Paper 3: Software Patents / Tech Antitrust

Comp 317/417, Dordal

Topic option 1: Should the rules for software patents be changed, or are they, as they stand, beneficial to society?

Paul Graham wrote

There's nothing special about physical [machines] that should make them patentable, and the software equivalent not.

Patents for physical machines have, arguably, helped advance society by creating an incentive for innovation. Is this still true for software patents? Do software patents foster innovation, leading to more software ideas for everyone? And if they do, do the benefits outweigh the negatives? For the purposes of patent law, should software continue to be included? Or are most software ideas intrinsically straightforward, suggesting that patent protection does not help anyone but the patent holder?

If you think software patents are sometimes beneficial, is this the norm, or the exceptional case?

Some people think that nothing should be patentable; the latter argument is made in Michele Boldrin and David Levine's The Case Against Patents, and their longer work Against Intellectual Monopoly. If you think that all patents are equally bad, feel free to make that argument, but please make your position clear. If you argue against all patents, you should be sure you understand your argument's implications for, say, the pharmaceuticals industry.

Here are a few justifications that have been advanced for considering software patents to be fundamentally different:
Others have argued that the only specialness of software patents is that the patent office allegedly has difficulty conducting patent examinations for software. Still others argue that it is the existence of open source that makes software patents unique.

In the I4I v Microsoft case, an obscure patent about a data structure for holding XML tags became very expensive for Microsoft, once the data structure in question was interpreted so broadly as to cover any method of manipulating XML structure separately from data. Does this represent a fundamental problem with the use of abstraction (ie in describing data structures) in computer science? Or was this just a quirk of the judicial system?

One approach is that, yes, software patents are on the whole beneficial, but that software should be subject to different patent rules. If this is what you feel, propose different rules and argue for them.

Discuss both sides, and come to a conclusion. Your conclusion should either support one side or the other (perhaps with qualifications), or else it should outline some sort of "compromise" position.

Here are a few more points to think about if you need suggestions. You don't have to address them all (you don't have to address any of them):

Topic option 2: Should Big Tech be broken up?

Facebook, Google, Amazon and Apple are each, in their ways, monopolies. Should this be taken as a sign of inefficient markets? Should, in other words, these companies be broken up, or subject to special rules?

And, if so, what should the underlying theory be? If the goal is lower prices for consumers, that's a problem with Facebook and Google, whose products are free. Past antitrust actions have always addressed some element of consumer harm, in one form or another, usually in terms of prices.

Might the consumer harm be that we pay too high a price in terms of privacy invasion? The paper The Antitrust Case Against Facebook (cached copy on Sakai) takes this approach. The author, Dina Srinivasan, argues that, during the time period when competition still existed, Facebook was forced to accept surveillance compromises:

For a decade, the competitive market then enjoined Facebook’s ability to initiate commercial surveillance. Facebook tried to renege on its promise not to track users in 2007, and again in 2010, but the market was competitive enough with adequate consumer choice to thwart Facebook’s attempts. Only after an historic public offering, the acquisition of over a billion users, and the exit of competitors, was Facebook finally able to add the condition of surveillance to its mandatory terms.

But Facebook's terms of service have always called for "complete" surveillance while you're on the site, and the Facebook "like" button was always used for third-party-cookie tracking. Some of the additional surveillance is tied to the rise of using the Facebook app rather than the web page.

For Google and Facebook, what evidence is there that the privacy costs are higher due to their monopolies? Could the consumer harm take the form of fewer options and less innovation? Microsoft Internet Explorer was certainly stuck in a rut, in this sense, until Firefox offered some serious competition.

And what about Amazon, which is upfront about pricing? Is Amazon nonetheless doing something anticompetitive? Or predatory? If monopolies themselves are a danger, make that argument (for example, it may leave us with fewer options in the future).

There are lots of arguments bandied about right now about breakups of these companies. In some cases, the call is for divestiture of some subsidiaries, like Instagram from Facebook. In Google's case, the usual calls are for more equitable behavior, and less "retaliation" against potential competitors. The EU levied a huge fine against Google for alleged retaliation against "price-comparison websites". Others have argued that this is silly, that these sites are a thing of the past, and that there's nothing wrong with having Google Search list the lowest prices.

If you think antitrust restraints -- breakup or new rules -- would benefit society (even after taking into account the negative effects on the company in question), explain why, and explain your proposed fix. If you think these restraints would harm society, or else would harm the companies involved more than society would benefit, explain that. Facebook has argued, for example, that its flagship service is doing well right now, but Instagram and other subsidiaries are their hedge against changing preferences, and that it would be unfair to prevent Facebook from diversifying. (Facebook has also argued that the "network effect" means that the value of a combination is worth more than the value of the separate parts.)

Antitrust actions against companies tend to be expensive for the companies and their investors, and reduce the potential for future growth, which puts a dent in the economy as a whole. For example, if Facebook were to divest itself of Instagram, in the short term this might look like more social-media competition. But in the long term, if traffic at drops, it might have a disproportionate negative effect on Facebook's strategic plans. Generally, all else being equal, corporate growth is considered to be a good thing.

You may pick just one or two of these companies, if you wish, or else discuss the problem from a general perspective.

Your paper (either topic) will be graded primarily on organization (that is, how you lay out your sequence of paragraphs), focus (that is, whether you stick to the topic), and the nature and completeness of your arguments.

It is essential that all material from other sources be enclosed in quotation marks (or set off as a block quote), and preferably with a citation to the original source as well.

Expected length: 3-5 pages (1000+ words)