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The IANA Transition Is Not Perfect, But Congress Should Approve It Anyway

In recent months, Sen. Ted Cruz (R-TX) has become the face of opposition to the U.S. government relinquishing its historic oversight of key technical functions of the Internet. This opposition will be on display today, as he holds a hearing to help Congress better understand the implications of such action. In some ways, Sen. Cruz’s opposition is justified—as ITIF has long argued, U.S. oversight of the Internet Corporation for Assigned Names and Numbers (ICANN) has been a crucial factor in its stability, and a transition away from U.S. oversight will create unique risks and challenges for Internet governance. But Sen. Cruz is still wrong to oppose the transition. Undoubtedly, the transition proposal is imperfect, but it has been vetted and approved by the global multistakeholder community. Therefore, any effort by the U.S. government to delay or derail the transition now would undermine the consensus developed by civil society and embolden other countries to intervene in the domain name system.

To understand today’s debate, a bit of historical perspective is necessary. In 1998, the Clinton administration announced plans to transition the management of the domain name system to the private

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Innovation Fact of the Week: EU Private Sector R&D Investment is 57% of U.S. Level

(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)

After controlling for GDP, businesses in the European Union were investing 57 percent as much in research and development (R&D) as their U.S. counterparts as of 2013. This should be of great concern to EU member countries since the bloc’s public investment in R&D was similar to that of the United States—just under 1 percent of GDP. Simply put, European businesses haven’t been doing enough to spur innovation in the region’s economy.

A successful innovation ecosystem requires robust investment from both public institutions and private industry. Bruegel, a Brussels-based economic policy think tank, has examined key measures of the region’s innovation capacity and found that the gap between the EU and United States reflects “a growing innovation-performance divide” between EU member states themselves. Bruegel finds that compared to EU’s innovation leaders (Denmark, Finland, Germany, and Sweden), other EU countries invest between 20 percent and 70 percent less in business R&D.

Read last week’s Innovation Fact of the Week

Photo Credit: Rock Cohen via 

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Why Europe’s Apple Decision is Misguided and What It Means for Ireland, Tech Companies, and the Future of Global Tax Reform

Last week, the European Commission ruled that Ireland hasn’t been taxing Apple enough and declared the company should pay back $14.5 billion more than Ireland thinks it owes. This underscores the degree to which European officials, having created a regulatory and economic environment that deters innovation and rapid growth, increasingly resent the competitive success of tech companies such as Apple, Amazon, Google, and Facebook. The large benefits these companies deliver to European consumers are seen not as welcome relief amidst an otherwise dreary economic picture, but as an indication of undue power that needs to be brought to heel. So an ongoing series of official investigations and regulatory actions has pried into not just tax practices, but also antitrust issues, privacy concerns, and business model restrictions.

Although the final ruling has not been published, European Competition Commissioner Margrethe Vestager’s decision almost certainly exceeds the Commission’s powers and provides clear evidence of this European animus toward U.S. companies. The decision is misguided and is going to have serious impact on Ireland’s economic competiveness, deter other innovative companies from expanding in Europe, and put into question the future of global tax reform.

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Ninth Circuit Throws Wrench into Jurisdictional Boundary Between FCC and FTC

To little fanfare, the Ninth Circuit Court of Appeals issued an opinion Monday morning in FTC v. AT&T Mobility. The case has important, if murky, implications for the future jurisdictional lines between the Federal Trade Commission (FTC) and Federal Communications Commission (FCC), opening some level of doubt as to which body will be responsible for protecting consumers and competition for a fairly large swath of the tech and telecom industries. While some reactions were overblown, just how far the fallout spreads is not clear. Regardless, the case warrants attention from policymakers on Capitol Hill, at the FCC, and elsewhere.

Back in 2014, the FTC brought an enforcement action against AT&T, suing the company for misleading customers about rate limiting or “throttling” of grandfathered unlimited data plans. AT&T defended itself by essentially saying, “Hey FTC, you don’t regulate us, the FCC regulates us,” pointing to what is called the “common carrier exemption” within section 5 of the FTC Act, which says that the FTC does not have jurisdiction over common carriers.

The question for the Ninth Circuit Court boiled down to whether the FTC common carrier exemption is “status-based” (triggered

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Innovation Fact of the Week: When India and Indonesia Adopted E-Procurement For Infrastructure Projects, Construction Quality Improved 16% on Average

(Ed. Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)

Developing countries often invest heavily in infrastructure as part of their economic development strategies. Contractor collusion, poorly qualified contractors, and corruption among public officials are often cited as factors that have hurt the quality of these projects. But India, Indonesia, and others have begun to address this problem by adopting e-procurement platforms, and as a result new roads and bridges are now of higher quality and being built in less time.

That is because e-procurement platforms improve transparency between government and industry while increasing competition between contractors. The platforms allow a government to centrally post requests for proposals on all of the projects it plans. Contractors can then bid on multiple projects and check who has won which ones, how much they bid, and the technical details of their proposal. This creates greater transparency and accountability along the entire contracting process.

In a recent article, a team of economists from University of Wisconsin-Madison, MIT, and Harvard estimate the impact that e-procurement platforms

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