Could you briefly explain the stages that information technologies (from radio to TV to the internet) undergo – invention, openness, consolidation, stagnation?
In the first stage, a new innovation and a new industry faces an almost inevitable challenge by existing industry to either subdue or take over the invention. In 1880, for example, no sooner had the Bell Company begun to sell the telephone than the telegraph industry tried to bankrupt it.
Assuming the new industry survives infancy, it then enters an age of openness, typified by both lots of entrepreneurship and really big dreams. One sees great new hopes for what this new technology will mean for humanity – even the end of war, an age of brotherly love, and so on. American radio in the 1920s and the internet of the 1990s-2000s are classic examples of this period.
After about a decade of openness comes consolidation – the rise of one of more dominant firms. Typically, the firm is personified by a great mogul who promise a new order: higher quality products, more reliability, and so on. By this point, the novelty has worn off, and consumers are often hungry for more order and reliablity.
The great monopolists take advantages of the economies of scale and of networks – in America, firms like AT&T, NBC, and so on. Not all is bad about this stage – at its best the result is a kind of monopolistic "golden age" which can be good while it lasts. In fact, the internet may be moving in that direction as we speak.
In the final stage, the once golden monopolist becomes established and stagnant. Uninterested or incapable of fundamental innovation, it begins to defends business from any threat using every tool available – including, most importantly, the help of government. The last stage can last a long time – as long, that is, as the ruling monopoly or cartel avoids disruption by a new invention, or, ultimately, a big breakup by the government. In America, AT&T is the classic example of the monopolist that lasted – over 70 years, and indeed it has made a comeback in recent years.
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Why is this cycle unique to the information industry?
Actually, it is not unique. But in the information industries, the swings are more extreme, and the stakes are higher. If a glove monopoly were to raise prices that's too bad, but life goes on. A powerful information monopolist, on the other hand, has the opportunity to do much more: shape what we believe, who governs, what's taken for granted. At its grandest, it can gain a control over thought itself, almost the kind of power that the medieval church once had.
You make a case in your book for why information companies need to be carefully regulated in order to preserve freedom of speech. In the current climate, do you think this will be possible?
Careful is the right word, because I am also very wary of over-regulation. Not only do I think it is possible, I think it is already commonplace. For example, in the United States, there have long been certain duties of non-discrimination imposed on telephone and cable companies, as well as limits on ownership. While there was a movement in the 1980s and 2000s to get rid of almost any rules, I think the pendulum has swung back in the other direction.
What, in your opinion, is the worst-case scenario for the future of the internet?
History suggests that the worst case would be that the internet becomes monopolised by a single, global monopolist, who, while popular and well-meaning at first, grows progressively more controlling, censorial and repressive. And not to mention, one nearly impossible to get rid of.
And what’s the best-case scenario?
In the best-case scenario we manage to somehow break the cycle that leads to dominant information empires. Either that means that firms never really reach monopoly (which already seems unlikely) or that once in power they behave well, and get disposed of as soon as they begin to behave badly. With monopolists we face a problem not unlike the problem of government – but since there's no election we need a way to reliably make sure a firm that's lost it actually gets thrown out of office.