Events Constantly Outstrip Washington’s Ability to Regulate Technology

Two events last week inform new debates about whether (or how) to regulate technology markets.

Via Twenty20

In the first, Amazon and Google’s long-simmering spat exploded just in time for the holidays.

As revenge for Amazon refusing to stock Google’s line of gadgets – the company’s Chromecast internet TV box, Google Home speaker and, most recently, its Nest line of smart thermostats – Google removed access to YouTube from Amazon’s own Fire TV devices. In defending the move, Google also pointed out that Amazon has refused to make its own internet TV service, Prime Video, work on Chromecast devices.

There are two curious things about this spat. One is that everybody involves loses. By restricting access to YouTube, Google will forgo the lucrative advertising revenues that come from it; Amazon, meanwhile, misses out on both sales of Google products and its own, which are now crippled by the loss of YouTube and are less attractive to shoppers.

The irony is thicker than a Christmas gravy. The fact that all these over-the-top video services and connected devices exist and prosper is the result of a free and open internet. The explosion of devices and content is a direct result of the multi-decade US policy of internet freedom. Amazon and Google launched and grew into some of the world’s great companies, while the internet was classified as an “information service.” No one is blocking YouTube, FireTV, Alexa, or Chromecast.

No one; that is, except for these competing devices and video services. For all the hyperbole about hypothetical “blocking” and “throttling” by internet service providers (ISPs), nearly all actual examples of blocking and throttling have come from rival web, software, device, and content firms.

Amazon and Google should be left to work out their differences. But it’s lost on no one that were net neutrality activists honest about their nondiscrimination principles that this is the type of thing they’d want Washington to regulate. Actually, the honest ones do.

Social mobility

The second news item last week was far less conspicuous but highly relevant to a new debate over social network portability. The idea is being pushed by University of Chicago economist Luigi Zingales, and AEI recently hosted an event and ran a symposium on it. Under Zingales’ proposal, the law would require social networks, such as Facebook and Twitter, to allow users to port their data and “social graphs” to competing social networks. Users would “own” their own data. It sounds reasonable at a superficial level. But in reality, such a legal mandate would be unbelievably complicated and cause lots of problems.

Among its many problems, the proposal assumes that Facebook, Twitter, and Snapchat are monopolies and impervious to competition. But I think the monopoly label is nearly always too easily deployed. Writing in the symposium, I speculated that, among other forms of competition, “New decentralized peer-to-peer technologies, such as blockchains, will soon begin disrupting the ‘walled gardens’ of today’s tech titans, especially eroding the advertising-centric models.”

Well, last week a company called Blockstack raised $52.8 million to do exactly that. As Venturebeat reports:

The company is building a sort of parallel to the internet that users access via the Blockstack browser and that features a wide variety of apps. The Blockstack ecosystem promises to benefit both users and app makers. It gives users control over their own data via a personal API. Meanwhile, it allows developers to launch apps without having to host user data or worry about related storage costs and data privacy.

Instead of having all your data stored centrally (for example, having your email stored by Google, your photos by Instagram, your social messaging stored by Facebook), you would have your data stored locally on your laptop, with copies in one or more cloud services of your own choosing. Blockstack apps would have pointers to the part of your data relevant to their app, but they wouldn’t own or store that data. ‘It’s like Facebook Connect – you bring your identity with you’ to various apps, Blockstack cofounder Ryan Shea told VentureBeat.

The internet is free and open, and not much dependent on Washington for mandates, whether for net neutrality, social portability, or otherwise. Blockchain sustainability, anyone?