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Answers to antitrust enforcement fails, but the litigation puts pressure on companies (MIcrosoft example)

Antitrust against Microsoft did not produce Bing and Google

Straterchy, March 12, 2019, https://stratechery.com/2019/where-warrens-wrong/, Where Warren’s Wrong,History: Microsoft and Google

Senator Warren opens the article by crediting the Microsoft antitrust case for the emergence of Google and Facebook: Twenty-five years ago, Facebook, Google, and Amazon didn’t exist. Now they are among the most valuable and well-known companies in the world. It’s a great story  —  but also one that highlights why the government must break up monopolies and promote competitive markets. In the 1990s, Microsoft  —  the tech giant of its time  — was trying to parlay its dominance in computer operating systems into dominance in the new area of web browsing. The federal government sued Microsoft for violating anti-monopoly laws and eventually reached a settlement. The government’s antitrust case against Microsoft helped clear a path for Internet companies like Google and Facebook to emerge. The story demonstrates why promoting competition is so important: it allows new, groundbreaking companies to grow and thrive — which pushes everyone in the marketplace to offer better products and services. Aren’t we all glad that now we have the option of using Google instead of being stuck with Bing? Start with the most obvious error: Bing was not even launched until 2009, eight years after the Microsoft case was settled. MSN Search, its predecessor, did launch in 1998, but with licensed search results from Inktomi and AltaVista; Microsoft didn’t launch its own web crawler until 2005 (these details will matter in a moment). What is more striking is that, in retrospect, the core piece of the government’s case doesn’t make any sense: of course a browser should be bundled with an operating system; a new computer without a browser would be practically useless (for one, how do you install a browser?). Moreover, Apple, not without merit, argues that restricting rendering engines to the one that ships with the OS (all browsers on iOS have no choice but to use the built-in rendering engine) has significant security benefits; this is debatable, but ultimately, most don’t care, simply because browsers are means to information, not ends. This, crucially, is something Microsoft did not understand in the 1990s; Microsoft’s operating system monopoly was predicated on owning the APIs with which applications were built, creating both lock-in and an ever expanding network effect. Unsurprisingly, Microsoft viewed the web through this exact same lens; that meant that Netscape was a threat because it was “middleware”, a potential means to run applications that were not locked into Windows. This is true, by the way — web apps work across operating systems and browsers — but this fact has absolutely nothing to do with the rise of Google. After all, when Google IPO’d in 2004, Internet Explorer had 95% market share; a browser was a means, not an end. The reality is that Google is an operating system of sorts, but the system is not a PC but rather the entire web; what ties things together are not APIs, but links. And, crucially, the business model that makes sense is not licensing, but advertising. This is a value chain that never even occurred to Microsoft, and why would it? The entire company was predicated on controlling operating systems for physical computers, controlling the APIs on top, and earning revenue through licensing; it was fabulously profitable, and as history shows again and again, being fabulously profitable with an existing value chain is the best way to not only fail to recognize a new market opportunity (Microsoft didn’t even have a web crawler until after Google’s IPO!), but to in fact be at a massive disadvantage when you finally do so. Look no further than mobile: Microsoft was not encumbered by antitrust when it came to their mobile ambitions, and yet they failed even more spectacularly there than they did online. In this case the company didn’t “miss” the opportunity — Windows Mobile came out back in 2000 — it was just stuck in a PC mindset when it came to product development, attached to its Windows licensing model when it came to monetization, and institutionally incapable of producing superior end user experiences thanks to the company’s traditional focus on platforms and compatibility. In short, to cite Microsoft as a reason for antitrust action against Google in particular is to get history completely wrong: Google would have emerged with or without antitrust action against Microsoft; if anything the real question is whether or not G

Turned – The enforcement actions against Microsoft undermined innovation at Microsoft

JamesPethoukis, March 14, 2019, https://ricochet.com/604242/the-microsoft-myth-we-shouldnt-assume-more-antitrust-will-give-us-more-tech-innovation/, The Microsoft Myth: We Shouldn’t Assume More Antitrust Will Give Us More Tech Innovation

Here’s what Steve Ballmer, Microsoft CEO from 2000 to 2014, said when he departed the company: “If there’s one thing I regret, there was a period in the early 2000s when we were so focused on what we had to do around Windows that we weren’t able to redeploy talent to the new device form factor called the phone.” And Vic Gundotra, a former head of Google’s mobile division, left Microsoft after it became clear “the company could not accept the reality that Windows was no longer the center of the universe,” according to “In The Plex: How Google Thinks, Works, and Shapes Our Lives,” a 2011 biography of the company by tech journalist Steven Levy.More on this from Stratechery tech analyst Ben Thompson: “In short, to cite Microsoft as a reason for antitrust action against Google in particular is to get history completely wrong: Google would have emerged with or without antitrust action against Microsoft; if anything the real question is whether or not Google’s emergence shows that the Microsoft lawsuit was a waste of time and money.” It’s also worth noting this analysis on Twitter by Andreessen Horowitz’s Benedict Evans on how regulators and other policymakers miss out on how markets and technology evolve when doing antitrust analysis: When a market is being created, people compete at doing the same thing better. Windows versus Mac. Office v Lotus. MySpace versus Facebook. Eventually, someone wins, and no-one else can get in. The market opportunity has closed. … Monopoly! … But then the winner is overtaken by something completely different that makes it irrelevant. PCs overtook mainframes. HTML/LAMP overtook Win32. IOS & Android overtook Windows. Google overtook Microsoft. … Tech anti-trust too often wants to insert a competitor to the winning monopolist, when it’s too late. Meanwhile, the monopolist is made irrelevant by something that that comes from totally outside the entire conversation and owes nothing to any anti-trust interventions. … None of this is to say regulation is a bad idea. It’s often very necessary. But historically that has not been where generational changes came from in tech.

Enforcement actions against Microsoft were useless and the actions themselves hurt the economy

02/21/2019Dominick Armentano, February 21, 2019, https://mises.org/library/antitrust-policy-both-harmful-and-useless, Antitrust Policy Is Both Harmful and Useless

The United States has had antitrust legislation at the federal and state level for more than 100 years. (The Sherman Antitrust Act [1890] and the Federal Trade Commission Act [1914] are the basic federal statutes.) The laws make illegal “every contract, combination … or conspiracy in restraint of trade” and any attempt to “monopolize” through merger or acquisition; in addition, “unfair … and deceptive practices” are also forbidden. Given this broad regulatory mandate, antitrust law is arguably this nation’s oldest ad hoc “industrial policy.” But whether any of this regulation has ever made economic sense is entirely debatable. Two recent legal developments illustrate the ongoing ambiguity of antitrust policy. The first involves the Supreme Court decision (Leegin Creative Leather Products v. PSKS, Inc., 2007) to allow manufacturers to set and enforce minimum prices, a practice knows as resale price maintenance. This decision breaks with decades of precedent and has been hailed generally as a step toward a more rational antitrust policy. The second development is the attempt by the Federal Trade Commission to block Whole Foods, Inc. from acquiring the Wild Oats company. But unlike the Supreme Court decision above, the FTC’s action has been widely ridiculed as an exercise in pure regulatory nonsense. Indeed, a district court judge recently denied a preliminary injunction against the merger. Actually, both public reactions miss the larger perspective. The Supreme Court did not really legitimize resale price maintenance; it simply ruled that the practice is no longer illegal per se but should be judged, instead, by a “rule of reason.” Firms that make such agreements are still subject to antitrust scrutiny and unreasonable attempt to restraint trade will unleash the trustbusters. In short, antitrust continues to regulate so-called vertical price agreements. And certainly the Federal Trade Commission’s prosecution of Whole Foods is nonsense but it is hardly new or even novel nonsense. The FTC has a long history of litigating silly cases (Ready to Eat Cereals, 1981; Staples, 1997) based on illogical theories of monopoly power and totally irrational definitions of the “relevant market.” Indeed, the FTC’s overall historical record of enforcement (especially in price-discrimination cases) is staggeringly anticonsumer. Yet despite the dismal enforcement experience, the antitrust establishment generally still supports vigorous enforcement of the antitrust laws. In antitrust, the more things change the more they seem to stay the same. MONOPOLY THEORY The economic logic for having any antitrust regulation is fairly straightforward. Economists have developed theories that imply that business firms could find it profitable to eliminate competition and “monopolize in restraint of trade” and, thus, misallocate economic resources. In plain English, antitrust exists to prevent firms from restricting market outputs and raising prices to consumers or retarding the pace of technological change. This is the so-called “public interest” rationale for antitrust. But are these theories correct? Is there really a free-market monopoly problem? Assuming that we can even define what we mean by a “free-market monopoly,” it would certainly follow that firms in a free market would have the freedom to attempt to monopolize (control the entire supply of) some raw material, product or service. But whether they would be able to restrict market output for any reasonable period of time is debatable. First, such attempts (mergers, buying up available supplies of raw materials) can be prohibitively expensive, even unprofitable, and therefore unlikely. Second, any other existing firm in the economy (or any new firm with access to capital) would be perfectly free to compete with any would-be monopolist, free to innovate, free to improve product, free to increase its own output, and consumers would be free to take advantage of that competition. Thus, any firm that attempted to monopolize and restrict market output could lose sales and profits to any other business organization that found it profitable to cater to consumers and compete. Any alleged free-market monopoly supplier that attempted to “restrain trade” would create profitable opportunities for competitors and potential competitors, and these profitable opportunities would exist as long as markets are legally open to new suppliers and consumers are legally free to support alternative suppliers. It is not obvious, therefore, that attempting to monopolize actually can restrain trade or misallocate economic resources. Following the approach above, a free-market monopoly supplier is not theoretically impossible. For example, if a firm were substantially more efficient than all of its competitors and potential competitors, that is, if it were able to produce some product or service at the lowest cost and charge the lowest price to consumers, it could become (temporarily, perhaps) the only supplier in some well-defined market. The firm’s “efficiency” would create a “barrier of entry” of sorts, totally benign of course, since the only competitors “excluded” would be relatively inefficient suppliers. Alternatively, consumers could always “monopolize” all of their choices for a specific product or service on only one company, making that company a momentary monopoly supplier. But it is difficult to understand what is economically problematic with any of this. Clearly this circumstance is not the devilish monopoly problem envisioned by critics of the free market since low costs, expanded outputs, lower prices, and free consumer choice are the beneficial attributes of an open market process; they clearly enhance, not harm, any reasonable definition of consumer welfare. So a free-market “monopoly” supplier is theoretically possible but not necessarily harmful and would not rationalize any antitrust regulation. CARTELS AND PREDATORY PRACTICES Free-market cartels are possible theoretically but they would be inherently unstable. Cartels, unlike a one-firm supplier, would require inter-firm cooperation and coordination in order to achieve any market-output restraint. But how is market output for each cartel member to be reduced? How are the reductions to be monitored? Won’t the firms attempt to cheat and won’t the cheating lead to larger outputs and lower prices? Indeed, won’t the higher cartel prices encourage new supply from outside the cartel, and won’t that lead to lower prices? In reality, free-market cartels (absent governmental support) have proved notoriously short lived and unsuccessful, especially when courts refuse to enforce cartel price-coordination agreements. Predatory practices are still another monopoly chimera. It is usually not rational for a dominant firm to attempt to eliminate all of its competitors through severe price-cutting since this practice is inherently expensive and uncertain, especially if the market is easily open to new supply. Even if a dominant firm were to succeed temporarily and eliminate some of its rivals, competitors would likely return when and if prices were increased to profitable levels. How, then, are dominant firms to profit from predation and how are consumers to be injured by price reductions? Lower prices, for whatever reason and for whatever length of time, are extremely proconsumer and are never to be regretted. Would critics of predation rather have dominant firms fix prices and not ever reduce them, or not respond to lower costs or the lower prices of rivals? Consumers, of course, can always decide whether they prefer the lower prices of the dominant firm or not. If they prefer lower prices, then they buy more from the dominant firm; if they don’t, then they continue to support the higher-priced rivals of the dominant firm. Either way, there is nothing whatever to be regretted about lower prices either initiated by (or matched by or undercut by) dominant firms. Again, no antitrust regulation is justified. GOVERNMENT AND MONOPOLY If we drop the strict free-market assumption, however, a real monopoly problem is easy to visualize. Government could license only one supplier (e.g., a taxi cab company) in some city market and restrict entry to all other suppliers; the market would then be monopolized by law. Or government could establish a legal monopoly in telecommunications, electricity generation, telephone service, first-class mail delivery, and in many other areas; indeed, government in the United States has historically done precisely this. And, curiously, these monopolies have always been legally immune from antitrust law! Clearly this is a monopoly problem since consumers, regardless of their preferences, would then legally be tied to only one supplier. In addition, would-be entrepreneurs with lower costs or with new products would legally be prohibited from offering those benefits to willing buyers. And with competition prohibited by law, the monopoly supplier would have few (if any) incentives to innovate, to expand output and to lower prices. But this monopoly problem ought never to be associated with “free markets” since its explicit source is the power of government to prohibit new supply. Removing all legal barriers to entry and competition (deregulation, correctly understood) would end this monopoly problem without antitrust intervention. ANTITRUST: SOME CLASSIC CASES If firms in free markets can really monopolize in restraint of trade, the empirical evidence should reside in the many classic antitrust cases brought over the last 100 years. Yet an examination of some of the most famous of these classic antitrust cases reveals that the firms indicted and (mostly) convicted were generally increasing market output, lowering market prices, and innovating. Microsoft (2001) Despite so-called regulatory reforms, this pernicious trend in antitrust enforcement has continued. The best and most recent example is, of course, US v. Microsoft (2001). The heart of the antitrust case brought by the Department of Justice and 19 state attorney generals in 1998 was that Microsoft’s decision to integrated its Web browser, Explorer, into its Windows 98 operating software system illegally excluded competitive browsers, such as rival Netscape’s Navigator, and evidenced an intent to “monopolize” in violation of the Sherman Act. Since Microsoft allegedly held a “monopoly” in operating systems and employed its monopoly power to exclude competitors unfairly, trial court judge Thomas Penfield Jackson, having agreed with the bulk of the government’s argument, found the company guilty of illegal monopolization and ordered the firm regulated and divested. On appeal, however, important parts of this decision, in particular the divestiture order, were overturned and the lower court judge rebuked. The government’s charges were always baseless. The plaintiffs first argued that Microsoft held a monopoly in operating systems (a near 90% market share) and that they had leveraged that market power into the browser market to crush Netscape. But the government’s market share numbers were grossly inaccurate. To arrive at a so-called monopoly market share, the trial court accepted a definition of the relevant market (“single user desktop PCs that use an Intel-compatible chip”) that conveniently excluded all of the computers and networking software made by Microsoft’s major rivals such as Apple, Sun, Novell, and a host of other companies. In addition, counting only licensed systems allowed Judge Jackson to exclude arbitrarily all of the operating systems sold at retail, those downloaded from the Web, and all “naked” computers shipped without any operating system installed at all. These factual errors narrowed severely the actual competitive market and simply turned Microsoft into the “monopolist” the government required for its antitrust violation. If market share is meaningful at all in antitrust analysis (extremely doubtful), Microsoft’s actual share of any realistic relevant market was less than 70% and not enough for any monopoly designation. But if Microsoft had no actual monopoly, then its battle with Netscape over the browser market takes on a totally different perspective. When Microsoft first integrated its browser into its operating system software, it was Netscape that held the bulk of the browser sales. It was Netscape that held the “dominant” market position in browsers and it was Microsoft that was attempting to better compete by improving the terms of exchange for PC consumers. Microsoft proceeded to fully integrate its browser and effectively reduce its price to zero and consumers responded favorably; Microsoft’s browser did more business and Netscape’s browser did less. Nor was the Netscape browser ever unfairly “foreclosed” or “excluded” from the market; PC users downloaded millions of copies of Netscape’s browser during the period of alleged exclusion by Microsoft. Thus, the entire government’s case was an attempt to regulate innovation and consumer choice at the behest of ambitious attorneys and disgruntled competitors. That Microsoft eventually emerged victorious in this particular case at the appellate level (after a decade of litigation some of which involved the FTC) does not mitigate the absolute folly of this persecution. CONCLUSIONS Antitrust theory and history are both a myth and a hoax. The laws were never intended to help consumers (Robert Bork’s protestations to the contrary) and their long historical track record is that they have not helped consumers. They have, instead, punished innovative and efficient business organizations while protecting less efficient competitors and every state-sanctioned monopoly. They have tended to make consumers poorer and the overall economy less efficient and they deserve to be repealed, not reformed. That the antitrust paradigm still can find support among a majority of economists, lawyers, and the public is a testament to intellectual laziness, to the power of special interest, and to decades of successful myth making.

Attempting to break-up requires a lot of litigation (Note: Also a DOJ trade-off link)

Jon Swartz, 6-11, 19, https://www.marketwatch.com/story/breaking-up-big-tech-is-a-big-task-2019-06-10, Four reasons why antitrust actions will likely fail to break up Big Tech

The likelihood of a Microsoft- or AT&T-like Sherman Act proceeding is highly remote,” Andrew Jay Schwartzman, an attorney with Georgetown’s Institute for Public Representation told MarketWatch in a phone interview, alluding to the Sherman Anti-Trust Act (1890), the first federal law that outlawed monopolistic business practices. Any endeavor to slice off pieces of the four tech titans or impose restrictions on how they do business is a Sisyphean task in terms of legal maneuvering, resources, and especially time, according to antitrust experts, former regulators and legal scholars. “Antitrust is a slow, messy remedy,” warns Adam Thierer, a senior research fellow at George Mason University’s Mercatus Center. “It can be a sledgehammer approach when what this situation requires is a scalpel.” How the heck would any of this apply to Facebook, Amazon, or Apple? How do you cleave off their units and divest them?” Thierer says.

Companies will react with a litigation tsunami

Jon Swartz, 6-11, 19, https://www.marketwatch.com/story/breaking-up-big-tech-is-a-big-task-2019-06-10, Four reasons why antitrust actions will likely fail to break up Big Tech

The sheer size and resources of the four companies under scrutiny — collectively, they employ over 900,000 people and rang up nearly $700 billion in sales last year — afford them the luxury of hiring an army of attorneys that dwarf the federal government, setting up a confrontation that could wend its way through court for years, according to Schwartzman. Which leads to the inevitable question: What is likely to happen, if anything? Efforts by Rep. Ro Khanna (D., Calif.), whose district covers Silicon Valley, and other Congressional members to regulate tech could prove to be the most likely outcome over the next few years. “What’s needed is a measured approach through legislation, not a bludgeoning of four companies that are so vital to the U.S. economy and its workforce,” Khanna told MarketWatch in a phone interview. “There needs to be give and take between Silicon Valley and the Beltway, not confrontation.” More: Silicon Valley congressman says, ‘It is embarrassing how technologically illiterate most members of Congress are’ For now, Facebook has faced the most scorn, although Alphabet has been fined billions of dollars in the past year by the European Union.

It will turn into a quagmire

Jon Swartz, 6-11, 19, https://www.marketwatch.com/story/breaking-up-big-tech-is-a-big-task-2019-06-10, Four reasons why antitrust actions will likely fail to break up Big Tech

The Justice Department’s antitrust lawsuit against AT&T, and its unsuccessful bid to break up Microsoft, took years to unfold and bled from one presidential administration to another. Indeed, whoever wins the White House in 2020 may be out of office before a potential case against one of the targeted four companies is decided or settled. A two-year FTC probe of Google for violating antitrust and anti-competition statutes in how it arranges its Web search results resulted in no action in 2013. Before that, uneventful government investigations of IBM Corp. IBM, +0.72%   and Microsoft took 13 and 11 years, respectively. The former was “referred to as the DoJ’s antitrust Vietnam, it was such a quagmire,” Thierer says What complicated those investigations, and is likely to undercut any new probe, is the speed with which the tech market moves. The IBM probe was focused on its dominance in mainframe computers even as the market quickly moved on to personal computers. Indeed, tech market leaders rise and fall, as in the cases of Myspace, Motorola, Nokia, and BlackBerry Ltd. BB, +3.66% .

Increasing the federal circuit court’s workload would hinder current courts ability to guarantee IP (intellectual property) protection

Kirk 06 – Michael K. Kirk, Executive Director of the American Intellectual Property Law Association, Chairman, Senate Judiciary Committee; United States Senate http://www.aipla.org/Advocacy%20Shared%20Documents/TES_2006-03-24_109C_ImmigrationBill-Specter-Kirk.pdf pg.1-2 KKC

We believe that such broadening of the Federal Circuit’s jurisdiction would seriously hinder the court’s ability to render high quality, timely decisions on patent appeals from district courts, and patent and trademark appeals from the U.S. Patent and Trademark Office. This runs directly counter to the present efforts of Congress to otherwise reform and improve this nation’s patent system. We take no position on other specific elements of the legislation or on the underlying need for immigration reform. Our concern focuses solely on the proposed shift in appellate jurisdiction, which we believe will do more harm than good. AIPLA is a national bar association whose approximately 16,000 members are primarily lawyers in private and corporate practice, in government service, and in the academic community. AIPLA represents a wide and diverse spectrum of individuals, companies, and institutions involved directly or indirectly in the practice of patent, trademark, copyright, and unfair competition law, as well as other fields of law affecting intellectual property. Our members represent both owners and users of intellectual property, and have a keen interest in an efficient federal judicial system. The Court of Appeals for the Federal Circuit was established in 1982 after more than a decade of deliberate study and Congressional consideration. The Hruska Commission (chaired by Senator Roman Hruska) conducted a study lasting nearly three years before recommending to Congress the establishment of a national appeals court to consider patent cases. It took two Administrations, several Congresses, and a number of hearings in both the House and Senate before legislation establishing the Federal Circuit was finally enacted. Over the past 26 years the Court, through its thoughtful and deliberate opinions, has made great progress in providing stability and consistency in the patent law. Removing immigration appeals from the general jurisdiction of the twelve regional Courts of Appeals and centralizing it in the Federal Circuit is an enormous change. Leaving aside the impact, both pro and con, on the affected litigants, the Federal Circuit is simply not equipped to undertake the more than 12,000 requests for review of deportation orders that twelve courts now share each year. The Federal Circuit currently has no expertise or experience in the field of immigration law. While the legislation envisions adding three judges to the twelve currently on the Court, we have serious concerns whether this increase will be adequate. Judge Posner has calculated that, even with the three additional judges proposed in the legislation, each of the fifteen Federal Circuit judges would be responsible for about 820 immigration cases per year, on the average—an incredibly large number that we believe will have a significant adverse impact on the remainder of the court’s docket. It seems inevitable that the proposed legislation will have a dramatic, negative impact on Federal Circuit decisions in patent cases and appeals from the USPTO. Such an increased caseload will necessarily delay decisions in these appeals, which in turn will cause uncertainty over patent and trademark rights and interfere with business investments in technological innovation. Beyond mere delay, the Federal Circuit’s ability to issue consistent, predictable opinions in patent cases will be complicated by an increase in the number of judges. If conflicts in panel opinions increase, the inefficient and often contentious en banc process will have to be used more often, further adding to the overall burden on the court. Business can effectively deal with decisions, positive or negative, but it cannot deal with protracted uncertainty caused by inconsistent opinions or long delays in judicial review. Demand for reform of the patent system has been the topic of considerable public debate of late. Congress held extensive hearings on this subject last year, and more are scheduled in coming weeks. The House is currently considering legislation that would dramatically change the patent statute, and we understand that patent reform legislation may soon be introduced in the Senate as well. It would be unfortunate for Congress to inadvertently compound the challenges facing the patent system by weakening the ability of the Federal Circuit to give timely and consistent consideration to patent cases. We appreciate your attention to this matter and urge you to reconsider this proposed expansion of Federal Circuit Court jurisdiction.

IP innovation and IPR protection is key to the economy

Bird, American Legislative Exchange Council, 12 – Tom Bird October 8, 2012, an intern for the International Relations Task Force. “Intellectual Property: The Innovation Economy’s Engine for Growth and Job Creation” http://www.americanlegislator.org/intellectual-property-the-innovation-economys-engine-for-growth-and-job-creation/ KKC

Intellectual Property (IP) is work or an invention resulting from creativity and innovation and can be used to define anything from a piece of art to the latest technological gadget. Intellectual property rights (IPR) have always been part of the American legal landscape and were so important to the Framers that they enshrined them in Article I, Section 8, Clause 8 of our Constitution. To promote the progress of science and useful Arts, by securing for limited Times to Authors and Inventors the Exclusive Right to their Respective Writings and Discoveries The Framers realized that protecting IPR was vital to encourage invention, creativity, and innovation, and the U.S. has relied on ingenuity to drive our economy ever since! According to the World Intellectual Property Organization over one fifth of all patents issued in 2006 were granted by the U.S. Patent Office, and the U.S. Chamber’s Global Intellectual Property Center (GIPC) found that over one-third of U.S. gross output originated from IP-centered companies and accounted for 74% of U.S. exports. Twenty-first century America is as cognizant as the Framers of the importance of protecting IP and has enacted laws making our nation second to none in protecting IPR. IP also creates high-paying American jobs! A recent GIPC study “IP Creates Jobs for America” has a state by state breakdown of what IP means in your state with state-specific statistics illustrating just how significant IP’s effects are from coast to coast. The study results indicate that wages in IP-intensive industries are 30% higher than similar jobs in non-IP industries. These jobs are found in numerous business sectors, including fashion, automotive, medical, energy, entertainment, electronics, biotech, consumer goods, and green technologies and account for 55 million U.S. jobs and over 45% of total employment. Globalization presents a number of challenges to IPR including the counterfeiting and piracy of American IP. In 2011, Business Software Alliance estimated that over half of the world’s computer users have used pirated software. Additionally, some national governments and large numbers of non-state actors do not enforce IP protections or do not have them at all. While testifying to the Senate Finance Committee last March US Trade Representative, Ambassador Ron Kirk observed that over 90% of Chinese government software is pirated. Inside ALEC underscores the importance of trade frameworks with strong IP provisions. Recognizing this threat to our nation’s economy, ALEC’s International Relations Task Force has a body of policy calling for the protection of IPR. We support the negotiation of high standard trade agreements with strong IP provisions; understand the threat that rogue internet sites pose to consumer health and safety as well as IP; and recognize the roles that all stakeholders including government at all levels, NGOs and the private sector can play in IPR protection. Some of these ideas are explored in Inside ALEC’s “Theft is Not a Free Market Principle” and “America’s Economic Freedom Depends on Protecting Our Intellectual Property.” Innovation drives our economy and the protection of the IP underpinning innovation is the key to spurring economic growth nationally and, of course, in the states. In order to reap IP’s benefits we must protect IPR.

Economic collapse causes nuclear war

Tønnesson 15 — (Stein Tønnesson, Leader of programme on East Asian peace @ Uppsala University, “Deterrence, interdependence and Sino–US peace,” International Area Studies Review, 18:3, p.297-311, http://journals.sagepub.com/doi/full/10.1177/2233865915596660, accessed 7-13-2017, SagePub, JSO)

Several recent works on China and Sino–US relations have made substantial contributions to the∂ current understanding of how and under what circumstances a combination of nuclear deterrence∂ and economic interdependence may reduce the risk of war between major powers. At least four∂ conclusions can be drawn from the review above: first, those who say that interdependence may∂ both inhibit and drive conflict are right. Interdependence raises the cost of conflict for all sides but∂ asymmetrical or unbalanced dependencies and negative trade expectations may generate tensions∂ leading to trade wars among inter-dependent states that in turn increase the risk of military conflict∂ (Copeland, 2015: 1, 14, 437; Roach, 2014). The risk may increase if one of the interdependent∂ countries is governed by an inward-looking socio-economic coalition (Solingen, 2015); second,∂ the risk of war between China and the US should not just be analysed bilaterally but include their∂ allies and partners. Third party countries could drag China or the US into confrontation; third, in∂ this context it is of some comfort that the three main economic powers in Northeast Asia (China,∂ Japan and South Korea) are all deeply integrated economically through production networks within∂ a global system of trade and finance (Ravenhill, 2014; Yoshimatsu, 2014: 576); and fourth, decisions∂ for war and peace are taken by very few people, who act on the basis of their future expectations.∂ International relations theory must be supplemented by foreign policy analysis in order to∂ assess the value attributed by national decision-makers to economic development and their assessments∂ of risks and opportunities. If leaders on either side of the Atlantic begin to seriously fear or∂ anticipate their own nation’s decline then they may blame this on external dependence, appeal to∂ anti-foreign sentiments, contemplate the use of force to gain respect or credibility, adopt protectionist∂ policies, and ultimately refuse to be deterred by either nuclear arms or prospects of socioeconomic∂ calamities. Such a dangerous shift could happen abruptly, i.e. under the instigation of∂ actions by a third party – or against a third party. Yet as long as there is both nuclear deterrence and interdependence, the tensions in East Asia are∂ unlikely to escalate to war. As Chan (2013) says, all states in the region are aware that they cannot∂ count on support from either China or the US if they make provocative moves. The greatest risk is∂ not that a territorial dispute leads to war under present circumstances but that changes in the world∂ economy alter those circumstances in ways that render inter-state peace more precarious. If China∂ and the US fail to rebalance their financial and trading relations (Roach, 2014) then a trade war∂ could result, interrupting transnational production networks, provoking social distress, and exacerbating∂ nationalist emotions. This could have unforeseen consequences in the field of security, with∂ nuclear deterrence remaining the only factor to protect the world from Armageddon, and unreliably∂ so. Deterrence could lose its credibility: one of the two great powers might gamble that the other ∂ =yield in a cyber-war or conventional limited war, or third party countries might engage in conflict∂ with each other, with a view to obliging Washington or Beijing to intervene