A Vision of (Regulatory) Things to Come for Twitter?

by on March 13, 2011 · 2 comments

Twitter could be in for a world of potential pain. Regulatory pain, that is. The company’s announcement on Friday that it would soon be cracking down on the uses of its API by third parties is raising eyebrows in cyberspace and, if recent regulatory history is any indicator, this high-tech innovator could soon face some heat from regulatory advocates and public policy makers. If this thing goes down as I describe it below, it will be one hell of a fight that once again features warring conceptions of “Internet freedom” butting heads over the question of whether Twitter should be forced to share its API with rivals via some sort of “open access” regulatory regime or “API neutrality,” in particular. I’ll explore that possibility in this essay. First, a bit of background.

Understanding Forced Access Regulation

In the field of communications law, the dominant public policy fight of the past 15 years has been the battle over “open access” and “neutrality” regulation. Generally speaking, open access regulations demand that a company share its property (networks, systems, devices, or code) with rivals on terms established by law. Neutrality regulation is a variant of open access regulation, which also requires that systems be used in ways specified by law, but usually without the physical sharing requirements. Both forms of regulation derive from traditional common carriage principles / regulatory regimes. Critics of such regulation, which would most definitely include me, decry the inefficiencies associated with such “forced access” regimes, as we prefer to label them. Forced access regulation also raises certain constitutional issues related to First and Fifth Amendment rights of speech and property.

The Telecommunications Act of 1996 got this ball rolling with its mandated access provisions for local phone service. To make a very long and tortured history much shorter, this was a battle over how far law should go to force local telephone companies to share their phone lines with rivals at regulated rates. (Check this old piece of mine for a flavor of how well that turned out.) The advocates of open access regulation eventually turned their attention to cable systems and tried (but failed) to apply similar sharing / access rules there. Following those fights, which involved many nasty court skirmishes, the Net neutrality wars broke out. Net neutrality is a type of forced access regime for broadband platforms. Although Net neutrality regulation would not necessarily require carriers to share networks with rivals, it would at least require that platform providers play by special access and interconnection rules set by federal regulators.

Forced access provisions have been used in other contexts. We might think of the provisions we saw at work in the Microsoft antitrust case as a form of forced access regulation. Some may also recall the interconnection provisions that governed AOL’s instant messaging service following its merger with Time Warner (discussed more below). There are other examples, but I think you get the point.

New Frontiers for Forced Access Regulation?

All this history is well known to all readers of this blog and followers of communications policy. The reason I repeat it here is because this fight is now spreading to new sectors, platforms, and technologies.

For example, “search neutrality” is one of those new frontiers of the forced access fight. Some academics and regulatory advocates are pushing for rules that would govern how search results are shown or for special requirements on search providers to eliminate supposed “search bias” or to ensure search “fairness” of various sorts. Make sure to read James Grimmelmann’s terrific treatment of the concept from his chapter in TechFreedom’s book, The Next Digital Decade, and then also listen to this podcast featuring Danny Sullivan dissecting the issue.

Some critics also want to treat search engines (and Google in particular) as “essential facilities.” In another essay from The Next Digital Decade, Geoff Manne has done a good job pointing out why that’s such a misguided idea.

Similarly, some folks (such as danah boyd) are already calling for Facebook to be regulated as a public utility or essential facility. I responded in my essay, “Facebook Isn’t a “Utility” & You Certainly Shouldn’t Want it to Be Regulated As Such,” in which I pointed out that Facebook isn’t exactly a “life-essential” service that is gouging customers, who have plenty of other choices in social networking services.

Adverse Possession & API Neutrality for Twitter?

An equally interesting battle is now set to unfold for Twitter following Friday’s announced changes. To get a flavor for what might lie ahead for the company, we might begin by taking a second look at what Harvard University’s Jonathan Zittrain proposed in his 2008 book, The Future of the Internet and How to Stop It. In that book, Zittrain suggested that “API neutrality” might be needed to ensure fair access to certain cyber-services or digital platforms to ensure “generativity” was not imperiled. On pg. 181 of the book, Zittrain argued that:

“If there is a present worldwide threat to neutrality in the movement of bits, it comes not from restrictions on traditional Internet access that can be evaded using generative PCs, but from enhancements to traditional and emerging appliancized services that are not open to third-party tinkering.”

After engaging in some hand-wringing about “walled gardens” and “mediated experiences,” Zittrain went on to ask: “So when should we consider network neutrality-style mandates for appliancized systems?” He responds to his own question as follows:

“The answer lies in that subset of appliancized systems that seeks to gain the benefits of third-party contributions while reserving the right to exclude it later. … Those who offer open APIs on the Net in an attempt to harness the generative cycle ought to remain application-neutral after their efforts have succeeded, so all those who built on top of their interface can continue to do so on equal terms.” (p. 184)

This might be a fine generic principle, but Zittrain implies that this should be a legal standard to which online providers are held. At one point, he even alludes to the possibility of applying the common law principle of adverse possession more broadly in these contexts. He notes that adverse possession “dictates that people who openly occupy another’s private property without the owner’s explicit objection (or, for that matter, permission) can, after a lengthy period of time, come to legitimately acquire it.” But he doesn’t make it clear when it would be triggered as it pertains to digital platforms or APIs.

As I noted in the first of my many reviews of his book, there are many problems with the logic of API neutrality or the application of adverse possession in these contexts. Here’s my critique of the “API neutrality” notion (again, this is from 2008):

First, most developers who offer open APIs aren’t likely to close them later precisely because they don’t want to incur the wrath of “those who built on top of their interface.” But, second, for the sake of argument, let’s say they did want to abandoned previously open APIs and move to some sort of walled garden. So what? Isn’t that called marketplace experimentation? Are we really going to make that illegal? Finally, if they were so foolish as to engage in such games, it might be the best thing that ever happened to the market and consumers since it could encourage more entry and innovation as people seek out more open, pro-generative alternatives.

Consider this example: Now that Apple has opened to door to third-party iPhone development a bit with the SDK, does that mean that under Jonathan’s proposed paradigm we should treat the iPhone as the equivalent of commoditized common carriage device? That seems incredibly misguided to me. If Steve Jobs opens the development door just a little bit only to slam it shut a short time later, he will pay dearly for that mistake in the marketplace. For God’s sake, just spend a few minutes over on the Howard Forums or the PPC Geeks forum if you want to get a taste for the insane amount of tinkering going on out there in the mobile world right now on other systems. If Apple tries to roll back the clock, Microsoft and others will be all too happy to take their business by offering a wealth of devices that allow you to tinker to your heart’s content. We should let such experiments continue and let the future of the Internet be determined by market choices, not regulatory choices such as forced API neutrality.

I think the same critique would apply to efforts to impose API neutrality on Twitter. But before going into more detail, we need to first ask another question: Does Twitter possess “market power” such that their actions warrant antitrust or regulatory scrutiny at all?

But Isn’t Twitter a “Monopoly”?

Savvy readers will recall that influential Columbia Law School cyberlaw professor Tim Wu has already labeled Twitter a “monopoly,” although he has not yet bothered telling us what the relevant market is here. As I pointed out in an essay critiquing the way Prof. Wu flippantly assigns the label “monopoly” to just about any big tech provider, it’s very much unclear what to call the market Twitter serves. After all, the service is only a few years old and competes with many other forms of communication and information dissemination. For me, Twitter is a partial substitute for blogging, IMs, email, phone calls, and my RSS feed. Yet, like most others, I continue to use all those other technologies and those technologies continue to pressure Twitter to innovate.

Regardless, Prof. Wu is now in a position to put his ideas into action since he is currently serving a short tenure as special advisor to the Federal Trade Commission (FTC).  Might he act on his instincts, therefore, and advise the agency to take action against Twitter? It is unlikely that Prof Wu will be around the FTC long enough to help them bring any sort of formal action against Twitter, but he could help lay the groundwork for a creative interpretation of our nation’s antitrust laws such that Twitter somehow comes to be labeled a “monopoly” or what he refers to as an “information empire” in his new book The Master Switch. (See my last review of the book here.)

But I think he’d have a very hard time convincing the folks in the FTC’s Economics Bureau that Twitter is really worth worrying about or that it has anything approximating a “monopoly” in this emerging market, whatever that market is. But Wu has the ear of key people in government right now and could be lobbying for more expansive constructions of “information monopoly” since he made it very clear in his book that traditional antitrust analysis was not sufficient for information sectors. “[I]nformation industries… can never be properly understood as ‘normal’ industries,” Wu claimed, and even traditional forms of regulation, including antitrust, “are clearly inadequate for the regulation of information industries,” he says. (p. 303)

The Principle of the Matter

So here’s my take on the issue. Twitter is an amazing innovator. It created the space it now plays in and that market is still so new and unique that we don’t even have a name for it yet. In America, we should – and usually do – celebrate such entrepreneurialism. But sometimes certain Ivory Tower elites, regulatory-minded advocates, paternalistic policymakers, or even disgruntled competitors, claim that such innovators “owe” the rest of us something because they got rich or powerful thanks to that innovation. “Forced access” or “neutrality” mandates becomes a convenient regulatory prescription to achieve that end even though the motivating principle behind such regulation is, essentially, “what’s yours is mine.”

Indeed, from my perspective, the entire notion of forced access to the Twitter API could be dismissed by noting that, technically speaking, Twitter’s API is its private property and they should be free to do as they wish with it. That’s why I’m particularly concerned with Zittrain’s notion that we might consider applying adverse possession principles to any digital platform with enough users; at root, it’s a call to limit or even abolish property rights for digital platforms once they gain popularity or have a large number of users. As noted below, that has extremely dangerous ramifications for digital innovation but, more profoundly in my opinion, it is an unjust and unconstitutional taking of an innovator’s property. Of course, I understand that property rights aren’t exactly in vogue in America anymore and that this isn’t really a satisfying answer from the consumer’s perspective, so let’s continue on and consider a few other reasons why forced access regulation of Twitter via API neutrality would be a mistake.

First, we should not forget that Twitter has yet to find a way to turn its service into a serious revenue-generator. The most obvious reason for that is that Twitter (a) doesn’t charge anything for the service it provides and (b) doesn’t lock down its platform / API such that they might be able to earn a return on their investment by monetizing eyeballs via advertising on their own platform. That’s why Twitter’s announcement on Friday won’t come to a shock to anyone with a whiff of business sense in their heads. At some point, Twitter probably had to do something like this if they wanted to find a way to monetize and grow their business.

I can hear some out there screaming out “but it’s not fair!” as if there was cosmic sense of cyber-justice that has been betrayed because Twitter had the audacity to lock-down their platform. Of course, it is certainly true that some third-party app providers may suffer because of Twitter’s move here.  I’m not going to lie to you; if Twitter’s move to exert greater control over its API somehow destroys the beauty that is the TweetDeck desktop interface, I am going to be screaming mad myself! I do not think there has ever been a slicker, more user-friendly interface for any web service in Internet history than what TweetDeck offers consumers. For my money – which means nothing since TweetDeck is free! – TweetDeck is digital perfection defined. And, incidentally, I’d be happy to pay for it if they asked.

But despite my gushing love for it, let’s be clear about something: TweetDeck has no inherent right to exist. Indeed, TweetDeck owes its very existence to the fact that Twitter offered its API to the world on a completely free, unlicensed, unrestricted basis. The same holds true for all those other third-party platforms that depend upon the Twitter API. What Twitter giveth, Twitter can taketh away.

Stated differently, Twitter has thus far had a voluntary open access policy in place for the first few years of its existence but now wants to partially abandon that policy. This policy reversal will, no doubt, lead to claims that the company is acting like one of Wu’s proverbial “information empires” and that perhaps Zittrain’s API neutrality regime should be put in place as a remedy.  Indeed, Zittrain has already referred to it as a “bait-and-switch” and cited back to the provisions of his book that I outlined above. I believe that foreshadows what’s to come: more pressure from the Ivory Tower and then, potentially, from public policy makers that will first encourage and then push to force Twitter to grant access to its platform on terms set by others.  It’s a potential first step toward the forced commoditization of the Twitter API and the involuntary surrender of its property rights to some collective authority who will manage it as a “collective good,” “common carrier,” or “essential facility.”

But Consider This… (on API Neutrality and Disincentives)

Of course, the people at Twitter certain realize how important all those third-party apps and platforms have been to growing the Twitter information empire. Thus, an overly-zealous move to crush third parities by denying them the API or any incidental use of the Twitter name / branding could backfire in two ways: it could lead to a major consumer backlash which in turn spurs the development of alternative platforms and entirely new types of competing services.

Vertical integration might be one way to partially alleviate those problems. Twitter could start cutting deals with existing third-party platforms that rely upon its API such that they were brought under the Twitter corporate umbrella, where more standardization could occur. But Twitter doesn’t have the money to buy them all out. Moreover, Twitter doesn’t want to see dozens of interfaces under its corporate umbrella. For them, this is about “a consistent user experience.” In other words, they’d obviously prefer a more standardized platform / interface that simply got rid of some of those third-party apps and platforms altogether.

As a result, in the short term, I think we’ll likely end up with a market dominated by Twitter’s proprietary platform(s) but with a couple of other leading existing third-party providers being tolerated by the company so as not to rock the boat too much. And that’s not a bad thing. Here’s the key principle to keep in mind: If we apply API neutrality or adverse possession principles forcibly, it sends a horrible signal to entrepreneurs that basically says their platforms are theirs in name only and will be forcibly commoditized once they are popular enough. That’s a horrible disincentive to future innovation and investment. However, it means we must sometimes tolerate short term spells of “market power” when we allow entrepreneurs to realize the benefits of their past innovations and investments if we hope to get more of them in the future.

Avoiding Static Snapshots

But wait, you say, isn’t this all quite horrible for the consumers and competition? Isn’t this just Wu’s “information empire” fear manifesting itself such that antitrust or API neutrality really is required?

Here’s where those warring conceptions of “Internet freedom” come into play. As I’ve noted here many times before in my work on the “conflict of visions” about Internet freedom today, it is during what some might regard as a market’s darkest hour when some of the most exciting disruptive technologies and innovations develop. People don’t sit still; they respond to incentives, including short spells of apparently excessive private power.

By contrast, the “static snapshot” crowd gets so worked up about short term spells of “market power” – which usually don’t represent serious market power at all – that they call for the reordering of markets to suit their tastes.  Sadly, they sometimes do this under the banner of “Internet freedom,” claiming that we can “free” consumers from the supposed tyranny of the marketplace. In reality, that vision wraps markets in chains and ultimately leaves consumers worse off by stifling innovation and inviting in ham-handed regulatory edits and bureaucracies to plan this fast-paced sector of our economy.

“Splitting the Root”

And innovation is possible. Is it really that unthinkable that a Twitter competitor might come along? In a sense, TweetDeck shows the way forward.  TweetDeck has already bucked Twitter’s 140-character limit by offering “Deck.ly,” an exclusive service that allows TweetDeck users to type Twitter messages longer than 140 characters, but which will only be visible via TweetDeck platforms. What if TweetDeck took the next bold step and offered an entirely separate API in direct competition to Twitter? It would be the tweeting equivalent of “splitting the root,” to borrow a concept from the domain name space.

Some would decry the potential lack of interoperability at first. But I bet some sharp folks out there would quickly find work-arounds. Has everyone forgotten the hand-wringing that took place over instant message interoperability just a decade ago (and the resulting restrictions placed on the company following its merger with Time Warner)? Big bad AOL was going to eat everyone’s lunch in the IM space, don’t you remember? But all the hand-wringing about AOL’s looming monopolization of instant messaging seems particularly silly now since anyone can download a free chat client like Digsby or Adium to manage IM services from AOL, Yahoo!, Google, Facebook and just about anyone else, all within a single interface — essentially making it irrelevant which chat service your friends use.

Again, people respond to incentives, and sometimes it takes bone-headed moves by market leaders to really get people off their butts and motivate them to code work-arounds and superior solutions. Is it so hard to imagine that a similar response might follow Twitter’s move this week? After all, we are not talking about replicating a massive physical network of pipes or towers here. We are talking about pure code, for God’s sake! Competition to Twitter is more than possible and it’s likely to come from sources and platforms we cannot currently imagine (just as few of us could have imagined something like Twitter developing just five years ago).

Conclusion

So, Twitter’s move is not an end but rather a new beginning. Personally, I think it could spawn another amazing round of innovation in this space. Again, we must not forget that we are dealing with a space that is still so new that we do not know what to call it. For that reason alone, we should be skeptical of calls for a preemptive regulatory strike. We need to have a little faith in the entrepreneurial spirit and the dynamic nature of markets built upon code, which have the uncanny ability to morph and upend themselves seemingly every few years. In the short term, Twitter will continue to possess a dominant position in whatever we call this market that it serves. But the short term is just that; it’s not the end of the story.

Now excuse me while I get back to Tweeting!

  • http://twitter.com/nbramble Nicholas Bramble

    “Has everyone forgotten the hand-wringing that took place over instant message interoperability just a decade ago (and the resulting restrictions placed on the company following its merger with Time Warner)?”

  • http://twitter.com/nbramble Nicholas Bramble

    “Has everyone forgotten the hand-wringing that took place over instant message interoperability just a decade ago (and the resulting restrictions placed on the company following its merger with Time Warner)?”

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