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We Got Trouble Right Here in River City, With a capital T, That Rhymes with P, which Stands for Power

We Got Trouble Right Here in River City, With a capital T, That Rhymes with P, which Stands for Power

(Recognize the title? That’s from The Music Man)

Is a form of neo – feudalism alive and thriving on the Internet? According to multiple sources, the answer to the question may be yes. Following are just a few of the sources:

1. The Battle For Power On The Internet, The Atlantic, Bruce Schneier, Oct 24, 2013.
2. Tech’s ‘Frightful 5’ Will Dominate Digital Life for Foreseeable Future, NYT , Farhad Manjoo, Jan 20, 2016.
3. How a Few Monster Tech Firms are Taking Over Everything from Media to Space Travel and What it Means for the Rest of Us, The Daily Beast, Joel Kotkin, Feb 9, 2014.
4. Big Tech Has Become Way Too Powerful, NYT, Robert Reich, Sep 18, 2015.

The seminal work on this phenomenon, Power_in_the_Age_of_the_Feudal_Internet, was created by Bruce Schneier. originally published at the online platform of the Internet and Society Collaboratory and then re-titled and published by The Atlantic. The article discusses how control of the Internet is bifurcated into two camps: (1) On one side are the nimble, unorganized, distributed powers such as dissident groups, criminals, and hackers. (2) On the other side are the traditional, organized, institutional powers such as governments and large multinational corporations.

In the early days of the Internet the agile and distributed groups had a majority of the power as they used the new platform to develop new ways of expressing themselves and conducting commerce. Now, Schneier believes that the centralized institutional powers such as large corporations and governments wield an increasingly larger proportion of power on the Internet.

Schneier states, that on the corporate side that Apple, Google, Microsoft, and Facebook are dominating in vendor managed devices and large personal data aggregation. According to Schneier, government power is also increasing on the Internet. Long gone are the days of an Internet without borders, and governments are better able to use the four technologies of social control: surveillance, censorship, propaganda, and use control.

Schneier called this model of computing feudal. Users pledge allegiance to more powerful companies and governments who, in turn, promise to protect them from both sysadmin duties and security threats.

Regarding corporate power, Farhad Manjoo at The New York Times agrees and adds one other corporate titan to the list, Amazon. The Frightful Five’s platforms span so-called old tech — Windows is still the king of desktops, Google rules web search — and new tech, with Google and Apple controlling mobile phone operating systems and the apps that run on them; Facebook and Google controlling the Internet advertising business; and Amazon, Microsoft and Google controlling the cloud infrastructure on which many start-ups run. Amazon also dominates online retailing. The National Federation of Retailing (NRF) Top 50 E-Retailers Report 2014 on e-commerce sales lists Amazon as #1 with $70B in sales. Apple at #2 generated approximately $20.6B in e-commerce sales. JD.com (JingDong mall) from China was #3 at $17.6B.

Joel Kotkin compares the five technology giants to the American version of the Japanese keiretsu. Kotkin states that, increasingly, American technology is dominated by a handful of companies allied to a small but powerful group of investors and serial entrepreneurs. These firms and individuals certainly compete but largely only with other members of their elite club. And while top executives and investors move from one firm to another, the big companies have constrained competition for those below the executive tier with gentleman’s agreements not to recruit each other’s top employees. Kotkin contrasts these companies with America’s previous gilded age giants saying, they share a lineage with the early 20th Century trusts that controlled railroads, cotton, silver, oil, and other commodities.

Former Secretary of Labor, Robert Reich, supports government intervention saying, whenever markets become concentrated, consumers end up paying more than they otherwise would, and innovations are squelched. Sure, big platforms let creators showcase and introduce new apps, songs, books, videos and other content. But almost all of the profits go to the platforms’ owners, who have all of the bargaining power.

Reich continues with, contrary to the conventional view of an American economy bubbling with innovative small companies, the reality is quite different. The rate at which new businesses have formed in the United States has slowed markedly since the late 1970s. Big Tech’s sweeping patents, standard platforms, fleets of lawyers to litigate against potential rivals and armies of lobbyists have created formidable barriers to new entrants. Reich believes that antitrust laws were created to fight this sort of market power. Reich states, that notwithstanding the early 1990’s prosecution of Microsoft, since then Big Tech has been almost immune to serious antitrust scrutiny, even though the largest tech companies have more market power than ever. Maybe that’s because they’ve accumulated so much political power.

The writers each have valid points in their arguments. Concentration of power in fewer and fewer corporations is a frightening concept for lovers of free enterprise. Technology that empowers authoritarian minded governments is also a shocking thought. On the other hand, the Internet has produced unbelievable innovation in our lives enabling people to research arcane topics within seconds, connect with lost friends and relatives, and instantly buy or sell products and services on devices small enough to comfortably fit in the palm of your hand. Simply amazing!

What’s the answer to this quandry? I’m not sure? Please read the linked articles, formulate your own opinions, and then share them with us in the comments below.
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Randall Smith – StratoSTACK Product Manager

Illustrations and Copy Edit: Jaime Baldwin- StratoSTACK Digital Media Specialist