If the Internet Breaks, it’s not Ralph’s fault, it’s ours

The Internet Society, an American non-profit organisation which counts the father of the Internet, Vint Cerf as one of its founding presidents, recently shared a report about Concentration of Power and its impact upon the World Wide Web.

The report highlights that a small group of large players that wield so much control over the Internet Economy, poses potential risks to the Internet. These risks are:

     * the potential for more limited choice in the marketplace
    * the lack of platform diversity may create significant economic dependencies, including the risk that companies will become too big to fail
    * the impact on interoperability and standardisation
    * regulatory responses to consolidation that may have unintended consequences to the global Internet

Policy Advisor, Carl Gahnberg talks to Enterprise IT News about the consequences of permanent favourites and regulatory landscapes that overlook the little guys.

EITN: Due to Internet concentration, do you see the unintended consequence of companies too big to fail yet? If you do, can you name one or two of these companies?

Carl: This is one of the key issues that we raise in the report. At the heart of the matter is a question about the potential dependencies or externalities that could be created by a service failure and that would, in turn, have significant impacts on other services or the broader economy.

The consequence of such strong dependencies, and in light of any associated risks, could be policies or regulatory protections of those companies that effectively gives them a favoured status that further cement their role.

This is a stark contrast to what we consider as one of the fundamental characteristics of the Internet: that it does not have any permanent favourites but is open to evolution and choice.

However, while this is a general concern, our research did not provide the required analysis that would allow us to classify some of the Internet companies as ‘too big to fail’.

Such a question would require deeper analysis in regard to the functionalities of a specific service, the extent others are dependent on those functionalities, and whether or not there are viable substitutes.

This is part of what we will be doing in 2019.  

EITN: Can you also give the top 3 impacts/consequences of companies that are too big to fail?

Carl: As we describe it in the report, the notion of too big to fail stems from strong dependencies between different services and operations, with consequences ranging from a complete failure to temporary disruptions in the quality of a service.

However, the notion of too big to fail also implies a cost/benefit analysis that may differ between various activities, services or even companies. For some services even temporary disruptions in the quality of service, for which there is no viable alternative, may be perceived as a “failure” that requires special protection. Thus, what the actual impact is would be dependent on the particular service that the company offers.

As mentioned above, one of the long-term consequences that we see is that the Internet could effectively get a set permanent favourites, meaning that the company or its associated technologies is used not because of its relevance or utility, but of some favoured and preferential status.

In our view, this notion of “no permanent favourites” has been one of the key properties of the Internet, allowing it to flourish and evolve to what it is today.

In essence, the Internet has been a place where good ideas are overtaken by better ideas, and giving some companies or their technologies a favored status would place the Internet on an evolutionary path that is significantly different than what we have seen over the past 25 years.

EITN: Facebook was involved in a huge privacy scandal ala Cambridge Analytica – are they still surviving because of this Internet power concentration that you speak of, or do you see their power wavering?

A company’s ability to address external events as a result of a concentration of power depends on factors such as geography, Internet penetration and perceptions about the Internet. 

For example, in a country where alternative services are prevalent, the power of such companies would not be as significant as they would be in other markets with less diverse offerings.

EITN: There is a list of risks you also shared, do you see other signs of unintended consequences yet? Please share top 3, if yes.

Carl: There is really one significant unintended consequence that emerges from the way we approach consolidation. Given that our understanding about consolidation is limited and focuses only on the applications’ layer of the Internet, the danger of unintended consequences increases.

Regulations and policies that directly interfere with Internet operations, or through regulatory inconsistencies across jurisdictions could have negative externalities for the Internet.

A very concrete example would be the proliferation of complex rules to which only the largest organisations may be able to comply – possibly even strengthening existing trends of consolidation.

For instance, there is anecdotal evidence, which suggests that for the costs associated with recent regulatory trends can only be borne by the bigger Internet players, which comes to show that regulation should be focused, informed and proportionate in order to achieve its desired goals.

One of the things that we try to emphasise in this report is that while the trends we see are accompanied by concerns there are also benefits.

Thus, one of the unintended consequences from uninformed action may be regulatory efforts that destroy technologies that are valuable to people today.

This is why we are calling for further study of this topic in 2019.

EITN: Your report called for key stakeholders to assess industry concentration. Who are these stakeholders?

Carl: It will require all stakeholders, not least due to the complexity of this issue. Consolidation affects many stakeholders including businesses, consumers, and governments.

They all have unique expertise and perspective to contribute.

Note from the Editor-in-Chief:

The Internet Society shares more about their 2019 action plan here:

An excerpt reads as below:

Our 2019 efforts will focus on understanding these issues, and on steps that may need to be taken to address the impact of consolidation on users, including opportunities it might bring.

Specific activities in 2019 will include a broad-ranging effort to clearly formulate the issue of consolidation so that directed research can be undertaken to understand how it might affect the Internet in the future, and what steps may be taken to ensure the Internet remains an open global platform for permission-less innovation.