Novel Neutrality Claims Against Internet Platforms: a Reasonable Framework for Initial Scrutiny
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Cleveland State Law Review Volume 59 Issue 4 Article 5 2011 Novel Neutrality Claims against Internet Platforms: A Reasonable Framework for Initial Scrutiny Jeffrey Jarosch Follow this and additional works at: https://engagedscholarship.csuohio.edu/clevstlrev Part of the Antitrust and Trade Regulation Commons, Computer Law Commons, and the Internet Law Commons How does access to this work benefit ou?y Let us know! Recommended Citation Jeffrey Jarosch, Novel Neutrality Claims against Internet Platforms: A Reasonable Framework for Initial Scrutiny , 59 Clev. St. L. Rev. 537 (2011) available at https://engagedscholarship.csuohio.edu/clevstlrev/vol59/iss4/5 This Article is brought to you for free and open access by the Journals at EngagedScholarship@CSU. It has been accepted for inclusion in Cleveland State Law Review by an authorized editor of EngagedScholarship@CSU. For more information, please contact [email protected]. NOVEL “NEUTRALITY” CLAIMS AGAINST INTERNET PLATFORMS: A REASONABLE FRAMEWORK FOR INITIAL SCRUTINY JEFFREY JAROSCH* I. INTRODUCTION .................................................................... 538 II. ECONOMICS OF PLATFORMS................................................. 541 III. BACKGROUND: THE NETWORK NEUTRALITY DEBATE AND ATTEMPTS TO APPLY NETWORK NEUTRALITY TO INTERNET- BASED PLATFORMS.............................................................. 545 A. Rules and Cases Establishing and Testing the Bounds of Network Neutrality .................................................. 545 B. Economic Views of Network Neutrality....................... 548 IV. ANTITRUST SCRUTINY OF TYING ARRANGEMENTS AND RECENT ATTEMPTS TO APPLY ANTITRUST TO INTERNET PLATFORMS ......................................................................... 553 A. The Basics of Tying Doctrine ...................................... 554 V. APPLICATION OF NETWORK NEUTRALITY AND ANTITRUST FRAMEWORKS TO THREE INTERNET PLATFORMS................. 560 A. Unique Characteristics of Internet Platforms ............. 561 B. Search Neutrality......................................................... 562 1. Neutrality-Based Scrutiny of Search.................... 566 2. Antitrust Scrutiny of Search ................................. 567 C. API Neutrality.............................................................. 572 1. Neutrality Principles Applied to API ................... 576 2. Antitrust Analysis of API Neutrality Claims ....... 577 D. Online Marketplace Neutrality.................................... 580 1. Neutrality-Based Analysis of Discriminating Online Market Platforms.................................................. 582 2. Antitrust Scrutiny of Online Markets’ Discriminatory Terms........................................... 584 VI. RECOMMENDATIONS AND CONCLUSION .............................. 585 This Article examines a recent trend in which the Federal Trade Commission and other enforcement agencies investigate Internet platforms for behavior that is * MA, JD, Law Clerk to the Honorable Alan E. Norris, United States Court of Appeals for the Sixth Circuit, 2011-2012. This Article was substantially completed while the author was the Searle Law and Public Policy Scholar, Searle Center on Law, Regulation, and Economic Growth, Northwestern University School of Law. 537 Published by EngagedScholarship@CSU, 2011 1 538 CLEVELAND STATE LAW REVIEW [Vol. 59:537 insufficiently “neutral” towards users or third parties that interact with the platform. For example, Google faces a formal FTC investigation based on allegations that it has tinkered with search results rather than presenting users with a “neutral” result. Twitter faces a formal investigation after the social media service restricted the ways in which third party developers could interact with Twitter through its application programming interface (“API”). These investigations represent a new attempt to shift the network neutrality debate to higher-level Internet platforms. Rather than focusing on providing basic Internet access neutrally, these novel neutrality claims look to platforms that are built upon the Internet, and seek to ensure that they, too, behave “neutrally.” Unfortunately, network neutrality principles do not transition well from Internet service providers to search engines and social media sites. Ultimately, the network neutrality debate serves as a poor tool for scrutiny of higher-level Internet platforms. This Article demonstrates that network neutrality cannot be applied to higher-level Internet platforms and then examines another possible method of analyzing novel neutrality claims using antitrust law. It re-frames novel neutrality claims as tying arrangements, the subject of extensive antitrust law and scholarship. In applying tying doctrine to novel neutrality claims, this Article demonstrates that it, too, is insufficient for examining novel neutrality claims on Internet platforms. The Article closes by proposing a different analysis to examine these novel neutrality claims, an analysis based on Justice O’Connor’s attempt to reform tying doctrine. I. INTRODUCTION In today’s Internet, the most important players are not manufacturers, designers, or programmers, but platforms. The big names in the Internet and computing— Google, Apple, Facebook, Microsoft—all offer more than a product or set of products. They offer an environment in which users operate, a starting point for them to interact, work, network, and be entertained.1 These platforms build upon the infrastructure of the Internet. For example, Google began as a search engine but now offers a group of websites, each of which links prominently to the others and provides a different service to users including maps, e-mail, a social networking service, a photo-sharing service, and dozens of others. It also offers a mobile environment through its Android operating system. Even Facebook is not simply a social-networking website but a platform upon which users can play games, share photos, and engage in a number of other social activities. Countless other websites and services allow users to post their activity to Facebook (or tweet it on Twitter). For example, a user of the social check-in service Foursquare has the option of 1 See Hanno F. Kaiser, Are “Closed Systems” an Antitrust Problem, 7 COMP. POL’Y INT’L 91, 99-101 (2011). According to Nokia CEO Stephen Elop: The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyze or join an ecosystem. Id. (quoting Elop in an e-mail). https://engagedscholarship.csuohio.edu/clevstlrev/vol59/iss4/5 2 2012] NOVEL “NEUTRALITY” CLAIMS AGAINST INTERNET PLATFORMS 539 posting a check-in to their Facebook wall. Similarly, a user of DailyFeats, a social media site for cataloguing daily accomplishments, has the option of posting their feats to Facebook.2 These platforms interact with each other and at times blur the lines between them.3 The next chapter in the story of competition and innovation on the Internet will rely on these platforms. Many Internet platforms have recently faced criticism, legal complaints, and formal investigations for being insufficiently “neutral.” The network neutrality debate has expanded. Neutrality advocates are no longer focused simply on physical gatekeepers to the Internet, but want to ensure that platforms that are built upon the Internet infrastructure themselves behave neutrally. This has resulted in a number of novel neutralities, some of which have become widely known. This article focuses on three such neutralities: search neutrality; API neutrality; and online marketplace neutrality. Generally, these novel neutrality claims seek to require platforms to treat all users and platform applications the same, without blocking or tolling some subset of disfavored applications, users, or uses. This policy debate and the manner in which Internet platforms’ relationships with each other and their users are scrutinized by the FTC and other enforcement agencies may radically influence how Internet platforms grow, innovate, and compete—in positive or negative ways. This Article considers two methods that the FTC or other enforcers may use to scrutinize violations of neutrality principles by Internet platforms, one based on network neutrality rules, and the other based on antitrust law. The Article demonstrates that neither of these methods is reasonable for analyzing the behavior of Internet platforms, and instead proposes a different method, loosely based on Justice O’Connor’s proposed reforms to tying doctrine.4 A vital area in which public policy may constrain Internet platforms is in how they interact with other platforms, services, and applications. Some platforms may choose to be very open and neutral towards applications built upon and services using the platform, others may wish to stop third-party uses of the platform, or limit interactions with the platform. Based on these different platform policies, Internet- based platforms face claims that they must behave neutrally towards applications or platform users. Importantly, these neutrality claims are not limited to scholars and commentators—instead, major Internet platforms including