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What Most Stunts FTC Antitrust and Consumer Protection Law and Enforcement?

As the FTC prepares for their public hearings on “competition and consumer protection in the 21st century” this fall, it would be reasonable and instructive for the FTC to seek to better understand the root cause of the need for these once-in-a-generation FTC hearings and to confront some of the most evident serious effects of this root cause problem.

First this analysis asks and answers “what most stunts the FTC’s antitrust and consumer protection law enforcement mission?

Second it asks a dozen of the most important questions the FTC should be asking to zero in on what problems are evidently happening with competition and consumer protection in the marketplace that the FTC’s mission and efforts evidently have been unable to deter, address or resolve since the Pitofsky hearings in 1995.

Third it provides research, evidence, analysis, and causation models that provide insight into the root cause-effects dynamics at play here, and that have been submitted to the FTC. (Find the White Paper series parts: 1, 2, 3, and 4.)       


I.                  What most stunts the FTC’s antitrust and consumer protection law enforcement mission?

Given the FTC’s unique dual mission to protect consumers and promote competition, the FTC’s fall series of public hearings on “competition and consumer protection in the 21st century” are a responsible, commendable, and a reasonable response to the substantial public evidence that indicates the FTC is struggling to fulfill its core mission concerning online activities and the dominant Internet platforms that have emerged since the 1995 FTC Pitofsky hearings.

By far the most transformative change that has affected the FTC and its ability to continue to fulfill its century old mission into the 21st century, obviously has been the widespread adoption and use of the Internet technology in most every dimension of life combined with America’s unique utopian Internet industrial policy, law, and court precedents that have created extremely asymmetric technology-treatment-trajectories for overall competition and consumer protection.

Thus >95% of the FTC’s interest and concern in these hearings should be, and likely will be, on what challenges the FTC’s ability to fulfill its worthy and longstanding mission of protecting consumers and promoting competition in the 21st century.

What should matter most to the FTC in this period of FTC “self-reflection and critical thinking” is what is it about the Internet that most affects the FTC’s ability to fulfill its dual mission?

Let me be crystal clear here. The FTC’s problem is NOT the Internet, technology, or innovation.

The much-underappreciated, huge problem confounding the FTC and stunting its competition and consumer protection mission and law enforcement is the practical effect that the Internet policy and law in Section 230 of the bipartisan 1996 Telecom Act has on the FTC, because it is only law, policy, and precedent that can determine legally and practically what the FTC can or cannot do to protect consumers or promote competition.

While Internet technology is inherently neutral by itself, it is law, policy, precedent, and human choices/behavior that takes something inanimately neutral and makes and makes it animatedly non-neutral: i.e. competitive or anticompetitive; fair or unfair; honest or deceptive; just or unjust; civil or uncivil; and safe or harmful. 

If the FTC learns one thing from these hearings, I trust it will be that well-intentioned, experimental 1996 Federal law in Section 230 as interpreted by the courts, is effectively, unintentionally, and increasingly stunting and de facto undercutting the FTC’s mission to protect consumers and promote competition because it effectively, unintentionally, and increasingly immunizes corporate illegality and de facto encourages irresponsibility, dishonesty, negligence, consumer endangerment, and unfair competition – the antithesis of the FTC’s mission.

Why the FTC has to have these hearings in 2018 and has to be open to more “fresh thinking,” “critical thinking,” evidence-driven reasoning, new causation models, and economic analytics, is because Congress has never before conducted such a massive policy experiment in mandating that an infant universal technology forever should be exempt from Federal and State regulation and immunized from civil liability and responsibility regardless of problems and harms it may cause, until Congress did it with an “interactive computer service,” in 1996 in Section 230.  

Since 1996 the Internet has become universal and Section 230’s Wild West Internet policy increasingly has been at war with the FTC’s civilized mission of protecting consumers online and promoting competition.

That’s evident and predictable because if we know anything about human nature, we know that government grants of special extraordinary freedoms and powers without requisite responsibility and accountability, will predictably encourage, incent, and reward some to engage in unfair and deceptive practices online that the FTC would normally consider illegal if done offline.

Simply, one often gets the behavior that one most incents and protects.   

Asymmetric accountability is Section 230’s opposite treatment of similar players and activities, and creates an unfair and deceptive playing field that predictably inverts normal economic and competitive incentives for individuals, groups, and companies.

Normal fair game rules and a level playing field encourage competition on the merits, pricing, quality, terms and conditions, specialization, differentiation, supply and demand, and risk and reward. 

However, absolutely asymmetric game rules and playing fields heavily-incent arbitrage behaviors that maximally exploit the abnormal win-win, “arbitrage spread” of simultaneously minimizing risk and maximizing reward.

This incentivizing and rewarding of regulatory arbitrage above most else, short-circuits free market forces and competition for winners and losers, and logically produces free market failure.

Arbitrage is speculative, non-productive, and parasitic. Arbitrageurs can’t lose under Section 230.

Cheaters can’t lose under Section 230 either, because its amoral authority also inverts normal economic and competitive incentives for individuals, groups and companies.

Section 230’s amoral authority is indifferent to right/wrong; just/unjust; fair/unfair; honest/deceptive; and safe/unsafe, which causes market incentive chaos and predictably results in free market failure.

Section 230 is a de facto “cheaters charter,” where cheaters can’t lose.

Section 230 inverts market incentives for Internet platforms from the normal competitive incentives to do what’s right, just, fair, true, and safe to win and keep customers long-term to benefiting from absolution of legal responsibility for however they curate or don’t curate their platforms; for tolerating what Is wrongful, unjust, unfair, deceptive, and unsafe online; and for enabling Internet platforms to achieve extraordinary first-mover and scale advantages, and winner-take-all network effects.


II.                 Top dozen questions the FTC should ask to resolve its mission fulfillment challenge.

If there is no government or market failure at work here…


1.      Why is no computer, device, network, or entity safe from online hacking?


2.      Why are there minimal incentives, duties, or expectations to write secure computer code, or to make secure equipment, devices, software, or apps – to protect American consumers?


3.      Why are Americans’ identities, privacy, data, and property so unsafe, nonsecure, or unprotected online in America?


4.      Why are there minimal government efforts and market forces to protect minors from online harms?


5.      Why is there minimal government or market consequence for: facilitating ISIS terrorist recruitment online? Live online broadcasting of murder, rape and torture? Or treating consumers as dehumanized “products” to be tracked, and lab rats to be tested, addicted, and manipulated by design?  


6.      Why is the integrity, civility, trustworthiness, and accountability of America’s key democracy processes -- elections, news, journalism, social media, organizing, and digital advertising -- in question?


7.      Why do brands have to worry for the first time that digital advertisers may endanger their brands with unfair and deceptive brand-unsafe ad placements?


8.      Why have most U.S. Fortune 500 companies had their intellectual property and trade secrets stolen online by China?


9.      Why don’t U.S. consumer protection agencies -- the FTC, FCC, CPSC, CFPB, FDA, SEC, and CFTC – have legal authority to protect Americans from Internet-originated harms?


10.   Why must American consumers depend on three unaccountable, conflicted, monopoly-bottleneck, Internet platforms for their access to accurate information for much of America’s consumer economy?


11.   Why over the last five years have the annual revenues of Google, Amazon, and Facebook (GAF) grown 42 times faster than the other 497 companies in the Fortune 500?


12.   Why does the government require operators of offline financial and commodity exchanges to be honest brokers and to not front-run, self-deal, or abuse inside information, and to protect private fiduciary information, but does not require Internet winner-take-all intermediary platforms to operate honestly and responsibly towards others?


 III.               Research, evidence, analysis, and models that provide insight into the cause-effects dynamics.

Below are four White Papers submitted August 17, 2018 to the FTC for the FTC hearings, on Topic 1: “the state of antitrust and consumer protection law and enforcement, and their development since the Pitofsky hearings.”  

Part 1: The Stunted State of U.S. Antitrust Enforcement of Internet Platforms

Part 2: Evident Internet Market Failure to Protect Consumer Welfare

Part 3: Fresh Thinking on the Unfair & Deceptive Competition Problem of Google, Amazon & Facebook’s Evident Monopsonizations of Consumer & Supplier Access to Accurate and Honest Information

Part 4: Rejecting the Google School of No-Antitrust Fake Consumer Welfare Standard




DISCLOSURES: The views in four submitted white papers are the author’s, no one asked for or reviewed these prior to submission to the FTC. Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an internetization consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. Cleland has testified before the Senate and House antitrust subcommittees on Google. Eight different Congressional subcommittees have sought Cleland's expert testimony and when he worked as an investment analyst, Institutional Investor twice ranked him the #1 independent analyst in his field.




Appendices: Abstracts of the four White Papers submitted to the FTC on Topic 1



Part 1 of 4: PDF here.

A White Paper for the FTC Hearings, Part 1 of 4 on Topic 1

The Stunted State of U.S. Antitrust Enforcement of Internet Platforms

America’s three enduring Internet platform monopolies and four market cartelizations are a result of

lax, asymmetric antitrust law enforcement and America’s anticompetitive Internet industrial policy



ABSTRACT: This white paper shows how the state of U.S. antitrust enforcement has changed since the Pitofsky hearings and what those changes have wrought concerning Internet platforms.

First this white paper spotlights: the failure of America’s antitrust enforcement to “protect the process of competition,” from three enduring and extending, Internet platform monopolies and four active Internet platform-driven market cartelizations; and the causes of this systemic failure, i.e. lax and asymmetric antitrust enforcement driven by an anticompetitive U.S. Government Internet industrial policy and law.

The U.S. Government is the problem here. America’s Internet industrial policy experiment and law in the bipartisan 1996 Telecom Act and in the bipartisan 1997 U.S. Framework for Global Electronic Commerce, has proven twenty years later to be an inherently pro-monopolization policy in heavily-favoring the economic and competitive interests of Internet intermediary platforms and technologists over non-Internet competition or consumer interests. This bipartisan Internet policy failure calls for bipartisan solutions.

This paper summarizes the evidence of America’s three standard monopolizing/monopsonizing distribution networks -- Google Standard Data, Facebook Standard Social, and Amazon Standard Commerce -- and how U.S. lax and asymmetric antitrust enforcement facilitated their respective dominances and consumer harms. Then this paper summarizes four ignored, derivative cartelization dynamics taking control of America’s information economy today: i.e. Internet platform cartelization bottlenecking the economy; digital advertising cartelization; search ecosystem cartelization; and cartelization of U.S. Internet startup financing.

Second, this white paper spotlights how U.S. Internet industrial policy standards have conflicted with, undermined, and arbitraged U.S. antitrust enforcement, and the otherwise sound Chicago School antitrust consumer welfare standard, for online intermediary platforms. These competition-distorting, Internet industrial policy standards are: 1) Competition Double Standard, where the 1996 Telecom Act now regulates the same technologies oppositely, despite the full Internet convergence of communications and information technologies since 1996; 2) Wild West Standard, that makes it U.S. policy that Internet companies be unfettered by Federal or State regulations that apply to every other business; and 3) Tech Welfare Standard, that uniquely protects “interactive computer services” with immunity from responsibility for negligence or consumer endangerment. No surprise that standards designed to heavily-advantage Internet companies, succeed and spawn serial monopolizations and cartelizations. Inputs drive outputs.



Part 2 of 4: PDF here.


A White Paper for the FTC Hearings, Part 2 of 4 on Topic 1
Evident Internet Market Failure to Protect Consumer Welfare
Utopian Internet Policy* of Amoral Authority & Asymmetric Accountability Legalizes Online Civil Illegality, which
Legally Inverts Normal Market Incentives, to Not Protect Consumer Welfare, Innovation, Choice, and Quality. Thus  
Government Policy Failure Causes Internet Market Failure for Protecting Consumer Welfare, Security, Privacy & Honesty.
 *Utopian U.S. Internet policy in Section 230 of the 1996 Telecom Act effectively exempts only Internet companies from: all U.S. communications law, regulation, and public responsibilities and most non-communications Federal/State regulation; and immunizes them from civil liability for whatever happens via their platforms and business models.

ABSTRACT: The purpose of this white paper is to document it is evident there is Internet Market Failure to protect consumer welfare

The simplest proof is the answer to this question: Why can American consumers expect safe and honest consumer products, food, drugs, vehicles, planes, etc. and privacy and honesty in offline health care, education, financial services, and communications, but can’t expect Internet platforms, data, devices, software, apps, sites, content, AI, AR, cryptocurrencies, etc. to be safe, secure, private, or honest?

The longer proof is documented here, via a Precursor causation model and empirical evidence of market failure and consumer harm.

The Wild West Internet’s evident dearth of market incentives to protect online consumers’ privacy, data, security, and well-being speak loudly. On the Internet there is little consumer expectation of privacy, security, safety, or honesty -- the exact opposite of what consumers expect in the offline free market.

This is NOT a problem of Internet technology or innovation, but a problem of Internet policy and law.

The root cause of this Internet market failure of minimal market incentives to protect consumer welfare is U.S. Internet policy’s utopian Section 230 provision in the 1996 Telecom Act. Its implicit utopian legal presumption was that Internet technology warranted extraordinary legal immunity from civil liability and responsibility, because Internet technology best solves the world’s problems, and because the Internet was only a force for good and not evil. Evidently, the Internet’s utopian promise has yielded many Internet dystopian results.   

Section 230 is a 1996 Federal law that immunizes corporate illegality online, and de facto encourages online irresponsibility, amorality, dishonesty, negligence, and consumer endangerment. In 2018, Congress had to pass FOSTA to override Sect. 230’s sweeping online immunity to legally be able to prosecute long-known online child sex-traffickers. That travesty is only the tip of this Sect. 230 iceberg.

In practice, Sect. 230 effectively absolves in advance the guilt, responsibility, and consequences, of much Internet-enabled civil wrongdoing, and which in turn inverts the intrinsic moral nature of America’s justice system, from one where under rule of law some acts are determined wrong and illegal, to the current Wild West Internet, where most anything goes, and what’s normally wrong and considered consumer harm offline, is ignored, tolerated, and even celebrated as right and good online.

In inverting the interests of justice to online civil injustice, Sect. 230 selectively denies: equal protection under the law, recourse, due process, deterrence, justice, order, public safety, and rule of law -- to much of the online dimension of America.

In absolving in advance Internet platforms from liability for operating in ways that enable consumer endangerment, Section 230 also inverts market incentives from protecting consumer privacy and security to exploiting consumer privacy and security, by legally minimizing the market risk and maximizing the market opportunity for disregarding consumer’s privacy, security and well-being.

Cumulatively over time, government policy failure has systemically inverted the market incentives that have aggregated to cause the current Internet market failure, where consumer privacy, data protection, safety, and security are devalued, and competed around dramatically less online than offline. Government failure in, yields market failure out. Utopian legal inputs, yield dystopian societal outputs.



Part 3 of 4: PDF here.


A White Paper for the FTC Hearings, Part 3 of 4 on Topic 1




ABSTRACT:  Better protecting the process of fair competition needs to be a higher priority of the FTC. The purpose of this analysis is to show how the FTC’s evident lax antitrust enforcement of Internet platforms over the last five years is largely a result of the FTC “missing the [competitive process] forest for the [individual competitor] trees.”

The evidence shows that three Internet intermediary bottlenecks --Google, Amazon, and Facebook (GAF) -- extraordinarily and similarly challenge the FTC’s vision statement: “A vibrant economy characterized by vigorous competition and consumer access to accurate information;” and unique mission statement: “…to protect consumers by preventing anticompetitive, deceptive, and unfair business practices…”.

In apparently myopically focusing on whether a specific company is an illegal monopoly that has harmed consumer welfare, it is evident the FTC has neglected a central part of its statutory mission of protecting the nation’s overall process of competition for a wide swath of America’s consumer demand and business supply to consumers. 

First, American consumers must depend on unaccountable, monopsony-bottleneck, Internet intermediary platforms -- Google, Amazon, and Facebook (GAF) which each have aggregated ~90% of online access to consumer demand -- for their continuous “access to accurate [discovery] information” for much of America’s consumer economy involving: information access online, click-to-door ecommerce, and social sharing of content.

This de facto monopsony market structure evidently is an overall unfair and deceptive competition process because those economic function bottlenecks evidently neither fairly represent the conflicts of interest of their multi-sided business models to consumers, nor do they have significant competition, independent accountability, or governmental vigilance to ensure that these Internet monopsony bottlenecks are honest brokers of information and fair intermediaries of economy-wide interactions, like other similar economy-wide intermediaries are required to be by the government, i.e. financial, commodity, asset exchanges and brokerages, which have market incentives, absent government deterrent accountability, to front run, self-deal, or abuse sensitive fiduciary information, by virtue of their unaccountable bottleneck monopsony power and position.

Apparently, lax FTC enforcement of Internet platforms has helped enable a gaping hole in consumer protection from “unfair methods of competition and unfair or deceptive acts or practices” in American “consumer access to accurate information.”    

Second, is the mirror image of the consumer problem above. American suppliers and potential competitors to Google, Amazon, and Facebook (GAF) must depend on unaccountable and conflicted, monopsony bottleneck Internet platforms for fair and honest brokering of their economy-wide, business interactions with their customers, and for providing fair, honest, and continuous “access to accurate [discovery] information” about their disintermediated customer relationships to ensure that the unaccountable and conflicted, monopsony bottleneck platforms do not abuse their monopsony power and position to unfairly or deceptively front-run, self-deal, or abuse sensitive business/fiduciary information.

The GAF intermediary platforms have become the de facto online, consumer market-makers in between most American consumer demand for most American consumer business supply with the evident bottleneck monopsony power to:


·        Interrupt competitive market forces and economic value creation;


·        Intercept inside information, trade secrets, competitive intelligence, and personal data;


·        Interject discrimination, front-running, and self-dealing; and


·        Interfere with the direct supplier-customer relationship, selling, marketing, and branding, because mass disintermediation of consumers and suppliers means that suppliers effectively must negotiate price, terms, and conditions with the platform and not the ultimate customer.  

Apparently, lax FTC enforcement of Internet platforms also has helped enable a gaping hole in preventing economy-wide unfair methods of competition and unfair or deceptive acts or practices” by assuming that consumer welfare is determined only by the end/result of lower consumer prices, and not also by the means of competition (or unfair competition) that provides (or prevents) competitive business models FOR the market (e.g. advertising vs. subscription) and competitive choices IN the market to meet American consumers’ dynamic various needs, wants, and means.

In sum, any fair and honest intermediation of economy-wide online systems of consumer demand and business consumer supply will naturally trend, via human nature, towards economy-wide unfair and deceptive disintermediation of consumer demand and business consumer supply, if there is no feared enforcement deterrent from the FTC, DOJ, or State AG cops policing the markets to keep them fair and honest.  

If the FTC’s planned hearings on the state of antitrust and consumer protection since 1995 determine that existing FTC authority is insufficient to address the above evident “unfair and deceptive acts or practices,” the FTC should request new authority from Congress to address them urgently.



Part 4 of 4: PDF here.


A White Paper for the FTC Hearings, Part 4 of 4 on Topic 1


Rejecting the Google School of No-Antitrust Fake Consumer Welfare Standard


Why a consumer price of free, or a lower price, is not a Monopoly® Get-Out-of-Jail-Free card.


Presented April 19, 2018 at the University of Chicago, Stigler Center for the Study of the Economy


and the State, 2018 Antitrust and Competition Conference on Digital Platforms and Concentration



ABSTRACT: Evidently, Alphabet-Google politically hijacked a significant part of the U.S. antitrust enforcement process from 2013-2018. A reasonable person looking at the publicly available evidence in this white paper and its supporting links, would conclude that Alphabet-Google has effectively politically hijacked a significant part of the U.S. antitrust enforcement process. That’s because: 1) from 2008-2012, the W. Bush and Obama antitrust enforcement authorities brought strong and consistent antitrust scrutiny and enforcement to Google; 2) the January 3, 2013, chaotic abrupt, bipartisan closure of the FTC Google antitrust investigation in just 44 days, just after the 2012 Presidential election, led by the Google outside antitrust counsel who helped shut down the Texas antitrust investigation of Google 18 months earlier, evidently was politically influenced; and 3) the dearth of any Federal antitrust scrutiny of Google since that controversial January 2013 FTC closure. A reasonable person looking at the publicly available evidence in this white paper and its supporting links, would also conclude that there is a de facto Google School of No-Antitrust at work trying to influence public opinion, the media, elected and government officials, and U.S. and State antitrust enforcers, to make the public believe Google (and other Internet platforms) have no antirust risk or liability, because they offer free innovative product and services, and to make conservatives believe that the Google School of No-Antitrust and the Chicago School’s consumer welfare standard and application are the same, when they are not. The Google School of No-Antitrust public stance that a consumer price of free or lower cost is always pro-consumer welfare, and cannot be anti-competitive or monopolistic, is not reasonable given the reasons and evidence in this white paper. Alphabet-Google’s antitrust arguments and narrative appear to be a blatant form of jury nullification in politicizing antitrust as regulation of innocent innovative winners and not law enforcement based on: the facts of the case (here & here); the economic rule of reason; the sound Chicago School consumer welfare standard; and antitrust precedent and law (here).


Precursor LLC Research on Asymmetric Accountability Harms:








































