How U.S. Internet Commons Policies Lessen Growth Jobs & Security

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Scott Cleland Contributor
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If prices are zero and property scorned, where’s the growth, jobs or value creation?

To grow and create jobs and lasting value for everyone, markets need: prices above costs; people and property safe to create value; and market competition to create choices and accountability.

Current U.S. Internet-commons policies yield the opposite, regulatory advantaging the Internet business world of “bits” massively over the non-Internet business world of “atoms.”

This profoundly asymmetric regulation generates Internet winner-take-all outcomes, and structurally inhibits non-Internet economic and employment growth — in two ways.

One is the huge asymmetry in the rules of the game.

Several Big Internet companies enjoy unbeatable special government treatment, rules and advantages over all other companies.

The other is a hugely unlevel playing field.

Big Internet algorithmic marketplaces — like Google’s, Amazon’s and Facebook’s, among others’ — face virtually none of the accountability and transparency requirements that non-Internet markets and exchanges face.

Imagine a virtual soccer match with rules of the game where only Big Internet players can use their hands “disruptively,” can’t be called for a foul, and can score “goals” for just passing or getting cheers.

Imagine a virtual soccer playing field where the league has decided who wins before the game – Big Internet companies – by tilting the field so much in their favor that the ball rolls down into their toward their opponent’s goal – by itself.

It’s gotten that bad.

This asymmetric, legal, regulatory, and law enforcement treatment appears to be at least part of why most of the 4,000 government-disfavored, public companies and millions of private companies find it so hard to grow, and why employment and productivity lag expectations.

People outside of Washington and three Congressional Districts in California, have no idea how pampered and entitled “The Netstablishment” of Google, Amazon, Facebook et al has become — at almost everyone else’s expense.

When one exposes the extreme corporate welfare that the U.S. Government now lavishes on Big Internet companies, Big Internet’s worshipped “innovative disruption” looks more like crony capitalism leveraging unbeatable Washington insider influence to privatize their disruptive profits, while socializing the public costs of purposely destroying many millions of American jobs.

If two-thirds of U.S. GDP is consumer spending, how do Internet commons’ mass-disemployment policies produce economic and employment growth?

Consider security.

Presuming they are above the law, Big Internet companies are refusing to comply with FBI and Homeland Security warrants for access to their technologies and encrypted algorithms to fight crime and deter terrorism.

Never mind such Constitutional, court-authorized, communications access has been bipartisan policy for almost 70 years.

Consider antitrust.

Three Big Internet companies have become de facto “netopolies” with roughly 90% online market shares in their respective online markets: Google, Facebook, and Amazon.

Over the last four years, U.S. antitrust authorities have perversely encouraged these winner-take-all markets.

They currently pre-judge that the following Internet behaviors can never be anti-competitive: forcing others’ prices to zero; baiting with open switching to closed; devaluing others’ privacy or proprietary content; or leveraging unbeatable internetwork effects.

They don’t even see a dominant platform acquiring its main viral-growth, emerging competitor as substantially lessening competition.

This perverse special treatment that Big Internet companies are above antitrust law picks online-ad-based business models as winners and paid models as losers; encourages extreme new media concentration never imaginable with old media; and lessens economic growth, jobs and security.

U.S. antitrust authorities are perversely ignoring the statutory purpose of antitrust – to prevent monopolization and promote fair competition – to protect innovation, a goal not found in antitrust statute.

Consider the applicability of liability and negligence laws.

Big Internet companies have taken extreme advantage of narrow legal provisions originally designed to restrict indecent communications to protect children, to confer on themselves blanket Internet immunity from any intermediary negligence or willful blindness to harmful and criminal activity that happens on their Internet platforms.

The quintessential example of Big Internet’s view that they are special and above the law was Google winning a lower court Federal injunction in 2014 for 18 months that prevented all State Attorneys General from investigating Google for any alleged Google violation of State laws.

Consider FCC regulation.

Big Internet companies recently secured extraordinary special treatment from the FCC.

The FCC’s Open Internet order that imposed 1934 common carrier regulation on ISPs, over Congress’ objections, created a new protected class of Internet companies, edge providers, that don’t have to pay for their outsized cloud computing consumption of Internet bandwidth.

The FCC’s privacy order created more restrictive privacy rules for ISPs that prevent ISPs from fully competing with the two dominant online advertisers, Google in search and Facebook in social.

The FCC, at Big Internet’s behest, proposed to force all pay TV providers to give Big Internet over-the-top video streamers free access to $200b worth of proprietary video programming via the FCC gutting copyright licensing protections.

This only scratches the surface of this Internet commons policy problem.

When non-Internet companies figure out how much Internet commons policies have picked the business world of bits to win and the business world of atoms to lose, they will either seek fair rules of the game and a level playing field of competitive opportunity – or they will lose.

If winner-take-all Internet commons policies are allowed to continue to deflate prices, devalue property, and disemploy millions, they will continue to lessen America’s growth, jobs and security.

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an internetization consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google and also before the relevant House oversight subcommittee on Google’s privacy problems.