Cleland served as Deputy United States Coordinator for Communications and Information Policy in the George H. W. Bush Administration. Eight Congressional subcommittees have sought Cleland’s expert testimony and Institutional Investor twice ranked him the #1 independent analyst in his field. Scott Cleland has been profiled in Fortune, National Journal, Barrons, WSJ’s Smart Money, and Investors Business Daily. Ten publications have featured his op-eds. For a full bio see: www.ScottCleland.com.
Latest posts by Scott Cleland (see all)
- Why New FTC Will Be a Responsibility Reckoning for Google, Facebook, Amazon - April 28, 2018
- How Did Americans Lose Their Right to Privacy? - April 6, 2018
Only three online intermediary platforms command bottleneck distribution control of ~90% of online demand and ~90% of offline supply, with gatekeeper access-power over users and toll-keeper pricing-power over suppliers. They are: Google in information/data; Facebook in social sharing; and Amazon in commerce.
It is no coincidence that the all the monopolizations in the American marketplace today exclusively involve online intermediary platforms; and that they are happening in the only country in the world with a longstanding official, Internet-first industrial policy, that specifically advantages the intermedia companies with permanent blanket protection from competition, regulation, and liability.
How did Google, Facebook, and Amazon become de facto government-sanctioned monopolies?
Well intentioned U.S. Government policy in the 1996 Telecom Act has massively distorted free market competition between online intermediaries and all other companies with outdated and now extreme asymmetric regulation that implicitly favors intermedia monopolization over market competition.
Internet-first industrial policy from 1996-2018, has granted online intermediary platforms unbeatable relative competitive advantages and special policy privileges, that de facto heavily-prioritize the commercial interests of Internet companies over the interests of everyone else.
Long term no company can compete successfully against online intermediary companies when U.S. Government policy creates such a profoundly and increasingly unfair playing field.
The Intermedia’s Government Permanent Protections from Competition, Regulation, and Liability
Competition — Double Standard: The 1996 Telecom Act now can regulate the same internet-integrated, communications-information, technologies oppositely, despite the full Internet convergence of communications and information technologies since 1996.
In America if one is originally a communications-information technology company, one is legacy regulated with technology-specific, legacy communications regulation: 1934 telecom/wireless service, 1934 radio broadcast service, 1943 TV broadcast service, 1962 satellite service, or 1984 cable service.
That means new services potentially require government authorization, licensing, or approval. New devices require government inspection and approval. In addition, legacy businesses also have a slew of appropriate legacy consumer protection obligations for privacy, safety, security, minors, the disabled, etc.
However, if one is originally an information technology company offering the same communications services using Internet protocol, one is completely unregulated and unaccountable, meaning one has huge time-to-market, cost, and competitive advantages over legacy companies engaged in the exact same businesses.
Regulation — Wild West Standard: Section 230 of the 1996 Telecom Act says: “It is the policy of the United States… to preserve the vibrant and competitive free market that exists for the Internet and other interactive computer services, unfettered by Federal or State regulation”
Over the last twenty years this policy has been interpreted by online intermediary platforms to mean that Federal, State, and local regulations do not apply to Internet companies until a court formally rules that they do, and that adverse ruling is upheld upon appeal. This de facto ‘we are above rules and outside the law’ Section 230 Internet Wild West ethos, means on civil matters, many Internet companies “compete” by routinely flouting laws that non-Internet companies obey and must obey.
It should be no surprise that a U.S. policy enshrined in law for over twenty years, effectively divides America into two accountability classes — one Wild West class for Internet intermediary companies which are exempt from most civil federal, state, and local regulatory accountability, and one civilized class, for the rest of America that remains subject to civil federal, state, and local regulatory accountability.
No surprise, these polarized commercial standards — where the U.S. government favors the Wild West Internet standard over the civilized standard expected when people are off-net — seem to be bleeding over and contributing to widely-appreciated polarization of American commercial and societal outcomes, like those favoring: Wild West over civilized society; consumer non-protection over consumer protection; social division over social cohesion; incivility over civility; depreciating trust over building trust; unfair playing field over level playing field; winner-take-all over competition; technology over people; automation over employment; etc.
The Wild West Standard enables only intermediary platforms like Google, Facebook, and Amazon, to capitalize the benefits of their unaccountable monopolies while socializing the costs of disruption and “moving fast and breaking things.”
Liability — Tech Welfare Standard: Section 230 has twenty-six words that provide sweeping immunity from civil liability for intermediary platforms. “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”
Protecting Section 230 is the Internet Association’s number one policy priority because they believe it provides: “Essential liability protections that have allowed internet platforms to scale and diversify.” Translation: They believe Section 230 is the special treatment and anticompetitive advantage that fuels their unique winner-take-all platforms.
Competitively, Section 230 effectively absolves Google, Facebook, and Amazon of normal corporate responsibility to police or curate user content to their sites. Section 230 means no friction because there is no cost or risk to the Internet platform for taking whatever content a user uploads to the site.
Their protected irresponsibility to take all comers, regardless of safety, truth, legitimacy, legality, civility, national security, consumer harm, etc. are huge anticompetitive cost and time-to-market advantages over those who are held accountable for curating or policing their companies online and offline properties to protect their customers and others from harm.
In short, Google, Facebook, and Amazon, are monopolies because America’s 22-year-old Internet-first industrial policy has tilted the playing field so much in their direction that they have become winner-take-all platforms – aka, de facto government-sanctioned monopolies.
What Congress giveth it can taketh away.
An appropriate, fair, and effective remedy here must do more than treat symptoms, it must cure the root cause of the malady.
If the problem is anticompetitive government policy in law that spawns de facto government-sanctioned monopolies via blanket exemptions from the legal responsibilities and accountabilities required of all other companies, the logical solution is government un-sanctioning these unaccountable monopolies by passing legislation that ends online intermediaries’ de facto exemptions from the legal responsibilities and accountabilities required of all other companies.
Google, Facebook, and Amazon are three of the most valuable, fastest-growing, and dominant companies in the world, worth almost $2 trillion, and growing revenues at monopoly 25-50% annual rates.
These entitled, privileged, and pampered companies no longer need government care, feeding, and around-the-clock protection from competition, regulation, and liability.
When will the U.S. government wean Google, Facebook, and Amazon from their government dependencies, special treatment, and extraordinary corporate welfare?
Importantly, only ten percent of current Senators and Representatives who voted in 1996 to grant these outdated special exemptions from accountability for online intermediaries, are still in office.
The 99% of American companies that don’t enjoy the unbeatable relative anticompetitive advantages and special policy privileges that Google, Facebook and Amazon enjoy, should ask for, and expect to get, equal treatment under the law from their elected officials.
This outdated, extreme asymmetric regulation is indefensible, anticompetitive, and anti-consumer.
The proposed remedy here is pro-competition, fair playing field, common sense, bipartisan, and laser-focused at the root cause of the problem.
Simply, pass legislation that: ends Internet companies’ government protection from competition, regulation and liability; restores equal protection under the law; makes asymmetric regulation symmetric; and levels the currently unfair competitive playing field.
No company, and no technology, should be above the rules or outside the law.
Same consumers same rules.
[Originally published at Precursor]