Coyote Blog

Step 1:  Large, high-profile company has business practice that ticks lots of people off -- e.g. Facebook slammed for selling user data to Cambridge Analytica

Step 2:  Regulation results -- e.g. European GDPR (though it predates the most recent Facebook snafu, it was triggered by similar outrages in the past we have forgotten by now so I use the more recent example)

Step 3:  Large, high-profile companies that triggered the regulation by their actions in the first place are the major beneficiaries (because they have the scale and power to comply the easiest).

GDPR, the European Union’s new privacy law, is drawing advertising money toward Google’s online-ad services and away from competitors that are straining to show they’re complying with the sweeping regulation.

The reason: the Alphabet Inc. ad giant is gathering individuals’ consent for targeted advertising at far higher rates than many competing online-ad services, early data show. That means the new law, the General Data Protection Regulation, is reinforcing—at least initially—the strength of the biggest online-ad players, led by Google and Facebook Inc.

This is utterly predictable, so much so that many folks were predicting exactly this outcome months ago.

My "favorite" example of this phenomenon is toy regulation that was triggered a decade ago by a massive scandal and subsequent recall by toy giant Mattel of toys with lead paint sourced from China.

Remember the sloppily written "for the children" toy testing law that went into effect last year? The Consumer Product Safety Improvement Act (CPSIA) requires third-party testing of nearly every object intended for a child's use, and was passed in response to several toy recalls in 2007 for lead and other chemicals. Six of those recalls were on toys made by Mattel, or its subsidiary Fisher Price.

Small toymakers were blindsided by the expensive requirement, which made no exception for small domestic companies working with materials that posed no threat. Makers of books, jewelry, and clothes for kids were also caught in the net. Enforcement of the law was delayed by a year—that grace period ended last week—and many particular exceptions have been carved out, but despite an outcry, there has been no wholesale re-evaluation of the law. Once might think that large toy manufacturers would have made common cause with the little guys begging for mercy. After all, Mattel also stood to gain if the law was repealed, right?

Turns out, when Mattel got lemons, it decided to make lead-tainted lemonade (leadonade?). As luck would have it, Mattel already operates several of its own toy testing labs, including those in Mexico, China, Malaysia, Indonesia and California.

The million bucks was well spent, as Mattel gained approval late last week to test its own toys in the sites listed above—just as the window for delayed enforcement closed.

Instead of winding up hurting, Mattel now has a cost advantage on mandatory testing, and a handy new government-sponsored barrier to entry for its competitors.

Kevin Drum says:

The Consumer Product Safety Improvement Act makes it illegal to sell toys that haven't been tested for lead content.  In general, I think that's a perfectly fine idea.

He can't understand, though, why its effects seem so perverse and Draconian when its core is such a "perfectly fine idea."  It is amazing to me that the law of unintended consequences is so hard even for seasoned political observers to grasp.

A sensible restriction might be that a child cannot by any reasonable use of the product ingest more than X concentration of lead.  But of course that is not what the government does.  The government requires that every toy undergo expensive testing and batch tracking (almost like that of an aircraft part).  This is not by any means the same as simply requiring products to limit lead exposure.  It is a one-size-fits-all regulation of process, rather than true safety.  It imposes huge testing and tracking expenses on products that can't possibly have any lead in them.

And, like many laws of this kind, it imposes a huge penalty on small competitors and new entrants and rewards larger toy makers who both have the scale to pay for the testing and the political clout to shape the law in their favor.  In fact, the big winner from the legislation has actually been Matel, the company whose recalls actually led to the law in the first place.

The Consumer Product Safety Improvement Act (CPSIA) requires third-party testing of nearly every object intended for a child's use, and was passed in response to several toy recalls in 2007 for lead and other chemicals. Six of those recalls were on toys made by Mattel, or its subsidiary Fisher Price.

Small toymakers were blindsided by the expensive requirement, which made no exception for small domestic companies working with materials that posed no threat.

"¦

So while most small toymakers had no idea this law was coming down the pike until it was too late, Mattel spent $1 million lobbying for a little provision to be included in the CPSIA permitting companies to test their own toys in "firewalled" labs that have won Consumer Product Safety Commission approval.

The million bucks was well spent, as Mattel gained approval late last week to test its own toys in the sites listed above"”just as the window for delayed enforcement closed.

Instead of winding up hurting, Mattel now has a cost advantage on mandatory testing, and a handy new government-sponsored barrier to entry for its competitors.

Update: Brad Warbiany has similar thoughts.

Sorry Mac folks, but as a guy who builds his own PC's, I am rolling on the floor laughing with Charlie Booker (via Market Power)

I hate Macs. I have always hated Macs. I hate people who use Macs. I
even hate people who don't use Macs but sometimes wish they did. Macs
are glorified Fisher-Price activity centres for adults; computers for
scaredy cats too nervous to learn how proper computers work; computers
for people who earnestly believe in feng shui.

PCs are the
ramshackle computers of the people. You can build your own from
scratch, then customise it into oblivion. Sometimes you have to slap it
to make it work properly, just like the Tardis (Doctor Who,
incidentally, would definitely use a PC). PCs have charm; Macs ooze
pretension. When I sit down to use a Mac, the first thing I think is,
"I hate Macs", and then I think, "Why has this rubbish aspirational
ornament only got one mouse button?" Losing that second mouse button
feels like losing a limb. If the ads were really honest, Webb would be
standing there with one arm, struggling to open a packet of peanuts
while Mitchell effortlessly tore his apart with both hands.

The two-button mouse thing has always been a mystery to me.  Clearly it is better.  Hell, I can't do without my two button mouse and its scroll-wheel.  Only a pathological desire not to copy anything from the PC world (copying from Xerox* is OK, I guess) has prevented Apple from adopting this no-brainer improvement.

* I may be one of the few people around who ever worked on the old Xerox workstations from which so much of the Mac was derived.  They had their issues, but they were unbelievable for their time.  I would put Xerox's failure to capitalize on this technology right up there with Amiga in the category of lost technological opportunities.  </dating myself>