Lost in the Clouds: The Impact of Changing Property Rights on Investment in Cloud Computing Ventures

Josh Lerner, Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER) and Greg Rafert, The Analysis Group explore Lost in the Clouds: The Impact of Changing Property Rights on Investment in Cloud Computing Ventures.

ABSTRACT: Our analysis seeks to understand the impact of changing allocations of property rights on investment in new firms. We focus on the Cartoon Network, et al. v. Cablevision decision in the U.S., which narrowed the protection enjoyed by content creators (e.g., movie studios) and gave greater rights to downstream technology firms, as well as decisions in France and Germany that took an opposite view. Our findings regarding relative venture capital investment in the U.S. and Europe, across Europe, and between the various judicial circuits of the U.S. suggest that decisions around the allocation of property rights can have economically and statistically significant impacts on investment in innovative enterprises.