It’s Time for a Social Network Neutrality

The network neutrality / common carriage debate is one of the most important debates of our time. At stake is the freedom to innovate, the freedom to listen, and the freedom to speak. To date, arguments for or against common carriage have focused largely on the relationship between Internet service providers and content creators, but a new threat is emerging.

Companies like Facebook, Twitter and LinkedIn have unlocked new ways for people to connect, curate, and consume. They have changed and continue to change how we interact with the web – how content is distributed, discovered, and delivered. But with the emergence of this new social layer comes a threat that rivals that posed by the great information monopolies of the 20th century – AT&T, the Radio Trust and the Motion Picture Patents Company, companies known for price gouging, anti-competitive behavior, and the stifling of innovation.

I recently finished Tim Wu’s “The Master Switch: The Rise and Fall of Information Empire.“ For anyone interested in network neutrality, this book is an incredible primer. Beyond presenting a thoughtful analysis and historical review of the information industry, Wu provides a compelling read – one might even call it a page-turner! If you haven’t yet, go buy it, and read it.

Network Neutrality

If you’re familiar with the basics of network neutrality, feel free to jump to my main argument below. If not, let’s start with a definition for common carriage.

At the heart of common carriage is the idea that certain businesses are either so intimately connected, even essential, to the public good, or so inherently powerful—imagine the water or electric utilities—that they must be compelled to conduct their affairs in a nondiscriminatory way.

As a simple example, if a man operates the only ferry over to town, that simple boatman is in a position of great power over other sectors of the economy, even the sovereign authorities. If, for example, he decided to charge one butcher more than another to carry his goods, this operator could bankrupt the one who didn’t enjoy his favor. The boatman is thus deemed to bear responsibilities beyond those of most ordinary businesses.

Wu, Tim (2010). The Master Switch: The Rise and Fall of Information Empires (p. 58).

Reflecting on Wu’s review of information monopolies, one can extract two primary tendencies manifest in countless examples throughout history. First, like all institutions they follow a law of self-preservation. If the ferry owner senses a threat to his monopoly in an innovation outside of his control, he will do everything in his power to acquire or squash it.

See:

Second, information monopolies will always act to maximize profits, and will often do so at the expense of their “riders.” If a passenger on the network is seen to reap significant profits on the back of the network, it is in the short-term interest of the monopoly to ransom network access for a share of those profits.

See:

  • The Motion Picture Patents Company consolidating control over film production and distribution by ransoming access to patent licenses and buying up independent theaters, ultimately leading to the independents’ flight to Hollywood.
  • RCA buying up nascent radio networks to create a single national content creator and distributor.

The tenuous relationship between distribution channels and that which is being distributed is summarized neatly by Wu:

You cannot serve two masters, and the objectives of creating information are often at odds with those of disseminating it.

Ibid., p. 306.

Social Network Neutrality

So what does this have to do with social networks like Facebook or Twitter?

Distributors, owners of “the pipes,” will always have an incentive to maximize profit by way of price discrimination, or, if they choose to produce their own content, to prioritize their own goods ahead of or instead of those of their competitors.

Social networks are a critical layer of infrastructure for a wide variety of applications and content. Unlike physical networks, opportunities for lock-in emerge not at the physical layer but at the social layer: our connections. In other words, they do not wield monopoly control by dint of massive up-front fixed costs but rather by the accumulated value contributed by users in the form of the social graph!

Without access to our social connections, applications like Zynga, Turntable, and Spotify face significant barriers to entry – both in terms of the product experience that they are able to deliver and their path to adoption via access to social promotional channels.

But will these social networks really exert their platform authority at the expense of competitors and users? The answer is that they already are.

Take the social gaming company Zynga, for example. The pace of Zynga’s growth has been mind-boggling. A significant portion of Facebook’s users spend a significant portion of their time on Facebook within Zynga’s games. When Facebook sensed a competitive threat emerging on their platform, they chose to reduce that threat by exerting their platform authority. Zynga was forced to give up 30% of their revenue to Facebook so that Facebook’s users could “benefit” from one standardized currency experience. How’s this for a Risk Factor, from Zynga’s S-1:

Facebook is the primary distribution, marketing, promotion and payment platform for our social games. We generate substantially all of our revenue and players through the Facebook platform and expect to continue to do so for the foreseeable future. Facebook and other platforms have broad discretion to change their platforms, terms of service and other policies with respect to us or other developers, and those changes may be unfavorable to us.

Facebook has even gone to battle with Google over data portability. The most recent challenge coming by way of a Chrome Extension that allows you to import your Facebook friends into Google’s new social network, Google+.

Playing the white knight (or social underdog), Google has tended to act in the interest of data portability, but Google’s policy of “we’ll let you import our contacts if you let us import your contacts,” reeks of data protectionism, and should be viewed with a healthy dose of skepticism, given Google’s own checkered past.

Google and Facebook are not alone. LinkedIn recently shut off API access to third party developers that they deemed competitive, including Monster and BranchOut, among others.

Not to be outdone, Twitter recently called on all third party developers to stop building Twitter clients. Said Twitter platform lead Ryan Sarver:

We need to move to a less fragmented world, where every user can experience Twitter in a consistent way.  This is already happening organically – the number and market share of consumer client apps that are not owned or operated by Twitter has been shrinking.

A “less fragmented world” sounds like code for “consolidation.” Can Twitter really innovate faster than thousands of third-party developers? Can LinkedIn replace the value that companies like BranchOut and Monster were planning on providing to businesses and users? We’ll never find out, because Twitter and LinkedIn can respond to any such emergent innovation by shutting down access to their API.

What happens when an information monopoly attempts to centralize innovation? No organization has done it better than Bell Labs. They were so successful that they invented magnetic tape, used to power the computer revolution, as early as 1934!

“The impressive technical successes of Bell Labs’ scientists and engineers … were hidden by the upper management of both Bell Labs and AT&T.” AT&T “refused to develop magnetic recording for consumer use and actively discouraged its development and use by others.” Eventually magnetic tape would come to America via imports of foreign technology, mainly German.

But why would company management bury such an important and commercially valuable discovery? What were they afraid of? The answer, rather surreal, is evident in the corporate memoranda, also unearthed by Clark, imposing the research ban. AT&T firmly believed that the answering machine, and its magnetic tapes, would lead the public to abandon the telephone.

Ibid. p. 106.

As a result of AT&T’s coverup, magnetic tape would not be “discovered” until the 1990′s. Holy crap! Anyone else terrified?

So what happens next?

Certainly these companies should be able to reap the rewards of the network that they’ve built, but when those rewards come at the expense of the user experience, the troubling effects of lock-in become apparent.

This is just the beginning. What happens when Facebook or Twitter decide that it is too ‘confusing’ for users to see photos from Instagram posted to their network, instead of through Facebook Photos? What happens when Facebook decides that Foursquare check-ins next to Facebook Places check-ins are detrimental to the user experience? Or that Groupon’s daily deals shared through the Facebook platform are confusing for users who are most eager to find Facebook’s deals?

As these networks settle on and begin to expand their business models, the definition of “competitor” will expand commensurately. Monopoly power of these large networks, as owners of our now primary channels for distribution and communication, will only increase as they become an ever larger part of our lives.

It’s time to stop seeing these companies as mere applications. They are the 21st century version of AT&T, of RCA, of the Motion Picture Patents Company. The infrastructure of the social web has been consolidated into the hands of a few. With consolidation comes control, and with control comes an incentive to wield it over those deemed competitive threats to the ultimate prerogative: preservation of control.

Government agencies responsible for policing antitrust clearly have these companies on their radar, but history has shown that government is as capable of enabling information monopolies as it is of squashing them. Users must stand and be counted. We must demand portability, and we should vote with our attention when it is not delivered.

At stake is the future of the Internet, and if the Internet is social, then there is no less at stake than the future of social.

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  • http://www.facebook.com/journalistically Journalistically

         This whole premise of “Social Neutrality” sounds vain, in every regard. As with every “Neutrality” that floats about the media oceans today. There is a point to this. The fact is people need to eat. People go to jobs and work. This is standard. You build an idea/model/invention, you either A) sit on it for personal use. B) Do nothing with it, begging the question why did you make/build/introduce it? C) sell it. D) share it, make it available freely. Keeping in mind, that no matter what choice the soul inventor purposed, someone will find a way to make a dollar off it.   
          The whole synopses of his book, entirely true. There is no false data or misconstrued idea’s here with what he poses. Though standing back, and really saying “.. hey, mobile carriers are in the business, of being in business” is some how not in the best interest of the people, is novel or a bad idea? Both? Its business. Social is a business. Phone companies, a boat service in his example. The internet as a whole, its all business man. Am I really the only one who finds the title and premise of this entire story or will/call to arms to make social neutral misplaced and odd? Essentially what your saying, in so many round about words is “hey, lets make every business that involves communication all play on the same field, all charge the same prices, use the same means as every other business that is in the business”. You do understand what neutral means? I hope I am making myself clear here. That is a not a metaphor in any regard, thats precisely what your asking in proposing a “Social Neutrality”. It would be highly redundant of me to continue further at this point. As anyone who has had interest in reading thus far, should be able to tie all the sums together. If not, let me be more clear. WE DO NOT HAVE MOBILE/TRAVEL/INTERNET ACCESS/CABLE TV/COST FOR SHIPPING or any of the millions of social/communication services that you can add its its place, at the SAME PRICE/GROUNDS as every other services that provide the same things, at a better/worse service as the next guy. These are business models. Google/Facebook/Twitter = Advertising dollars. In order to keep those business as they grow larger running, they have to sustain a source (good source) of income. Mailing a letter, requires you to make  sound choice on how/when/how much your wiling to pay for that service. 
         There are many patents/social spaces that we could discus that in many instances only one company is running/holding hostage as leverage. And rightly so, its business man. I say we don’t need neutrality at all, it only stifles our choice, limiting us. Let social be “Free”. Not in the sense or scope of dollars, but in freedom. Freedom to choose. if one game is in town, the beauty and motivation is to knock the next guy off his game, innovate, make a superior product in both cost and efficiency, ease of use etc etc. In this light, this whole article and idealism is laughable. SOME PEOPLE WORK HARDER THAN OTHERS. (enlarged only for emphasis, as I cant high light). Not all social spaces are created equally indeed. May the best company win, if not, don’t use it. If they’re the only company doing it, charging whatever they propose, start a new one. That is the beauty in this dynamic. That is the art.  
         Social neutrality? Genuine, I will give you that. But vain, unpractical, inapplicable to anything. To include its own very intent. Communication is a tool. Whether your holding a pigeon with a letter, a pen with paper, a MacBook Pro, or even travelling on horse back. Social in all regards is a tool first. Your means of communication is already, and will always be neutral. Its freedom and means/ability to use these social tools that is the real issue. 
         So with out technicality’s of how networks/social spaces today, past or present choke/stifle/deter competition, which I believe you already understand, That is just my lowly opinion. Social neutrality, is no friend of mine, or yours. Now playing: Social Neutrality, unfortunately, there is nothing to see here >_> 

  • alexmr

    I agree with the sentiment here and that when social network pipes get too much power, they may exercise it in a monopolistic way for their own good.

    That said, it’s always good to learn from companies who are at least trying to do the right thing. No one is saying Google is always altruistic (and full disclo: i used to work there) but google takeout is pretty solid when it comes to social data portability: http://googlesystem.blogspot.com/2011/06/google-takeout.html

    • Guest

      It’s great that Google has the ‘Takeout’ option. It’s also great that Google tried for ‘Open Social’ back in 2007. However, I do believe the
      time is now ripe to think far ahead of all this, to a point where Google,
      Facebook, Diaspora, Twitter, we the citizens, and the government, become
      ‘friends’, socialize, sit at the same table, form a consortium, and come
      up with open standards in social networking — just like it happened with CERN, HTML, HTTP, NCSA, and
      w3.org

      Indeed, social networking may have become even more revolutionary if only Mark Zuckerberg had hopped over to MIT to do a Ph.D.
      under Tim Berners-Lee, instead of moving to California and starting up
      Facebook. :)

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  • Guest

    Very interesting. Time for the public to protest the ‘walled gardens’ of social networking, and demand open standards. It is just not fair that, due to the lack of portability and interoperability, we lose all our ‘social identity’, our friends and other important relationships each time we decide to switch ‘providers’! Not only that, open standards and portability in this area will increase innovation.

    What you say also reminded me of this article by Tim Berners-Lee:
    Long Live the Web: A Call for Continued Open Standards and Neutrality
    http://www.scientificamerican.com/article.cfm?id=long-live-the-web

    • http://www.jakelevine.me jakelevine

      Totally agree with you – at stake is something a bit more fundamental than competitive markets and incentives for innovation – our very identities are locked into these silos.

      Love that article, thanks for your thoughts.

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  • http://www.simplyzesty.com Lauren Fisher

    Good read. The problem is that we’ve invested so much of our time into building our connections on external sites – those that facilitate the building of these networks – that we can forget these platforms are the ones that have ultimate control. Like you highlighted with the LinkedIn example, they can develop a great service like opening up their Groups API but they decide how far that can go, restricting use by developers.

    This is their decision of course, and it shows that social networks are beginning to become more closed off as they realise the risk in handing over too much control (a la Twitter closing off sites/apps that replicated the Twitter experience).

    But it was this openness that got them to the position they’re now in, so what happens when they become less open? It presents an uncertain future for the networks and they have a difficult decision to make in terms of how much they encourage other apps to access the service they’re providing to enhance the user experience, and how much they exert their control and influence.

  • Deboraweb

    Emily was just explaining this topic to us this weekend and we realized how many levels it has. We googled it for more info and found your post in the top results! Very cool- good insights! DEB

    • http://www.jakelevine.me jakelevine

      Thanks Deb! Funny that you came across it.

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