A public policy collaborator and sparring partner wrote me just now, saying: “I don’t imagine you guys spend much time looking at media monopolies!”
Think about it.
Oh my. So today, as part of its ongoing effort to look like the hip new regulatory agency on the block, the Federal Communications Commission decided to launch a MySpace page. Really. Big. Mistake.
I mean, shouldn’t someone over there have known it would take about 2 milliseconds for various cranks to launch into profanity-laced rants that would make George Carlin blush? Sure enough, the page is already littered with some of the most colorful language you’ll ever lay your eyes on, mixed in with some 9/11 conspiracy theories, a plug for the Marijuana Policy Posse, and something about the FCC “build[ing] a cone of terror in [our] homes.”
Go check it out, but avert the children’s eyes first. It ain’t pretty. Which begs the question: Will the FCC apply its Pacifica indecency standard to its own MySpace page? Seems like their site is pretty “pervasive” to me, and there could be “children in the viewing audience.” Time to censor these “fleeting expletives” on the FCC’s MySpace page!
Seems like everywhere I turn someone is gushing about their new Droid phone, including my TLF colleagues Berin Szoka, Braden Cox, and Ryan Radia, who all had great fun rubbing their new toys in my nose over the past couple of days. And why not, it’s a very cool little device. It makes my HTC Touch seems positively archaic in some ways, and it’s only a year old. Apparently, 100,000 people already picked up a Droid in just its first weekend on the market.
But here’s the first thing that pops in my mind every time I see someone showing off their new Droid: How can a device like this even exist when America’s leading cyberlaw experts have been telling us that the whole digital world is increasingly going to hell because of “closed” devices, proprietary code, and managed networks? I’m speaking, of course, about the lamentations of Harvard professors Lawrence Lessig, Jonathan Zittrain, and their many disciples. As faithful readers will recall, I have relentlessly hammered this crew for their unwarranted cyber-Chicken Little-ism and hyper techno-pessimism. (See my many battles with Zittrain [1, 2, 3, 4, 5, 6 + video] and my 2-part debate with Lessig earlier this year).
“Left to itself,” Lessig warned in Code, “cyberspace will become a perfect tool of control.” He went on to forecast a dystopian future in which nefarious corporate schemers would quash our digital liberties unless benevolent public philosopher kings stepped in to save our poor souls. Code was the Old Testament of cyber-collectivism. The New Testament arrived last year with Zittrain’s The Future of the Internet and How to Stop It. In it, we hear the grim prediction that “sterile and tethered” digital technologies and networks will triumph over the more “open and generative” devices and systems of the past. The iPhone and TiVo are cast as villains in Zittrain’s drama since they apparently represent the latest manifestations of Lessig’s “perfect control” paranoia.
Apple’s “Angel of Death”
How completely out-of-control has this thinking gotten? Well, here’s David Weinberger — another Harvard Berkman Center worrywart — talking about that supposed satanic font of all evil, the Apple AppStore: Continue reading →
by Berin Szoka & Adam Thierer
The latest call for “search neutrality” and “cloud neutrality” comes from Andrew Odlyzko of the University of Minnesota’s School of Mathematics & Digital Technology Center—and probably among the top ten most influential academics in Internet policy. In his latest Review of Network Economics article “Network Neutrality, Search Neutrality, and the Never-ending Conflict between Efficiency and Fairness in Markets,” Odlyzko shows (discussed by Ars) just how slippery the slippery slope of Net neutrality regulation will be—exactly as we predict in our recent paper “Net Neutrality, Slippery Slopes & High-Tech Mutually Assured Destruction.” Odlyzko concludes:
for pervasive infrastructure services that are crucial for the functioning of society, rules about allowable degrees of discrimination have traditionally applied, and are likely to be demanded for the Internet in the future. Those rules have often been set by governments, and are likely to be set by them in the future as well. For telecommunications, given current trends in demand and in rate and sources of innovation, it appears to be better for society not to tilt towards the operators, and instead to stimulate innovation on the network by others by enforcing net neutrality. But this would likely open the way for other players, such as Google, that emerge from that open and competitive arena as big winners, to become choke points. So it would be wise to prepare to monitor what happens, and be ready to intervene by imposing neutrality rules on them when necessary.
Odlyzko identifies search and cloud computing as the next most likely targets of “neutralization” and explains how calls for regulating these virtual “networks” would flow logically from the current arguments for neutrality mandates at the infrastructure layer:
The net neutrality debate is often pictured as a contest between the two most prominent corporate champions of the opposing sides, AT&T and Google. But the underlying issue predates both companies by centuries. It was never resolved completely, since it arises from a conflict between society’s drives for economic efficiency and for fairness. There is no reason to expect that this conflict will lessen, and instead there are arguments that suggest it will intensify. Should something like net neutrality prevail, the conflict would likely move to a different level. That level might become search neutrality. (And allegations about discriminatory behavior of a web search provider have surfaced recently in China, Tschang (2009).) Or, to take another currently popular concept, if “cloud computing” does become as significant as its enthusiasts claims, it could lead to dominance of a single service provider. The effective monopoly of that dominant player could then become perceived as far more insidious than any of the “walled gardens” or “intelligent network” that telcos would like to build.
There is, of course, an entirely different approach to the issue that does not involve the sort of across-the-board cyber-meddling that Odlyzko suggests: Freedom for all players at all layers of the Net to invest and innovate in the “networks” or “platforms” that offer content, connectivity and services. Continue reading →
Mercury News Columnist Chris O’Brien warns Beware the hype around mergers! O’Brien catalogs the many failed that ultimately ended in divestitures in the tech sector in recent years citing data provided by PricewaterhouseCoopers’ Bryan McLaughlin, who estimated tha:
in the third quarter, which ended in September, about 40 percent of the acquisition deals involved some kind of divestiture, up from 25 percent for the same period one year ago. That is, companies weren’t buying smaller, stand-alone outfits; they were buying essentially the castoffs of other companies.
And a recent survey by Pricewaterhouse found that 69 percent of the 215 companies polled expected divestiture activity to either stay the same or increase over the next year.
Many of these divestitures are the fruit of ill-considered acquisitions made over the past few years. This failure rate should come as a surprise to no one in the board room or executive cubicle. A few years ago, McKinsey & Co. published a study indicating that 70 percent of mergers failed to generate the expected returns. Hope, however, seems to spring eternal in boardrooms as companies keep making deals.
Let’s try to keep these failure rates in mind as we see increased antitrust fervor about blocking or otherwise restricting or simply bogging down mergers. The truth is that most mergers don’t work out in the end. But that’s an argument against aggressive antitrust enforcement scratch that intervention, rather than for it, because some mergers do create great value for consumers through greater efficiencies and government bureaucrats are unlikely to be able to guess which are which. If they could, they’d be making a fortune in the private sector advising companies how to avoid boneheaded deals! This problem is particularly acute in the tech sector, where today’s leaders tend to become tomorrow’s laggards because of the inevitability of disruptive innovation, which big companies manage poorly.
Google has just announced its 2010 Fellowships, open to students 18+ (as of January 1st, 2010) eligible to work U.S. Among the participating organizations are three think tanks home to TLFers: The Progress & Freedom Foundation (Adam & I), the Competitive Enterprise Institute (Ryan Radia) and Cato (Jim Harper). Applications are due December 28th, 2009, so apply today to help us in the fight for real Internet freedom!
Adam Thierer and I will be participating in two separate panels at the FTC’s December 7 “Exploring Privacy” workshop discussing, respectively, surveys & expectations and online behavioral advertising. Below is the cover letter I filed as part of my comments (PDF & Scribd), along with four past PFF publications and a working paper on the benefits of online advertising.
Privacy Trade-Offs: How Further Regulation Could Diminish Consumer Choice, Raise Prices, Quash Digital Innovation & Curtail Free Speech
In general, we at PFF have argued that any discussion about regulating the collection, sharing, and use of consumer information online must begin by recognizing the following:
- Privacy is “the subjective condition that people experience when they have power to control information about themselves and when they exercise that power consistent with their interests and values.”[1]
- As such, privacy is not a monolith but varies from user to user, from application to application and situation to situation.
- There is no free lunch: We cannot escape the trade-off between locking down information and the many benefits for consumers of the free flow of information.
- In particular, tailored advertising offers significant benefits to users, including potentially enormous increases in funding for the publishers of ad-supported content and services, improved information about products in general, and lower prices and increased innovation throughout the economy.
- Tailored advertising increases the effectiveness of speech of all kinds, whether the advertiser is “selling” products, services, ideas, political candidates or communities.
With these considerations in mind, policymakers must ask four critical questions:
- What exactly is the “harm” or market failure that requires government intervention?
- Are there “less restrictive” alternatives to regulation?
- Will regulation’s costs outweigh its supposed benefits?
- What is the appropriate legal standard for deciding whether further government intervention is required? Continue reading →
If you have any credit cards, you’ve probably received notices recently that your credit card company is going to do you some wonderful favors, like apply payments to the balances carrying the highest interest rate first. These same notices also contain changes in other contract terms that might make you worse off. One of mine, for example, tells me that henceforth my annual percentage rate on purchases will be the prime rate plue 11.99 percent, with a minimum of 17.99 percent. The company tells me this is higher than my old fixed rate. (I don’t know what it was, since I never use credit cards to borrow.)
These changes are the result of new federal regulations that were supposed to make credit card companies give us a break on certain terms and conditions. But since all of the terms and conditions of the credit card contract are not comprehensively regulated, the companies can adjust other terms to make up for the money they lose as a result of the mandated regulatory changes. Some scholars call this “term substitution.” I call it “regulatory whack-a-mole,” after that carnival game in which you whack a mole that pops up out of a hole only to have another mole pop up out of another hole.
What does this have to do with technology policy? Term substitution is a pervasive feature of reality whenever regulators regulate some, but not all, aspects of a transaction. Since technology markets are not comprehensively regulated like public utilities, we can expect to see term substitution all over the place in technology markets in response to regulatory mandates.
If you want to find term substitution in technology markets, think of transactions that are only partially regulated:
- If wireless companies couldn’t charge early termination fees, we’d pay more for phones.
- The last time the federal government tried to regulate “basic” cable rates (for your local broadcast and public affairs channels), rates for “expanded basic” and premium channels went up.
- Casket sales have also experienced term substitution. Responding to low-priced Internet competition and federal regulations that allow consumers to BYOB (bring your own box), funeral directors simply reduce casket prices and increase the price they charge for their services.
- Net neutrality regulation might have this kind of effect, if it prevents network operators from charging high-bandwidth users different prices from low-bandwidth users. Forcing them to charge everyone the same, unregulated price could mean the low-bandwidth users pay more than they otherwise would.
I’m curious to hear more actual examples from readers of term substitution in technology markets. What’s the most interesting thing you’ve seen?
By Eric Beach and Adam Marcus
In the previous entry in the Privacy Solutions Series, we described how privacy-sensitive users can use proxy servers to anonymize their web browsing experience, noting that one anonymizer stood out above all others: Tor, a sophisticated anonymizer system developed by the Tor Project, a 501(c)(3) U.S. non-profit venture supported by industry, privacy advocates and foundations, whose mission is to “allow you to protect your Internet traffic from analysis.” The Torbutton plug-in for Firefox makes it particularly easy to use Tor and has been downloaded over three million times. The TorBrowser Bundle is a pre-configured “portable” package of Tor and Firefox that can run off a USB flash drive and does not require anything to be installed on the computer on which it is used. Like most tools in the Privacy Solutions series, Tor has its downsides and isn’t for everyone. But it does offer a powerful tool to privacy-sensitive users in achieving a degree of privacy that no regulation could provide.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
Federal Agencies Can Easily Manage Settings on Their MySpace Page, but How Should They?
by Adam Thierer on November 13, 2009 · 9 comments
I got some feedback from readers about my post last night regarding the irony of the FCC’s newly-created MySpace page containing some rather vulgar user comments. I wondered if the agency would continue to allow such comments when the agency regulates similar words when they are uttered on broadcast TV or radio. A few people asked me why the agency hasn’t bother using the comment management tools that MySpace puts at the public’s disposal. It’s a good question, and actually I’m not sure why they didn’t do that right from the start. Perhaps the agency is concerned about being accused of censoring public comment. [Incidentally, the White House and some federal agencies have MySpace pages, so perhaps I need to look into how those agencies manage comments.]
Regardless, the FCC now has taken steps to deal with this. John Eggerton of Broadcasting & Cable and Kim Hart of The Hill point out that the agency has removed some vulgar comments on their MySpace page (namely, any comment with the F-bomb in it). And I assume the agency is now taking steps to screen comments going forward. For those who are not aware, MySpace empowers users (including government agencies if they choose to set up profiles) to require approval before new comments appear on their profiles (accessed by clicking “My Account” and then “Spam”). Here are the options:
So, here are some questions that both agencies and policy wonks will need to consider going forward. Continue reading →