20131437 Yusuf Salman 1 - REVISED
Deriving Competition from Monopolised Markets: the ICT User as a
Consumer1. IntroductionThe competitive market model accommodates
two different multi-user structures. The First is the consumers,
who try to maximise their utility by buying goods and services in a
competitive market, and second is the producers that have the
resources to produce, and try to maximise their utility (profit) by
selling goods and services in the same market. This market, by
definition of the model, consists of indefinite numbers of
consumers and producers, where each has a negligible individual
effect on the markets dynamics, but all create an environment for
an optimal price according to the cumulative supply and demand.
Therefore, all actors are price takers. This article will take this
economic model as a basis alongside Consumer Theory and approach
the idea of users of information and communication technologies
(ICTs) as the consumers.A typical discussion on users and suppliers
of goods and services in this context is concerned with patent
laws, software copyrights, competition law, and cross-media
ownership. While multinational corporations monopolising the ICT
markets is still an issue of interest, some models of approach and
methods of legislation intended to increase competition should be
questioned in terms of the user as an active, unstable force that
does not always act as an insignificant individual actor in the
market. Other stakeholders like the state or other interest groups
aside, this issue has the two most significant groups of
stakeholders: the users of ICTs, and ICT firms creating goods and
services. Assuming that the interests of both groups will need as
little protection as possible through the natural functioning of
the market, the competitive market model serves both sides in
theory. On the other hand, the concept of competition is one not
fixed and stable in real life, but a dynamic, unstable
concept.[footnoteRef:1] Moreover, do the legal measures and
concepts to increase competition and protect both the individuals
(ICT users) and organisations (ICT firms) in terms of privacy,
ownership, and similar issues actually create a monopolised market
in terms of an opportunity approach that would try to achieve a
competitive equilibrium of opportunity, rather than a price
equilibrium in a perfect competition? This article will outline a
basic set of principles and approaches in theoretical models in
economics and intellectual property law, to investigate how
economic models relate to the current competitive issues discussed
under intellectual property law in reference to the subjects like
the rights of the users[footnoteRef:2], regulations implied by
states or other authorities, and the possible outcomes of policy
regarding ICTs. [1: Noll, Roger G., The Conflict over Vertical
Foreclosure in Competition Policy and Intellectual Property Law,
SIEPR, No. 03-22 , 2004.] [2: Users in general.]
2. Competitive Market Model and Consumer TheoryAccording to
Consumer Theory, when an exchange takes place by voluntary
decisions, we assume the exchange makes both sides better off, as
such an exchange would not have taken place voluntarily if it did
not favour both sides. So, an exchange of money, with a device such
as a mobile phone or a service such as a subscription to a social
networking website already creates some form of positive marginal
utility for the consumer and the seller, as an individual would not
spend his/her money if it did not increase his/her utility. The
phrase some form of here is associated with the assumptions about
exchange under Consumer Theory, such as parties in an act of
exchange being perfectly rational.[footnoteRef:3] Besides, such
assumptions not only are concerned with the individual dynamics
benefiting individuals, but the society benefiting from the
collection of individual actions as well.[footnoteRef:4] Some
discussions on the monopolisation of ICT markets and intellectual
property rights include this approach as a negative element, as
people are naturally not perfectly rational, or the idea that some
intervention is required to protect the consumer or the producer is
common. So, in the scope of this article, such a form of positive
marginal utility is explained as the idea of marginal utility for
the user. That is, even if the user might not actually be better
off by buying a new mobile phone, they would not have bought it if
they thought they would be worse off. In this example, the consumer
at least thinks that they are better of, and this is a form of
utility. [3: Prasch, Robert E., Toward a General Theory of Market
Exchange, Journal of Economic Issues, Vol 29 (3), 1995, pp.
807-828.] [4: Thomton, Mark, Cantillon and the Invisible Hand,
Quarterly Journal of Austrian Economics, Vol. 12(2), 2009,
27-46.]
While approaching the ICT market on this level, one might argue
that the competition argument regarding both sides should be a
utility-optimising one, rather than a utility-maximising one. The
reason for this is that, with these models and concepts, the
utility already exists, but must be shared almost evenly within
individuals or individual organisations in each group of
stakeholders. Utility also cannot be materially quantified; that
is, Person As utility after consuming an apple may be higher than
Person Bs utility after buying a new car. The notion of utility in
this sense calls for the introduction of other concepts like
emotions, privacy, human rights, and creative industries in the
discussion of the ICT market. According to Vilfredo Pareto,
microeconomic decisions made by individuals are largely irrational,
and only rational behaviour in economic decisions would be either
repeating the thing that seems to work, or approaching utility as a
function derived from experience of having consumed a thing and
being satisfied with the consumption.[footnoteRef:5] According to
Bruni and Sugden, Paretos approach in this matter and the current
approaches in behavioural economics suggest that economics is a
separate behavioural science that is independent of
psychology.[footnoteRef:6] In any case, both of Paretos
identification methods for logical behaviour would stay outside of
the assumptions of rationality, because repeating what seems to
work is not necessarily logical, but most of the time a flawed
emotional way of thinking that might not lead to what is rational,
but maybe could help individuals reach what seems rational. The
consumption of something tried and felt satisfying might stand as
first-hand evidence because it is beneficial; however, it might
also interfere with the possibility that the consumer will be
willing to try something else that might be even more beneficial.
In this sense, an opportunity approach would oppose some
assumptions of the competitive model and Consumer Theory, as it is
about the opportunity and fairness in entering the market,
regardless of the fairness of conditions within the market. For
example, with this approach, a company worth $10 million and able
to make $1 million a year has the same level of opportunity with
another company worth $1 million, but able to make $100 thousand a
year. The basic competitive model does not take into account the
differences in capital, opportunities in investment, or the
intermediaries which break the hypothetical competitive cycle that
consists of two sets of actors. [5: Bruni, Luigino, Sugden, Robert,
The Road Not Taken: How Psychology Was Removed from Economics, and
How It Might be Brought Back, The Economic Journal, Vol. 117(516),
146-173.] [6: Ibid.]
The competition approach dictates that any Firm A has as much
right to exist as any other Firm B, while the individual has the
right to have as many choices as possible in consumption. In the
real world, this approach is not concerned about creative input, or
emotional utility. So, in order for the user to make a rational
choice about one particular kind of good, the differences among
different brands should be present. So, in real life, consumers
have preferences depending on many different material differences
among brands and models of goods and services, and various personal
characteristics. Prasch also argues that this is a factor that
undermines standard theories about exchange, as the utility that a
person receives from a particular exchange is, under certain
circumstances, not independent of the nature of the traded goods,
their income, or social status.[footnoteRef:7] According to the
competitive model, an ideal market requires identical products from
different producers, which does not reflect individual preferences
in real life. While this article makes use of the competitive
model, the definition of competition here should be being able to
choose and be chosen among materially different alternatives with
individual opportunities as uniform as possible. [7: Thomton, Mark,
Cantillon and the Invisible Hand, Quarterly Journal of Austrian
Economics, Vol. 12(2), 2009, 27-46.]
Within the scope of this article, the competition is not
necessarily one of goods and services, but of opportunities,
especially the distinction of formal equality and compensatory
equality of opportunities. Joseph asserts that formal equality of
opportunities is essentially a principle of non-discrimination or
procedural fairness which thus includes concepts like recruitment
according to merit, on the other hand defining compensatory
equality as a form of equality of opportunities that demands
compensation for the ones who started off in a disadvantaged
position.[footnoteRef:8] This article completely ignores the second
type of equality of opportunities, as it is not the aim here to try
to go deeper into individual actors complex personal or commercial
interests. The assumption here comes from the preferences approach
of Consumer Theory, and the question of would the consumer consume
a Good A, if it did not feel considerably superior to a Good B? By
the opportunity approach, Good A must have the same right to be
considerably superior to any other good, in direct proportion to
its capacity as a product that has a function, meaning, and an
opportunity cost[footnoteRef:9].With this question of superiority
in mind, the competitive model seems to fail as a fully equipped
tool to understand real-life dynamics between consumers and
producers, because it is merely a model. It still is an
approximation of how markets should work under a certain
perspective, and it is at least helpful in understanding the
differences between monopoly and competition. [8: Joseph, Lawrence
B., Some Ways of Thinking about Equality of Opportunity, the
Western Political Quarterly, Vol. 33(3), 1980, 393-400.] [9: The
opportunity cost here is the cost including the emotional, personal
cost of choosing Good A over another good.]
3. Competitive Approaches in the LiteratureThis section of the
article approaches two different competitive concepts to clarify
the concept of competition in intellectual property law. The
Privacy by Design Approach, while largely competitive, does not
seem to be a competitive option in terms of opportunities, when it
is a requirement or form of standardisation. On the other hand,
this approach may also be used as a separate choice by a producer
in promotion of its products. In such a case a consumer who is more
concerned about privacy will choose the product based upon these
principles, and another consumer who is more concerned about other
functions will choose the product based upon other types of
functions. Secondly, the captive audience doctrine explains how
concepts like freedom of choice and freedom of options, or
opportunities relate to intellectual property rights, and how such
concepts might be utilised to achieve a balance of opportunities.
The third part of this section compares and incorporates
monopolistic rights and innovations, and is based upon questioning
the divisibility and relationships between the two.3.1. Privacy by
Design ApproachThe Privacy by Design Approach is a control-based
approach concerning the control of the user over the ICT tools and
services they use. The Privacy by Design Approach which argues that
interactive/mobile goods, applications and services should be
designed to protect privacy, rather than setting privacy as a rule
to cope up with user concerns, has been adopted by the Federal
Trade Commission[footnoteRef:10] in the United States and the
European Commission[footnoteRef:11] in the year 2012. On this
level, the respect for the privacy of the individual is an aspect
of a good or a service that provides utility. Among the seven basic
principles provided by Ann Cavoukian about this
approach[footnoteRef:12], one is directly related to this article:
positive-sum, rather than zero-sum in functionality of the goods
and services. Here, Cavoukian argues that traditional zero-sum
assumptions require unnecessary trade-offs in usage. As argued
here, dichotomies like privacy vs. security, or privacy vs.
functionality might be considered false dichotomies, and these
couples of concepts might as well exist simultaneously. However,
the preference of the user as a consumer is what creates the
utility in the first place. For example, the user may find more
utility in a widely functional design with almost no concern in
respect for privacy. On the other hand, visiting back the exchange
argument of Consumer Theory, the user somehow has already agreed to
have limited control over the product they bought, as the
information about the product was available to them to a
considerable extent, and they would not have made the voluntary
choice if that information did not create utility for them. At this
stage, the Privacy by Design Approach might be considered as an
approach that undermines personal choice, and tries to make the
user better off despite the user herself. In this sense, the rights
and the competitive opportunities of the user to transfer the
control over their personal data, or the intellectual property they
buy or rent including the design of the goods and services- to
another party, usually being the producer, is also a form of
control over such information. The user still has control, though
not absolute, over their personal data, by letting the device, the
software or the producer use their data, not transferring their
rights on the data itself. They still own the data. The ownership
discussion is also popular in academic
publications.[footnoteRef:13] Again, academics typically should be
able to agree and/or choose to accept that their work will be
either placed in the public domain, or owned by themselves. So,
according to the concept of competition under the scope of this
article, that the user is not perfectly rational, or that the
choice is not perfectly free of external factors does not undermine
competition, as the existence of competition in opportunities
assumes material differences. To ensure theoretically equal
opportunities, such differences among any given set of stakeholders
must be equal to any other; however, this issue is only secondary
to the main argument about opportunities. Again, the user is free
to choose from a set of goods and services available to her, but
the competitive problem here is that there actually is not an
indefinite number of equally available options. [10: Federal Trade
Commission, Protecting Consumer Privacy in an Era of Rapid Change:
Recommendations for Businesses and Policymakers. 2012.
http://www.ftc.gov/os/2012/03/120326privacyreport.pdf ] [11:
European Commission, Proposal for a Regulation of the European
Parliament and of the Council on the Protecton of Individuals with
regard to the Processing of Personal Data and on the Free Movement
of Such Data (General Data Protection Regulatoin). 2012.
http://ec.europa.eu/justice/data-protection/document/review2012/com_2012_11_en.pdf
] [12: Cavoukian, Ann. Privacy by Design: the 7 Foundational
Principles. 2009.
http://www.privacybydesign.ca/content/uploads/2009/08/7foundationalprinciples.pdf
] [13: Owen-Smith, Jason, Intellectual Property, Between the Ivory
Tower and the Market, Who Owns Academic Work? Battling for Control
of Intellectual Property by Corynne McSherry, Science, Vol.
295(5561), 2002, 1840-1841. ]
3.2. Captive Audience DoctrineMonopolistic or oligopolistic
control of the market is not always dependent on, or supported by
the preferences of the user. The Captive Audience Doctrine
recognises an individuals interest in being free from forced
communication.[footnoteRef:14] For example, an advertisement on a
billboard is not technically forced upon an individual, but if the
piece of advertisement is in the form of an audio content inside a
moving bus, the individual cannot avoid being subjected to it. That
individual is part of a captive audience. The sticky relationships
created by monopolised ICT markets are similar in nature. For
instance, a user might be consuming services within the Google
ecosystem. They might be using e-mail services by Google at work,
sharing files via Google Drive with their colleagues, and attending
meetings on Google Hangouts. Different factors interfere with their
choices here, and these are not usually about personal preferences.
The more investment they and their connections make into the same
ICT ecosystem, the harder it will be for them to leave this
ecosystem.[footnoteRef:15] So, in a way, they are stuck in there,
and they cannot choose to avoid communication in that particular
ecosystem, which makes them a part of a captive audience. This
resembles the concept of network externality that refers to an
increase in consumer utility for a product if the number of other
people increases. This increase theoretically comes from the
reduced cost of using a product after buying it, such as having to
put less time and effort in learning such a product, or overall the
technological advantages of the community of users and producers as
the advancement in technology is intellectually sponsored, in a
way, promoted by the larger user base.[footnoteRef:16] However,
this concept has two significant differences from the doctrine of
captive audience. The sticky relationships between ecosystems and
consumers in the example affect the consumer directly, as they are
the one stuck in the Google ecosystem. On the network externalities
part, it is the producer that loses the limited number of users to
whom the product would actually be more beneficial if other buyer
did not join in. Conner and Rumelt suggest that the QWERTY keyboard
layout is still the most popular layout for production, as almost
everyone uses it, despite the fact that many other layouts have
proven to be more practical, faster, or less prone to typing
mistakes.[footnoteRef:17] The second significant difference is the
level of obligation in the continuation of usage. A user who is in
a working environment will have too little or no choice in using a
different e-mailing service, file-sharing application or a device.
For a softer approach, a user will also be much less socially
advantaged if they decide to leave Facebook, on which almost all of
their friends are. On the network externalities side, same rules
may apply for the producer, for example, in deciding to produce a
totally different keyboard layout no one has ever heard of.
However, while such a thing is almost always a commercial decision
for the producer[footnoteRef:18], the consumers choice here is
almost always personal. [14: Fallon, Jr., Richard H., Sexual
Harassment, Content Neutrality, and the First Amendment Dog That
Didnt Bark, The Supreme Court Review, Vol. 1994, pp. 1-56.] [15:
Baruh, Lemi, Salman, Yusuf, Mobil Mecralarda Veri Gizlilii ve
Tasarmla Veri Korunmas Yaklam, Pi: Pazarlama ve letiim Kltr
Dergisi, 2014, 16-23.] [16: Conner, Kathleen R., Rumelt, Richard
P., Software Piracy: An Analysis of Protection Strategies,
Management Science, 1991, 125-139.] [17: Ibid.] [18: The almost
here takes into account the hypothetical producer who might want to
introduce a new keyboard layout with their lovers name on the top
row.]
The example of a workplace might be too complicated here, as
organisations can also have commercial preferences. On a personal
level, there is still a competitive problem about ICT goods and
services. Commercial preferences of organisations might require ICT
goods and services to be designed as to hold users responsible for
following up on their rights to acquire them, instead of
recognising their rights by default.Information ecosystems
experienced through digital devices are increasingly inimical to
user disengagement both by the nature of their content-delivery
architecture, design which, we argue, is meant to prevent the user
from switching to a competing brand, and by the nature of the users
investment in customization of online and mobile services, which
create disincentives for users to repeat the customization process
on different platforms.[footnoteRef:19] [19: Baruh, Lemi, Popescu,
Mihaela, Trapped in My Mobility: How a Principle of Control over
Communicative Interaction Can Guide Privacy by Design in Mobile
Ecosystems]
Someone who has invested more in creating a profile on and
getting used to Facebook will have more difficulty moving away from
it and to another social networking site. The Facebook example
itself still does not contradict with the idea of competition in
this article, as the user already had preferences and made the
choice to invest in that particular platform; however, they did not
have enough options to begin with. There were not virtually
identical platforms that provide different functions but the same
level of opportunities in the market of social networking sites.
So, the vacuum of opportunities created by Facebook created
websites like Twitter. In the online social networking market, none
has a monopoly over opportunity; however, they are materially
different, and some people use Facebook, while others use Twitter,
or both at the same time like many.3.3. Intellectual Property
Rights: Competition vs. InnovationIntellectual property rights are
monopolistic by nature. They give the right-holder a monopoly over
intellectual content. According to Mellor and Alexander, such
rights also contradict with the Treaty of Rome, which requires
abolition of national barriers, as they remain territorial in
application and differences.[footnoteRef:20] Such an idea of
monopoly over content not only damages competition over the content
as a good or a service, but also creates different circumstances
about the content within different borders, therefore undermining
the assumptions of equal opportunities. Different conditions of
entry into markets, and different conditions of operation in such
markets, while such differences are not proportionate to the
overall opportunities of consumers and producers in a hypothetical
closed system, do not imply equal opportunities. However, this
monopoly does not necessarily have to extend to a market of
intellectual content. Two main approaches describe the competitive
nature of such rights. By the pure understanding of the Competitive
Market Model, the first view is that IP concepts such as patents
and copyrights create unfair advantages in a market and harm the
competition. On the other hand, such rights encourage innovation by
individuals and organisations. [20: Mellor, James, Alexander,
Daniel, Intellectual Property, the International and Comparative
Law Quarterly, Vol. 39(3), 1990, pp. 695-699.]
By the utility assumption, the artist produced artistic content
at least partly because of the utility they get from the
intellectual property rights. These rights, in this sense, might
also be the only source of their income, networking capabilities,
or artistic development. Again, by the exchange argument, the
audience would not demand and consume, for example, a book with a
price including the royalties, if it did not contribute to their
utility; that is, if the book did not present artistic development,
or a considerable amount of quality added by the writers incentive
to produce content that would bring the writer extra income.
Another example is, according to a tear-down report by a research
firm, the iPhone 6 costs Apple about $200 to make, which shows a
profit margin of approximately 70%.[footnoteRef:21] This issue has
many other sides, but Consumer Theory and the Competitive Market
Model explain some aspects of this monopoly rent, largely based on
the devices popularity. More than two times the profit over cost
does not tell us anything good about the absolute competition in
that market; however, people are not buying iPhones primarily for
things like making calls, sending SMSs, and similar activities,
which they could easily do with a $20 device. The iPhone has the
added intellectual value to it, and users buy it to increase their
utility. The iPhones popularity might be because of its proclaimed
unique design, the additional functions it presents, the culture it
represents or however significant it is- the innovation it brings
into the market. The existence of the iPhone as it is, is by itself
a way to increase user demand for the iPhone, and decrease the
demand for other brands and models of smartphones, as different
models and brands of smartphones constitute substitute goods in the
market. The innovation activities performed by Apple definitely
create some form of monopoly over some user categories, and
decrease the competition by creating a competitive advantage, but
not necessarily an unfair one. Apples right to have this
competitive advantage encourages others to innovate. The benefit of
a governments promise to grant intellectual property rights is the
creation of incentives to invest in the research and development of
new products.[footnoteRef:22] Such potential monopolization of the
market forces the others to step up their game, and create more
desirable goods and services for the users. However, according to
Schmalensee, especially large patent portfolios owned by
corporations might be used to hurt competition and harm other
competitors via infringement cases.[footnoteRef:23] On the other
hand, this creates another potential of marginal utility for the
user, and the user is less likely to demand absolute competition in
the market, while they might easily be considering themselves as a
part of a different, or cooler community, by taking advantage of
their preferences. On the other hand, for example, the same user
would be less likely to buy the new iPhone, if it were sold for
$10,000 each. With this logic, the way to create a perfectly
competitive market of opportunities should come from creating a
market that is competitive enough to allow entry and provide the
consumer with a sufficient number of choices, and monopolised
enough to create a momentum that would allow innovation to
constantly reach a point of opportunity that seeks more
competition. [21: iPhone 6 Plus: $100 Costlier for Consumers to Buy
Just $15.50 More Expensive for Apple to Make, IHS, 2014,
http://press.ihs.com/press-release/design-supply-chain/iphone-6-plus-100-costlier-consumers-buy%E2%80%94just-1550-more-expensive-
] [22: Wu, Tim, Intellectual Property, Innovation, and
Decentralized Decisions, Virginia Law Review, Vol. 92(1), 2006, pp.
123-147.] [23: Schmalensee, Richard, Standard-Setting, Innovation
Specialists and Competition Policy, the Journal of Industrial
Economics, Vol. 57(3), 2009, 526-552.]
The competition argument about innovation works the other way,
too. The existence of competition forces innovation and the
existence of innovation forces counter-innovation for others to
compete. Having less competitive advantage creates a need to gain
such advantage, which in turn may result in an overall increase in
innovation in the market. Competition may increase the incremental
profits from innovating, and thereby encourage R&D investments
aimed at escaping competition.[footnoteRef:24] In other words, the
existence of patents held by Apple is not actually a competitive
problem for Samsung or Google, but an innovation opportunity to
show how they are better than Apple, just because they are
different from Apple. Trying to escape competition might also
create a competitive environment for opportunities among different
stakeholders, where one invests in innovation to be in the
competition, and another invests in innovation to get away from it,
locking both kinds of stakeholders in a constant race of
innovation. Samsung and Google are, at least currently, big market
actors that have the resources to create different solutions in
this competition in a limited scope. On the other hand, maybe LG or
HTC would find it more difficult to compete with these top few.
Further down the scale, it is not easy to provide solutions for the
small or mid-sized enterprise owner. On this stage, the consumer
can still utilise their options, and can be happy, but they can
also be happy with consuming Huawei products that are usually
cheaper in price, and can do most of the things a Samsung device
can do. Arguably, this price different still does not guarantee
that they will have the same marginal utility by using a Huawei
product with an Android operating system, as they would have, if
they used a Samsung product with the same specifications and
operation system. Additionally, trying to balance the marginal
utilities of the consumer and the producer requires optimisation,
not maximisation of utilities. This optimisation approach ensures
that the consumer and the producer cannot be protected in the
competition at the same time and on the same level, which leaves
the aim to focus on creating a fairly competitive market of
opportunities, rather than utilities, and estimate the optimal
balance of utilities, rather than optimal utilities for each party
on an individual level. [24: Aghion, Phillippe, et al., Competition
and Innovation: An Inverted-U Relationship, the Quarterly Journal
of Economics, Vol. 120(2), 2005, 701-728.]
4. A Monopoly of StandardsStandardisation of approaches for
intellectual property rights might benefit competition in the ICT
markets. Different implementations of these monopolising rights
bring new restricting mechanisms into otherwise more competitive
markets, and lock the different groups of users into different
ecosystems. For example, Apple and Microsoft holding on to
different digital rights management (DRM) encryption methods
usually prevents the user from utilising the same content that is
locked in one platform in another platform. Simple commercial
decisions like distributing a music album via a BitTorrent
Bundle[footnoteRef:25] also locks at least some users out of fully
utilising the content they paid for. Any kind of standardisation
here, even restrictions within the ecosystems, prevents the content
from becoming the users property. For example, the user who buys
content via iTunes has the right to use the product without
altering it (usus), but they do not have the right to derive profit
over it (fructus). Moreover, the user also does not have the full
right to abuse the product, or transfer their rights over it to
someone else or alter it in ways not intended by the producer
(abusus). A standardisation approach that would bring restrictions
on producers rights to restrict the users right on the product,
would in turn obstruct the voluntary choice of a consumer who might
choose to be restricted in exchange of additional functionality.
This whole issue prevents any user from actually and completely
owning content, by not letting the user surrender their data or
partially share their rights on the data with the producer,
therefore not having the complete voluntary option to abuse the
product. Here the intellectual property rights enable the
rights-holder to decide on how the property itself is going to be
used by the others, especially those who paid for
usage.[footnoteRef:26] By this function of these monopolising
rights, the content, or the goods and services in general with ICT
natures are already owned by some persons or organisations. In the
iTunes example, there are people or organisations that have the
full control over the purchased songs. They can profit over them,
they can alter them in ways they did not previously intend. So,
purchasing songs on such platforms might not pose a significant
example of owning songs as pieces of property, but it provides ways
to understand how property-like such goods and services are.
Considering usus, fructus, and abusus, such goods and services
might be considered not property at all. However, from a general
perspective, those can also be considered as partly-property. The
user does not own the product, but they own the rights to for this
example- listen to the product, and they actually bought those
rights within the market. A standardisation that aims to achieve
price equilibrium, or distribute rights over content in a
competitive market, therefore eliminating monopoly or oligopoly in
a larger sense, would also be an infringement of the producers
rights on the content or the good and services. [25: Thom Yorke
released his recent album Tomorrows Modern Boxes as a Torrent
Bundle. A Torrent Bundle utilises peer to peer (p2p) sharing
applications and allows the content creator to sell his/her own
work.
http://pitchfork.com/news/56876-thom-yorke-announces-new-album-tomorrows-modern-boxes/
] [26: Gimbel, Mark, Some Thoughts on the Implications of Trusted
Systems for Intellectual Property Law, Stanford Law Review, Vol.
50(5), 1998, pp. 1671-1687.]
Standardization also brings other problems. Setting a basis of
standards in intellectual property rights and forcing every agent
to comply with those is problematic. Now, different platforms using
different DRM protections lock people into different ecosystems,
just like selling books from different publishers in different sets
of stores. If a regulator decides to enforce the same method of
approach for every situation, for example, like the privacy by
design approach, this also locks people and firms into something: a
monopoly of methods. Any person or organisation that creates
content would be locked out of such a market if condoning to
technical standardisations is not profitable. Forcing any monopoly
or oligopoly in this matter to settle for standardisation is
forcing the smaller-scaled organisations more. Larger
establishments often tend to be more prepared for the potential
changes in the market, and they often have the necessary resources
to compensate for such changes. Standardisation for the sake of
weakening the monopoly would only make the market harder to enter,
therefore strengthening the existing monopolistic or oligopolistic
structures.On the other hand, the issue of cross-media ownership is
also a concern in this context. Many countries have legislation
against owning different kinds of media platforms to some extent.
These measures are usually designed to increase competition and
challenge conglomeration. On a producer vs. consumer basis, this
again is a two-sided issue. Monopolisation of the market is by
default considered as a difficulty in entering the market; however,
this also has another side. In a monopolised market, monopoly rent
is created. The actors on the monopolised side are not the price
takers anymore, as they can fix prices on a level that is more than
a perfectly competitive price and actually set the prices
themselves. This monopolistic advantage usually makes the market
harder to enter, as the price setters are usually the ones
dominating the market, but in a more competitive market, when
compared to a perfect monopoly, the monopoly rent makes the market
more attractive to new entries. A first actor earning monopoly rent
over the competitive price will encourage a second actor who
desires to have a slice of that rent.[footnoteRef:27]
Conglomeration may also provide the content creator with additional
power over content. People or companies holding intellectual
property rights over a particular piece of content would not be
able to use it in a different medium in any way they choose by
themselves anyway. The creator(s) of Batman would not find it easy
to cope up with the general market, and most of their actions about
creating anything outside the comic book ecosystem would have legal
consequences, as they have already agreed to transfer some of their
rights to the publisher. Conglomeration may be profitable for the
content creator, and this profitability actually would make the
market worth entering. However, not everyone can have a
multi-million-dollar idea. [27: Ferguson, James M., Daily Newspaper
Advertising Rates, Local Media Cross-Ownership, Newspaper Chains,
and Media Competition, Journal of Law and Economics, Vol. 26(3),
1983, pp. 635-654.]
This whole approach is connected to the conditions of exemption
in competition law. Most approaches to the concept of competition
suggest that competition for the sake of competition itself should
not be the aim.[footnoteRef:28] As the emphasis on competition is
defined firstly as the protection of the interests of the parties,
competition as a blanket requirement may be undermined in certain
cases, to pursue the interests of an agent. Turkish Competition Law
allows exemption from competition for the following reasons: [28:
Seville, Catherine, EC Competition Law. Dominant Position and
Exemption, the Cambridge Law Journal, Vol. 51(2), 1992,
206-208.]
a) New improvements and developments in the services related to
the production or the distribution of goods, or, achieving economic
or technical innovation,b) Interest of the consumer,c) Such an
exemption does not remove competition from a substantial portion of
the market of concernd) Competition is not limited to an extent
that exceeds the amount required to achieve the aims in items (a)
and (b).With the addition in 2005, such exemptions from the
competition law may be subject to consideration of specific
conditions or time limits.[footnoteRef:29] [29: Art. 5, Turkish
Competition Law, Law No. 4054.]
As long as the overall competition is achieved in the market,
and the rights or interests of the consumer are pursued, there is
no legal problem with a limited amount of competition in a certain
market. Besides, such exemptions are also subject to some
conditions. Not every entrepreneur or content creator has the
option to be backed by a conglomerate featuring, for example, a
design company for licensing out official t-shirts and toys, a
movie production company shooting movies, a publication agency
publishing magazines and comic books. Additionally, not everyone
has the option to follow a vertical integration on every stage of
production due to budget concerns. Like consumers, producers are
also limited by their budget constraints. In this sense, in the
long run, every actor in the market would have the same possibility
and opportunities to become a conglomerate, and take part in
different particular markets of their choice at the same time, that
is, of course, if they desire so. In a perfectly competitive set of
markets, conglomeration would not be a problem, as the
conglomerates in particular, single markets would be in the same
position as anyone else. In many examples, conglomerates usually
speed up the industrial development.[footnoteRef:30] The
monopolisation problem here is a problem about monopolisation
itself, not particularly and necessarily conglomeration. Here, it
just happens to be that conglomerates tend to be richer, and have
larger resources to monopolise the markets; but do the consumers
really care? On the other hand, problems occur when larger
establishments or conglomerates in this case abuse their dominant
positions in the markets. In the case of Turkey, Trk Telekom, which
also owns different companies in markets like mobile
communications, call centre outsourcing and internet services, is
the sole provider of landline telephone infrastructures. This gives
Trk Telekom an unfair advantage and virtually unlimited power to
decide on the price of goods and services they provide. The
European Community policy about dominant positions regarding such
issues is based on the Treaty of Rome which states such
establishments must not be allowed to take one or more dominant
positions in the Common Market or a substantial part of
it.[footnoteRef:31] In any case, according to the Treaty of Rome,
it is not the existence of a dominant position that creates
problems and that should be prohibited, but the abuse of such a
dominant position.[footnoteRef:32] In comparison to the example of
the Turkish Competition Law, mergers, acquisitions or price
manipulations by abusing a dominant position is not in the best
interest of the public or the market. Such behaviour undermines a
substantial proportion of competition in a certain market or
sometimes in the economy as a whole, and should be opposed in both
price and opportunity approaches in competition. [30: Peng, Mike
W., Lee, Seung-Hyun, and Wang, Denis Y. L., What Determines the
Scope of the Firm over Time? A Focus on Institutional Relatedness,
the Academy of Management Review, Vol. 30(3), 2005, pp. 622-633.]
[31: Art. 86, the Treaty of Rome.] [32: George, Ken, Jacquemin,
Alexis, Dominant Firms and Mergers, the Economic Journal, Vol.
102(410), 1992, 148-157.]
With the existing to some extent monopolised market structures,
the consumer only seeks to raise their utility. Having different
versions of things a consumer likes or prefers in a widely spread
set of different markets benefits the consumer if the sole concern
is the current, short-term, not investigated utility here. On the
other hand, in many cases, having similar opportunities in the same
preference category or association set might actually lead to a
lower utility in the long run, but the consumer is a person whose
sole purpose is to increase their utility here and now, in line
with their budget constraints. As far as they can get their utility
from consuming intellectual property, still not their property, and
as long as they are a satisfied consumer, they will not be bothered
to care about how conglomeration or cross-media ownership damages
the competition. In any case, a Harry Potter novel fan will demand
Harry Potter movies, t-shirts and toys, and will get significant
utility out of them. Regardless of long term consequences regarding
their utility, the consumer interested in intellectual content will
find, as described about a form of utility in things they like. The
phrase things they like explains how the conglomerates get things
done in an exchange scenario, and appeal to current utility
perceptions of the users. Conglomeration provides the user with
content similar to those they like in different forms.The current
industrial context of conglomeration and concentration
significantly extends film musics promotional reach and commercial
functions. In addition to selling soundtrack CDs, film music
functions as a site for launching new artists, providing a renewed
platform for singles or leftover tracks, and, most importantly,
organising consumption patterns by positioning media products
according to the imagined tastes, preferences, and habits of
idealized target demographics.[footnoteRef:33] [33: Tompkins,
Joseph, Whats the Deal with Soundtrack Albums? Metal Music and the
Customized Aesthetics of Contemporary Horror, Cinema Journal, Vol.
49(1), 2009, pp. 65-81.]
However, the focus is on markets where the consumer is happy (or
has utility) and nothing else matters, or on attempts to optimise
this happiness among a hypothetical set of both consumers and
producers? The meaning of competition under the scope of this
article contains two assumed rights: the right of the consumer to
have as many choices as possible with the same opportunities to
choose, and the right of the producer to exist in a market
regardless of its size and resources in the first place, and have
the opportunities to enter or leave any market, or operate in such
markets as fairly proportionate to its financial resources and
reach of different markets. Of course, its size and resources will
affect how it will survive in competition, but what is discussed
here is that the big firm, and the small firm should have the same
opportunities and possibilities in entering into and surviving with
the markets to ensure producer satisfaction, competition and
consumer interest. Aiming to optimise a general set of markets in
consumers and producers interests at the same time, it would not be
wise to treat the set of consumers as a flock of wild animals in a
cruel natural environment that will kill them no matter how they
behave in their nature. What producers do or experience also
matters, and it especially affects the utility of the consumer in
the long run. Commercial decisions made by both the consumers and
the producers matter in a larger perspective.5. ConclusionMost
measures within intellectual property law, legislative discussions
and commercial policy that are aimed at increasing competition in
the markets of goods and services might actually fight against
competition in the markets of opportunities for both the consumers
and the producers. Trying to explain the difference between these
two types of competitive markets would be meaningful if one takes
the user of ICT technologies and platforms as a consumer. Within
the scope of this article, the question is not whether intellectual
property rights ultimately create irreversible monopolisation of
different markets or not, but it is can we utilise monopolisation
in different markets of goods and services in favour of the
competition in different markets of opportunities? The term
opportunity in question is one of entering a market under different
conditions, but the same set of principles that are proportional to
the size and power of the entity. The competitive market model
still remains a utopia that is used to understand the market
dynamics in real life; however, truly competitive markets of
opportunities may actually be achieved through non-competitive
real-life examples of the markets of goods and services.