Virulent Word of Mouse

February 2, 2012

What would you say to David Cameron about Google?

Filed under: Editorial,Internet economics and communications policy — Shane Greenstein @ 11:05 pm

Why was Google invented in the US and not the UK? Jonathan Haskell, Professor at Imperial College in London, asked that question in his most recent blog post. What motivated him to ask it? He got a little nudge from his Prime Minister, David Cameron, who asked the same question.

Haskell justifiably hesitates to put too much emphasis on one single factor. At the same time, he wants to use the example to suggest that aspects of the law for copyright play a role. In particular, he stresses that the US has a legal notion called “fair use” while the UK lacks such a notion.

The argument stresses that fair use eliminates the need  for contracting every time a new use or user builds an incremental innovation using a small part of copyrighted material. This matters for certain online innovations — such as innovative search tools. More generally, fair use reduces the costs of innovations that make use of lots of little bits of copyrighted material. In the absence of fair use the innovator would have to contract with every copyright holder, which can be cumbersome or prohibitively expensive. Haskell’s argument stresses the the equivalent UK notion is much narrower, which raises contracting costs, and, thus, disables experimentation in many online activities.

I do not have any reason to disagree with this insight. The characterization of US copyright law is reasonable for this argument. However, not being an expert on UK copyright law, all I can say is that Haskell’s argument sounds plausible to me.

I would like to add one observation and pose two questions.

The observation summarizes something I said in a prior post about Google’s early history. Summarizing that earlier post,  Google’s success did not arise from a single epiphany. It came from the accumulation of many innovations. Google’s success  had many fathers, including Google’s imitation of, and improvement over, innovations done by Overture. That was accomplished with multiple inventions, including page-rank, as well as investment in more speed and reliability. It also including further development of its second-price quality-weighted position auction.  NSF funding paid for initial advance, and Silicon Valley’s ecosystem played a big role too. The efforts of many clever computer scientists played a role, as did the efforts of many bloggers.

Second, let’s pose a question. Does the US law for safe harbor play a role? Does the UK have anything equivalent? The US laws largely were defined in the DMCA, which passed in 1998. While I do not think the US safe harbor rules played a role in Google’s early growth, these processes certainly played a role in YouTube’s experience. Their importance has been widely recognized too. It has come up prominently in recent issues about reforming copyright law in the face of piracy.

The argument for safe harbors — e.g., adopting and executing routine procedures for taking down copyrighted material limits the liability to a hosting site — goes something like this: a well defined procedure for no liability helps innovators by giving them legal certainty about what does and does not violate another copyright holder’s rights. Does the UK have something equivalent?

The second question concerns antitrust. Does the application or lack of application of antitrust law play any role in the difference between the US and UK experience?  I usually think of US antitrust law as friendly to innovators, and particularly focused on keeping channels open, which helps entrepreneurs. It also leads to deconcentration of ownership. How does that compare with the UK?

I also ask this question partially as a result of a recent court decision in France. Yes, France has nothing to do with the UK, but this example is just too weird to go without mention, so please forgive the lack of segue. The French court found Google violated antitrust law because it gave away its maps for free. A french map maker complained and won their suit, apparently, by convincing a judge that free maps violated France’s antitrust laws. I have seen some wacky court decisions over the years, but on the surface this one sure seems inexplicable. Is the UK as wacky as all this?

To summarize, Jonathan Haskell asks a great question, motivated by his Prime Minister’s question. Why did Google start in the US and not the UK? He and I agree that multiple factors ultimately played a role. Haskell also suggests the definition of fair use has something to do with it. I wonder if safe harbors and antitrust also play a role.

What do you think?

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