Revenue Chokepoints

The chapter examines how payment providers (PayPal, Visa and MasterCard) and advertising intermediaries (Google, Yahoo and Microsoft) police websites selling or advertising counterfeit goods through non-legally binding agreements. These agreements essentially institute controversial provisions from the failed Stop Online Piracy Act. Payment and advertising intermediaries withdraw their services from websites selling counterfeit goods (termed ‘infringing websites’), thereby throttling the sites’ revenue. Major payment providers are especially powerful regulators as they can starve sites of revenue by terminating their payment services, which can be difficult to replace given the significant market share controlled by Visa, MasterCard, and PayPal. Macro-intermediaries’ latitude in designating certain content or behavior as ‘inappropriate’ for their platforms raises serious questions about unfair regulatory behavior that may inadvertently – or, more troublingly, deliberating – target lawfully operating sites. The chapter’s case studies examine a U.S. payment-termination program and programs (one in the U.S. and the other in the U.K.) to terminate digital advertising services to infringing sites.