Serious legislation is required to combat the countless abuses of power by 'The Web Trust.'
Policy makers are beginning a long overdue reappraisal of the giant website and social media companies (“edge” providers) that dominate the Internet today — or as they might have been called a century ago, "The Web Trust."
Facebook spread lies for money, grossly distorting our elections. Google has been hit with a whopping $2.7 billion dollar fine in Europe for biasing its search results towards pay-for-play favorites. Amazon’s acquisition of Whole Foods suggests its stranglehold on online shopping is targeting the brick and mortar world. And consumers are starting to understand how relentlessly they are tracked and their identities probed by The Web Trust’s omnipresent advertising machine. Even the edge companies’ usual boosters are asking if they should have “non-discrimination obligations consistent with our traditional concepts of common carriage” — the strictest form of regulation we’ve seen in this sector.
Our society has always protected itself from monopolists, be they utilities, railroads, oil companies, or financiers, acting against abuses while preserving innovation and economic growth. Most of those early monopolies followed the same pattern as The Web Trust — after an initial burst of competitive activity, the landscape quickly became dominated by a handful of monopolistic giants.
That problem is repeating itself in force within the Internet system, largely because so many of these platforms — Google, Facebook, Amazon and the like — are really “networks” that connect users to each other. The larger they get, the more indispensable they become to users seeking to reach each other — they are “natural” monopolies. That scale allows them to insinuate themselves into other markets as Google has done, morphing from a core search business into YouTube videos, Android smartphones, and, most perniciously, data mining and digital advertising.
Meanwhile, other industries and businesses become little more than grist for the monopolists’ mill. The edge giants dwarf the cable, telco and satellite companies who spend billions on faster networks that the edge companies then commandeer, free riding off the value created by this ever-improving connectivity. Features like home assistants, 4K television and virtual/augmented reality exist not because Google or Apple invented them — they’ve been science fiction staples for years — but because ultrafast wired and wireless infrastructure has been built to support them.
The creative industries are also victims of The Web Trust’s expanding power. Newspapers, film and music companies and artists now provide the raw material that companies like Google and Facebook scrape and reassemble for the consumer, hijacking most of the economic value of their work, whether legally or illegally. Why report news, check facts and pay serious editors and writers when it all simply becomes fodder for Facebook’s indiscriminate newsfeed? Why make recordings if they will show up on YouTube’s “free” economy, helping Google sell more ads but generating scraps for artists and musicians?
And while these abuses all cry out for remedy, federal policymakers seem stuck on a hamster wheel litigating and re-litigating the “net neutrality” rules for broadband providers (who support neutrality), while dodging the problems created by the giants on the edge.
The FCC is right to revisit the illogical “public utility” rules imposed on broadband companies by former FCC Chair Tom Wheeler, who seemed eager to do The Web Trust’s bidding. Unlike search or social media, connectivity is an innovative, fluid market with competing wired and wireless options that have continually improved consumers’ ability to reach anybody or anything, anywhere. We now have not just companies, but whole systems and technologies like cable, fiber, satellite, cellular, DSL and other options that compete for your attention. The FCC is right to reject obsolete Ma Bell era regulation that denies this basic fact.
But the more pressing question is: What obligations should be imposed on the Web Trust giants as they embed themselves ever further into our lives? How do we assure ourselves that the “users” they connect us to are human or that the search results they feed us are based on merit — not pay for play (or worse, algorithmic racism).
It’s time to consider whether to break up the Google search and advertising functions, or to deny safe harbors that protect the tech platforms if they turn a blind eye to sex trafficking or commercial piracy. We need a new privacy Bill of Rights to demystify the algorithms that track and tag you and shape your on-line experience.
In these partisan times, it speaks to how dangerous The Web Trust has become that both Republicans and Democrats are calling for action and reform. If Congress and the administration want to preserve a truly open internet, they need to become the trustbusters for a new, digital generation.
Ev Ehrlich is president of ESC Co., an economics consulting firm, and was undersecretary of commerce from 1993 to 1997.
