Catching Flies with Honey

Actions that are publicly appealing in the short term can have undesirable long-term consequences when they secure privileged access to those elected to oversee their conduct. Economists call such influential access, “regulatory capture.” Elected officials often try to block it by post-election directives, but skilled special interests know how to bypass such barriers. Because Citizens United has commoditized financial campaign support, regulatory capture now must be more nuanced to be effective. When a regulators’ front door is locked rear door access can be gained by voluntarily performing “good deeds” that favor their regulators. Our efficient infringer opposition’s ubiquitous incumbencies depend on continued congressional and White House tolerance of their digital dominance. They are skilled at regulatory capture. One means is to voluntarily deploy their vast resources by making “Godfather-like” offerings “that” cannot be refused.” There is nothing unlawful about such conduct. And as the old bromide says, “you can catch more flies with honey.” But because regulatory capture is ultimately corrosive to our rule of law, it’s inevitable capture must be carefully watched.

Readers will recall how Google rescued President Obama after ACA’s initial rollout was technically botched. Google “volunteers” quickly got ACA up-and-running. Readers also may remember that to ward off regulatory capture President Obama barred all lobbyists from joining his administration. So while anti-patent academics streamed in its front door, Google slipped in the back. That Google’s anti-patent bent fit snugly with their academic patent bashing theories was then evidenced by the president’s infamous Rose Garden press conference warning America about patent trolls. Once established, Google’s many lobbyists’ White House visits and administration Google appointments (including our present PTO Director) confirmed the government’s regulatory capture.

Efficient infringement is only one of the many informational efficiencies sought by our five largest corporations. (Apple, Alphabet (Google) Amazon, Facebook, and Microsoft). Patents are a form of commercially useful data. They want all original data. Apple and Microsoft use it to sweep users into proprietary ecosystems. Facebook and Google use it to sell advertising. Amazon uses to sell, well, everything else. None of this is unlawful. Indeed, we cannot do without much of what they do. But incumbencies maintained by data mastery of digital markets call for close congressional and administration watchfulness if only because of their overwhelming size and scalability. The purpose of patent reform is to disrupt disruptive innovation and such regulatory oversight. Patent reform’s success thus far reflects the regulatory capture of much of Congress and the White House. Now we have a new president and Congress. Big tech has no plans to release its captives. Watch for new good deeds aimed this time at President Trump and Leader McConnell.

Google’s Erik Schmidt bet on the wrong presidential horse. Facebook’s Thiel is well placed with Trump but is unpredictable. At present President Trump’s strongest poll support is the public’s perception that he is saving US jobs. Jobs are scarce in McConnell’s home state of Kentucky. US jobs have thus become a priority for both men. Trump’s principal concern at present is “this Russia thing.” Whether or not it deserves it’s coverage, at the very least it pulls focus from the Trump labor initiatives including job creation. In addition to being the spouse of Labor Secretary Chow Senator Mitch McConnell is also the gatekeeper to the Senate floor where votes on tax reform and healthcare (and indeed all else from post offices to impeachment). He will determine Trump’s success or failure. He is Trump’s most prominent DC ally. With Google on the outs, it is Apple’s turn to capture the regulators. Apple’s good deed is a “twofer” because it hits on both of big tech’s congressional and administrative sweet spots.

“Apple announced Friday that it was giving $200 million to Corning, which makes the tough, scratch-resistant face for every iPhone and iPad, to support the glass maker’s efforts to develop and build more sophisticated products at its factory in Harrodsburg, Ky.”

Like Google’s ACA rescue this honeyed regulatory capture has been executed perfectly. There is nothing wrong with Apple’s move. Measured by market cap, Apple is our nation’s largest firm. Corning is a very well respected company. What’s not to like? Be assured there will be a broad appreciation of Apple’s good deed by both leaders and their Secretary of Labor. But the privileged access back door has opened once again. The pro-patent advocate had better stay concerned.

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