by Tim Wu
Here it was: Google’s first real foray into the world of the telephone, as distinct from the computer and the Internet. The significance cannot be overstated. Until 2007, the Internet industries had, in the main, been playing defense—attempting to preserve the status quo of net neutrality and limit the power of their rivals among other information enterprises. Now, coming out of this defensive crouch, Google took the fight to its adversaries, attempting to plant the flag of openness deep in the heart of telephone territory, Bell’s holy land since the 1880s.
Project Android has puzzled many industry observers, for it has no obvious revenue model. Google distributes Android for free, as it does most of its other products. Mind you, what Google is giving away is not a telephone or even a telephone service—users must still buy those—but rather an operating system for telephones, based on the Linux kernel, the Ur–free and open software beloved of tech geeks. By giving away a version adapted for telephony, Google was distributing a free set of tools for programmers of any affiliation to write applications.
Given what we understand about Google, it should be obvious that this move was, like so many other initiatives, a means to an end rather than an end in itself. Project Android is a hearts-and-minds effort, a use of soft power to “convert” the mobile world into territory that is friendly to Google rather than to its enemies. It is, to return to our wild kingdom analogy, an effort to extend the world of ice and snow, where the polar bear cannot be defeated. And of course it is a long shot. As I wrote at the time, in Slate magazine, “Google is making its deepest foray yet into a foreign territory where its allies are few. It faces the challenge of not just entering the wireless world but also converting its inhabitants. Provided that Google has the nerve and resources to try to remake wireless in its image, it’ll either prove its greatest triumph or its Waterloo.” A high-stakes long shot, but one that Google’s adversaries have given it little choice but to take.
Not surprisingly, Android has made the already strained relationship with former pal Apple downright hostile. Perhaps stung by the memory of Windows and what had followed, Jobs was quick to trash Android in The New York Times. “Android hurts them [Google] more than it helps them,” said Jobs. “It’s just going to divide them and people who want to be their partners.”
This quote illustrates a crucial difference of mind-set. Since 2000, Jobs’s innovations have depended on making the right deals. The success of his iTunes store has had less to do with the technology than with his being the first to get the music industry to consent to online downloads. Having been CEO of Pixar Animation Studios during his years in the Apple wilderness, Jobs is one of the few players who can move with ease between Hollywood and Silicon Valley. And he was able to extend his dealmaking reach beyond that corridor to work with the world’s largest telephone company, making the iPhone the ultimate expression of his partnership mentality.
Schmidt and Google, meanwhile, have taken a different view. Their partnerships are few, and rarely, if ever, exclusive. For at bottom the firm believes, almost as an article of faith, that open protocols obviate the need for big combinations. As Schmidt puts it, the “interconnection makes you appear as one company while operating as two.” In other words, why incur the burdens of marriage when you can have friends with benefits? Implicit in this view is the basic conception of the Internet and Wozniak’s idea of the computer as worlds that minimize the need for permission.* The very same idea animates the Android.
Android may be the most significant of Google’s territorial maneuvers, but it is not the only one. In the winter of 2010 the firm announced plans to build its own fiber optic connections, another bold incursion into the lands of telephone and cable and its first real flirtation with vertical integration. The full scope of the motivations isn’t clear—Google insists it means only to create a “showcase” designed to spur the telephone and cable companies to expand broadband penetration, in which America lags the developed world despite having invented the technology. More startling were reports in the New York Times in the summer of 2010 that Google was on the verge of a deal with Verizon to align their policy positions and launch special “managed services.” Google’s close relationship with Verizon—its first friendship with a Bell—is hard to interpret. Eric Schmidt and Google believe they are converting Verizon to the side of openness and sundering the Bell Empire for good. But we’ve heard that before, and it is not completely clear who is converting whom. Verizon/Google makes for a powerful vertical combination. Verizon, formerly known as Bell Atlantic, is a seasoned monopolist, having held parts of its domain since the capitulation of Western Union in the 1870s. And so it may be Google that is learning from the master.
For now, we may still view Google and its Internet industry allies as locked in a complex, slow-moving struggle with AT&T and cable, the entertainment conglomerates and Apple. But while there are two sides in the broadest terms, the underlying reality is not so simple, as the firms have a web of allegiances as complex as those of nineteenth-century Europe. Verizon, a former Bell, for instance, has been in Google’s camp for some time, having become an Android convert in 2009. It likes to declare itself an apostle of an open wireless future,21 which presents the odd prospect of the reborn Bell system split into an open and a closed half. Meanwhile, some Internet firms, including Yahoo!, have long allied themselves with the centralizers, if only as a hedge against Google. Nevertheless, no one denies that the future is to be decided by one of two visions.
If the centralizers—AT&T, Hollywood, and Apple—prevail, the future will be informed by a marriage of twenty-first-century technology and twentieth-century integrated corporate structure. The best content from Hollywood and New York and the telephone and networking power of AT&T will converge on Apple’s appliances, which respond instantly to ever more various human desires. It is a combination of undeniable power and attraction. And not least among its virtues, the worst of the Internet—the spam, the faulty apps, the junky amateur content—is eliminated. Instead, the centralizers pledge to deliver what Lord Reith promised from the BBC: “the Best of Everything.”
For its part, the openness movement, of which Google has been the leader, despite whatever sort of pact may loom with Verizon, is based on a contrary notion of virtue, one that can be traced back to the idealism of 1920s radio and of course the foundation of the Internet itself. At some level, the apostles of openness aspire to nothing less than social transformation. They idealize a postscarcity society, one in which the assumption of limited resources dictating traditional economic theory are overturned, a world in which most goods and services are free or practically free, thereby liberating the individual to pursue self-expression and self-actualization as an activity of primary importance.22 It may sound fantastical, but our lives are already full of manifestations of this idea. Digitization, for example, by eliminating most of the expenses associated with activities like making a film or distributing a recording, has enabled virtually anyone to prove his worth as a filmmaker or a singer. But the feasibility of such a quasiutopian information economy depends on an open communications infrastructure that facilitates individual expression, not mass conformity.
There is, as with all competing visions of the good, a downside to each. More specifically, as ever in the history of information networks, something is lost in seeking the benefits of an open system, just as there is in adopting a closed one. Each side of course imagines its preference as offering us more than it denies us. Apple and the conglomerates think it perfectly sensible to identify popular desires and then to fulfill them. As Jobs put it, “We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That’s what we get paid to do.” Such cultural surrogacy does deliver an extremely polished product, both as content and as delivery system, indeed one very widely desired. But inevitably it is not to every taste. The champions of openness propose an untidier world of less polish, less perfect
ion, but with more choice. It is, in that side’s view, choice, the freedom to figure out what one wants, that people prize most. In Eric Schmidt’s words: “The vote is clear that the end user prefers choice, freedom, and openness.”
And so we have the essential alternatives: a world of information that looks much like the twentieth century’s, only better—more beautiful and more convenient. Or a revolution in the very means by which information is produced and consumed.
The conflict is familiar in its contours; we have now seen it several times before, as the Cycle has worked its way through the film, radio, and telephone industries. The difference now, however, is this: In the 1920s and 1930s, there was a sense that the progress toward centralized, integrated models was somehow inevitable, simply the norm of industrial evolution. In the time of Henry Ford, Theodore Vail, and the rest, it had seemed quite natural, in a Darwinian way, that the big fish ate the little ones until there were only big ones trying to eat one another. All the power would thus come to reside in one or two highly centralized giants, until some sort of sufficiently disruptive innovation came along and proved itself a giant killer. Small fry would then enter the new decentralized environment, and the natural progression would start all over again.
The twenty-first century begins with no such predilection for central order. In our times, Jane Jacobs is the starting point for urban design, Hayek’s critique of central planning is broadly accepted, and even governments with a notable affinity for socialist values tout the benefits of competition, rejecting those of monopoly. Nor does the new century partake of the previous one’s sense of what is inevitable. Technology has reached a point where the inventive spirit has a capacity for translating inspiration into commerce virtually overnight, creating major players with astonishing speed, where once it took years of patient chess moves to become one, assuming one wasn’t devoured. The democratization of technological power has made the shape of the future hard to know, even for the best informed. The individual holds more power than at any time in the past century, and literally in the palm of his hand. Whether or not he can hold on to it is another matter.
* At the time of announcement, AT&T Wireless was operating under its old name, Cingular.
* Some may argue that the Macintosh was more significant than the Apple II; without discounting the importance of the former, the significance of personal computing seems categorically larger than the importance of adding the desktop interface to the personal computer.
* Most notably at the Palo Alto Research Corporation, then owned by Xerox, whose labs, by 1975, had produced a computer closely resembling the Apple Macintosh. The Apple Lisa also, technically, came between the Macintosh but did not thrive.
* As we’ve seen, vertical integration serves as often as a means of corporate defense as efficiency. By combining related functions, the integrated entity can prevent rivals from depriving it of some essential component, as for instance when the Hollywood studios acquired movie theaters to prevent theater owners from shutting out studio products. Interesting, but beyond the scope of this book, is whether this defense function suggests an alternative explanation to the prevailing theory of the firm as shaped by the relative efficiency of internal and external contracting, which the economist Ronald Coase articulated in 1937.
† Technically, this is achieved by placing a “robots.txt” file on the root directory of the Web server in question. Google, for its part, could ignore the robots.txt files; in the United States that would foreground an unsettled copyright question, namely, whether expressly involuntary indexing is copyright infringement.
* At the time, it went by the name “BackRub.”
* Notable members of the alliance at its launch included China Mobile, Intel, NTT DOCOMO, Sprint/Nextel, T-Mobile, HTC, LG, Samsung, and Motorola.
* Permission is a fundamental feature of what we call “property,” and in this sense you can understand that at some level the entire struggle is between a world with more or fewer property rights.
CHAPTER 21
The Separations Principle
An empire long united, must divide; an empire long divided, must unite. Thus it has ever been, and thus it will always be.
—LUO GUANZHONG
The Romance of the Three Kingdoms
Luo Guanzhong’s fourteenth-century novel captures the perennial alternation between concentrated and dispersed power that has shaped most of human history. Aside from a few patches of relative enlightenment, our own among them, the course of political power has continued on this winding way all over the world for most of recorded time. Nowadays, we sometimes like to think we have progressed past the cyclical rise and fall of centralized power, but in truth, even in the absence of an actual Caesar or Khan, the human ambition to build and overthrow empires lives on, however adapted to new forms and contexts. It has been the aim of this book to show that our information industries—the defining business ventures of our time—have from their inception been subject to the same cycle of rise and fall, imperial consolidation and dispersion, and that the time has come when we must pay attention.
Living in a contemporary democracy can lull us into regarding concentrated power as a historical problem we have more or less solved. The American Constitution was designed above all in the awareness of the danger of centralized power, and its response to that danger was, as Justice Kennedy once wrote, to “split the atom of sovereignty.” By this he was referring specifically to our federal system, by which we distinguish powers reserved to the states from federal powers, but it could equally refer to any number of essential separations that the Constitution enshrines: separations of executive, legislative, and judicial powers; separations of the government’s enumerated powers from those reserved to the individual, the latter protections found in the Bill of Rights, from which also derives the separation of church and state. Not that the framers invented the notion. The various divisions of power found in most of the world’s constitutional governments today are based on an idea as old as ancient Greece and continued under the Roman Republic. Behind the very notion of separation is a theory of countervailing power. Separations are an effort to prevent any single element of society from gaining dominance over the whole, and by such dominance becoming tyrannical.
The American political system is designed to prevent abuses of public power. But where it has proved less vigilant is in those areas where the political meets the economic realm, where private economic power comes to bear on public life. We seem loath as a society to acknowledge the historical coincidence of the two, even though historians such as Arthur Schlesinger, Jr., have persuasively described our history as an ongoing contest between public and private power. We like to believe that our safeguards against concentrated political power will ultimately protect us from the consequences of accumulated economic power. But this hasn’t always been so.
This relative indifference to the danger of private power is of complex origin. It owes in part to the Lockean sanctification of private property as enunciated by Jefferson. It owes as well to the nature of our constitutionalism: the American system reserves to the individual or, as the case may be, to the individual states any powers not explicitly granted to the federal government. The federal government’s right to interfere with free enterprise is derived mainly from the Commerce Clause, and the extent of that right has never been uncontroversial. As a consequence, while popular demand for regulation has waxed and waned, American economic life has been built mostly on freewheeling capitalism.
This tradition has bequeathed to us an economic history far more spasmodic and cyclical than American political history (aside from the obvious exception of the Civil War). While the U.S. Constitution has proved relatively sturdy and adaptable, it is America’s economic life that has been subject to a dynamic of imperial rise and fall akin to that in The Romance of the Three Kingdoms. The rise of an explicit political empire was successfully forestalled by the Constitution; and, as if in response, American history became, in no smal
l part, a chronicle of commercial empires, including the industrial dominions of men like Carnegie and Rockefeller as well as those described in this book. The reason this displacement of energies could even have occurred is simple: while our political theology seeks to tame the state of nature, our economic orthodoxy submits to it. And so most influential economic thought, from Smith to Keynes to Schumpeter, accepts as intrinsic to a free-market system the ravages of boom and bust, as well as the various consequences of imperial growth and overreach, recommending that government policy should seek, at most, to moderate the resulting tremors.
It would be quite radical today even to contemplate imposing on the economy the kind of safeguards that the Constitution places on the political system, though such ideas have occasionally been proposed in our history, for instance by Justice Louis Brandeis and President Andrew Jackson. The latter, who fought and destroyed the Second Bank of the United States, warned in 1837 that without control over private power, “you will in the end find that the most important powers of Government have been given or bartered away, and the control over your dearest interests has passed into the hands of these corporations.” But in our times, it goes without saying that economic vitality—innovation, growth, and opportunity—depends on the freedom of the economic system to rise and fall, crash and burn.
The difference in the American approaches to political versus economic power is a subject too vast to be done justice here. Suffice it to say that one must recognize it in order to understand the course of American industrial history. But there is a further difference to bear in mind, whatever we might think of the special treatment of industrial power in general; and that concerns the special case of concentrated power over the creation, transmission, and exhibition of information.