Ontario’s ban on StubHub scalper bots will backfire on the consumer

Another day, another overreaching bill being passed in Ontario, Canada.

This time it’s a “consumer protection bill” proposed by the Ministry of Government and Consumer Services:

TORONTO — Ontario is set to introduce ticket sale legislation today that would ban so-called scalper bots and impose new rules on reselling tickets.

The Canadian Press has learned that it will be part of a larger consumer protection bill.

As always, a small issue turns into a giant “omnibus” bill giving the state more control over people’s lives.

An outcry from fans shut out of buying tickets to the Tragically Hip’s farewell tour last year prompted the Ontario government to take a look at the issue.

Scalper bots are designed to purchase online a large number of tickets for a concert, show, or other event, enabling the person running the software to sell those tickets at a profit, and it would be illegal to knowingly resell a ticket originally purchased by a bot.

Attorney General Yasir Naqvi, however, has previously admitted enforcing a ban on scalper bots, which are not unique to Ontario, would be difficult.

Of course it is extremely difficult to detect bots, and is why the bill should be discarded immediately.

There are an infinite number of ways to disguise a bot’s behavior and it’s origin, and given the government’s complete lack of technological savvy (they are not a technology firm after all), they will never be able to keep pace with improvements in bot development and be capable of enforcing the ban.

Online poker serves as a good example. Outside of banning online poker, which is just stripping away more freedoms from citizens as they did in the United States, bots will not go away.  This has led to a companies investing in research and development to battle against bots.

Ultimately, players retain the freedom to choose between multiple companies. They can choose from a large conglomerate like PokerStars, for example, that has a certain degree of bot detection in place, or opt for a smaller site where bots are not as rampant.

The free market in this case does the job of both allowing smaller companies to survive and for innovation to occur to solve the bot problem naturally.

Under the new legislation, Ministry of Government and Consumer Services agents would get the power to do inspections and lay fines against violators of the act. Companies themselves would also get the power to sue other companies for losses resulting from the use of bots.

And this is how a bill gets abused to reinforce monopolies and stifle innovation. Small companies and startups fear litigation due to unaffordable legal costs. The additional threat of fines from the government dissuades them more from entering the ticket re-selling domain. There will be less incentive to properly solve the bot problem through new technology.

Ticket resale site StubHub has previously said it supports efforts to tackle bots, but that it values the ability of users to buy and sell tickets at prices fans deem appropriate, free from regulatory interference. It told the government during consultations that more regulatory burdens on the ticket market will drive sales off mainstream platforms that provide certain protections.

The Canadian Press
Published Thursday, October 5, 2017 5:43AM EDT 

It wouldn’t surprise me if StubHub/TicketMaster worked with legislators on this bill to ensure their monopoly in the ticket resale market. They’re right in saying that regulatory interference will harm free market pricing of tickets. Ticketmaster doesn’t care about that, so long as the consumers are still paying them the fixed “convenience fee”.

What they miss, more importantly, is that the bill dissuades competition from new startups that may develop new technology to mitigate the bot problem.  They also miss the fact that StubHub will no longer need to invest anything into bot detection research and development since they can just rely on the guns of the state to do their dirty work.

Meanwhile, the government doesn’t mind expanding its power even more with everything else passed under the same “consumer protection bill”.

The rule of thumb applies: take any bill or act from the government and assume its effects are the opposite of its name. “Consumer protection bill” is not doing anything to protect consumers. Consumers are losing more of their freedoms and will be forfeiting more of their money to price-gouging monopolies.

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