (Dec. 23, 2019, 8:25 AM), https://cnn.com/2019/12/20/tech/amazon-fake-kids-products/index.html [https://perma.cc/B2DY-9N9P].

[2] 2019 Amazon SMB Impact Report, AMAZON at 2, https://d39w7f4ix9f5s9.cloudfront.net/61/3b/1f0c2cd24f37bd0e3794c284cd2f/2019-amazon-smb-impact-report.pdf [https://perma.cc/F6Y9-VD33] (last visited Mar. 17, 2020).

[3] 2019 Amazon SMB Impact Report, supra note 2, at 7.

[4] Id. at 3.

[5] SHOP SAFE Act of 2020, 116th Cong., 2d Sess. (proposed Mar. 2, 2020).

[6] Counterfeit, MERRIAM-WEBSTER, https://merriam-webster.com/dictionary/counterfeit [https://perma.cc/KDU9-KVPC] (last visited Mar. 17, 2020).

[7] U.S. Customs and Border Protection Office of Trade, Intellectual Property Rights Fiscal Year 2018 Seizure Statistics, U.S. CUSTOMS AND BORDER PROTECTION at 6, https://www.cbp.gov/sites/default/files/assets/documents/2019-Aug/IPR_Annual-Report-FY-2018.pdf [https://perma.cc/N4J5-QVHW] (last visited Mar. 17, 2020).

[8] 2019 Amazon SMB Impact Report, supra note 2, at 7.

[9] SHOP SAFE Act of 2020, 116th Cong., 2d Sess. (proposed Mar. 2, 2020).

[10] Nicole Nguyen, Stolen Artwork Is All Over Amazon – And Creators Want The Company To Do Something About It, Buzzfeed News (Jan. 23, 2019, 12:02 PM), https://www.buzzfeednews.com/article/nicolenguyen/amazon-counterfeit-art-sellers-fakes-copyright-infringement [https://perma.cc/9FA7-G5P6].

[11] Boykoff & Sebastian, supra note 1.

[12] Id.

[13] Id.

[14] Id.

[15] Alan Rappeport, Lawmakers Propose Making E-Commerce Companies Liable for Counterfeits, The New York Times (Mar. 2, 2020), www.nytimes.com/2020/03/02/us/politics/counterfeits-bill-china-amazon.html [https://perma.cc/RWH6-7LXH].

[16] SHOP SAFE Act of 2020, 116th Cong., 2d Sess. (proposed Mar. 2, 2020).

[17] Id.

[18] Id.