dominance – Technology Liberation Front https://techliberation.com Keeping politicians' hands off the Net & everything else related to technology Tue, 06 Oct 2015 15:33:56 +0000 en-US hourly 1 6772528 Unintended Consequences of the EU Safe Harbor Ruling https://techliberation.com/2015/10/06/unintended-consequenses-of-the-eu-safe-harbor-ruling/ https://techliberation.com/2015/10/06/unintended-consequenses-of-the-eu-safe-harbor-ruling/#comments Tue, 06 Oct 2015 15:12:58 +0000 http://techliberation.com/?p=75831

The big news out of Europe today is that the European Court of Justice (ECJ) has invalidated the 15-year old EU-US safe harbor agreement, which facilitated data transfers between the EU and US. American tech companies have relied on the safe harbor to do business in the European Union, which has more onerous data handling regulations than the US. [PDF summary of decision here.] Below I offer some quick thoughts about the decision and some of its potential unintended consequences.

#1) Another blow to new entry / competition in the EU: While some pundits are claiming this is a huge blow to big US tech firms, in reality, the irony of the ruling is that it will bolster the market power of the biggest US tech firms, because they are the only ones that will be able to afford the formidable compliance costs associated with the resulting regulatory regime. In fact, with each EU privacy decision, Google, Facebook, and other big US tech firms just get more dominant. Small firms just can’t comply with the EU’s expanding regulatory thicket. “It will involve lots of contracts between lots of parties and it’s going to be a bit of a nightmare administratively,” said Nicola Fulford, head of data protection at the UK law firm Kemp Little when commenting on the ruling to the BBC. “It’s not that we’re going to be negotiating them individually, as the legal terms are mostly fixed, but it does mean a lot more paperwork and they have legal implications.” And by driving up regulatory compliance costs and causing constant delays in how online business is conducted, the ruling will (again, on top of all the others) greatly limits entry and innovation by new, smaller players in the digital world. In essence, EU data regulations have already wiped out much of the digital competition in Europe and now this ruling finishes off any global new entrants who might have hoped of breaking in and offering competitive alternatives. These are the sorts of stories never told in antitrust circles: costly government rulings often solidify and extend the market dominance of existing companies. Dynamic effects matter. That is certainly going to be the case here.

#2) Cross-border digital trade suffers: This conclusion follows from point #1, of course. Writing just before the decision was announced, lawyers as Norton Rose Fulbright’s Data Compliance Report blog noted that if the safe harbor was invalidated, “the impact on the world economy would be immense.” Well, here we are.  Dan Castro of ITIF hopes that EU and US officials can pull back from the brink of this impending disaster and “finish the process of creating a Safe Harbor 2.0 with terms that give comfort to all parties.” I suspect that many tech companies are hoping for the same miracle to occur. But don’t hold your breath. The Europeans have decided that this is the hill that they will die on. They haven’t shown too much interest in preserving an innovative tech market or enhancing global digital trade flows in the past due to heightened concerns about privacy, and there’s no reason to think they will back down now with a more measured approach. Importantly, as I noted in my earlier essay, “How Attitudes about Risk & Failure Affect Innovation on Either Side of the Atlantic,” this trans-Atlantic clash of vision transcends the debate over privacy law. It’s about broader cultural and political attitudes toward risk-taking and disruption. Most leaders in Europe value stability–both economic and cultural stability–more than US officials and citizens. This tension was always bound to reach a breaking point and the Digital Economy and data handling policies is where the you-know-what is finally hitting the fan.

#3) Web Balkanization accelerates: This is just another blow to the idea of a seamless global Internet. But as tech lawyer Tiffany C. Li pointed out on Twitter this morning in response to the decision, while Web pundits decry balkanization in other contexts, many of them seem to be cheering it on in this case because this decision deals with privacy and data regulation, which they favor more regulation of. But you can’t have your cake and eat it to. Indeed, the great irony of so many “Internet freedom” debates today is that pundits absolutely hate the idea of Internet control and Web balkanization… right up until the point where they absolutely love it! Think of this as the tech policy world’s selective morality problem. (I elaborated on these themes in my essays “When It Comes to Information Control, Everybody Has a Pet Issue & Everyone Will Be Disappointed,” and “Copyright, Privacy, Property Rights & Information Control: Common Themes, Common Challenges.”)

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#4) But the big dogs won’t bolt out of Europe: But this should also be another reminder that there are no “John Galt moments” in the world of tech, as some tech libertarians hope. The biggest players won’t pack their bags and head home because there’s still too much money sitting on the table in Europe. Big firms will instead scramble to comply, just as they are trying to do with the so-called Right to Be Forgotten ruling. Of course, this just exacerbates problem #1 already discussed above: The big dogs stay and do their best to comply with the costly regulatory regime while smaller players get crushed by the rules and all the other potential new entrants just stay home.

#5) The decision ignores the real problem: widespread government surveillance: I don’t often find myself agreeing with Cory Doctorow on much, but he gets it exactly right when he notes that, “this doesn’t mean that Europeans won’t be subjected to mass surveillance, including mass surveillance by the NSA.” He elaborates:

If the European Court of Justice wants to end mass surveillance of Europeans, it can only do so by banning mass surveillance — by ruling that laws that treat foreigners’ data as fair game are unconstitutional. If US tech giants want to get loose from a farcical, expensive, and pointless exercise that continues to treat them as adjuncts to the world’s spy agencies, they need to lobby the US government to change the laws under which it treats foreigners as fair game.

Thus, it would certainly be nice if, as CDT suggested in response to the ruling, that the “EU Safe Harbour Ruling Should Reinvigorate Surveillance Reform Efforts.” Of course, that requires that tech companies muster the courage to stand up to public officials here in the States who always want them to (literally) hand over the keys to the kingdom. That’s why the current debate over crypto backdoors is so essential. It’s good to see a number of tech companies pushing back on that front and refusing to get rolled by law enforcement and national security agencies the way that far too many telecom and tech companies have been in the past. Following today’s ECJ ruling, tech companies are realizing just how serious this problem really is because now European officials are striking out against the safe harbor agreement as a surrogate for their general frustrations with US surveillance more generally. Indeed, in a press release following today’s ECJ ruling, the Internet Association, which represents major US tech firms, noted that, “The Internet industry has consistently supported surveillance reform” and the Association pushed for swift congressional action to clarify and limit existing surveillance powers. It remains to be seen whether the US tech sector and other related industries will be able to push back effectively against the growing surveillance state leviathan, but it’s more clear today than ever before why that’s a fight worth having.

]]> https://techliberation.com/2015/10/06/unintended-consequenses-of-the-eu-safe-harbor-ruling/feed/ 2 75831 Googlephobia: Part 5 – Google at Ten & Its Competition https://techliberation.com/2008/09/11/googlephobia-part-5-google-at-ten-its-competition/ https://techliberation.com/2008/09/11/googlephobia-part-5-google-at-ten-its-competition/#respond Thu, 11 Sep 2008 22:30:51 +0000 http://techliberation.com/?p=12657

By Berin Szoka & Adam Thierer

As we noted in our intro to this ongoing series, Google’s tenth anniversary has passed with Googlephobia reaching new heights of hysteria.

But is Google really too big and dangerous, or are people just too lazy to find other alternatives to each of the wonderful services that Google offers?  If one is truly paranoid about the firm’s supposed dominance, it doesn’t take much effort to live a Google-free life. To prove it, we set out to find alternatives to each of the services that Google provides.  After awhile, we got a little tired of compiling alternatives in each category and just provided links for the additional choices at your disposal.  It’s tough to see what the fuss is about with the cornucopia of choices at our disposal.  If you don’t like Google, then just don’t use it or any of its services.  The choice is yours.

In each case, we’ve listed Google first, even though Google may not be the market leader ( e.g., Google’s relatively unknown social network Orkut).

Search Engines

eMail

Encyclopedia

Instant Messaging

Web Browsers

Social Networks

Mapping

Mobile Search / Portal Services

Video Hosting

Photohosting

Document / Spreadsheet Creation

Online File Storage

Blog hosting services

RSS blog feed aggregators

WebClipping Services

News Aggregators

Calendar Services

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By Berin Szoka & Adam Thierer as part of an ongoing series

With Google celebrating its 10th anniversary this week, many panicky pundits are using the occasion to claim that Google has become the Great “Satan” of the Internet.  Nick Carr wonders what the future holds for “The OmniGoogle.” The normally level-headed Mike Malone worries that Google is “turning into Big Brother.”  And Washington Post’s Rob Dubbin says that he can’t escape Google’s “tentacles,” even for just 24 hours.  Meanwhile, speculation abounds that the Justice Department is preparing a major antitrust lawsuit against Google concerning its advertising partnership with Yahoo! or perhaps even a broader suit concerning Google’s “dominance” of online advertising generally.

Carr quotes Google co-founder Sergey Brin’s now-famous 2003 interview:

I think people tend to exaggerate Google’s significance in both directions.  Some say Google is God.  Others say Google is Satan.  But if they think Google is too powerful, remember that with search engines, unlike other companies, all it takes is a single click to go to another search engine. People come to Google because they choose to.  We don’t trick them.

In the last five years, Google has become far more than just a search engine.  As Google’s suite of suite of complementary products continues to grow, so too does the specter of Google as an all-knowing and therefore all-powerful economic colossus.  Yet Google isn’t even close to being the sort of nefarious monopolist out to destroy user privacy at every turn, as some seem to imply—if not exclaim.  Indeed, in our view, the Net is overall a far better place because of the existence of Google and the many free services it provides consumers.

Our point is not that Google should be immune from criticism.  Indeed, healthy criticism of corporate actions plays a vital role in the free market by disciplining corporate policies and behavior—often thus providing an effective alternative to government regulation.  This is particularly important in the area of consumer privacy protection, as demonstrated by Google’s quick response to public concern about its Chrome EULA.

We hold no brief for Google and our aim is not to be Google apologists.  In fact, we’ve had more than a few run-ins with Google on many important policy issues in the past ( e.g., on net neutrality, spectrum policy, and the need for “baseline Federal privacy legislation”) and will likely continue to do so in the future.  We are always willing to engage serious, rational discussions about other policy issues involving Google, such as concerns about its alleged market power, but it seems to us that the hysteria about Google’s supposed dominance of the Internet is clouding rational discussion of the policy issues raised by Google, its innovations and its success.  Indeed, the creeping paranoia about all things Google-related that is most evident throughout the blogosphere (but that reaches far beyond it) has produced an environment that resembles nothing so much as a lynch mob:  Angry, short-tempered, out for corporate blood, and unwilling to engage in reasoned discussion.

Gates_of_BorgThe specter of Google’s market power driving—and confusing—so many of today’s Internet policy debates is reminiscent of the previous generation of conspiracy theories about how Microsoft, like the Borg (perhaps sci-fi’s scariest villains), would assimilate all in its path—forever controlling the digital revolution.  We don’t want Google to become the victim of the same regulatory & antitrust ordeal that Microsoft has endured over the past decade, with the kind of hysterical claims of Chicken Little-ism that drove a ten-year crusade against Microsoft.  Short-sighted, heavy-handed government intervention can cripple a creative company while doing little to actually benefit consumers because regulators cannot keep pace with technological change—perhaps the only constant fact in the every-changing digital world.

Of course, like all temporal things, Microsoft’s seemingly permanent “monopoly” has faded, and the bulk of the criticism it once faced has shifted focus to Google.  Microsoft continues to be the subject of many unfair attacks because of its success (a/k/a “dominance”) in the OS, office product, and browser markets.  Other companies have experienced similar attacks on a smaller scale:  Facebook and the once-angelic Apple have both been subject to increasing criticism for their success in certain sectors of the digital economy, customer complaints about openness ( e.g., “locked” devices or portability of social networking data) and privacy policies.  The hysteria surrounding Google is not unique in kind, yet it is clear that the mantle of “Great (digital) Satan” has clearly passed from Microsoft to Google.

Thus, we have decided to start a new series of essays on “Googlephobia” (a term that seems to have taken off in the spring of 2005, when the French government seriously proposed creating its own alternative to the Google search engine).  We’ve already penned a few essays on the topic here (as have a number of our TLF colleagues) and, therefore, our next installment in the series will be #5—in which we will outline the many competitors to Google’s many products.

But here are a few of our past essays on the topic, which clearly belong on the list even though they weren’t part of a series at the time:

And here’s an oldie on the same topic:

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