For my contribution to Berin Szoka and Adam Marcus’ (of TechFreedom fame) awesome Next Digital Decade book, I wrote about search engine “neutrality” and the implicit and explicit claims that search engines are “essential facilities.” (Check out the other essays on this topic by Frank Pasquale, Eric Goldman and James Grimmelmann, linked to here, under Chapter 7).

The scare quotes around neutrality are there because the term is at best a misnomer as applied to search engines and at worst a baseless excuse for more regulation of the Internet.  (The quotes around essential facilities are there because it is a term of art, but it is also scary).  The essay is an effort to inject some basic economic and legal reasoning into the overly-emotionalized (is that a word?) issue.

So, what is wrong with calls for search neutrality, especially those rooted in the notion of Internet search (or, more accurately, Google, the policy scolds’ bête noir of the day) as an “essential facility,” and necessitating government-mandated access? As others have noted, the basic concept of neutrality in search is, at root, farcical. The idea that a search engine, which offers its users edited access to the most relevant websites based on the search engine’s assessment of the user’s intent, should do so “neutrally” implies that the search engine’s efforts to ensure relevance should be cabined by an almost-limitless range of ancillary concerns. Nevertheless, proponents of this view have begun to adduce increasingly detail-laden and complex arguments in favor of their positions, and the European Commission has even opened a formal investigation into Google’s practices, based largely on various claims that it has systematically denied access to its top search results (in some cases paid results, in others organic results) by competing services, especially vertical search engines. To my knowledge, no one has yet claimed that Google should offer up links to competing general search engines as a remedy for its perceived market foreclosure, but Microsoft’s experience with the “Browser Choice Screen” it has now agreed to offer as a consequence of the European Commission’s successful competition case against the company is not encouraging. These more superficially sophisticated claims are rooted in the notion of Internet search as an “essential facility” – a bottleneck limiting effective competition. These claims, as well as the more fundamental harm-to-competitor claims, are difficult to sustain on any economically-reasonable grounds. To understand this requires some basic understanding of the economics of essential facilities, of Internet search, and of the relevant product markets in which Internet search operates.

The essay goes into much more detail, of course, but the basic point is that Google’s search engine is not, in fact, “essential” in the economically-relevant sense.  Rather, Google’s competitors and other detractors have basically built precisely the most problematic sort of antitrust case, where success itself is penalized (in this case, Google is so good at what it does it just isn’t fair to keep it all to itself!).

Search neutrality and forced access to Google’s results pages is based on the proposition that—Google’s users’ interests be damned—if Google is the easiest way competitors can get to potential users, Google must provide that access.  The essential facilities doctrine, dealt a near-death blow by the Supreme Court in Trinko, has long been on the ropes.   It should remain moribund here.  On the one hand Google does not preclude, nor does it have the power to preclude, users from accessing competitors’ sites; all users need do is type “www.foundem.com” into their web browser—which works even if it’s Google’s own Chrome browser!  To the extent that Google can and does limit competitors’ access to its search results page, it is not controlling access to an “essential facility” in any sense other than Wal-Mart controls access to its own stores.  “Google search results generated by its proprietary algorithm and found on its own web pages” does not constitute a market to which access should be forcibly granted by the courts or legislature.

The set of claims that are adduced under the rubric of “search neutrality” or the  “essential facilities doctrine” against Internet search engines in general and, as a practical matter, Google in particular, are deeply problematic.  They risk encouraging courts and other decision makers to find antitrust violations where none actually exist, threatening to chill innovation and efficiency-enhancing conduct.  In part for this reason, the essential facilities doctrine has been relegated by most antitrust experts to the dustbin of history.

The full text of my essay is below, but you can also find it at SSRN and the book’s website.

The Problem of Search Engines as Essential Facilities (Geoffrey A. Manne) http://d1.scribdassets.com/ScribdViewer.swf

By Ryan Radia and Wayne Crews

Today, the European Commission opened a formal antitrust investigation into Google to probe allegations that the firm rigged its search engine to discriminate against rivals. This intervention in the online search market, however, will distort the market’s evolution, discourage competitors from innovating, and ultimately hurt consumers.

Google isn’t a monopoly now, but the more it tries to become one, the better it will be for us all. When capitalist enterprises strive to earn a bigger market share, rival firms are forced to respond by trying to improve their offerings. Even if Google is delivering biased search results, it is only paving the way for competitors to break into the search market.

The European Commission is wrong to assume that Google possesses monopoly power. Google accounts for just 6 percent of all dollars spent on advertising in Europe. And even loyal Google users regularly find websites through competing search engines like Bing or through social websites like Facebook and Twitter.

Before resorting to tired old competition laws, European policy makers should remember that the Internet economy is hardly understood by anybody—including by regulators. We are in terra incognita; no one knows how information markets will evolve. But one thing is for sure: Online search technology cannot evolve properly if it is improperly regulated. Why make risky investments in hopes of revolutionizing Internet markets if marvelous success means regulation and confiscation?

The real threat to consumers is not from successful high-tech firms like Google, but from overreaching government interventions into competitive market processes. As economists have documented in scholarly journals, antitrust intervention is especially problematic in the information age, because it severely underestimates the critical role of innovation in dynamic high-tech markets.

In the information age, ingenuity—not market power—is the key to success. America’s high-tech sector is strewn with former market leaders who were no match for the relentless forces of creative destruction. Rapid, unpredictable change is the hallmark of the modern digital economy. Google may be on top in many high-tech markets today, but it won’t stay there for long unless it keeps innovating and delivering a superior search product.

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” Thus did Ronald Reagan capture the essence of big government. The two biggest challenges facing defenders of free markets in technology policy lie in Reagan’s second point:

• Telling the “Good News Story” about how “it” (human ingenuity—what the great economist Julian Simon called our “Ultimate Resource”) keeps “moving” (by inventing new hardware, software, services, etc.)
• Holding the line against efforts to extend the regulatory regimes of the past over new technologies, and chipping away at those regimes as best we can

So one might think that believers in limited government would celebrate a company like Google as a great American success story: A university research program launched by two smart kids (one of whom fled Communist oppression) that grew from a garage start-up into a global tech titan whose wide-ranging innovations are revolutionizing more and more of the economy. Surely free marketeers would rally to the defense of such a company when, say, the New York Times—that if-it-moves-regulate-it bastion—calls for bringing “into the regulatory fold,” right?

Unfortunately, all too many free marketeers seem willing to hang Google out to dry, or at least stay silent because they resent the pro-regulatory policy positions taken by the company or the political leanings of its employees and leadership. The company has hardly been a champion of digital capitalism in Washington, allying itself with a number tax/regulate/subsidize groups, pushing for net neutrality regulation, and using antitrust as a sword against its rivals (some of whom seem willing to return the favor). But the principles at stake are too important for free marketeers to gloat, as Adam Thierer argued in an op/ed for National Review Online earlier this week: Government vs. Google: Why Free Marketeers Should Rally Against “Search Neutrality.”

• First Amendment Protection of Search Algorithms as Editorial Discretion – by Berin Szoka
• Net Neutrality, Slippery Slopes & High-Tech Mutually Assured Destruction – by Berin Szoka & Adam Thierer
• The Day Real Internet Freedom Died – by Berin Szoka & Adam Thierer
• Odlyzko on Net Neutrality, Price Discrimination, PrivacyFail, Search & Cloud Neutrality – by Berin Szoka
• Google Voice & the Slippery Slope of Net Neutrality Regulation – by Adam Thierer
• Is the FCC Becoming the Federal Cloud Commission? – by Adam Thierer
• My Net Neutrality Debate with Public Knowledge – by Berin Szoka

I’ve long been a fan of Danny Sullivan, who edits Search Engine Land, and probably knows more about search engines than anyone outside the companies that actually run them. But my respect for his wit, eloquence and perspective  has reached new heights with his latest piece:  The New York Times Algorithm & Why It Needs Government Regulation, a lampoon of the NYT’s foolish call for search neutrality in an editorial yesterday, turning the Times’ arguments right back at them, and pointing out the hypocrisy by which the established press often tries to deny First Amendment protection to newcomers to the speech business. Danny’s post is truly a masterpiece of satire, worthy of Jonathan Swift. But one section deserves special attention:

I’ve been covering the search space closely for nearly 15 years, from before Google itself even existed, so I have seen these types of claims far longer and examined them in far more depth than what went into that New York Times editorial. My guess is that the editorial staff (the staff that writes the newspaper’s editorials, which are opinion pieces, which is confusing when the newspaper also has an editorial staff that writes “editorial” stories elsewhere that are supposed to be unbiased) spent about an hour or so discussing recent Google news, then someone was probably assigned to write the editorial and invested all of about three hours on it. That’s not much time or care for a major and well-respected newspaper (in many quarters) to decide the government should evaluate “fairness” when it comes to making editorial judgments in search results, be they from Google or any other search engine.

I’m afraid Danny’s right. What a shameful day for the “Grey Lady.” Anyway, here are a few of the pieces Adam and I have written about the dangers inherent in the seductive idea of search neutrality:

• First Amendment Protection of Search Algorithms as Editorial Discretion – by Berin Szoka
• Net Neutrality, Slippery Slopes & High-Tech Mutually Assured Destruction – by Berin Szoka & Adam Thierer
• The Day Real Internet Freedom Died – by Berin Szoka & Adam Thierer
• Odlyzko on Net Neutrality, Price Discrimination, PrivacyFail, Search & Cloud Neutrality – by Berin Szoka
• Google Voice & the Slippery Slope of Net Neutrality Regulation – by Adam Thierer
• Is the FCC Becoming the Federal Cloud Commission? – by Adam Thierer
• My Net Neutrality Debate with Public Knowledge – by Berin Szoka

Today’s NYT piece by Brad Stone about Google (Sure, It’s Big. But Is That Bad?) offers a superb example of how to use the rhetorical question in an article headlined to suggest that you might actually be about to write a thoughtful, balanced piece—while actually writing a piece that, while thoughtful and interesting, offers little more than token resistance to your own preconceived judgments.  But perhaps I’m being unfair: Perhaps Stone’s editors removed “YES! YES! A THOUSAND TIMES, YES!” from the headline for brevity’s sake?

Anyway, despite its one-sidedness, the piece is fascinating, offering a well-researched summary of the growing cacophony of cries for regulatory intervention against Google, and also a suggestion of where they might lead in crafting a broader regulatory regime for online services beyond just Google.  In short, the crusade against Google and the crusade for net neutrality (in which Google has, IMHO unwisely been a major player) are together leading us down in intellectual slippery slope that, as Adam and I have suggested, will result in “High-Tech Mutually Assured Destruction” and the death of Real Internet Freedom.

Ironically, this push for increased government meddling—a veritable “New Deal 2.0″—is all justified by the need to “protect freedom.”  But it would hardly be the first time that this had happened. As the great defender of liberty Garet Garrett said of the New Deal 1.0 in his 1938 essay The Revolution Was:

There are those who still think they are holding the pass against a revolution that may be coming up the road. But they are gazing in the wrong direction. The revolution is behind them. It went by in the Night of Depression, singing songs to freedom.

That theme lives on in the works of those like antitrust warrior Gary Reback, an anti-Google stalwart whose book Free the Market: Why Only Government Can Keep the Marketplace Competitive Adam savaged in his review last year. Reback argues:

Google is the “arbiter of every single thing on the Web, and it favors its properties over everyone else’s,” said Mr. Reback, sitting in a Washington cafe with the couple. “What it wants to do is control Internet traffic. Anything that undermines its ability to do that is threatening.”

Move over, ISPs! Search engines are the real threat! Somehow, I feel fairly confident in predicting that this will be among the chief implications of Tim Wu’s new book, The Master Switch: The Rise and Fall of Information Empires, to be released in November, which his publisher summarizes as follows:

A secret history of the industrial wars behind the rise and fall of the twentieth century’s great information empires—Hollywood, the broadcast networks, and AT&T—asking one big question: Could history repeat itself, with one giant entity taking control of American information? Most consider the Internet Age to be a moment of unprecedented freedom in communications and culture. But as Tim Wu shows, each major new medium, from telephone to cable, arrived on a similar wave of idealistic optimism only to become, eventually, the object of industrial consolidation profoundly affecting how Americans communicate. Every once free and open technology was in time centralized and closed, a huge corporate power taking control of the “master switch.” Today, as a similar struggle looms over the Internet, increasingly the pipeline of all other media, the stakes have never been higher. To be decided: who gets heard, and what kind of country we live in. Part industrial exposé, part meditation on the nature of freedom of expression, part battle cry to save the Internet’s best features,  The Master Switch brings to light a crucial drama—rife with indelible characters and stories—heretofore played out over decades in the shadows of our national life.

Egad! Who will save us from “information empires” and their “master switch?” (Adam mocked the “kill switch” idea in his 2008 debate with naysayer extraordinaire Jonathan Zittrain—start at 51:52.) The government, obviously! But how will they do so?

To the extent that there are real, demonstrable harms at issue, and not just bogeymen invented by the advocates of regulation or overblown anecdotes, and competition, facilitated by data portability among services, proves inadequate to prevent genuine harm to consumers, we could rely on”(1) a new legislative framework centered on an FTC-like enforcement model of ex post adjudication grounded in antitrust law; (2) increased industry self-regulation, technical collaboration, and alternative dispute resolution mechanisms; and (3) greater reliance on community policing and expert third-party oversight” such as PFF has proposed in the past regarding net neutrality (in”DACA”), as Adam and Mike Wendy have recently explained.

But I suspect that instead, we will wind up with a vast, and ever-expanding regime of prophylactic, ex ante “neutrality” regulation for not just Internet access, but also for “search neutrality” (Google as well as Microsoft) but also about “device neutrality” (mobile handsets), “app neutrality” (Apple’s iTunes store, Facebook’s developers and Google’s Android mobile OS) and so on for social networking, email, instant messaging, online advertising,  etc.—in short, “Everything Neutrality!”

To riff off a longstanding theme of PFF’s work (Net Neutrality or Net Neutering?), and to paraphrase the even-more-longstanding Bob Barker: “Help control protect (via control) the pet population Net applications! Have your pet favorite Net service spayed or neutered!”

By Berin Szoka & Adam Thierer

We learned from The Wall Street Journal yesterday that “Federal Communications Commission Chairman Julius Genachowski gets a little peeved when people suggests that he wants to regulate the Internet.” He told a group of Journal reporters and editors today that: “I don’t see any circumstances where we’d take steps to regulate the Internet itself,” and “I’ve been clear repeatedly that we’re not going to regulate the Internet.”

We’re thankful to hear Chairman Julius Genachowski to make that promise. We’ll certainly hold him to it. But you will pardon us if we remain skeptical (and, in advance, if you hear a constant stream of “I told you so” from us in the months and years to come). If the Chairman is “peeved” at the suggestion that the FCC might be angling to extend its reach to include the Internet and new media platforms and content, perhaps he should start taking a closer look at what his own agency is doing—and think about the precedents he’s setting for future Chairmen who might not share his professed commitment not to regulate the ‘net. Allow us to cite just a few examples:

Net Neutrality Notice of Proposed Rulemaking

We’re certainly aware of the argument that the FCC’s proposed net neutrality regime is not tantamount to Internet regulation—but we just don’t buy it. Not for one minute.

First, Chairman Genachowski seems to believe that “the Internet” is entirely distinct from the physical infrastructure that brings “cyberspace” to our homes, offices and mobile devices. The WSJ notes, “when pressed, [Genachowski] admitted he was referring to regulating Internet content rather than regulating Internet lines.” OK, so let’s just make sure we have this straight: The FCC is going to enshrine in law the principle that “gatekeepers” that control the “bottleneck” of broadband service can only be checked by having the government enforce “neutrality” principles in the same basic model of “common carrier” regulation that once applied to canals, railroads, the telegraph and telephone. But when it comes to accusations of “gatekeeper” power at the content/services/applications “layers” of the Internet, the FCC is just going to step back and let markets sort things out? Sorry, we’re just not buying it.

Chairman Genachowski may sincerely believe that a clear, bright line can be drawn between the “infrastructure layer” (which he’s certainly going to regulate) and what he likes to think of as “the Internet” (which he promises not to regulate). But as we warned last October, the day after the FCC launched this NPRM:

The promise made yesterday by the FCC—to only apply neutrality principles to the infrastructure layer of the Net—is hollow and will ultimately prove unenforceable. The reality is that regulation always spreads. The march of regulation can sometimes be glacial, but it is, sadly, almost inevitable: Regulatory regimes grow but almost never contract… The basic premise of neutrality regulation is already being proposed for other layers of the Internet….  whatever the FCC might say today, any large online intermediary with a popular platform potentially faces the threat of “network neutrality” mandates—because every platform is essentially a “network,” too. We’re not just talking about “search neutrality” (Google as well as Microsoft) but also about “device neutrality” (mobile handsets), “app neutrality” (Apple’s iTunes store, Facebook’s developers and Google’s Android mobile OS) and so on for social networking, email, instant messaging, online advertising, etc.

We explained how the intellectual foundations for this regulatory creep have already been laid by groups like Free Press and Public Knowledge and law professors like Columbia’s Tim Wu (father of “Net Neutrality”), Harvard’s Jonathan Zittrain (father of “API/device Neutrality”), and Seton Hall’s Frank Pasquale (father of “Search Neutrality”). Joining this intellectual vanguard of Internet regulation is George Washington law school professor Dawn Nunziato, whose new book, Virtual Freedom: Net Neutrality and Free Speech in the Internet Age, is a veritable manifesto for expansive neutrality regulation (especially of Google)—and how the First Amendment (“Congress shall make no law…”) should be twisted not just to allow such regulation of speech platforms, but to require it! Even Wu, whose work blazed a trail for these others, is pretty clear about the breadth of his original vision for “neutrality” regulation, as his popular Net Neutrality FAQ makes clear:

The promotion of network neutrality is no different than the challenge of promoting fair evolutionary competition in any privately owned environment, whether a telephone network, operating system, or even a retail store. Government regulation in such contexts invariably tries to help ensure that the short-term interests of the owner do not prevent the best products or applications becoming available to end-users.

Zittrain, Pasquale, and Nunziato don’t pull any punches either: They don’t shy away from flirting with nebulous neutrality definitions and wide-ranging government powers to regulate. So we don’t have to imagine what the “slippery slope” might look like: There are plenty of very smart and highly influential legal academics out there hard at work sketching out precisely where the path Chairman Genachowski has started us down will ultimately lead.

It’s no less clear why we’ll wind up marching down that path, no matter what the current FCC leadership intends.

1. The current net neutrality rulemaking sets a profoundly dangerous legal precedent of essentially unlimited claims of “ancillary jurisdiction”: As our friends at the Electronic Frontier Foundation (who have a soft spot for net neutrality in theory) put it, “If ‘ancillary jurisdiction’ is enough for net neutrality regulations (something we might like) today, it could just as easily be invoked tomorrow for any other Internet regulation that the FCC dreams up (including things we won’t like).” Our PFF colleague Barbara Esbin carefully dissected this issue for the Commission in her recent filing in this proceeding.
2. As explained above, the general regulatory principle of controlling “gatekeepers” doesn’t end with infrastructure.
3. As EFF notes, “Experience shows that the FCC is particularly vulnerable to regulatory capture.”
4. Now that FCC has opened the door to micro-managing online business practices in the name of “neutrality,” the companies that have made America the leader in the Digital Revolution are already turning on each other in a dangerous game of brinksmanship, escalating demands for regulation and playing right into the hands of those who want to bring the entire high-tech sector under the thumb of government—under an Orwellian conception of “Internet Freedom” that makes corporations the real “Big Brother,” and government, our savior.

This strategy of political escalation will thus quickly steamroll over whatever promises made today to narrowly cabin the principle of neutrality regulation—and end in “Mutually Assured Destruction.” That’s why we referred to the day the FCC started down this path back in September as “The Day Internet Freedom Died.”

If that title sounds melodramatic, take a step back and consider that, back in 1996, Congress decided to enshrine in law the principle that the Internet is different from traditional media: Apart from an ill-considered effort to censor online indecency and obscenity (which was quickly struck down by the Supreme Court as unconstitutional) and the enforcement of intellectual property and criminal laws, Congress decided to take a purely laissez-faire approach to the Internet.  As Barbara reminded the Commission in her net neutrality filing, “Section 230(b)(2) flatly declares that it is the policy of the United States ― to preserve the vibrant competitive free market that presently exits for the Internet and other interactive computer services, unfettered by Federal or State regulation.”

So Chairman Genachowski’s decision to revert to the common carrier model of the railroad era marks a fundamental break with the approach Congress decided we would take to the Internet. The DC Circuit will likely soon rule that the FCC has vastly overstepped its authority in trying to set Internet policy without any clear grant of authority from Congress to do so.

Wireless Innovation & Investment Notice of Inquiry

In fact, the same kind of thinking is already being extended by this FCC in a number of other arenas using a flurry of innocuous-seeming “Notices of Inquiry.” While these notices purport only to ask questions, they either:

1. Foreshadow where the Commission intends to go in proposing new regulations based on its nearly limitless conception of its own regulatory authority;
2. Are intended to pressure Congress to give the agency more statutory authority; or
3. Are intended to intimidate industry into “playing ball” so the FCC won’t actually have to stick its neck out by trying to write rules to regulate Internet activities that are clearly beyond its existing authority and might well be unconstitutional even if Congress ever did expand that authority.

Exhibit A is the language in the Commission’s August 2009 Wireless Innovation and Investment Notice of Inquiry, (paragraph 60, pg. 21) that suggests the FCC is angling to become the Federal Cloud Commission:

As other approaches, such as cloud computing, evolve, will established standards or de facto standards become more important to the applications development process? For example, can a dominant cloud computing position raise the same competitive issues that are now being discussed in the context of network neutrality? Will it be necessary to modify the existing balance between regulatory and market forces to promote further innovation in the development and deployment of new applications and services?

Good morning, Google!  Hello, Facebook! Is anyone out there in the cloud listening to the rumbling thunder of federal regulation? What began as academic theory in a law school ivory tower is coming soon to a regulatory agency near you! But wait… there’s more!

National Broadband Plan Public Notice #21 (Cloud Computing)

Last November, as part of the Commission’s ongoing effort to develop a National Broadband Plan, the FCC released a request for information “on data portability and its relationship to broadband.”  (NBP Public Notice #21) “The Commission seeks tailored comment on broadband and portability of data and their relation to cloud computing, transparency, identity, and privacy,” the notice says.  Here was the second item on the list of things the Commission said it was investigating (p. 2):

When considering the portability of data, we also consider the processes through which data are moved. In this context, we seek comment on how to identify and understand cloud computing as a model for technology provisioning…. What types of cloud computing exist (e.g., public, hybrid, and internal) and what are the legal and regulatory implications of their use? … To what extent are consumers protected by industry self-regulation (e.g., the Cloud Computing Manifesto), and to what extent might additional protections be needed? … What specific privacy concerns are there with user data and cloud computing? What precautions should government agencies take to prevent disclosure of personal information when providing data? Is the use of cloud computing a net positive to the environment? Are there specific studies that quantify the environmental impact of cloud computing?

We suppose some might claim there’s nothing wrong with the FCC looking into these issues, and that the agency’s interest in cloud computing is entirely benign. (Never mind the fact that the Federal Trade Commission already enforces the privacy policies of cloud computing providers and is looking hard at online privacy.)  Seeing all these open-ended questions about something so obviously beyond the scope of the FCC’s authority just makes the potential for—and perhaps even inevitability of—regulatory creep hard to miss.  Eventually, when a regulatory agency asks enough questions, especially the sort of questions highlighted above… well, to paraphrase Master Yoda:

Open-ended inquiries about new regulations are the path to the Dark side. Inquiries lead to agency oversight. Agency oversight leads to regulation. Regulation leads to suffering for innovators and consumers alike.

Again, we’re not just inventing bogeymen here. It’s quite clear that regulatory advocates want to take neutrality regulation into “the Cloud.” As Jason Lanier, author of the popular book You Are Not a Gadget summarizes one of his key themes:

While there is a lot of talk about networks and emergence from the top American technologists, in truth, most of them are hoping to thrive by controlling the network that everyone else is forced to pass through. Everyone wants to be a “Lord of a Computing Cloud.”

In Lanier’s dystopia of techno-feudalism, the Lords oppressing the poor digital “peasants” certainly aren’t just those running broadband service providers. It’s the Google, Facebooks, and Twitters of the world. It’s similar to the “sharecropper” concern raised by Nick Carr in his book The Big Switch. Complaints like those will only grow in the years to come, and few will buy—or even pause to remember—the distinction Chairman Genachowski seems to stand on now between infrastructure and “the Internet.”

National Broadband Plan Public Notice #29 (Privacy)

The “Recovery Act” passed in January 2009 tasked the FCC with formulating “a detailed strategy for achieving affordability of such service and maximum utilization of broadband infrastructure and service by the public.” The FCC seized this as an opportunity to solicit suggestions as to how regulate the use and collection of data by the private sector on the grounds that concerns about privacy might somehow be slowing broadband adoption.

Chairman Genachowski’s flurry of open-ended inquiries about new regulation are clearly intended to give a bully pulpit to regulatory advocates to demand that the FCC issue the very sort of Internet regulations the Chairman purports to abhor (or that Congress give the agency authority to do so). But most of these notices at least appear to be objective requests for comments written independently of the groups the Commission seems so eager to hear beg for Internet regulation. But in this case, the Commission dispensed with that tedious formality and just outsourced the writing of the inquiry itself to one of the outside groups clamoring the loudest for data regulation in the name of “privacy”: our friends at the Center for Democracy & Technology, with whom PFF has worked closely on many free speech issues in the past.

CDT is on to something when they write that “Consumers will not embrace broadband if they have a sense that everything they do online will be watched by government officials.” We’ll join with them in the fight to protect consumers’ privacy from the Real Big Brother—government!—but once again, as with net neutrality, advocates of regulation see government as the protector of our digital liberties (if only we can forever make sure noble civil-libertarians are in charge of the regulatory apparatus of the state!). So CDT has it exactly backwards when they say: “Consumer privacy concerns encompass not only what companies do with their data, but also the extent to which the government accesses it.” And instead of just suggesting that the FCC’s National Broadband Plan include a recommendation that Congress clean up the antiquated laws intended to limit government surveillance, CDT pushes for sweeping regulations that would affect the ability of most online services and sites to collect and use the data they need to improve their services, innovate, and maybe even try to make some money on advertising to support all the free content and services they give away.

Thus, instead of focusing on the clear harm from government, the FCC’s outsourced inquiry goes after online operators as “privacy proxies” for concerns about government action. At least Congress actually asked for the FCC’s recommendations in this case, unlike all the other inquiries the agency has launched sua sponte. But as Berin noted in his comments on this inquiry, the Recovery Act allowed the FCC to “recommend only those policies that it concludes will, on net, help achieve “affordability” and ‘maximum utilization’ of broadband.” That means the Commission would actually have to consider the many trade-offs inherent in the private sector use of data before recommending regulation: If the Internet ecosystem is impoverished by government intervention, however well-intentioned it may be, users will have that much less reason to adopt and “utilize broadband.” So the FCC would have a lot of cost-benefit analysis to do before it could actually make the kinds of regulatory recommendations CDT wants. And we suspect that, on the whole, that analysis wouldn’t turn out the way CDT thinks it would.

Child Safe Viewing Act Notice of Inquiry

In a somewhat similar vein, Congress last year asked the agency to examine how well parental control technologies work to allow parents to filter objectionable content online. So while the FCC may have had, for once, the authority to ask broad questions, it’s startling just how broad those questions were. The Commission obviously has no authority over video games or virtual worlds, online video distribution networks or video hosting sites, mobile web content, MP3 players or iPods, P2P networks, VCRs or DVD players, PVRs or TiVo, Internet filters, safe search tools, laptops, and so on. And yet, all these things (and much more) were mentioned in the Commission’s Child Safe Viewing Act Notice of Inquiry.

The proceeding raises the prospect of what Adam has called “convergence era content regulation” since it opens the doors to FCC meddling on a number of new fronts in the name of “protecting children.” Although the Commission’s final report to Congress stopped short of calling for an substantive expansion of the agency’s content regulatory regime, it teed up another proceeding, discussed next. (And if Congress hasn’t moved more quickly to grant the FCC new power in this area, it’s probably because they’re busy trying to figure out how to get around a line of First Amendment cases that consistently require government regulation to yield to “less restrictive” alternatives like parental control tools and education.)

Empowering Parents & Protecting Children Notice of Inquiry

This wide-ranging inquiry reads like the ultimate “fishing expedition” by a regulatory agency—fishing for new jurisdictional authority to regulate, that is!  The questions asked are too broad, far-flung and various to catalog here (we’ll have a big filing coming in the matter soon), but the Commission asks about extending to Internet media the model of the 1990 Children’s Television Act, which imposes “public interest” obligations on broadcasters and cable operators to offer “education” content while also strictly limiting how much advertising may be shown during children’s TV. The Commission also alludes, ominously, to the V-chip model for requiring universal ratings for television and hints that it would really like for “current laws [to] be updated to reflect this convergence and to keep pace with changes in technology” (¶ 41).

The Commission mentions only in passing at the very end of the Inquiry that it “has varying degrees of statutory authority with respect to different media. We ask commenters, in proposing any action, to discuss the source and extent of the Commission’s authority to take the action, or whether new legislation would be needed to authorize such action” (¶ 58). Translation: “Uh, yeah… so… we know we don’t have a statutory leg to stand on here, but we think it’d be really cool if we did, so let’s just all, you know, kinda brainstorm about what kind of regulation we could be imposing here and what kind of law we’d need get Congress to pass to make it all legal. Or if you have any creative ideas on how we could get away with just making up the jurisdiction thing on our own, that’d be even better!”

YouTube, you’re first on the list of targets for the kind of online video regulation the FCC is hinting at here—and none too subtly. But why stop there? The FCC’s laundry list of complaints aren’t limited just to video, but could apply to essentially all online media. But this is all in the name of “protecting the children,” and Chairman Genachowski doesn’t want to regulate the Internet, so we really don’t need to worry—right?

Future of Media Notice of Inquiry

Most recently, in late January, the Commission launched the ambitiously-named “Examination of the Future of Media and Information Needs of Communities in a Digital Age.” The FCC asks a number of good questions about how government could get out of the way of media struggling to reinvent themselves in the digital era by scrapping outdated regulations. The inquiry also tips its hat to the vital importance of advertising in supporting media. But it’s otherwise pretty bad news as a harbinger of a “Chill Wind” for the future of a free press in this country, as Ken Ferree, PFF’s former president and current board member noted.

In particular, the Commission comes right out with a “trial balloon” about imposing public interest obligations on online operators—the very thing it hinted at slightly more delicately in the “Empowering Parents” inquiry mentioned above:

Broadcasters have certain public interest obligations, including that they provide programming responsive to the needs and issues of their communities and comply with the Commission’s children’s programming requirements. Cable and satellite operators have their own responsibilities…  Should such obligations be applied to a broader range of media or technology companies, or be limited in scope?

OK, so we’re not going to “regulate” online content operators; we’re just going to impose “public interest” obligations on them to provide certain kinds of content preferred by politicians. Right… and if Google News or YouTube don’t do enough to “serve the public interest,” what then? Will the Federal Search Commission take away Google’s search license or cloud computing license?

Of course, we don’t mean to suggest that even the “Federal Cloud Commission” would ever be so unsubtle as to create a formal licensing system when they can probably achieve the same ends with far less obvious regulation. But how is this all going to work, exactly? Again, this is exactly the kind of hopelessly vague regulatory morass Congress had in mind when it declared that the federal government would avoid “fettering” the “vibrant competitive free market … for the Internet and other interactive computer services” with regulation.

The FCC goes on to revive the kinds of broad net neutrality ideas discussed above in asking:

How would policies related to “open Internet” or “universal broadband” or other FCC policies about communications infrastructure affect the likelihood that the Internet will meet the information needs of communities? Are there search engine practices that might positively or negatively affect web-based efforts to provide news or information?

In other words, “Tell us why and precisely how we should start regulating search engines in order to help ‘save  news.'” Google, here’s looking at you, kid! You want to keep your search license, dontcha? Well, just do what the nice men from Washington want and there won’t be any trouble.

Finally, the Commission opens the door to the noxious proposal for a “public option” for media, which Adam has lambasted. Here’s what the Commission says:

In general, what categories of journalism are most in jeopardy in the digital era? What categories are likely to flourish? While much is still to be determined as media companies test various business models and payment approaches in the coming years, based on what is known now, are there news and information needs that commercial market mechanisms alone are unlikely to serve adequately?

Don’t worry, it’s not as if government will exercise control over the media companies it funds if the media-socialist fantasies of the neo-Marxist Robert McChesney and his ironically-named “Free Press” group actually come true. Nope, government’s just here to help!

We’d all do well to remember that subsidies always come with strings attached—namely, regulation. That’s the Golden Rule: “He who has the gold, makes the rules!”

Conclusion

Chairman Genachowski, with all due respect, if you don’t like people suggesting that the FCC may be positioning itself to regulate the Internet and digital media platforms, then you might want to take a careful look at what your agency has been doing. You should think hard both about the precedents that will be set by “neutrality” regulation for online content and services, and also about the quasi-regulatory effect that your agency’s flurry of open-ended inquiries will have on the operators you claim not to want to regulate.

What will future Chairmen do with these precedents? What will emerge from every “Pandora’s Box” you’ve opened with each new sweeping inquiry? The answer, we fear, is an endless parade of new Internet regulations—and the death by a thousand cuts of real Internet freedom.

Forbes.com has just published an editorial that Berin Szoka and I penned about yesterday’s net neutrality announcement from the FCC.

The Day Internet Freedom Died

by Adam Thierer & Berin Szoka

There was a time, not so long ago, when the term “Internet Freedom” actually meant what it implied: a cyberspace free from over-zealous legislators and bureaucrats. For a few brief, beautiful moments in the Internet’s history (from the mid-90s to the early 2000s), a majority of Netizens and cyber-policy pundits alike all rallied around the flag of “Hands Off the Net!” From censorship efforts, encryption controls, online taxes, privacy mandates and infrastructure regulations, there was a general consensus as to how much authority government should have over cyber-life and our cyber-liberties. Simply put, there was a “presumption of liberty” in all cyber-matters.

Those days are now gone; the presumption of online liberty is giving way to a presumption of regulation. A massive assault on real Internet freedom has been gathering steam for years and has finally come to a head. Ironically, victory for those who carry the banner of “Internet Freedom” would mean nothing less than the death of that freedom.

We refer to the gradual but certain movement to have the federal government impose “neutrality” regulation for all Internet actors and activities—and in particular, to yesterday’s announcement by Federal Communications Commission (FCC) Chairman Julius Genachowski that new rules will be floated shortly. “But wait,” you say, “You’re mixing things up! All that’s being talked about right now is the application of ‘simple net neutrality,’ regulations for the infrastructure layer of the net.” You might even claim regulations are not really regulation but pro-freedom principles to keep the net “free and open.”

Such thinking is terribly short-sighted. Here is the reality: Because of the steps being taken in Washington right now, real Internet Freedom—for all Internet operators and consumers, and for economic and speech rights alike—is about to start dying a death by a thousand regulatory cuts. Policymakers and activists groups are ramping up the FCC’s regulatory machine for a massive assault on cyber-liberty. This assault rests on the supposed superiority of common carriage regulation and “public interest” mandates over not just free markets and property rights, but over general individual liberties and freedom of speech in particular. Stated differently, cyber-collectivism is back in vogue—and it’s coming very soon to a computer near you!

“Net Neutrality” proponents insist, however, that only regulation can save us from nefarious corporate schemers out to quash our rights and destroy all innovation. Over the last decade, a cabal of activist-minded cyber-law professors have successfully turned the world of Internet policy upside down by persuading an entire generation of law students, policymakers, and a number of large Internet companies that “Internet Freedom” means the very opposite of what it used to mean. Borrowing tactics that would have made Orwell proud, they have convinced many in the public and the policymaking community that the old Internet Freedom is slavery, in that we are all just tools of Corporate Big Brother. Thus, they offer us a new Internet Freedom: Neutrality über alles! Their freedom, as in Orwell’s Oceania, is not a freedom from the State, but a gleaming utopia that can only be created by the State.

We see the triumph of this thinking with Chairman Genachowski’s proclamation that, “This is not about government regulation of the Internet. It’s about fair rules of the road for companies that control access to the Internet. We will do as much as we need to do, and no more, to ensure that the Internet remains an unfettered platform for competition, creativity and entrepreneurial activity.”

Yet, no matter how vociferously the proponents of FCC-enforced “neutrality” insist that it is not regulation they seek, the reality is that the steps they counsel would put the FCC in the driver’s seat for a host of Internet economic and social issues. Internet companies and technologies will come to be regulated like crusty old “common carriers” and broadcast stations that must serve some amorphous “public interest.”

But as the FCC’s long history of meddling in media and communications markets makes clear, micro-management of dynamic markets is a recipe for economic stagnation, strangled innovation, and speech controls. And the path to regulation does not end with infrastructure providers. The specter of neutrality haunts not just today’s Internet service providers but also all high-tech innovators, like Google, Apple, Facebook, Microsoft and their descendents. Although the FCC’s original mandate was mostly to deal with spectrum “interference”—something that could have been, and actually was being, dealt with using property rights—the agency quickly expanded its mission: Broadcast regulation metastasized into government control over speech, innovation, campaign advertising and a “fairness doctrine” for news coverage. Likewise, Net Neutrality mandates will give rise to neutrality mandates for other areas.

The slope is slippery and we’re already heading down it: The push for “Wireless Neutrality” is already well under way and the FCC is currently investigating Apple’s rejection of the Google Voice application for the iPhone. Thus, “Net Neutrality” leads to “Device Neutrality” and “Application Neutrality,” but the same rationale would apply equally to any circumstance in which access to a communications platform is supposedly limited to a few “gatekeepers.” Some academics have already proposed a “Federal Search Commission” to deal with accusations of “search bias.” At the end of the day, we’ll need a full-blown Federal Information Commission with a Search Bureau, a Cloud Computing Division and several other ministries to micro-manage the many flavors of neutrality regulation.

The path back toward real Internet freedom lies in restoring the presumption of liberty enshrined in the First Amendment, which is not a sword with which the government can ensure fairness, diversity or openness, but a shield against government meddling in media, communications and online markets.