The “Internet of Things” (IoT) is already growing at a breakneck pace and is expected to continue to accelerate rapidly. In a short new paper (“Projecting the Growth and Economic Impact of the Internet of Things“) that I’ve just released with my Mercatus Center colleague Andrea Castillo, we provide a brief explanation of IoT technologies before describing the current projections of the economic and technological impacts that IoT could have on society. In addition to creating massive gains for consumers, IoT is projected to provide dramatic improvements in manufacturing, health care, energy, transportation, retail services, government, and general economic growth. Take a look at our paper if you’re interested, and you might also want to check out my 118-page law review article, “The Internet of Things and Wearable Technology: Addressing Privacy and Security Concerns without Derailing Innovation” as well as my recent congressional testimony on the policy issues surrounding the IoT.)

Along with colleagues at the Mercatus Center at George Mason University, I am releasing two major new reports today dealing with the regulation of the sharing economy. The first report is a 20-page filing to the Federal Trade Commission that we are submitting to the agency for its upcoming June 9th workshop on “The “Sharing” Economy: Issues Facing Platforms, Participants, and Regulators.” We have been invited to participate in that event and I will be speaking on the fourth panel of the workshop. The filing I am submitting today for that workshop was co-authored with my Mercatus colleagues Christopher Koopman and Matt Mitchell.

The second report we are releasing today is a new 47-page working paper entitled, “How the Internet, the Sharing Economy, and Reputational Feedback Mechanisms Solve the ‘Lemons Problem.'” This study was co-authored with my Mercatus colleagues Christopher Koopman, Anne Hobson, and Chris Kuiper.

I will summarize each report briefly here.

In our new filing to the FTC, we address the five questions the Commission set forth in its workshop annoucement. Those five questions are as follows:

• How can state and local regulators meet legitimate regulatory goals (such as protecting consumers, and promoting public health and safety) in connection with their oversight of sharing economy platforms and business models, without also restraining competition or hindering innovation?
• How have sharing economy platforms affected competition, innovation, consumer choice, and platform participants in the sectors in which they operate? How might they in the future?
• What consumer protection issues—including privacy and data security, online reviews and disclosures, and claims about earnings and costs—do these platforms raise, and who is responsible for addressing these issues?
• What particular concerns or issues do sharing economy transactions raise regarding the protection of platform participants? What responsibility does a sharing economy platform bear for consumer injury arising from transactions undertaken through the platform?
• How effective are reputation systems and other trust mechanisms, such as the vetting of sellers, insurance coverage, or complaint procedures, in encouraging consumers and suppliers to do business on sharing economy platforms?

We provide detailed answers to each of these questions as well as one additional major question that was not posed by the Commission in its workshop notice but which is, no doubt, on the minds of many at the agency and outside it: What should the FTC do about state and local barriers to entry and innovation that might be thwarting the growth of the sharing economy? (I blogged about that issue here a couple of weeks ago and our filing includes that discussion.)

Please take a look at our filing for detailed answers to each of these questions. (Incidentally, our filing is an extension of an earlier working paper that Koopman, Mitchell, and I released late last year on “The Sharing Economy and Consumer Protection Regulation: The Case for Policy Change.”) But, to briefly highlight the thrust of our argument, here’s a passage from our new filing:

As the debate surrounding the sharing economy moves forward, policymakers must keep in mind that merely because regulations were once justified on the grounds of consumer protection does not mean they accomplished those goals or that they are still needed today. Even well-intentioned policies must be judged against real-world evidence. Unfortunately, the evidence shows that many traditional consumer protection regulations hurt consumers; in the words of New York Attorney General Eric Schneiderman, they are often “cumbersome, and some are just plain protectionist.” Markets, competition, reputational systems, and ongoing innovation often solve problems better than regulation when they are given a chance to do so. There are two reasons for this. First, market imperfections create powerful profit opportunities for entrepreneurs who are able to find ways to correct them. Second, regulatory solutions too often undermine competition and lock in inefficient business models.

We continue on to explain exactly why that is the case, while also offering some constructive solutions to other issues that are on the minds of regulators.

Meanwhile, the new working paper we are releasing today provides much greater detail on the fifth of the five questions the FTC posed in its workshop notice regarding reputation systems and other trust mechanisms. Here is the abstract from the paper:

This paper argues that the sharing economy—through the use of the Internet and real time reputational feedback mechanisms—is providing a solution to the lemons problem that many regulators have spent decades attempting to overcome. Section I provides an overview of the sharing economy and traces its rapid growth. Section II revisits the lemons theory as well as the various regulatory solutions proposed to deal with the problem of asymmetric information. Section III discusses the relationship between reputation and trust and analyzes how reputational incentives affect commercial interactions. Section IV discusses how information asymmetries were addressed in the pre-Internet era. It also discusses how the evolution of both the Internet and information systems (especially the reputational feedback mechanisms of the sharing economy) addresses the lemons problem. Section V explains how these new realities affect public policy and concludes that asymmetric information is not a legitimate rationale for policy intervention in light of technological changes. We also argue that continued use of this rationale to regulate in the name of consumer protection might, in fact, make consumers worse off. This has ramifications for the current debate over regulation of the sharing economy.

We believe that our research makes it clear “how the sharing economy relies upon—and has helped spur the growth of—sophisticated reputational feedback mechanisms that facilitate online trust and commerce, overcoming many of the information asymmetries that seemed intractable… just a generation ago. In combination with online review services and other information-sharing technologies enabled by the Internet,” we conclude, “these reputational tools can help create more effective, and largely self-regulating, markets that provide more information to more individuals than ever before.”

We look forward to continuing engagement with officials at the FTC and other policymakers at the federal, state, and even international level on these issues. We hope our research will help legislators and regulators find sensible ways to adjust policy for the sharing economy so as not to derail the sort of “permissionless innovation” that has thus far powered this exciting sector and produced the many pro-consumer benefits flowing from it. Check out our filing and new paper for more details.

The Mercatus Center at George Mason University has just released my new white paper, “The Perils of Classifying Social Media Platforms as Public Utilities.” [PDF] I first presented a draft of this paper last November at a Michigan State University conference on “The Governance of Social Media.” [Video of my panel here.]

In this paper, I note that to the extent public utility-style regulation has been debated within the Internet policy arena over the past decade, the focus has been almost entirely on the physical layer of the Internet. The question has been whether Internet service providers should be considered “essential facilities” or “natural monopolies” and regulated as public utilities. The debate over “net neutrality” regulation has been animated by such concerns.

While that debate still rages, the rhetoric of public utilities and essential facilities is increasingly creeping into policy discussions about other layers of the Internet, such as the search layer. More recently, there have been rumblings within academic and public policy circles regarding whether social media platforms, especially social networking sites, might also possess public utility characteristics. Presumably, such a classification would entail greater regulation of those sites’ structures and business practices.

Proponents of treating social media platforms as public utilities offer a variety of justifications for regulation. Amorphous “fairness” concerns animate many of these calls, but privacy and reputational concerns are also frequently mentioned as rationales for regulation. Proponents of regulation also sometimes invoke “social utility” or “social commons” arguments in defense of increased government oversight, even though these notions lack clear definition.

Social media platforms do not resemble traditional public utilities, however, and there are good reasons why policymakers should avoid a rush to regulate them as such. Treating these nascent digital services as regulated utilities would harm consumer welfare because public utility regulation has traditionally been the archenemy of innovation and competition. Furthermore, treating today’s leading social media providers as digital essential facilities threatens to convert “natural monopoly” or “essential facility” claims into self-fulfilling prophecies. Related proposals to mandate “API neutrality” or enforce a “Separations Principle” on integrated information platforms would be particularly problematic. Such regulation also threatens innovation and investment. Marketplace experimentation in search of sustainable business models should not be made illegal.

Remedies less onerous than regulation are available. Transparency and data-portability policies would solve many of the problems that concern critics, and numerous private empowerment solutions exist for those users concerned about their privacy on social media sites.

Finally, because social media are fundamentally tied up with the production and dissemination of speech and expression, First Amendment values are at stake, warranting heightened constitutional scrutiny of proposals for regulation. Social media providers should possess the editorial discretion to determine how their platforms are configured and what can appear on them.

This 63-page paper can be found on the Mercatus site here, on SSRN, or on Scribd.  I’ve also embedded it below in a Scribd reader. Eventually, a shorter version of this paper will appear as a chapter in a MIT Press book.

Social Networks as Public Utilities [Adam Thierer]

As I noted here a few days ago, the Federal Communications Commission held a workshop on Tuesday about “Speech, Democratic Engagement, and the Open Internet.”  It was a shockingly one-sided affair with the deck being stacked almost entirely in favor of advocates of Net neutrality regulation. Worse yet, those advocates shamelessly made up spooky stories about a future of “private censorship” that could only be remedied by using the First Amendment as a club to beat private players into submission. The token opposition at this Chicken Little circus was Robert Corn-Revere, a Partner at the law firm of Davis Wright Tremaine LLP in Washington, D.C.   Bob set the record straight–both in terms of baseless accusations that were flying that day as well as the revisionist histories of the First Amendment that were being put forward. I’m happy to report that Bob allowed PFF to reprint his remarks as a new white paper entitled, “The First Amendment, the Internet & Net Neutrality: Be Careful What You Wish For.”

In his essay, Corn-Revere discusses the relationship between the First Amendment and regulatory policy, particularly the treatment of new communications technologies, and he warns that government regulation of broadband networks could “provide the vehicle for advancing new First Amendment theories for media regulation” and online speech and expression more generally.  “It should not be forgotten,” he argues, “that the federal government’s initial impulse was to censor the Internet and to subject it to a far lower level of First Amendment protection. It pursued this agenda for more than a decade but was blocked by a series of First Amendment rulings.”  The Communications Decency Act and the Child Online Protection Act are just two notable examples. Luckily, the courts determined that “the open Internet would be at great risk if the government is allowed to exercise such power,” he notes, and they struck down such laws.

But we must be vigilant in defending our free speech rights, Corn-Revere warns. He notes that, “the constitutional ramifications of the network neutrality debate extend far beyond the question of whether the FCC should or should not adopt a given set of rules. On a doctrinal level the question is whether technological convergence should also lead to regulatory convergence, where the least common denominator of First Amendment protection becomes the governing rule.”

“The First Amendment, the Internet & Net Neutrality: Be Careful What You Wish For” is available on the PFF website and can also be viewed down below in a Scribd document reader. I want to also recommend that everyone take a look at the brief remarks that FCC Commissioner Robert McDowell delivered at the opening of that FCC event that Corn-Revere spoke at. “Efforts to advance ‘First Amendment values’ through additional government regulation risks turning over two hundred years of First Amendment jurisprudence on its head,” McDowell rightly argued. And that’s also consistent with the outstanding address delivered last week by Kyle McSlarrow, President & CEO of the National Cable & Telecommunications Association, on the same issue, in which he correctly noted that, “the First Amendment is framed as a shield for citizens, not a sword for government.” “By its plain terms and history, the First Amendment is a limitation on government power, not an empowerment of government,” McSlarrow said.

Thank God a few people in this town are still taking a stand for the real First Amendment.

Robert Corn-Revere Remarks at FCC Workshop on Speech and Democracy http://d1.scribdassets.com/ScribdViewer.swf?document_id=24208240&access_key=key-2h2o9rho7g9qr414utqi&page=1&version=1&viewMode=list

Whatever you think about this messy dispute between AT&T and Google about how to classify web-based telephony apps for regulatory purposes — in this case, Google Voice — the key issue not to lose site of here is that we are inching ever closer to FCC regulation of web-based apps!  Again, this is the point we have stressed here again and again and again and again when opposing Net neutrality mandates: If you open the door to regulation of one layer of the Net, you open up the door to the eventual regulation of all layers of the Net.

You might not buy that story initially but if you doubt it then I invite you to read just about any history of American broadcast media regulation over the course of the past seven decades. (You might want to start with Krattenmaker & Powe’s Regulating Broadcast Programming or Jonathan Emord’s Freedom, Technology, and the First Amendment). In such histories you will find a common theme: Once regulation of media and communications platforms gets underway, the natural progression of things is uni-directional — Up!  That is, when new questions arise about how to “deal with” a new service, network, platform, or technology, the general tendency is the “regulate up” instead of “deregulating down.”  When regulators are given a greater say about the contours of markets as technologies evolve and/or converge, we shouldn’t be surprised that their first instinct is to “bring them into the fold.”

And, sadly, that is exactly what is likely to occur eventually with Google Voice. The only really interesting question is what else regulators start mucking with in the search and applications layer once they get their hands on it.  And if you still insist that I am being overly paranoid about “regulatory creep” and the prospect of the FCC gradually transforming into the Federal Information Commission, then consider what the agency had to say about cloud computing in paragraph 60 (pg. 21) of the FCC’s recent Wireless Innovation and Investment Notice of Inquiry, which was launched on August 27th:

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?

Wow, who knew that the FCC even had the authority to oversee or regulate the cloud, right?  Well, they don’t. But, again, this is exactly how things have unfolded before: Throw statutory authority to the wind and slowly start extending the agency’s regulatory tentacles into new areas, services, technologies, platforms, and networks.  In this case, you can just imagine how some folks will use that FCC language to accuse Google of being in “a dominant cloud computing position” such that “the context of network neutrality” will be applied to cloud service (like Google Voice!) to “modify the existing balance between regulatory and market forces.”  Indeed, that’s pretty much what AT&T is suggesting in their letter to the FCC this week.

In a post yesterday over at the Google Public Policy Blog, my old friend Rick Whitt of Google insists that Google Voice is different than a traditional common carrier telecom service and that it doesn’t belong in the same regulatory bucket as those older voice services.  To Rick and my other friends at Google, I have only one thing to say about that argument: Good luck with that!  My prediction: Within two to three years you’ll be under the FCC’s thumb.

Again, I very much hope I am proven wrong. But I know that I won’t be wrong because neither side is going to back down in the escalating net neutrality war of mutually assured destruction.  “Regulating up” will carry the day and become, once again, our new telecom M.A.D. policy.

Holman Jenkins has a stinging editorial in today’s Wall Street Journal entitled, “Neutering the ‘Net,” which borrows a term that my friend Randy May coined long ago to describe what net neutrality regulation will ultimately accomplish. What I like best about the Jenkins essay was the way he exposed Free Press for their hypocrisy over metering as a possible alternative approach to network management, something I documented in this piece and this piece about their new-found love of Internet price controls.  Here’s how Jenkins puts it in his essay today:

The mask really slipped earlier this year when Time Warner Cable began experimenting with usage-based pricing to protect the average broadband customers from the 20% of users who create 80% of the traffic. A lobby called Free Press, the most extreme of the pro-net neutrality interests, went ballistic, calling metered pricing a “price-gouging scheme” and backing a bill in Congress to ban it. Never mind that Free Press had previously argued just the opposite, saying usage-based pricing was a fairer way to deal with congestion than, say, by selectively slowing down file-sharing sites that gobble up disproportionate broadband capacity. Never mind, too, the irony that the net-neut campaign against the selective slowing of non-urgent traffic has left only differential pricing as a way to bring a modicum of efficiency to network usage.

Indeed.  Of course, we should expect nothing less from the neo-Marxist media reformistas as the UnFree Press.

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.

Interesting piece by Farhad Manjoo of Slate today entitled “So Gmail Was Down. Get Over It.” Manjoo notes that Google’s Gmail service went down briefly this week — for an hour and a half — and that led to a lot of people “freaking out” over the downtime. He asks” “Google’s e-mail service works 99.9 percent of time. Why do we freak out during the other 0.1 percent?”

That’s an good question, but I actually didn’t hear all that many people bitching about it this time around. In fact, I am rather surprised how little I heard about this incident. I think that’s because many of us are gradually growing accustomed to a world in which communications networks and digital devices deliver something less than the holy grail of “five 9s” uptime.  That was the standard for telephony and computing in the world I grew up in: 99.999% was the magic number that network engineers aspired to and that many of us in the public generally demanded.

Today, however, we settle for something less.  As Manjoo’s piece about Gmail suggests, we’ll settle “three 9s,” as in 99.9% reliability.  And sometimes we’ll settle for far less than that. Why is that?  I think Robert Capps has part of the answer in his recent Wired essay, “The Good Enough Revolution: When Cheap and Simple Is Just Fine.” Capps points out the modern Digital Age has seen the “triumph of what might be called Good Enough tech.  Cheap, fast, simple tools are suddenly everywhere.” He continues:

So what happened? Well, in short, technology happened. The world has sped up, become more connected and a whole lot busier. As a result, what consumers want from the products and services they buy is fundamentally changing. We now favor flexibility over high fidelity, convenience over features, quick and dirty over slow and polished. Having it here and now is more important than having it perfect. These changes run so deep and wide, they’re actually altering what we mean when we describe a product as “high-quality.”  And it’s happening everywhere.

I think that much is obvious. The triumph of “Good Enough” can be seen most notably in how we make phone calls today. Whether its the cell phone call that breaks up or drops out mid conversation, or the Skype call that sounds like two tin cans connected by string, the bottom line is we settle for something far less reliable today than we did in the past. When I was a kid growing up in rural Illinois and Indiana in the 70s, phones were blocky, all black, and plenty expensive. But they worked just fine. The call sounded great. I sometimes long for that quality today when struggling to put together a podcast and having to live with horrendous Skype quality problems.  Or when I am trying to listen to a conference call on my cell phone only to have the call dropped a couple of times, requiring me to call back in several times.

Robert Capps points out we have all made similar trade-offs for music. As an audiophile, I am just sick about the decline of high-quality music. The MP3 revolution has been marvelous in many ways, but the underlying quality of the music’s reproduction is not one of them.  Those of us with high-end audio equipment would be happy to do an “A/B” test for you non-believers any day of the week and show you just how lame over-compressed MP3s and satellite radio sound compared to CDs or, better yet, glorious old vinyl LPs!

But we live with these trade-offs because, as Capps suggests, flexibility, convenience and cost have improved so much.  Who doesn’t love the idea of carrying your entire music collection in your pocket on a media player or mobile phone that is smaller than a deck of cards?  And we all really like the sound of that when the the price is so nice; as in constantly falling. The price of communications connectivity and digital media have both plummeted in real terms compared to the past.

Thus, incidents like Gmail’s brief outage this week are likely to become less concerning for most of us as time goes on. Gmail a great free service that works great 99.9% of that time.  And that’s plenty good enough for most of us.

What Unites Advocates of Speech Controls & Privacy Regulation? [pdf]

by Adam Thierer & Berin Szoka The Progress & Freedom Foundation, Progress on Point No. 16.19

Anyone who has spent time following debates about speech and privacy regulation comes to recognize the striking parallels between these two policy arenas. In this paper we will highlight the common rhetoric, proposals, and tactics that unite these regulatory movements. Moreover, we will argue that, at root, what often animates calls for regulation of both speech and privacy are two remarkably elitist beliefs:

1. People are too ignorant (or simply too busy) to be trusted to make wise decisions for themselves (or their children); and/or,
2. All or most people share essentially the same values or concerns and, therefore, “community standards” should trump household (or individual) standards.

While our use of the term “elitism” may unduly offend some understandably sensitive to populist demagoguery, our aim here is not to launch a broadside against elitism as Time magazine culture critic William H. Henry once defined it: “The willingness to assert unyieldingly that one idea, contribution or attainment is better than another.”^[1] Rather, our aim here is to critique that elitism which rises to the level of political condescension and legal sanction. We attack not so much the beliefs of some leaders, activists, or intellectuals that they have a better idea of what it in the public’s best interest than the public itself does, but rather the imposition of those beliefs through coercive, top-down mandates.

That sort of elitism—elitism enforced by law—is often the objective of speech and privacy regulatory advocates. Our goal is to identify the common themes that unite these regulatory movements, explain why such political elitism is unwarranted, and make it clear how it threatens individual liberty as well as the future of free and open Internet. As an alternative to this elitist vision, we advocate an empowerment agenda: fostering an environment in which users have the tools and information they need to make decisions for themselves and their families.

I. The Elitism of Speech Regulation

First, consider how those two elitist beliefs identified above are on display when lawmakers or regulatory advocates make efforts to control speech or content.^[2] Calls to regulate free speech are often premised on the belief that something must be done to “protect The Children.”^[3] Personal and parental responsibility ^[4] are regarded as inadequate safeguards ^[5] since some parents will inevitably fall down on the job by not adequately shielding their children’s eyes and ears from potentially objectionable (or supposedly harmful) speech. Therefore, government must regulate content that is indecent, profane, excessively violent, and so on. The definition of those things is then left to unelected bureaucrats and judges to make on our behalf.

But it’s not just about “The Children.” Some regulatory advocates believe that even the choices made by consenting adults must be disregarded because some people fail to understand the supposedly destructive nature of the speech they are consuming. Government must act to protect people from making what some regulatory advocates regard as destructive or even immoral choices that could bring harm to them or their loved ones.

In sum, regulatory advocates are essentially saying that people cannot be trusted or left to their own devices and, therefore, government must intervene and establish a baseline “community standard” on behalf of the entire citizenry to tell them what‘s best for them.^[6] Even if those citizens have tools and information at their disposal to make sensible decisions about objectionable content, that’s not good enough because they might not do the job properly. Government must do it for them!

II. The Elitism of Privacy Regulation

This same mentality motivates calls for privacy regulations. Those who call for government interventions to “protect privacy” often claim that people too willingly surrender personal information about themselves and that they don’t understand the adverse consequences of those actions.^[7] Alternatively, regulatory advocates claim that advertising and marketing efforts are inherently “manipulative” and that people do not realize they are being duped into surrendering personal information or into buying products or services they supposedly don’t need.^[8] Of course, those regulatory advocates rarely pause to explain to us how it is that they were not also duped and manipulated by the same things—again revealing their deeply-rooted elitism! (As discussed below, this makes it clear how the psychological phenomenon of “third-person effect hypothesis” is driving much of this debate.)

“Protecting The Children” is also used as a rhetorical cover for regulation here, but not as often in debates over speech controls.^[9] Instead, regulatory advocates mostly focus on adults who are presumed not to know what is in their own best interest—necessitating paternalistic government intervention on their behalf.

III. Intellectual Schizophrenia on Both the Left & Right

What is particularly interesting about all this is the way these two issues expose a sort of intellectual schizophrenia at work on both the Left and Right of the political spectrum. Left-leaning policymakers and intellectuals typically decry censorship efforts (except where “commercial speech,” “hate speech” and “bias” are at issue), but are quick to rally around proposals to layer privacy regulations on the Internet. The opposite is often true of many on the Right of the political spectrum: They typically declare privacy regulations to be paternalistic and antithetical to free enterprise (or perhaps just erosive of efforts to legislate morality),^[10] but in the next breath advocate controls on content they find objectionable.

Few on either side stop to consider the relationship between speech and privacy. In fact, they are but two sides of the same coin. After all, what is your “right to privacy” but a right to stop me from observing you and speaking about you?^[11] “Protecting privacy,” therefore, typically means restricting speech rights in the process. Advocates of privacy regulation often insist that the use, processing and collection of information are “conduct” unprotected by the First Amendment, but in fact, the First Amendment broadly protects the gathering and distribution of information as part of the process of communication (“speech”).^[12] Similarly, attempts to “clean up” speech or “protect The Children,” often require regulations that would betray the privacy of adults by expanding the role of government, and impose serious burdens on businesses and markets—such as age verification mandates ^[13] or extensive data retention requirements.^[14]

IV. Common Tactics & Regulatory Mechanisms

The two movements also share common political tactics and regulatory approaches. Privacy advocates generally favor “opt-in” mandates as the federal “baseline standard” for any website collecting information about users, especially their browsing habits (regardless of whether the information is “personally identifiable”). In other words, the law would create a property right in such “personal information” (ironically, many advocates of this approach criticize or reject intellectual property.) In a similar vein, many advocates of speech controls push for mandatory parental control tools or restrictive default settings.^[15] That is, if government won’t censor speech outright, regulatory advocates want lawmakers to at least (1) require that media, computing and communications devices be shipped to market with parental controls embedded or included (as proposed in Australia and with China’s “Green Dam” filter),^[16] and possibly, (2) that such controls be defaulted to their most restrictive position—forcing users to opt-out of the controls later if they want to consume media rated above a certain threshold.

More sophisticated advocates of speech controls and privacy regulation will likely argue that their paternalism is less elitist or intrusive because they merely want to “nudge” the public into making “better” decisions. Economist Richard Thaler and legal scholar Cass Sunstein (director of President Obama’s Office of Information and Regulatory Affairs, responsible for analyzing most new federal regulations) popularized this approach with their 2008 book Nudge: Improving Decisions about Health, Wealth, and Happiness. Based on behavioral economics studies, they argue that both government and private actors must inevitably make decisions about “choice architecture” and that, by setting defaults, incentives and rules smartly, “choice architects” can and should improve decision-making without blocking, fencing-off or significantly burdening choices.^[17]

In this regard, Sunstein and Thaler’s approach parallels the work of Lawrence Lessig, one of the most influential Internet policy thinkers. Lessig has argued that the “architecture” of “code” (how software is written) “regulates” all online activities and requires government oversight and intervention to keep in check. Otherwise, he warned ominously a decade ago, “Left to itself, cyberspace will become a perfect tool of control.”^[18] Lessig’s hyper-pessimistic predictions have proven unwarranted, however. Far from fostering a world of “perfect control,” code and cyberspace have proven remarkably difficult to regulate, but nonetheless has generally benefited consumers and citizens without centralized direction.^[19] Still, Lessig, Sunstein, and others of this ilk persist in their advocacy of “nudges” of many varieties to impose their will on cyberspace through mandates from above.

But while it might be possible to define “better decisions” and argue that poor choice architecture leads people to choose things they clearly don’t want in contexts like investment decisions and mortgages, how can elites know what other people really want in highly subjective contexts like privacy and speech? Should they rely on opinion polls—the highly subjective results of which depend heavily on “choice architecture” of question-crafting—to guess what the right default should be?^[20] Was the Chinese proposal to mandate deployment of “Green Dam” just a harmless “nudge” because users weren’t barred from uninstalling the filtering software that must accompany their computers (i.e., “opting-out”)? The problem becomes even more difficult where trade-offs among competing values are inevitable. For example, data collection about Internet users raises privacy concerns for some but benefits all, creating more funding for “free” content (i.e., speech) and services users prefer by making more valuable the advertising that supports online publishers. In short, regulations of speech and privacy are likely to be pure paternalism, even when billed as “libertarian paternalism as Thaler and Sunstein label their approach.^[21]

What might be called “regulatory blackmail” is also a time-honored tradition among both advocates of speech controls and privacy regulation. When censorship advocates have previously been impeded by the First Amendment, they have worked behind the scenes with lawmakers or regulatory agencies to use indirect pressure and strong-arming tactics to extract “voluntary concessions” from companies or others.^[22] For example, in 2004, the FCC strong-armed radio giant Clear Channel into agreeing to a “voluntary” consent decree that involved taking Howard Stern off the air.^[23] Similarly, in 2008, XM and Sirius Satellite Radio finally agreed to set aside 4% of their system capacity for use by politically favored racial minorities (a kind of speech control) as a “voluntary condition” of their merger—after the FCC had sat on their application for nearly 16 months.^[24] This race-based preference would have been unconstitutional if the FCC had imposed it directly.^[25] While the FTC has been far less prone to such abuse and actually plays a key role in holding companies to their promises, its current Chairman, Jon Leibowitz, has hung the “regulatory sword of Damocles” over the heads of the online advertising industry, threatening them with a “day of reckoning” if he doesn’t get what he wants from industry self-regulatory efforts.”^[26] The sword could actually fall if the FTC turns self-regulation into the European model of “co-regulation,” where the government steers and industry simply rows.^[27]

V. The Crisis Mentality that Drives Regulation

Speech and privacy regulatory advocates share another trait in common: an affinity for the use of a crisis mentality as a method of spurring political action. In his 1995 book The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy, political philosopher and economist Thomas Sowell formulated a model that he argued drives ideological crusades to expand government power over our lives and economy. “The great ideological crusades of the twentieth-century intellectuals have ranged across the most disparate fields,” noted Sowell. But what they all had in common, he argued, was “their moral exaltation of the anointed above others, who are to have their different views nullified and superseded by the views of the anointed, imposed via the power of government.”^[28] These government-expanding crusades shared several key elements, which Sowell identified as follows:

1. Assertion of a great danger to the whole society, a danger to which the masses of people are oblivious.
2. An urgent need for government action to avert impending catastrophe.
3. A need for government to drastically curtail the dangerous behavior of the many, in response to the prescient conclusions of the few.
4. A disdainful dismissal of arguments to the contrary as either uninformed, irresponsible, or motivated by unworthy purposes.

We see this model at work on a daily basis today with our government’s various efforts to reshape our economy, but the model is equally applicable to debates over speech controls and privacy regulation. In particular, the various “technopanics”^[29] we have witnessed in recent years fit this model. For example, consider how this model plays out in the debate over online social networking:

1. Assertion of a great danger to the whole society [online sexual predators], a danger to which the masses of people are oblivious.
2. An urgent need for government action [such as mandatory online age verification ^[30] or the Deleting Online Predators Act ^[31]] to avert impending catastrophe.
3. A need for government to drastically curtail the dangerous behavior of the many [must stop kids and adults from being online together on same sites], in response to the prescient conclusions of the few [some state Attorneys General].^[32]
4. A disdainful dismissal of arguments to the contrary as either uninformed, irresponsible, or motivated by unworthy purposes [child safety researchers and others are told that their research is meaningless or offbase].^[33]

We also see this model in play in other debates, such as efforts to regulate “excessively violent” video games and television programming.^[34] And consider how this model plays out on the privacy front:

1. Assertion of a great danger to the whole society [amorphous privacy violations], a danger to which the masses of people are oblivious.
2. An urgent need for government action [“baseline federal privacy regulation”] to avert impending catastrophe.
3. A need for government to drastically curtail the dangerous behavior of the many [anyone who shares information online], in response to the prescient conclusions of the few [a handful of privacy advocacy groups].
4. A disdainful dismissal of arguments to the contrary as either uninformed, irresponsible, or motivated by unworthy purposes [any suggestion that privacy concerns are being overblown and that most information-sharing is socially beneficial is dismissed out-of-hand].

Worse yet, regulatory intervention in these cases simply begets more and more intervention to correct the inevitable failures of, or dissatisfaction with, previous interventions.^[35] Thus, the “crisis” cycle never ends.

VI. Third-Person Effect Hypothesis as an Explanation

Something more profound than simple political elitism seems to be at work here, however. A phenomenon psychologists refer to as the “third-person effect hypothesis” can explain many calls for government intervention, especially in the media world.^[36] Simply stated, speech and privacy critics sometimes seem to only see and hear in media or communications what they want to see and hear—or what they don’t want to see or hear. When they encounter perspectives or preferences that are at odds with their own, they are more likely to be concerned about the impact of those things on others throughout society and come to believe that government must “do something” to correct those perspectives. Many people desire regulation because they think it will be good for others, not necessarily for themselves. The regulation they desire has a very specific purpose in mind: “re-tilting” speech or market behavior in their desired direction.

The third-person effect hypothesis was first formulated by W. Phillips Davison in a seminal 1983 article:

In its broadest formulation, this hypothesis predicts that people will tend to overestimate the influence that mass communications have on the attitudes and behavior of others. More specifically, individuals who are members of an audience that is exposed to a persuasive communication (whether or not this communication is intended to be persuasive) will expect the communication to have a greater effect on others than on themselves.^[37]

Davison used this hypothesis to explain how media critics on both the Left and Right seemed to simultaneously find “bias” in the same content or reports when they couldn’t possibly both be correct. In reality, their own personal preferences were biasing their ability to fairly evaluate that content. Davison’s article prompted further research by many other psychologists, social scientists, and public opinion experts to test just how powerful this phenomenon was in explaining calls for censorship and other social phenomena.^[38] In these studies, third-person effect has been shown to be the primary explanation for why many people fear—or even want to ban—various types of speech or expression, including news,^[39] misogynistic rap lyrics,^[40] television violence,^[41] video games,^[42] and pornography.^[43] In each case, the subjects surveyed expressed strong misgivings about allowing others to see or hear too much of the speech or expression in question, but greatly discounted the impact of that speech on themselves. Such studies thus reveal the strong paternalistic instinct behind proposals to regulate speech. As Davison notes:

Insofar as faith and morals are concerned… it is difficult to find a censor who will admit to having been adversely affected by the information whose dissemination is to be prohibited. Even the censor’s friends are usually safe from the pollution. It is the general public that must be protected. Or else, it is youthful members of the general public, or those with impressionable minds.^[44]

It’s easy to see how this same phenomenon is at work in debates about privacy. Regulatory advocates imagine their preferences are “correct” (right for everyone) and that the masses are being duped by external forces beyond their control or comprehension, even though the advocates themselves are somehow immune from the brain-washing and privy to some higher truth that the hoi polloi simply cannot fathom. Again, this is Sowell’s “Vision of the Anointed” at work.

Consider the flare-up in 2004 over the introduction of Gmail, Google’s free email service. At a time when Yahoo! mail (then as now the leading webmail provider) offered customers less than 10 megabytes of email storage, Gmail offered an astounding gigabyte of storage that would grow over time (now over 7 GB). Rather than charging some users for more storage or special features, Google paid for the service by showing advertisements next to each email “contextually” targeted to keywords in that email—a far more profitable form of advertising than “dumb banner” ads previously used by other webmail providers.^[45] Self-appointed (or, to extend Sowell’s framework, “self-anointed”) privacy advocates howled that Google was going to “read users’ email,” and led a crusade to ban such algorithmic contextual targeting.^[46] Thierer responded to these critics by pointing out that the service was purely voluntary and noted:

you don’t speak for me and a lot of other people in this world who will be more than happy to cut this deal with Google. So do us a favor and don’t ask the government to shut down a service just because you don’t like it. Privacy is a subjective condition and your value preferences are not representative of everyone else’s values in our diverse nation. Stop trying to coercively force your values and choices on others. We can decide these things on our own, thank you very much.^[47]

Interestingly, however, the frenzy of hysterical indignation about Gmail was followed by a collective cyber-yawn: Users increasingly understood that algorithms, not humans, were doing the “reading” and that, if they didn’t like it, they didn’t have to use it. Today, nearly 150 million of people around the world use Gmail, and it has a steadily growing share of the webmail market. Even though cyber-consumers have embraced the service, some privacy advocates persist in their effort to shut down Gmail. They appear determined to stop at nothing to impose their will on others—the essence of political elitism—even if that means cutting off free email service for 150 million people!^[48]

A similar debate has played out more recently regarding targeted online advertising in general. Advertising on search engines is, much like Gmail, targeted “contextually” based on search terms entered by users and most advertising on other websites is based on the nature of content on a site or page. But certain data is collected about users as they browse to make that advertising more effective—by measuring its performance, reducing fraud, preventing over-exposure, etc. Some privacy advocates have insisted that industry self-regulation of such practices (even if enforced by the FTC) is inadequate and have called for preemptive regulation. They are even more offended by “behavioral advertising” which allows publishers whose content would have little value as the basis for contextually targeting advertising on their own sites to compete for more highly valued advertising by showing ads to users based on other sites they’ve visited. In both cases, data collection can increase the funding available to publishers to produce more of the content and services preferred by users, thus conferring an enormous indirect benefit on users, but also directly benefits users by increasing the relevance of the advertising they see.^[49] For some of the more extreme advocates of privacy regulation, however, there are no trade-offs, only absolutist “solutions:” To them, privacy is so obviously desirable that they feel at ease in deciding what’s best for everyone else. Such absolutists often respond with righteous indignation and conspiratorial fulmination when challenged to identify the harm against which they’re protecting consumers, while disdainfully dismissing all talk of the benefits of online advertising as self-serving industry propaganda.^[50]

VII. The Principled Alternative: Trust People & Empower Them

There is an alternative to this elitist mentality: freedom and personal responsibility. Individuals should be permitted to live a life of their own, even if they sometimes make mistakes or choices that are at odds with what elites think is best for them. ^[51]

Of course, the world isn’t perfect. In an ideal world, adults would be fully empowered to tailor speech and privacy decisions to their own values and preferences. Specifically, in an ideal world, adults (and parents) would have (1) the information necessary to make informed decisions and (2) the tools and methods necessary to act upon that information. Importantly, those tools and methods would give them the ability to not only block the things they don’t like—objectionable content, annoying ads or the collection of data about them—while also finding the things they want.

Achieving that ideal is likely impossible, but the good news is that we are moving closer to it with each passing day. Citizens have more tools and methods at their disposal than ever before which enable them to make decisions for themselves and their families. And this is true for both parental controls ^[52] and privacy controls.^[53]

Of course, some speech and privacy elitists will argue that we can’t trust empowerment tools ( e.g., filters, rating systems, or other controls) that are created by companies or other affected parties. But rather than trying to enhance those tools and educate users about how to use them, these elitists skip right past user empowerment and channel their energies into regulations that would impose a top-down, one-size-fits all standard on all adults and families—or even into trying to craft the perfect “nudge” that will help users make what elites believe to be the “right” decisions. Of course, these tools can, and should, be improved. Those groups worried about speech/content and privacy issues should focus on how we might drive such protections from the bottom-up by empowering individuals instead of government bureaucrats. The goal in both cases should be a “let-a-thousand-flowers-bloom” approach, which offers diverse tools and strategies for our diverse citizenry.^[54] We need not accept “one-size-fits” all approaches, whether they be regulatory mandates or “nudges,” based on the presumption that elites know best.

Finally, it is vital not to lose sight of what’s ultimately at stake here. If regulatory approaches trump the empowerment agenda we have described, the future of a free and open Internet—indeed, as technology converges, the future of all media—is at risk.^[55] By imposing technological solutions from the top-down that can never keep pace with technological change, regulation necessarily forecloses freedom and innovation.^[56] By contrast, individual empowerment allows innovation to flourish. The better approach across the board is education, not regulation.^[57] Empowerment, not elitism, is the path forward. The digital elite should be leading this effort by developing and promoting technologies of empowerment, not crafting regulatory mandates to force their will upon us.^[58]

#

Adam Thierer is a Senior Fellow with The Progress & Freedom Foundation and the director of its Center for Digital Media Freedom. Berin Szoka  is a Senior Fellow with PFF and the Director of PFF’s Center for Internet Freedom.

[1] . William A. Henry, In Defense of Elitism (1995) at 2-3.

[2] . See Adam Thierer, The Progress & Freedom Foundation, Congress, Content Regulation, and Child Protection: The Expanding Legislative Agenda, Progress Snapshot 4.4, Feb. 2008, www.pff.org/issues-pubs/ps/2008/ps4.4childprotection.html. Like American courts, we use the term “speech” as a broad catch-all for communications, including both actual speaking as well as other forms of transmitting, as well as receiving, information (“content”).

[3] . See generally Adam Thierer, Don’t Scapegoat Media, USA Today, Dec. 4, 2008, www.pff.org/issues-pubs/ps/2008/ps4.24scapegoatmedia.html; Marjorie Heins, Not in Front of the Children, “Indecency,” Censorship, and the Innocence of Youth (2001); Karen Sternheimer, It’s Not the Media: The Truth about Pop Culture’s Influence on Children (2003); Karen Sternheimer, Kids These Days: Facts and Fictions about Today’s Youth (2006).

[4] . See Adam Thierer, The Progress & Freedom Foundation, FCC Violence Report Concludes that Parenting Doesn’t Work, PFF Blog, Apr. 26, 2007, http://blog.pff.org/archives/2007/04/fcc_violence_re.html.

[5] . See Adam Thierer, The Progress & Freedom Foundation, Sen. Rockefeller Gives Up on Parenting at Senate Violence Hearing, PFF Blog, June 26, 2007, blog.pff.org/archives/2007/06/sen_rockefeller_1.html.

[6] . Adam Thierer, Conservatives, Porn, and “Community Standards,” The Technology Liberation Front, March 2, 2009, http://techliberation.com/2009/03/02/conservatives-porn-and-community-standards.

[7] . Berin Szoka & Adam Thierer, The Progress & Freedom Foundation, Online Advertising & User Privacy: Principles to Guide the Debate, Progress Snapshot 4.19, Sept. 2008, www.pff.org/issues-pubs/ps/2008/ps4.19onlinetargeting.html.

[8] . Jeff Chester, for decades the great gadfly of American advertising, has decried “the system … developed to track each and every one of us and our behavior for one-on-one marketing efforts” as “manipulative, intrusive and un-democratic.” Wendy Melillo, Q&A: Chester Writes the Book on Privacy, Dec. 11, 2007, www.gfem.org/node/227. For instance, Chester and other leading “privacy advocates” ridicule the idea of smart phones as a “liberating technology” and insist that,

Despite the glowing words about customization and personalized service, what marketers and advertisers are increasingly offering consumers is merely the illusion of free choice. Mobile operators offer their various options and services, not on an individual basis, but preconfigured according to segmented demographic profiles.

Center for Digital Democracy and U.S. Public Interest Research Group, Complaint and Request for Inquiry and Injunctive Relief Concerning Unfair and Deceptive Mobile Marketing Practices, Jan. 13, 2009 (emphasis original), www.democraticmedia.org/files/FTCmobile_complaint0109.pdf. See generally Berin Szoka & Adam Thierer, The Progress & Freedom Foundation, Targeted Online Advertising: What’s the Harm & Where Are We Heading?, Progress on Point 16.2, Feb. 2009, www.pff.org/issues-pubs/pops/2009/pop16.2targetonlinead.pdf.

[9] . Berin Szoka & Adam Thierer, The Progress & Freedom Foundation, COPPA 2.0: The New Battle over Privacy, Age Verification, Online Safety & Free Speech, Progress on Point 16.11, May 2009, www.pff.org/issues-pubs/pops/2009/pop16.11-COPPA-and-age-verification.pdf.

[10] . The Supreme Court has used a “right to privacy” to strike down laws against the use of contraception by married couples, Griswold v Connecticut, 381 U.S. 479 (1965), and abortion, Roe v. Wade, 410 U.S. 113 (1973).

[11] . Eugene Volokh, Freedom of Speech and Information Privacy: The Troubling Implications of a Right to Stop People From Speaking About You, 52 Stanford L. Rev. 1049 (2000), available at www.pff.org/issues-pubs/pops/pop7.15freedomofspeech.pdf.

[12] . See , Amicus Brief for Association Of National Advertisers, Cato Institute, Coalition For Healthcare Communication, Pacific Legal Foundation And The Progress & Freedom Foundation In Support Of Appellants, IMS Health v. Sorrell, No. 09-1913-cv(L), 09-2056-cv(CON) (2nd Cir. 2009), available at www.pff.org/issues-pubs/filings/2009/071309-Brief-Amici-Curiae-ANA-et-al-Second-Circuit-(09-1913-cv).pdf.

[13] . See Adam Thierer, The Progress & Freedom Foundation, Social Networking and Age Verification: Many Hard Questions; No Easy Solutions, Progress on Point No. 14.5, March 2007, www.pff.org/issues-pubs/ pops/pop14.8ageverificationtranscript.pdf; www.pff.org/issues-pubs/pops/pop14.5ageverification.pdfAdam Thierer, The Progress & Freedom Foundation, Statement Regarding the Internet Safety Technical Task Force’s Final Report to the Attorneys General, Jan. 14, 2008, www.pff.org/issues-pubs/other/090114ISTTFthiererclosingstatement.pdf; Nancy Willard, Why Age and Identity Verification Will Not Work—And is a Really Bad Idea, Jan. 26, 2009, www.csriu.org/PDFs/digitalidnot.pdf; Jeff Schmidt, Online Child Safety: A Security Professional’s Take, The Guardian, Spring 2007, www.jschmidt.org/AgeVerification/Gardian_JSchmidt.pdf.

[14] . Adam Thierer, The Progress & Freedom Foundation, Mandatory Data Retention: How Much is Appropriate, PFF Blog, June 26, 2006, http://blog.pff.org/archives/2006/06/mandatory_data.html

[15] . Adam Thierer, The Progress & Freedom Foundation, The Perils of Mandatory Parental Controls and Restrictive Defaults, Progress on Point 14.4, Apr. 11, 2008, www.pff.org/issues-pubs/pops/2008/pop15.4defaultdanger.pdf.

[16] . Adam Thierer, China’s Green Dam Filter and the Threat of Rising Global Censorship, PFF Blog, June 17, 2009, http://blog.pff.org/archives/2009/06/chinas_green_dam_filter_and_threat_of_rising_globa.html

[17] . They define choice architecture as follows: “A structure designed by a choice architect(s) to improve the quality of decisions made by homo sapiens. Often invisible, choice architecture is the specific user-friendly shape of an organization’s policy or physical building when homo sapiens come into contact with it. Examples of choice architecture include a voter ballot, a procedure for handling well-meaning people who forget a deadline, or a skyscraper.” Nudge Glossary of Terms, www.nudges.org/glossary.cfm.

[18] . Lawrence Lessig, Code and Other Laws of Cyberspace (1999) at 6.

[19] . See Adam Thierer, Code, Pessimism, and the Illusion of “Perfect Control,” Cato Unbound, May 2009, www.cato-unbound.org/2009/05/08/adam-thierer/code-pessimism-and-the-illusion-of-perfect-control

[20] . See Solveig Singleton & Jim Harper, With A Grain of Salt: What Consumer Privacy Surveys Don’t Tell Us, 2001, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=299930.

[21] . As Cato Institute scholar Will Wilkinson has argued, the book’s “agreeably banal doctrine of choice-preserving helpfulness” blurs the lines between paternalism and libertarianism, and thus “the thrust of the conceptual renovation behind the term libertarian paternalism is to empower, not limit, political elites.” Why Opting Out Is No “Third Way,” Reason, October 2008, www.reason.com/news/show/128916.html. See also Adam Thierer, The Progress & Freedom Foundation, Sunstein’s “Libertarian Paternalism” is Really Just Paternalism, PFF Blog, April 7, 2008, http://blog.pff.org/archives/2008/04/sunsteins_liber.html.

[22] . See Robert Corn-Revere, “’Voluntary’ Self-Regulation and the Triumph of Euphemism,” in Rationales & Rationalizations: Regulating the Electronic Media (Robert Corn-Revere, ed., 1997), at 183-208.

[23] . Telecom Policy Report, Commission Settles Indecency Charges, But At What Cost?, June 30, 2004, http://findarticles.com/p/articles/mi_m0PJR/is_25_2/ai_n6091525.

[24] . See Adam Thierer, XM-Sirius, Regulatory Blackmail, and Diversity, June 17, 2008, http://blog.pff.org/archives/2008/06/xmsirius_regula.html.

[25] . See Comments of W. Kenneth Ferree on Implementation of Sirius-XM Merger Condition, The Progress & Freedom Foundation, MB Docket No. 07-57, March 30, 2009, www.pff.org/issues-pubs/filings/2009/033009siriusXMconditionfiling.pdf.

[26] . See Szoka & Adam Thierer, supra note 8 at 3.

[27] . See id. at 2.

[28] . Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy (1995) at 5.

[29] . Alice Marwick, To Catch a Predator? The MySpace Moral Panic, First Monday, Vol. 13, No. 6-2, June 2008, www.uic.edu/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/2152/1966; Wade Roush, The Moral Panic over Social Networking Sites, Technology Review, Aug. 7, 2006, www.technologyreview.com/communications/17266; Anne Collier, Why Techopanics are Bad, Net Family News, April 23, 2009, www.netfamilynews.org/2009/04/why-technopanics-are-bad.html; Adam Thierer, Parents, Kids & Policymakers in the Digital Age: Safeguarding Against ‘Techno-Panics,’ Inside ALEC, July 2009, at 16-17, www.alec.org/am/pdf/Inside_July09.pdf; Adam Thierer, Progress & Freedom Foundation, Technopanics and the Great Social Networking Scare, PFF Blog, June 10, 2008, http://techliberation.com/2008/07/10/technopanics-and-the-great-social-networking-scare.

[30] . Supra note 13.

[31] . In the 109th Congress, former Rep. Michael Fitzpatrick (R-PA) introduced the Deleting Online Predators Act (DOPA), which proposed a ban on social networking sites in public schools and libraries. DOPA passed the House of Representatives shortly thereafter by a lopsided 410-15 vote, but failed to pass the Senate. The measure was reintroduced just a few weeks into the 110th Congress by Senator Ted Stevens (R-AK), the ranking minority member and former chairman of the Senate Commerce Committee. It was section 2 of a bill that Sen. Stevens sponsored titled the “Protecting Children in the 21st Century Act” (S. 49), but was later removed from the bill. See Declan McCullagh, Chat Rooms Could Face Expulsion, CNet News.com, July 28, 2006, http://news.com.com/2100-1028_3-6099414.html?part=rss&tag=6099414&subj=news.

[32] . See Emily Steel & Julia Angwin, MySpace Receives More Pressure to Limit Children’s Access to Site, Wall Street Journal, June 23, 2006, online.wsj.com/public/article/SB115102268445288250-YRxkt0rTsyyf1QiQf2EPBYSf7iU_20070624.html; Susan Haigh, Conn. Bill Would Force MySpace Age Check, Yahoo News.com, March 7, 2007, www.msnbc.msn.com/id/17502005.

[33] . See, e.g., Letter of Henry McMaster, Attorney General, South Carolina to Attorney General Richard Blumenthal and Attorney General Roy Cooper Regarding Internet Safety Task Force (“ISTTF”) Report, January 14, 2009, www.scag.gov/newsroom/pdf/2009/internetsafetyreport.pdf

[34] . See Adam Thierer, The Progress & Freedom Foundation, Video Games and “Moral Panic,” PFF Blog, Jan. 23, 2009, http://blog.pff.org/archives/2009/01/video_games_and_moral_panic.html ; Adam Thierer, The Progress & Freedom Foundation, Fact and Fiction in the Debate over Video Game Regulation, Progress Snapshot 13.7, March 2006, www.pff.org/issues-pubs/pops/pop13.7videogames.pdf.

[35] . “All varieties of interference with the market phenomena not only fail to achieve the ends aimed at by their authors and supporters, but bring about a state of affairs which—from the point of view of their authors’ and advocates’ valuations—is less desirable than the previous state affairs which they were designed to alter. If one wants to correct their manifest unsuitableness and preposterousness by supplementing the first acts of intervention with more and more of such acts, one must go farther and farther until the market economy has been entirely destroyed and socialism has been substituted for it.” Ludwig von Mises, Human Action, at 858 (3rd ed. 1963) (1949).

[36] . See generally Adam Thierer, The Progress & Freedom Foundation, Media Myths: Making Sense of the Debate over Media Ownership (2005) at 119-123, www.pff.org/issues-pubs/books/050610mediamyths.pdf (Explaining how the third-person effect serves as a powerful explanation for the heated backlash that followed an FCC effort to moderately liberalize media ownership rules in 2003-04).

[37] . W. Phillips Davison, The Third-Person Effect in Communication, 47 Public Opinion Quarterly 1, Spring 1983, at 3.

[38] . For the best overview of third-person effect research, see Douglas M. McLeod, Benjamin H. Detenber, and William P. Eveland., Jr., Behind the Third-Person Effect: Differentiating Perceptual Processes for Self and Other, 51 Journal of Communication, Vol. 51, No. 4, 2001, at 678-695.

[39] . Vincent Price, David H. Tewksbury & Li-Ning Huang, Third-person Effects of News Coverage: Orientations Toward Media, Journalism & Mass Communications Quarterly, Vol. 74, at 525-540.

[40] . Douglas M. McLeod, William P. Eveland & Amy I. Nathanson, Support for Censorship of Violent and Misogynic Rap Lyrics: And Analysis of the Third-Person Effect, Communications Research, Vol. 24, 1997, at 153-174.

[41] . Hernando Rojas, Dhavan V. Shah, and Ronald J. Faber, For the Good of Others: Censorship and the Third-Person Effect, International Journal of Public Opinion Research, Vol. 8, 1996, at 163-186.

[42] . James D. Ivory, Addictive, But Not For Me: The Third-Person Effect and Electronic Game Players’ Views Toward the Medium’s Potential for Dependency and Addiction, University of North Carolina at Chapel Hill, School of Journalism and Mass Communication, Aug. 2002.

[43] . Albert C. Gunther, Overrating the X-rating: The Third-person Perception and Support for Censorship of Pornography, Journal of Communication, Vol. 45, No. 1, 1995, at 27-38

[44] . Supra note 37 at 14. Along these lines, a December 2004 Washington Post article documented the process by which the Parents Television Council, a vociferous censorship advocacy group, screens various television programming. One of the PTC screeners interviewed for the story talked about the societal dangers of various broadcast and cable programs she rates, but then also noted how much she personally enjoys HBO’s “The Sopranos” and “Sex and the City,” as well as ABC’s “Desperate Housewives.” Apparently, in her opinion, what’s good for the goose is not good for the gander! See Bob Thompson, Fighting Indecency, One Bleep at a Time, The Washington Post, Dec. 9, 2004, at C1, www.washingtonpost.com/wp-dyn/articles/A49907-2004Dec8.html.

[45] . See Chris Anderson, Free: The Future of a Radical Price at 112-118 (2009).

[46] . See Letter from Chris Jay Hoofnagle, Electronic Privacy Information Center, Beth Givens, Privacy Rights Clearinghouse, Pam Dixon, World Privacy Forum, to California Attorney General Lockyer, May 3, 2004, http://epic.org/privacy/gmail/agltr5.3.04.html.

[47] . See email from Adam Thierer to Declan McCullaugh on Politech Email discussion group, April 30, 2004, http://lists.jammed.com/politech/2004/04/0083.html (emphasis added).

[48] . See Complaint and Request for Injunction of the Electronic Privacy Information Center against Google, Inc., March 17, 2009, http://epic.org/privacy/cloudcomputing/google/ftc031709.pdf; see also Ryan Radia, Should the FTC Shut Down Gmail and Google Docs Because of an Already-Fixed Bug?, Technology Liberation Front Blog, March 18, 2009, http://techliberation.com/2009/03/18/should-the-ftc-shut-down-gmail-and-google-docs-because-of-an-already-fixed-bug/.

[49] . See Berin Szoka & Mark Adams, The Progress & Freedom Foundation, The Benefits of Online Advertising & the Costs of Regulation, PFF Working Paper, forthcoming.

[50] . Anti-advertising crusader Jeff Chester often resorts to questioning the motives of those who question whether his regulatory prescriptions would actually benefit consumers, see, e.g., http://techliberation.com/2009/06/17/behavioral-advertising-industry-practices-hearing-some-issues-that-need-to-be-discussed/#comment-11698840. See generally Jeff Chester, Digital Destiny: New Media and the Future of Democracy (2007).

[51] . “The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs or impede their efforts to obtain it. Each is the proper guardian of his own health, whether bodily or mental and spiritual.” John Stuart Mill, On Liberty (Penguin Classics, 1859, 1986) at 72.

[52] . Adam Thierer, The Progress & Freedom Foundation, Parental Controls & Online Child Protection, Special Report, Version 4.0, Summer 2009, www.pff.org/parentalcontrols.

[53] . Adam Thierer, Berin Szoka & Adam Marcus, The Progress & Freedom Foundation, Privacy Solutions, PFF Blog, Ongoing Series, http://blog.pff.org/archives/ongoing_series/privacy_solutions.

[54] . Comments of Adam Thierer, The Progress & Freedom Foundation, In the Matter of Implementation of the Child Save Viewing Act; Examination of Parental Control Technologies for Video or Audio Programming; MB Docket No. 09-26, April 16, 2009, www.pff.org/issues-pubs/filings/2009/041509-%5bFCC-FILING%5d-Adam-Thierer-PFF-re-FCC-Child-Safe-Viewing-Act-NOI-(MB-09-26).pdf.

[55] . See Adam Thierer, FCC v. Fox and the Future of the First Amendment in the Information Age, Engage, Feb. 20, 2009, www.fed-soc.org/doclib/20090216_ThiererEngage101.pdf

[56] . “To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.” Friedrich von Hayek, “The Pretence of Knowledge,” in The Essence of Hayek, (Hoover Inst., 1984), at 276.

[57] . Adam Thierer, The Progress & Freedom Foundation, Two Sensible, Education-Based Legislative Approaches to Online Child safety, Progress Snapshot 3.10, Sept. 2007, www.pff.org/issues-pubs/ps/2007/ps3.10safetyeducationbills.pdf.

[58] . See, e.g., Berin Szoka, Google, CDT, Online Advertising & Preserving Persistent User Choice Across Ad Networks Through Plug-ins, Technology Liberation Front Blog, March 13, 2009, http://techliberation.com/2009/ 03/13/google-cdt-online-advertising-preserving-persistent-user-choice-across-ad-networks-through-plug-ins/.

The introduction below was originally written by Berin Szoka, but now that I (Adam Marcus) am a full-fledged TLF member, I have taken authorship.

Adam Marcus, our exceptionally tech-savvy new research assistant at PFF, has published his first piece at the PFF blog, which I reprint here for your edification.

Today Google’s DC office hosted an interesting panel on cloud computing.  What was missing was a good definition of what “cloud computing” actually is.

While Wikipedia has its own broad definition of cloud computing, many think of cloud computing more narrowly as strictly web-based for which clients need nothing but a web browser. But that definition doesn’t cover things like Skype and SETI@home.  And just because PFF has implemented Outlook Web Access so we can access the Exchange server via the Web, doesn’t necessarily mean we’ve implemented what most people might think of as “cloud computing.”  Yet these are all variations on a common theme, which leads me to propose my own basic definition: any client/server system that operates over the Internet.

To understand the potential policy and legal issues raised by cloud computing so-defined, one must break down the discussion into a 4-part grid.  One axis is divided into private data ( e.g., email) and public data (e.g., photo sharing).  The other axis is divided into data hosted on a single server or centralized server farm and data hosted on multiple computers in a dynamic peer-to-peer network (e.g., BitTorrent file sharing).

There are also a great number of peer-to-peer cloud computing projects that don’t require the sharing of user data.  SETI@home may be the most well-known example:  When the Search for Extra-Terrestrial Intelligence (SETI) project lost its funding and could no longer afford the massive servers it used to process the data from its radiotelescopes, it realized that it could distribute the work to Internet users in the form of a screensaver (thus the SETI work would only be done when a user’s computer was idle).

It is encouraging to see that Congress is no longer considering simply outlawing cloud computing (which used to be called distributed computing), but if there is to be an intelligible debate about policy responses to cloud computing, we must define our terms and realize that policies beneficial to some forms of cloud computing may complicate-sometimes fatally, in business terms-other forms.  For example, regulations imposed on companies storing users’ personal data may stymie peer-to-peer backup applications like Wuala, which distributes each user’s backup data to other users, but uses encryption to prevent users from accessing the data they’re storing for others. Wuala might be forced to close down if regulations requiring companies to keep records for a set period of time or follow separate procedures for minors were interpreted to apply to each Wuala user.

As Georgetown CCT professor Mike Nelson explained at the Google workshop, technology generally follows a clear evolution in the following steps: from hardware to software to people to organizations to policy.  It’s taken a long time to educate lawmakers about the Internet.  Today’s panelists all seemed to agree that cloud computing could be “the next big thing.”  That necessarily means that the education process for lawmakers needs to start all over again, explaining the ways in which cloud computing is similar to prior technologies, the ways it’s different, and the salient differences among the four broad categories of cloud computing described above.  Until that’s done, any talk of legislation in this area is simply premature.