Status: Pending.
Summary: The American Airlines Vacations site misrepresented carrier surcharges as “tax” in violation of governing regulation and prior DOT consent decrees.
Delta – refusal to refund TSA fees
Multinationals in the Digital Economy
The Brookings Institution‘s Global Goliaths: Multinational Corporations in the 21st Century Economy includes my chapter Multinationals in the Digital Economy. The lead paragraph:
Modern digital services largely come from multinational corporations (MNCs) whose size and scope are unprecedented. It has not always been this way. Just a few decades ago, users typically turned to local firms for most kinds of information technology (IT). And, historically, software was known for its low barriers to entry and the quick rise of startups and small firms. This chapter examines the forces contributing to the rise of digital MNCs, as well as the challenges they face.
JetBlue – refusal to refund TSA fees
Revisiting Barlow’s Misplaced Optimism
Revisiting Barlow’s Misplaced Optimism, Symposium for John Perry Barlow, 18 Duke L. & Tech. Rev. 97.
As part of Duke Technology Law Review‘s Symposium for John Perry Barlow, I reflected on the perspective of early Internet luminary John Perry Barlow, the vision he offered, and what I see as the most promising sources of accountability for online behavior. My piece begins:
Barlow’s A Declaration of the Independence of Cyberspace calls for a “civilization of the mind in cyberspace,” and he says it will be “more humane and fair” than what governments have created. Barlow’s vision is unapologetically optimistic, easily embraced by anyone who longs for better times to come. Yet twenty years later, it’s easy to see some important respects in which reality fell short of his vision. Alongside the Internet’s many pluses are clickbait, scams, hacks, and all manner of privacy violations. Ten thousand hours of cat videos may be delightful, but they’re no civilization of the mind. With a bit of hindsight, Barlow’s techno-utopianism looks as stilted as other utopianism—and equally far removed from reality.
Beyond being overly optimistic about how perfectly the ‘net would unfold, Barlow was also needlessly skeptical of plausible institutions to bring improvements. He writes: “The only law that all our constituent cultures would generally recognize is the Golden Rule.” But the moral suasion—and practical effectiveness—of the Golden Rule presupposes participants of roughly equal power and status. It is no small feat to meaningfully consider what Joe User might want from Mega Social Network if the tables were turned and Joe owned the goliath. As a practical matter, any claim a user has against a goliath requires state institutions to adjudicate and enforce. When Barlow wrote A Declaration of the Independence of Cyberspace, tech goliaths were much smaller. Plus, the Internet’s early users were in a certain sense more sophisticated than the mainstream users who eventually joined. So the gap from little to big was much narrower then, arguably making governments less important in that era. But as the big get bigger and as the Internet attracts average users who lack the special sophistication of early adopters, governments play key roles—adjudicating disputes, enforcing contracts and beyond.
Class Action Settlement — Phone Calls and Text Messages Recorded by Twilio updated May 21, 2020
Flowers, et al. v. Twilio, Inc. is a consumer class action alleging that Twilio recorded phone calls and text messages for its customers Handy Technologies and Homejoy and text messages for its customer Trulia, without the consent of all parties to those communications, in violation of California privacy law.
The parties reached a settlement which received final approval by the Court on June 11, 2019. Persons included in the settlement will be eligible to receive a portion of the settlement fund based on whether their recorded communication(s) involved a phone call or only text messages.
Payments to Class Members will be distributed pro rata based on the type of recorded communication. Each Settlement Class Member who had only a text message recorded by Defendant will receive one share, while each Settlement Class Member who had at least one telephone call recorded by Defendant will receive eight shares. The value of one share will be determined by dividing the net settlement fund by the total number of shares allocated to the Settlement Class. The Settlement Administrator estimates that a Class Member with a recorded phone call will receive $64.30 and a Class Member with only a recorded text message will receive $8.04. This is only an estimate and may change as the Settlement awards are finalized. if the Settlement administrator has the correct mailing address for a Class Member, that Class Member will automatically receive his or her share of the Settlement.
Case documents (including Complaint and Class Notice) are available at the settlement website, californiarecordingsettlement.com.
Checks were first mailed out in September 2019 and those expired on December 16, 2019.
In February 2020, the Court approved re-issuing checks to settlement class members who did not cash the first round of settlement checks in 2019. Those checks were re-issued on March 10, 2020 and will expire on June 8, 2020.
If you received one of these re-issued checks, you must cash it before June 8, 2020 to ensure you get your share of the settlement. After June 8, 2020, any uncashed settlement checks will be voided and cancelled.
Do not attempt to cash any settlement checks after the void or expiration date listed on the check, or you may be subject to bank fees. If you still have an uncashed settlement check issued in 2019, you should not attempt to cash it.
If you have any questions about a re-issued settlement check, you can email or call Class Counsel at recordingsettlement@gbdhlegal.com or 1-800-531-4446. You can also contact the Settlement Administrator at Flowers v. Twilio Settlement Administrator, P.O. Box 404103, Louisville, KY 40233-4103.
An Introduction to the Competition Law and Economics of “Free” with Damien Geradin
Benjamin Edelman and Damien Geradin. An Introduction to the Competition Law and Economics of ‘Free’. Antitrust Chronicle, Competition Policy International. August 2018.
Many of the largest and most successful businesses today rely on providing services at no charge to at least a portion of their users. Consider companies as diverse as Dropbox, Facebook, Google, LinkedIn, The Guardian, Wikipedia, and the Yellow Pages.
For consumers, it is easy to celebrate free service. At least in the short term, free services are often high quality, and users find a zero price virtually irresistible.
But long-term assessments could differ, particularly if the free service reduces quality and consumer choice. In this short paper, we examine these concerns. Some highlights:
First, “free” service tends to be free only in terms of currency. Consumers typically pay in other ways, such as seeing advertising and providing data, though these payments tend to be more difficult to measure.
Second, free service sometimes exacerbates market concentration. Most notably, free service impedes a natural strategy for entrants: offer a similar product or service at a lower price. Entrants usually can’t pay users to accept their service. (That would tend to attract undesirable users who might even discard the product without trying it.) As a result, prices are stuck at zero, entry may be more difficult, effectively shielding incumbents from entry.
In this short paper, we examine the competition economics of “free” — how competition works in affected markets, what role competition policy might have and what approach it should take, and finally how competitors and prospective competitors can compete with “free.” Our bottom line: While free service has undeniable appeal for consumers, it can also impede competition, and especially entry. Competition authorities should be correspondingly attuned to allegations arising out of “free” service and should, at least, enforce existing doctrines strictly in affected markets.
Class Action Settlement — Refunds for Certain American Airlines Checked Bag Fees
Bazerman v. American Airlines, Inc. is a consumer class action pending in the District of Massachusetts. The plaintiff alleges that American Airlines has charged passengers to check bags that should have been free under American’s contract with customers. On June 22, 2018, U.S. District Court Judge William Young preliminarily approved a settlement. If granted final approval, eligible American Airlines passengers who submit a valid, timely claim will receive either a 75% refund or a full refund plus interest for incorrectly charged bag fees. Awards will range from $18.75 to $200 plus interest per bag. Class members must submit a claim by November 26, 2018 to receive a refund. The final approval hearing is set for February 21, 2019. (Note that these dates were extended by court order.)
The Court has authorized notice to be sent to class members. Class members should receive an email on Saturday, July 21, 2018, with the subject line: “Notice of Class Action Settlement – Refunds for American Airlines Checked Bag Fees.” If you’ve flown on American in the past six years and get this email, you should read it since you may be eligible for a refund. The email includes a class notice and claim form. The case documents (including Claim Form and Class Notice) are available at the settlement website, aabaggagefeesettlement.com.
If you have any questions, you may contact Class Counsel: Linda M. Dardarian, Byron Goldstein, and Raymond Wendell at AAcheckedbags@gbdhlegal.com or 1-866-762-8575, or Benjamin Edelman.
Updated Research on Discrimination at Airbnb with Jessica Min
In December 2015, Mike Luca, Dan Svirsky, and I posted the results of an experiment in which we created test Airbnb guest accounts, some with black names and some with white names, finding that the latter got favorable responses from hosts more often than the latter. Black users widely reported similar problems — Twitter #AirbnbWhileBlack — and in September 2016 Airbnb responded with a report discussing the problem and Airbnb’s plans for response.
I promptly posted a critique of Airbnb’s plans, broadly arguing that Airbnb’s commitments were minimal and that the company had ignored a simpler and more effective alternative. But ultimately the proof is in the results. Do minority guests still have trouble booking rooms at Airbnb? Available evidence indicates that they do.
Below is a table based on work of Jessica Min (Harvard College ’18) as part of her undergraduate thesis measuring discrimination against Muslim guests. The table summarizes eight studies, with data collected as early as July 2015 (mine) and as late as November-December 2017 (hers), the latter postdating Airbnb’s report by more than a year. Each study finds minority users at a disadvantage, statistically significantly so.
| Author/title/place and year of publication | Dates of data collection | Sample size | Summary of findings | Noteworthy secondary findings |
| Edelman, Benjamin, Michael Luca, and Dan Svirsky.
Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment. American Economic Journal: Applied Economics, 2017. |
July 2015 | 6,400 listings across five U.S. cities | Guests with distinctively black names received positive responses 42% of the time, compared to 50% for white guests.
|
Results were persistent across type of hosts (i.e. race, gender, experience level, type and neighborhood of listing).
Discrimination was concentrated among hosts with no African American guests in their review history. Hosts lost $65 to $100 of revenue for each black guest rejected. |
| Ameri, Mason, Sean Rogers, Lisa Schur, and Douglas Kruse.
No Room At The Inn? Disability Access in The New Sharing Economy. Working paper, 2017. |
June to November 2016 | 3,847 listings across 48 U.S. states | Guests with disabilities received positive responses less often. Hosts preapproved 75% of guests without disabilities, but only 61% of guests with dwarfism, 50% of blind guests, 43% of guests with cerebral palsy, and 25% of guests with spinal cord injury. | Airbnb’s non-discrimination policy, which took effect midway through data collection, did not have a significant effect on host responses to guests with disabilities. |
| Ahuja, Rishi and Ronan C. Lyons.
The Silent Treatment: LGBT Discrimination in the Sharing Economy. Working paper, 2017. |
June – July 2016 | 794 listings in Dublin, Ireland | Guests in male same-sex relationships were approximately 25 percentage points less likely to be accepted than identical guests in heterosexual relationships or female same-sex relationships. | The difference was driven by non-responses from hosts, not outright rejection.
The difference persisted across a variety of host and location characteristics. Male hosts and hosts with many listings were less likely to discriminate. |
| Cui, Ruomeng and Li, Jun and Zhang, Dennis J.
Working paper, 2016. |
Three audit studies. Summarizing the results as to guests without prior reviews: | |||
| September 2016 | 598 listings in Chicago, Boston, and Seattle | Guests with distinctively black names received positive responses 29% of the time, compared to 48% for white guests. | The authors assess hosts’ apparent reasons for discrimination, including whether hosts were engaged in statistical discrimination and whether reviews reduce the problem of discrimination. | |
| October – November 2016 | 250 listings in Boston and Seattle | Guests with distinctively black names received positive responses 41% of the time, compared to 63% for white guests. | ||
| July – August 2017 | 660 listings in Boston, Seattle, and Austin | Guests with distinctively black names received positive responses 42% of the time, compared to 53% for white guests. | ||
| Sveriges Radio’s Kaliber show, Sweden | October 2016 | 200 listings in Stockholm, Gothenburg, and Malmö | For hosts who said no to guests with black-sounding names, a second inquiry was then sent from a guest with a white-sounding name. Of hosts who had previously declined the black guest, many told the white guest that the listing was available. | Methodology follows longstanding testing for discrimination in US housing markets, sending a white applicant after a landlord declines a black prospective tenant. |
| Min, Jessica
No Room for Muhammad: Evidence of Discrimination from a Field Experiment over Airbnb in Australia. Undergraduate honors thesis, 2018. |
November – December 2017 | 813 listings in Sydney, Australia | Guests with distinctively Middle Eastern names received positive responses 13.5 percentage points less often, compared to identical guests with white-sounding names. | Results were persistent across all hosts, including hosts with shared properties and those with expensive listings.
Discrimination was most prominent for hosts with highly sought-after listings, where hosts can reject disfavored guests with confidence of finding replacements. |
My bottom line remains as I remarked in fall 2016: Airbnb’s proposed responses are unlikely to solve the problem and indeed have not done so. Truly fixing discrimination at Airbnb will require more far-reaching efforts, likely including preventing hosts from seeing guests’ faces before a booking is confirmed. Anything less is just distraction and demonstrably insufficient to solve this important, and long-festering, problem.
On Uber Selling Southeast Asia Business to Grab
Uber and Grab provide much the same service — ride-hailing that lets casual drivers, using their personal cars, transport passengers in on-demand service. In the markets where both operate, in Southeast Asia, they’ve been locked in a price war. Grab has local expertise and, in many countries, useful product customizations to suit local needs. Uber is an international powerhouse. It hasn’t been obvious which would win, and both firms have spent freely to attract drivers and passengers. Today the companies announced that Uber would sell its Southeast Asia assets to Grab.
It’s clear why both companies like the deal. They’d end costly competition with each other — saving billions on incentives to both drivers and passengers. Diving the world market — with Grab dominating Southeast Asia, Didi in China (per a 2016 transaction), and Uber most everywhere else — they can improve their income statements and begin to profit.
But for every dollar of benefit to Grab and Uber, there is corresponding cost to drivers and passengers. Free of competition from each other, neither company will see a need to pay bonuses to drivers who complete a target number of rides at target quality. Nor will they see a reason to offer discounts to passengers who direct their business to the one company rather than the other. And with drivers and passengers increasingly dependent on a single intermediary to connect them, Grab will be able to charge a higher markup — a price increase that harms both sides.
Some will protest that aggrieved passengers can take taxis, buses, bikes, or private cars, or just walk. Indeed. But there’s always a substitute. If Coca Cola and Pepsi merged, customers could still drink water. Antitrust law is, prudently, not so narrow-minded. The relevant question under law is the SSNIP test, assessing customer response to a small but significant and non-transitory increase in price. Facing such an increase, would passengers truly go elsewhere? In my travels in Southeast Asia, I’ve often found Grab and Uber to be 30% cheaper than taxis. There’s plenty of room for them to increase price without me, and other passengers similarly situated, finding it profitable to switch to taxis. That means Grab and Uber are, under the relevant test, in a separate market from taxis. Then they can’t seek shelter from having (maybe) a small market share relative to taxis and other forms of transportation.
Separately, it’s not apparent what alternative is available to Grab and Uber drivers. Facing higher fees from Uber, what exactly are they supposed to do? They certainly can’t become taxi drivers (requiring special licenses, special vehicles, and more). There’s no obvious easy alternative for them. For drivers, ride-hailing is plainly distinct from other forms of transportation and other work.
The short of it is, ride-hailing is different from alternatives. Grab, Uber, passengers, and regulators know this instinctively, and extended economic and legal analysis will confirm it. With Grab and Uber in a distinct market, they jointly have near-complete market share in the markets where both operate. Under antitrust law, they should not and cannot be permitted to merge. No one would seriously contemplate a merger of Lyft and Uber in the US, and sophisticated competition regulators in Southeast Asia should be equally strict.
Additional concerns arise from the special role of SoftBank, the Japanese investment firm that held shares in both Grab and Uber. Owning portions of both companies, SoftBank cared little which one prevailed in the markets where both operated. But more than that, SoftBank specifically sought to broker peace between Grab and Uber: When investing in Uber in December 2017, SoftBank sought a discount exactly because it could influence Uber’s competitors across Asia. Such overlapping ownership — intended to reduce competition — raises particularly clear concerns under competition law. A Grab spokesman tried to allay these concerns by claiming the transaction was “a very independent decision by both companies [Grab and Uber]” — yet in the next sentence noted that Masa [SoftBank CEO Masayoshi Son] was highly supportive of the” transaction (emphasis added).
The Grab-Uber transaction follows Uber’s summer 2016 agreement to cede China to Didi, which led that firm to an unchallenged position in that market. News reports indicate higher prices and inferior service after the Didi-Uber transaction — the same results likely to arise in the Southeast Asia markets where Uber and Grab propose to combine.