Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Friday, May 20, 2011

Paradise is a Walled Garden? Trust, Antitrust and User Dynamism

Posted by D. Daniel Sokol

Salil K. Mehra, Temple University - James E. Beasley School of Law discusses Paradise is a Walled Garden? Trust, Antitrust and User Dynamism.

ABSTRACT: In the worlds of technology and cyberlaw, the term “walled garden” has become an epithet to epitomize a proprietary, controlled – and likely sterile – platform, community, or standard. This dystopian view of closed, proprietary communities is presented most clearly by Zittrain (2008), who casts the choice facing society as between sterile but safe examples of “information appliances” such as the iPhone and “networks of control” such as Facebook – and on the other hand, vulnerable but malleable personal computers (PCs) and a “generative” Internet, that is, information technology that fosters greater creativity among users.

But can a “walled garden” in fact be a kind of creative paradise? If so, what sort of policy steps would foster such a result? The platforms in question, that is networks, devices and online communities, often find themselves at the intersection of network effects, standard-setting and user-generated content and innovation. Commentators suggest a variety of approaches, including antitrust intervention, direct government regulation, or taking no action based on the perceived strength of market solutions.

This Article makes several claims. First, that we cannot yet appreciate the potential importance of user-created content and innovation. This Article is the first to apply the EVLN (exit-voice-loyalty-neglect) model introduced by Albert Hirschmann (and since extended and broadened) to understand the economic considerations of user choices. Second, the error-cost framework developed in antitrust over the past several decades can help inform policy choices aimed at promoting user dynamism within walled gardens. Perhaps counterintuitively, this Article explains how the error costs argue for action rather than passivity. In fact, the Federal Trade Commission’s recent patent-ambush standard setting cases implicate concerns that are analogous to those surrounding user dynamism in walled gardens. Finally, while neither antitrust nor regulation may offer a perfect solution, this Article proposes consumer protection-style enforcement of hosts’ ex ante commitments to users in order to foster trust and thereby stimulate user creation and innovation.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/05/paradise-is-a-walled-garden-trust-antitrust-and-user-dynamism.html

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