Hello Barbie: First They Will Monitor You, Then They Will Discriminate Against You. Perfectly.

53 Pages Posted: 16 Mar 2015 Last revised: 27 Oct 2015

Irina D. Manta

Hofstra University - Maurice A. Deane School of Law

David S. Olson

Boston College Law School

Date Written: March 15, 2015

Abstract

This Article argues that the evolution of software — and the looming age of the “Internet of Things” — will allow manufacturers to make use of consumer monitoring technologies and restrictive software licenses to price discriminate more perfectly. First, the increasing communication between software and its producers gives more opportunities to monitor consumer behavior and characteristics. Second, attaching restrictive copyright licenses to software — and to goods containing software — enables producers to restrict use and resale of their products. By combining monitoring and restrictive licensing, producers will have increasingly better ability and opportunities to price discriminate among their consumers.

This Article explains that increased monitoring and price discrimination will not always happen because, in some cases, it will be against the manufacturers’ financial interests. But in other cases, manufacturers will indeed restrict use of products to facilitate price discrimination. The Article argues that the low marginal cost of distribution of software makes it more likely that price discrimination of software-enabled goods will be welfare enhancing and will result in cross- subsidization from rich to poor so that poor consumers can get more products for lower prices. The Article also demonstrates that the traditional policy reasons to disallow restraints on personal property do not apply to software-enabled devices. We conclude that rather than discouraging the use of restrictive software licenses, the law should adapt to better facilitate such licenses and the more perfect price discrimination that goes with them.

Keywords: copyright, price discrimination, internet of things, privacy, law and economics, cyberlaw, software licensing, antitrust

JEL Classification: K21, O34

Suggested Citation

Manta, Irina D. and Olson, David S., Hello Barbie: First They Will Monitor You, Then They Will Discriminate Against You. Perfectly. (March 15, 2015). 67 Alabama Law Review 135 (2015); Boston College Law School Legal Studies Research Paper No. 358. Available at SSRN: https://ssrn.com/abstract=2578815 or http://dx.doi.org/10.2139/ssrn.2578815

Irina D. Manta (Contact Author)

Hofstra University - Maurice A. Deane School of Law ( email )

121 Hofstra University
Hempstead, NY 11549
United States

David S. Olson

Boston College Law School ( email )

885 Centre Street
Newton, MA 02459-1163
United States
617-552-1378 (Phone)
617-552-4098 (Fax)

Paper statistics

Downloads
729
Rank
27,170
Abstract Views
11,053