Wu ponders future Internet monopolies

May 10, 2011, 3:04 a.m.

Net neutrality theorist Tim Wu spoke Monday afternoon at a talk hosted by the Center for Internet and Society. He discussed the threat of the Internet being run by one giant corporation, as has been the case with other information industries in the course of American history.

Wu is currently on leave from his professorship at Columbia Law School to serve as a senior advisor at the Federal Trade Commission in Washington, D.C. In his lecture, held at the Law School, he explored a topic presented in his book, “The Master Switch.”

Wu ponders future Internet monopolies
Author Tim Wu spoke at Monday's lecture at the Law School. (ZACK HOBERG/The Stanford Daily)

“Is the problem of the recurring monopoly destined to be the fate of the Internet as well?” Wu asked the audience of students, Silicon Valley software engineers and professors.

Wu also pondered whether the Internet could be ruled by one “corporate leviathan” in possession of the master switch.

To address these questions, he drew from the history of the radio, telephone, television and film industries and a theory of a three-phase cycle that repeats itself across industries.

According to this theory, a disruptive invention improves and replaces existing technologies approximately every 20 years. Next, there is period of openness characterized by wide experimentation with the new technology’s capabilities and limitations. Finally, there is the consolidation phase, in which key players force out competition and monopolize the industry.

“We can learn so much from looking back at the way industries have consolidated over time,” said law school lecturer Anthony Falzone, executive director of the Fair Use Project. “We have the same concerns in the present with how things were in the past.”

Wu said the Internet has gone through the first phase of invention, and is now either in the second phase of open experimentation or the beginning of the third phase of consolidation. He cited Facebook, Google and Twitter as possible examples of consolidation.

One problem with consolidation and monopolies, Wu noted, is that the industry gets stuck in a state of lack of innovation.

“You want companies to be overtaken if something better arises,” he said.

He referred to the case of Hosni Mubarak, the recently ousted president of Egypt, saying that if a company gains too much power, it may become erratic and abusive.

“You want them to be a little insecure so that the company is always cautious,” he said.

If barriers to entry are too high, better services and products cannot emerge.

First year law school student Christian Geib, who attended the talk, thought this was already a problem.

“To get any traction on a new project you must go through a big, established company like Google or Facebook,” he said.

During the event, Wu also discussed measures that can be taken to construct the architecture of the Internet to allow for competition. He stressed the need to maintain open channels, avoid vertical monopolies and prevent the government from sheltering a company, as it has done in the past.

“The openness of the Internet is crucial to having the same shot at creating,” Barbara van Schewick said after the talk. She is the faculty director of the Law School’s Center for Internet and Society and, along with Wu, is a lead theorist on net neutrality.

Others in the audience were more skeptical of Wu’s points.

“He adopted a rather cynical view of it, characterizing the power of network effects as a harmful byproduct of malignant monopolies,” said Michael Broukhim, a first year master’s student in law and business. “I think there are lots of benefits from people using the same products and operating on the same platforms.”

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