Paper 3: Software Patents / Antitrust

Comp 317/417, Dordal

Topic option 1: Do software patents need reform?

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. But some feel that software patents, in particular, have not been socially useful. Do we need to revise the rules for software patents?

If yes, do you have modest technical changes in the patent process in mind, or do you want to scrap software patents entirely, or something in between?

If no, say why; you might pick a common objection or two to software patents and explain why the objection is not sufficient to justify change, or you might argue that, whatever the drawbacks, software patents do create a socially useful incentive for invention, or you might address a combination of these.

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, and thus deserving of special rules:
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.

Discuss both sides, and come to a conclusion. Your conclusion should either support one side or the other (perhaps with qualifications).

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 Amazon or Google be broken up?

The question is really whether society as a whole would be better off. Or are we better off with large tech companies, and the large-scale services they can provide?

You may either pick one of the companies for your paper, or else talk about both.

(Facebook is not on the list. A couple years ago there were widespread calls for it to be broken up, or that Instagram should be spun off. Not now. Facebook's stock has fallen by a factor of three, and TikTok is viewed as serious competition.)

For Google, the usual antitrust issue is with their lock on the advertising marketplace, rather than on search. Google is also a near-monopoly in search, but there are competitors. One of Google's biggest ad businesses is search ads. The second biggest appears to be display ads: the ads you see when visiting non-Google sites.

Once upon a time the argument was widely accepted that AT&T, the Bell System, was a natural monopoly. The idea was that routing calls between different long-distance providers was too complicated. This is sometimes called the network effect; sometimes it's more efficient for everyone to have the same provider. But at that time daytime long-distance calls cost a dollar a minute (back when you could get an adult McDonalds meal for a dollar), so maybe we were not in fact better off. It wasn't until the rise of cell phones that marginal long-distance calling costs dropped to zero. (And Google is notoriously bad at cutting people off from gmail, because as a monopoly they just do not need to care.)

Network-effect arguments apply to both Google and Amazon. Once upon a time, Facebook had an even stronger argument: how would we interact with Friends who were on other social networks? But TikTok has been moving the social-media space in the direction of entertainment rather than keeping up with friends. For Amazon, the strongest network effect is maybe tied to their delivery system: having one delivery provider is more efficient. And Amazon Marketplace "third-party" merchants basically use Amazon for that delivery network. For Google, a single ad network certainly has its advantages in that there's only one provider to place "tracker" code on everyone's web pages, that reads and writes third-party tracking cookies. For search itself, a monopoly isn't quite as necessary.

In recent decades the usual standard in the US courts for antitrust cases was that the actions of a business had to harm consumers. Does Google do that? On the one hand, Google's services are free. But keep in mind that you can theoretically still "overpay" for free services, in the sense that the service might be better if there were competition. Google search has certainly responded to competition. Alternatively, you can describe a problem, and argue that a new, different law is necessary to address it.

For Google, the pro-monopoly argument is more that Google seems to be doing a good job with both advertising and search. But would search be better with a serious competitor? As for advertising, the multi-state antitrust suit against Google suggests that the advertising market is not being well-served by Google, though some of the claims are a bit overstated. Publishers, though, might be getting less revenue than they would in a different environment.

For Amazon, the pro-monopoly argument is basically that Amazon is nowhere near a monopoly when you look at in-person shopping too. But will a time come when Amazon captures a majority of retail sales? They are hugely dominant in online sales. Some have argued that it is really Amazon's delivery practices that are a monopoly: nobody else can afford free shipping. Of course, shipping isn't free: Prime members pay $140/year (if you're not a student). In some sense, having to prepay shipping upfront, like Prime, is inherently anticompetitive; once you sign up with one seller, other online sellers can't compete. Should Amazon have to divest its shipping service, or guarantee open common-carrier access to all other companies?

Breaking Google up probably means spinning off some of its advertising units. For Amazon, there's more options: dividing the whole company, or regulating certain company activities, or spinning off its delivery unit, or a combination.

Either argue for things to be left as they are, or propose a remedy. Breaking the company up doesn't have to be the only remedy; maybe you can argue that Google, etc should simply be subject to a certain set of restrictions or regulations. That is, in order to improve overall competition these companies might lose the freedom to do what they want. An example might be that Google search had to treat all searches equally; they couldn't penalize searches for search terms representing Google competitors. Or maybe a company would simply face heightened scrutiny for any corporate acquisitions.

Both companies clearly provide considerable value to consumers.

As usual, your paper should come to a conclusion: break 'em up, or leave 'em be.

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)