The thought receptacle

Stephen's mental dustbin

Sun, 12 Apr 2015


[I wrote this a while back, after getting annoyed by the links to Twitter, Facebook, Flickr and other “presences” proudly sported by government services' web pages.]

The British government still does not understand the internet. They seem limited to recognising that it's an Important Thing For The Future, one that's Unfashionable Not To Use. But to them it is a foreign, other-worldly thing which they do not believe they have any role in shaping. This is unfortunate, because the internet has serious non-technical problems which are precisely the sort of thing that government power is suited to sorting out.

Imagine going back a century to a time when some new way of doing business was coming about. And imagine the government endorsing the idea that there should be only one company capable of delivering any one service using these new means. And these would not be publicly-owned companies chartered to serve the public interest. They would be private, multinational companies with no accountability to anyone but their shareholders.

This might not have happened a century ago, but it has certainly happened in the last couple of decades, with internet services. Today you can hardly find a reputable institution that doesn't proudly sport front-page links for services such as Twitter, Facebook, Flickr, LinkedIn and so on. Government services are especially keen to do this. Name a department, and chances are they'll sport such links on their front page. BIS does, of course. The DfT does. Even the NHS does. The Land Registry does. I could sit here all night visiting government organisations' web sites, and I bet I'd find few that didn't.

Any service connecting people with people is a kind of network. Metcalfe's law tells us that networks' utility increases with the square of their size. So big networks have benefits. The problem comes when private companies retain exclusive control of a large network. Like any monopoly, this is bad for competition: the incumbents have both the power (and motivation) to crush young upstarts, to aggressively seek rent, and to avoid acting in anyone's interests but their own. Their network's size and mindshare means they get “business by default”; few people think of using anything else, and it's the best network anyway, because size trumps other issues. Once a proprietary network reaches a certain level of dominance, competitors don't stand a chance.

Our incumbent network-owners are not only being allowed to perpetuate their monopolies -- they're receiving direct government assistance in doing so. The government doesn't understand that “Twitter” isn't a technology or a concept. it's a closed service run by a profit-seeking corporation. Although there is an underlying concept, which we could call “social microblogging”, the Twitter model is only one of many ways in which such a network can operate. By changing laws and incentives, governments can change these dynamics. In fact, that's possibly the most widely agreeable, right-winger-friendly definition of what government is for. When monopolies arise by natural processes, government has at best flimsy excuses. When government is helping monopolies on their way, it's clear that something has gone very wrong.

Let's consider the equivalent scenario with the humble telephone. We all know monopolies are bad, so let's skip to British Telecom at the moment of privatisation. Imagine the government allowed BT to render its network usable only by other BT customers. Although consumers are allowed to get a non-BT phone, hence “competition”, there's a catch. Don't expect to ring anyone else with your non-BT phone. You'll only be able to ring those who are customers of your chosen company. This would be unthinkable... it would be missing the whole point of privatisation. How could we expect consumers to break the stranglehold of a monopoly if choosing a different provider meant being cut off?

Networks are quite a general concept. It's clear that Twitter and Facebook are networks. But a lot of other services behave like networks. For example, eBay is a network. Why would I search on another auction site? It might offer a better experience, but it won't have as many listings, so it's not worth my while. Amazon is something of a network too, since it is a de-facto rendezvous point between people and products: linking to a product's Amazon page, its de-facto “web presence”, is how people exchange links to books, music and so on, and the page is also a nexus for reviews and crowdsourced product information. Since Amazon is the dominant incumbent in the book-selling industry, this dominance automatically disadvantages competition and rewards centralisation of content onto the Amazon network.

Google -- the last competitive triumph of public-facing internet services -- is an interesting non-example. Its search engine could compete with Alta Vista precisely because web search is not a network-like service. It didn't matter how many people were using Alta Vista already -- Google did it better. Slowly, the word spread. People didn't need to wait for their friends to switch to Google -- they just did it.

Once a service is a sufficiently large network, it acquires anticompetitive properties which only regulation can counteract. The answer is to legally enforce the openness of networks. Once a network reaches a certain size, it must be forced, by law, to operate on an open-access basis using open protocols. (Telephone networks and the rail network already have this requirement.) To this, we have to add the usual provision: the right of innovators to a limited right of exploitation of whatever innovation they create. So new network services can be rolled out proprietarily -- but once these services themselves reach a certain high level of uptake, they must be deemed mature and then subject to the same openness rules.

Before you lambast me for being all socialist in advocating “yet more regulation”, remember that competition is what I'm seeking here. Few people would claim that we have a working market in any networked sector of business on the internet. Government seems to think that the internet is “special”, that creating dependence on these private companies' networked services is some kind of brave new world of business and prosperity. It's time government learned that there's nothing that makes Internet monopolies magically beneficial in ways that other ones aren't. By supporting them, it's giving us all the disadvantages of monopolies without the benevolent intentions of state ownership. Even Thatcher would be appalled.

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