MAX PLANCK INSTITUTE FOR INNOVATION & COMPETITION
RESEARCH PAPER SERIES

"Data-Driven Economy and Artificial Intelligence: Emerging Competition Law Issues" Free Download
Max Planck Institute for Innovation & Competition Research Paper No. 16-08

GINTARE SURBLYTE, Max Planck Institute for Innovation and Competition
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Artificial Intelligence (AI), although it is not an entirely new phenomenon, has been developing more intensively relatively recently. AI is based on artificial neural networks (ANNs), which are modelled upon the architecture of human brains. Beside several ethical issues, such as whether “artificial brains? can and should be created in the first place, a number of legal questions emerge. One of the most urgent issues to be analyzed as regards AI is whether there is a need for a regulatory intervention. It is probably fair to say that AI is currently in a shape of a cocoon. In an academic legal research AI is still pretty much “terra incognita?. However, although there is no clear and visible AI market failure (yet), it may be worthwhile analyzing what the status quo of the markets in the digital economy is with a perspective view of the AI markets of the future. After all, AI is featured by the systems that can autonomously learn and improve (machine learning). Such self-learning capability of the machines is based on the technique called “deep learning?. The latter is fed by data. In this regard, it may well be that the purpose of current data collection and processing is related to conquering future markets for AI, so that a “snapshot? analysis of the issues related to current data-driven markets would show only one side of the coin of the market dynamics. The latter insight has to be borne in mind by both regulators and competition authorities. It is in this context that it has to be analyzed whether or what type of protection is needed for (non-personal) data and what is the optimal scope of protection of “deep learning? algorithms. After all, a current “open source? strategy of the biggest market players may be attractive from a short-run perspective, but may possibly raise competition law concerns in a long run. If current processes in the markets feature competition for developing future systems of AI, the question of (setting) standards and interoperability may turn out to be mostly important for future competition.

"Does a Local Bias Exist in Equity Crowdfunding? The Impact of Investor Types and Portal Design" Free Download
Max Planck Institute for Innovation & Competition Research Paper No. 16-07

LARS HORNUF, University of Trier
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MATTHIAS SCHMITT, Max Planck Institute for Innovation and Competition
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We use hand-collected data of 20,460 investment decisions and two distinct portals to analyze whether investors in equity crowdfunding direct their investments and portfolios to local firms. The results suggest that investors exhibit a local bias, even when controlling for family and friends. In addition to the regular crowd, our sample includes angel investors who invest considerable amounts and exhibit a larger local bias. By contrast, well-diversified investors are less likely to suffer from this behavioral anomaly. The data further show that portal design is important for attracting investors more prone to having a local bias. Finally, firms engaging in equity crowdfunding overcome funding barriers by attracting investors at all distances. These findings corroborate regulation targeted to specific investor groups, advise managers of equity crowdfunding portals about their business model, and inform individual investors of their biases.

"Collaborative Standardization and Disruptive Innovation: The Case of Wireless Telecommunication Standards" Free Download
Max Planck Institute for Innovation & Competition Research Paper No. 16-06

HARIS TSILIKAS, Max Planck Institute for Innovation and Competition
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Collaborative standardization, an efficient and inclusive form of organised innovation under the auspices of standard setting organisations (SSOs), has demonstrated significant technological achievements in the field of wireless telecommunications. At the core of collaborative standardization is a working balance of interests and incentives of all stakeholders involved, i.e. contributors of technology and users of standards, epitomised by licensing on FRAND terms. Standardization contributes to significant gains in consumer welfare, in the form of lower prices, more innovation and more consumer choice and convenience. At the same time, standardization fosters competitive markets, upstream and downstream. However, its character as a process of disruptive innovation is widely disregarded; its contribution to the process of creative destruction and its spill-overs to remote sectors of the economy are ignored. Competition policy and enforcement could play a meaningful and beneficial role only insofar as they are firmly based on a realistic view of standardization, its economic significance and its impact to innovation and growth.

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About this eJournal

The Max Planck Institute for Innovation and Competition Research Paper Series is a source for research papers authored by the Max Planck Institute for Innovation and Competition academic staff (Eds.: Prof. Josef Drexl, Dir., Prof. Dietmar Harhoff, Exec. Dir., Prof. Reto M. Hilty, Dir.). Papers cover topics on intellectual property law (copyright, patent, trademark law), competition law (law of unfair competition, antitrust law), innovation research and entrepreneurship. To access all the papers in this series please use the following URL: http://www.ssrn.com/link/Max-Planck-Intellectual-RES.html

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Directors

LAW RESEARCH CENTERS PAPERS

BERNARD S. BLACK
Northwestern University - Pritzker School of Law, Northwestern University - Kellogg School of Management, European Corporate Governance Institute (ECGI)
Email: bblack@northwestern.edu

RONALD J. GILSON
Stanford Law School, Columbia Law School, European Corporate Governance Institute (ECGI)
Email: rgilson@leland.stanford.edu

Please contact us at the above addresses with your comments, questions or suggestions for LSN-RES.