Net Neutrality’s End Will Let Power Eat the Internet

The prospect of regulating internet platforms has recently gained a strange confluence of support, from progressive, tech-savvy policymakers such as Tim Wu and Lina Khan to conservative politicians such as U.S. President Donald Trump and former White House Chief Strategist Steve Bannon. Although they have different concerns, they agree that web platforms have too often misused their power over the way that news travels. The recent proposals to use antitrust law to break up technology companies are at odds with the U.S. government’s broader push to deregulate the internet, treating the symptoms instead of the causes of the internet’s trust crisis.

This summer, the U.S. House of Representatives refused to vote to protect net neutrality, ending a long-contested set of regulations designed to ensure equal access to the internet. Net neutrality advocates held that the policy protected innovation and fairness by requiring internet service providers to provide equal access to all traffic. Net neutrality opponents said that the policy limits innovation by preventing internet service providers from adapting their offerings to maximize value and use. While there are already examples of collateral damage, the federal debate is over for now, and what’s left is navigating how the end of net neutrality will change the internet.

For context, net neutrality was a U.S. domestic trade regulation, but one that became a global norm, like much of America’s leadership in the establishment and early governance of the internet. This is a particularly precarious time for antitrust scrutiny of the relationship between infrastructure and content providers in the United States—there are a growing number of calls to break up major platforms like Facebook and Amazon, and a growing number of massive, market-consolidating mergers. Judicial approval of the AT&T and Time Warner merger in June signaled open season for massive vertical integrations, even as an initial Department of Justice attempt to block it failed, has prompted Disney and Comcast to face off in a $65 billion bidding war for Fox, just the beginning of a growing wave of media mega-mergers.

A number of experts have pointed to other countries that haven’t adopted net neutrality as examples of the kinds of changes to expect—highlighting things like buying packages of content, as opposed to data. And while those are very likely consequences, they also significantly underestimate the geopolitical implications of liberalized markets, vertically integrated media conglomerates, and the ability to purchase preferential treatment in the information economy. If the recent Facebook and Cambridge Analytica controversy has taught us anything, it’s the precarity of institutions in the face of outside influence exercised through vertically integrated information platforms.

The end of net neutrality in the United States gives government license for internet service providers to cater even more to advertisers—whether companies, wealthy individuals, or foreign adversaries—selectively targeting content and information. In some parts of the world, major advertisers such as Google and Facebook have launched large infrastructure projects, including Free Basics, which gives users access to select web services; data pricing subsidies; and Project Loon, which provides national backhaul capacity – the supportive infrastructure for all the data and internet traffic nationwide. The end of net neutrality makes the United States the largest, least-regulated media market that’s not substantially state-owned. China, by contrast, has always made market access conditional on complicity with the government’s sweeping surveillance and data use programs.

It’s possible that the end of net neutrality will have similar effects to trade liberalization. Trade liberalization resulted in significant increases in global equality—especially as India and China industrialized—but similarly large increases in domestic inequality. Wealth is most commonly measured through national averages, but the overwhelming trend across market and geography is a historic concentration of wealth in a small minority of the population, amid a global leveling in low-value and production jobs. The ultimate impact is that low-skill workers in developed countries tend to lose out to low-skill workers in less regulated countries. In other words, the richest are getting richer, and everyone else is getting poorer.

The same is true of companies—with the end of net neutrality, large and high-value companies are starting to vertically integrate and consume even larger portions of the market, whereas small and midsize enterprises will struggle to compete—not only with larger companies, but with each other. When media companies own the infrastructure and the content, their ability to manipulate the underlying market should raise significant concerns, not only for free market capitalists but also for antitrust champions and those working on preserving the integrity of public dialogue.

Unlike India’s and China’s approach to trade liberalization, however, the United States is leaving the regulation of digital markets to an increasingly chaotic institutional infrastructure. As Harvard University professor Dani Rodrik has pointed out, India and China painstakingly managed their accession to globalized markets, choosing vectors for growth. India focused on developing as a services economy, fueling growth through outsourced, skilled labor. China built itself as the world’s production exporter. Each approach has had strengths and weaknesses but hung on government-led market development and investments. The U.S. government’s approach to media regulation, under the current administration, strongly promotes market self-regulation—while reactively threatening regulatory action against individual companies. If there is an underlying philosophy, it’s that by enabling broad-based consolidation, the United States may be able to build on its private dominance of the internet.

There are deeply entrenched interests on all sides of regulatory philosophy debates—but self-regulation around other public interest standards, such as environmental protection and labor, has not been particularly effective. The recent political history of the internet, which has included massive voter manipulation scandals, the unprecedented recall of Kenya’s presidential election, arms dealing in Libya, and a rise in anti-refugee violence in Germany, makes it clear that the stakes for our information environment are just as high as they are for our planet’s health. The political class is waking up, though, and there is a large confluence of governments, platforms, billionaires, journalists, and civil society organizations launching efforts focused on moderating content and journalistic credibility.

The commercial politicization of news is hardly new—viewed globally and historically, the West’s experiments in objective, politically independent journalism are more exception than rule. According to Freedom House, 2018 marks the 12th straight year of declining press freedom. Although the organization primarily focuses on failures of democratic governance, the timeline also aligns with the influence of the internet’s largest advertising-funded social platforms.

As many have pointed out, the internet platforms’ business models are structurally very similar to those manipulated for soft censorship in more authoritarian contexts. There’s perhaps no more obvious example than Google’s initial foray into China, its departure, its re-entry through Dragonfly—a search engine that allows government censorship. The platform economy centralizes control of information, making it a target for other powerful interests, and ties it to business models and shareholders that require endless growth, creating a clear means of manipulation.

It’s easy to lament the quality of content moderation or the virtually unchecked power of unregulated markets, but punishing companies for growing into the markets that policymakers are racing to deregulate is disingenuous, at best.

The end of net neutrality and the rush to vertical integration in media suggest that the unprecedented centralization of control over information and the wealth it creates are far from over. And, as long as it’s possible for internet companies to cross-subsidize business models in ways that disadvantage new market entrants, digitization will continue to result in moral hazard, economically and figuratively.

If the U.S. government is serious about ensuring unbiased news, building truly free markets, or reducing election manipulation, it will need to be significantly less laissez-faire.