John M. Newman

Antitrust in Zero-Price Markets: Foundations

“Zero-price markets,” wherein firms set the price of their goods or services at

Antitrust in Zero-Price Markets: Applications

0, have exploded in quantity and variety. Creative content, software, search functions, social media platforms, mobile applications, travel booking, navigation and mapping systems, and myriad other products are now widely distributed at zero prices. But despite the exponential increase in the volume of zero-price products being consumed, antitrust institutions and analysts have failed to provide an adequate response to markets without prices.Modern antitrust law is firmly grounded in neoclassical economics — price theory. Steeped in price theory, preeminent antitrust theorists have unsurprisingly urged that without prices there can be no markets, or at least no exercise of market power. This heavy methodological dependence on positive prices has led federal courts and antitrust-enforcement agencies to overlook potentially massive consumer-welfare harms. The dramatic consolidation of the broadcast-radio industry as a result of deregulation in the late 1990s provides one example: during hundreds of merger reviews, the U.S. Department of Justice failed even to consider potential harm to listeners. Yet recent empirical research indicates that such harm likely occurred.These failures to conceive of zero-price markets as antitrust “markets” indicate how fundamentally zero prices challenge traditional theories and analytical frameworks. This Article establishes a novel taxonomy of customer-facing costs, distinguishing “market-signaling” from “non-market-signaling” costs. Crucially, it demonstrates that market-signaling costs are present in many zero-price contexts. The absence of positive prices thus does not foreclose antitrust scrutiny; “trade,” for purposes of the Sherman and Clayton Acts, encompasses zero-price transactions. To continue ignoring welfare harms in these markets would be both unjust and inefficient. The Article concludes by identifying antitrust law’s proper role within — and stance toward — zero-price markets.

Innovation Policy for Cloud-Computing Contracts

“Free” products have exploded in popularity along with widespread Internet adoption—but many of them are not truly free. Customers often trade their attention or personal information to access zero-price products. This exchange dynamic brings zero-price markets within the scope of antitrust law. But despite the critical role that such markets now play in modern economies, the antitrust enterprise has largely failed to account for their unique attributes.In response, this Article undertakes two primary tasks. The first is to address particular areas of current antitrust doctrine that require revision or reinterpretation in the face of zero prices. Topics addressed include consumer standing (can attention or personal information qualify as “property” under the Clayton Act?), market definition (is the SSNIP-based hypothetical-monopolist test still workable?), market power (can the traditional emphasis on “power to control price” be refocused on more relevant modes of competition?), defenses (is there a viable “free goods” defense?), and damages (can attentional or informational harms be quantified with the requisite degree of accuracy?). The second task is to examine applications of antitrust law to particular types of strategic conduct. Toward this end, the Article surveys and critiques the existing antitrust case law involving zero-price markets. Though this analysis reveals some flawed judicial reasoning, it also identifies an encouraging trend toward honest attempts to grapple with the distinctive difficulties posed by zero-price markets.

Anticompetitive Product Design in the New Economy

Like any truly disruptive technological leap that alters real-space behavior, the shift to cloud computing carries with it implications for the design and implementation of legal systems. This paper explores, with a focus on choice of law and contract law, how legal institutions can facilitate the diffusion of cloud services. It proceeds in three parts. First, it relates the results of a new survey of cloud service contracts. The survey shows that choice-of-law provisions in cloud contracts have become ubiquitous, overwhelmingly favor U.S. over non-U.S. jurisdictions, and heavily favor California over other U.S. states. Second, the paper offers normative suggestions, based on analogous Internet-related jurisprudence, for how choice-of-law analyses should proceed in the cloud context. Third, the paper analyzes the future of the cloud. Two alternative paths present themselves: (1) the cloud may continue to be delivered by a thick core of large providers, or (2) by leveraging blockchain technology, the cloud may shift to a distributed model. This decentralized cloud would likely rely heavily on smart contracts — replacing choice of law with “choice of code” and (via self-enforcement mechanisms) rendering much of traditional contract law obsolete. The paper concludes by suggesting extralegal systems to address the gaps left by this obsolescence.