Don't Let This Get Lost In The Shuffle: The Data Transfer Project Is Expanding, And Could Help Create Real Competition Online

from the this-is-important dept

While lots of people are angling to break up the big internet companies in the belief that will lead to more competition, we've long argued that such a plan is unlikely to work. Instead, if you truly want more competition you need to end the ability of these companies to lock up your data. Instead, we need to allow third parties access so that the data is not stuck in silos, but where users themselves both have control and alternative options that they can easily move to.

That's why we were quite interested a year ago when Google, Facebook, Microsoft and Twitter officially announced the Data Transfer Project (which initially began as a Google project, but expanded to those other providers a year ago). The idea was that the companies would make it ridiculously easy to let users automatically transfer their own data (via their own control) to a different platform. While some of the platforms had previously allowed users to "download" all their data, this project was designed to be much more: to make switching from one platform to another much, much easier -- effectively ending the siloing of data and (worse) the lock-in effects that help create barriers to competition. As we noted last year:

But the really important thing that this may lead to is not so much about transferring your data between one of the giant platforms, but hopefully in opening up new businesses which would allow you to retain much greater control over your data, while limiting how much the platforms themselves keep. This is something we've talked about in the past concerning the true power of data portability. Rather than having it tied up in silos connected to the services you use, wouldn't it be much better if I could keep a "data bank" of my data in a place that is secure -- and where if and when I want to I can allow various services to access that data in order to provide the services I want?

In other words, for many years I've complained about how we've lost the promise of cloud computing in just building up giant silos of data connected to the various online services. If we can separate out the data layer from the service layer, then we can get tremendous benefits, including (1) more end-user control over their own data (2) more competitive services and (3) less power to dominate everything by the biggest platforms. Indeed, we could even start to move towards a world of protocols instead of platforms.

So it's good news to see the latest announcement about the project is that it's expanding once again. While the headlines are that Apple has joined the program (to round out the biggest internet companies) it's also notable that two other very interesting, but much smaller, players are joining as well: the federated Mastodon project and Tim Berners-Lee's Solid, which is an attempt to build the kind of "protocols, not platforms" approach that we keep advocating for.

There are still many open questions about how well all of this will work -- but if you believe in true competition among internet services this is the project to pay attention to it, as it has the highest likelihood of actually creating such competition. Plans to "break up" big tech just creates a few more data silos and effectively locks in some pre-selected (slightly smaller) giants, thanks to network effects. What the Data Transfer Project does is flip the equation. It makes it so that more competition can thrive without taking away the network effects that make the internet so powerful. It's the most interesting, and most compelling approach to generating actual competition among internet services.

I still hope that the project goes even further in knocking down silos and opening up for competition, but it's already quite encouraging. Of course, it got almost no attention at all because anti-trust is sexy, whereas companies opening themselves up to competition through technological means is apparently boring.

Filed Under: competition, data portability, data transfer project, lock-in, mastodon, solid
Companies: apple, facebook, google, microsoft, solid

How Publishers & Copyright Gave Amazon The Very Power That Publishers Now Hate

from the which-was-totally-predictable dept

We've been meaning to weigh in some more on the whole Amazon/Hachette battle, because lot of misinformation has been spewed around (including by Paul Krugman). Unfortunately there have just been too many other things to cover and we haven't had the time to do a more thorough piece. However, Tim Lee, over at Vox, has a good short piece detailing how many of the publishers' problems are really because of copyright law and the stupid DRM that the publishers themselves demanded -- and which now gives Amazon its power over them in the market. The issue? The DMCA and the fact that Section 1201 makes it illegal to circumvent any DRM (even if for non-infringing purposes). End result, all those books on Amazon are stuck on Amazon.

Amazon has taken advantage of the DMCA too. Kindle books come copy-protected so that only Amazon-approved software can read it without breaking the law. Of course, software to convert it to other formats exists, but it's illegal and accordingly isn't very convenient or user-friendly.

And that creates a huge barrier to entry. People who want to create new e-reader apps or devices can't do what MP3 startups did in the 1990s and offer to automatically import your existing e-books from Kindle, iTunes, or other major platforms. Instead, they have to start from scratch, creating their own e-book store and convincing all the major publishers to sign up for it.

Even more daunting, they have to convince customers to toss their existing e-book libraries and buy new copies of their e-books on the new platform — or split their time between multiple platforms.

The thing is, none of this is even remotely surprising. Almost six years ago, we warned book publishers of this exact scenario. This wasn't hard to predict, because the same damn thing had happened in music, before Apple finally dumped its music DRM. But no one listens to us.

And yet, you can bet that if changing the anti-circumvention provisions of the DMCA is up for discussion during the next effort at copyright reform, the book publishers and their lobbyists will actually be among the most vocal about keeping it the way it is. They still don't seem to recognize how their own demands for DRM created the situation they're so worried about today with Amazon having more power than the publishers like.

Filed Under: anti-circumvention, copyright, dmca, dmca 1201, drm, ebooks, lock-in, publishers
Companies: amazon

The Post-Snowden Surveillance World: Network Effects, Low Marginal Costs, And Technical Lock-in

from the only-connect dept

The concept of network effects, and the lock-in they produce, are both by now fairly well known. Most people understand why Microsoft retains its stranglehold on the desktop and word processing formats, despite the availability of equivalent free alternatives like GNU/Linux and LibreOffice, just as Facebook dominates the social networking sphere. A fascinating new paper by Ross Anderson, Professor of Security Engineering at Cambridge University, uses the idea of network effects and related areas to explore some of the deeper implications of Snowden's revelations about the modern world of surveillance (pdf).

Alongside network effects, Anderson notes two other factors, familiar from the world of technology, that are increasingly visible in the world of surveillance: low marginal costs and technical lock-in. First, the network effects:

The Snowden papers show that neutrals like Sweden and India are heavily involved in information sharing with the NSA, even though they have tried for years to pretend otherwise. A non-aligned country such as India used to be happy to buy warplanes from Russia; nowadays it still does, but it shares intelligence with the NSA rather then the FSB. If you have a choice of joining a big spy network like America's or a small one like Russia's then it's like choosing whether to write software for the PC or the Mac back in the 1990s. It may be partly an ideological choice, but the economics canoften be stronger than the ideology.

Here's how low marginal costs have revolutionized world politics:

Second, modern warfare, like the software industry, has seen the bulk of its costs turn from variable costs into fixed costs. In medieval times, warfare was almost entirely a matter of manpower, and society was organised appropriately; as well as rent or produce, tenants owed their feudal lord forty days' service in peacetime, and sixty days during a war. Barons held their land from the king in return for an oath of fealty, and a duty to provide a certain size of force on demand; priests and scholars paid a tax in lieu of service, so that a mercenary could be hired in their place. But advancing technology brought steady industrialisation. When the UK and the USA attacked Germany in 1944, we did not send millions of men to Europe, as in the first world war, but a combat force of a couple of hundred thousand troops -- though with thousands of tanks and backed by larger numbers of men in support roles in tens of thousands of aircraft and ships. Nowadays the transition from labour to capital has gone still further: to kill a foreign leader, we could get a drone fire a missile that costs $30,000. But that's backed by colossal investment -- the firms whose data are tapped by PRISM have a combined market capitalisation of over $1 trillion.

Finally, there's the technical lock-in:

First, there are lock-in effects in the underlying industries, where (for example) Cisco dominates the router market: those countries that have tried to build US-free information infrastructures (China) or even just government information infrastructures (Russia, Germany) find it's expensive. China went to the trouble of sponsoring an indigenous vendor, Huawei, but it's unclear how much separation that buys them because of the common code shared by router vendors: a vulnerability discovered in one firm's products may affect another. Thus the UK government lets BT buy Huawei routers for all but its network's most sensitive parts (the backbone and the lawful-intercept functions). Second, technical lock-in affects the equipment used by the intelligence agencies themselves, and is in fact promoted by the agencies via ETSI standards for functions such as lawful intercept.

The rest of the paper explores the implications of those factors. For example, Anderson notes that network effects lead to a surprising degree of technical integration between Western democracies and some of the less salubrious regimes around the world, notably through the export of spying technologies from the former to the latter. Another kind of integration is taking place between intelligence agencies and law enforcement:

It looks increasingly like law-enforcement and intelligence systems will merge into a single surveillance system, since the issue engages all of the three reasons that makes information markets different: there are strong network effects, there is technical lock-in growing from the fact that everyone’s using the same technology platforms and presenting warrants to the same service firms for the same data; and the back-end systems needed to aggregate, index, and analyse the product have high capital costs and very low marginal ones. Institutional arrangements are starting to reflect this; in addition to the FBI acting as the NSA’s funnel into Google and Microsoft, all UK police wiretaps are now done by the National Technical Assistance Centre, which is essentially a service window at GCHQ. There is indeed no point in making the taxpayer buy the same systems twice.

Despite these rather depressing observations and predictions, the paper does contain some upbeat thoughts. For example, Anderson emphasizes that network effects provide a good reason for the US to support a more principled kind of surveillance, in the knowledge that its current dominance will pass, and that it, too, will be subject to just the kind of spying that it currently inflicts on others:

If the barriers between nations that participate in the intelligence networks are not sustainable in the long term, and neither are the barriers between intelligence and law enforcement, then what's sauce for the goose will be sauce also for the gander. Policymakers should not delude themselves into believing that a temporary 'home field advantage', as NSA Director General Alexander put it, will last for ever, or even for the lifetime of most of us.

Anderson even manages to see hope that the experience of addressing the consequences of network effects in the world of surveillance may lead to broader gains in the future:

The regulation of surveillance might therefore be a useful early example of what governance could look like in a future networked world, and may in fact be one of the hardest such problems that we face. It contains elements of both fear and hope: fear that an apparatus of global surveillance might be captured by an oppressive successor empire, and hope that there might be no successor, but merely civilisation (whatever that means). This asymmetry may introduce the possibility of new approaches, and nudge realists from selfishness to more enlightened selfishness. As for liberal thinking, the lesson is that we don't just have to rely on international institutions; there are extremely powerful network effects in play, which will be a force for pacification and stability; we must work with them.

As that indicates, this is an extremely thoughtful and wide-ranging paper that draws together a number of big issues -- surveillance, privacy, governance, geopolitics etc. It's an important contribution to the debate initiated by the release of NSA and GCHQ documents by Edward Snowden, and anyone interested in what the longer-term implications of those revelations will be really ought to read it.

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Filed Under: lock-in, marginal costs, network effects, ross anderson, security, surveillance

Why TV Everywhere Will Fail: Because It's Based On Taking Away Value, Not Adding It

from the not-how-things-work,-folks dept

We've been pretty skeptical of the plans by the big cable companies to create "TV Everywhere," a system to try to reduce churn by offering users the ability to access TV shows online that match their cable subscriptions. The problem, of course, is that the cable companies aren't looking at this as a way to embrace the future, but more as a way to make the internet act more like cable. This is a recipe for failure. Mark Glaser, over at PBS MediaShift, digs in to explain the many reasons why TV Everywhere is likely to fail, and they're all focused around a simple issue: the whole concept is based on limiting consumer options, rather than increasing them. The TV Everywhere supporters shoot back that they are increasing options by giving people access to their TV channels online, but that's only under very restrictive conditions that are more designed to keep you from cutting the cord from the cable company -- a relationship many customers are fed up with and would love to ditch. It's a simple message that so many companies have trouble understanding these days: you don't succeed by limiting customers and taking away value.

Filed Under: cable, lock-in, tv everywhere

Why Are Book Publishers Making The Same Mistake The Record Labels Made With Apple?

from the we've-seen-this-movie-before,-and-it-doesn't-end-well dept

Back in 2005, we noted that Apple's dominance over the online music space, which upset the record labels tremendously, was actually the record labels' own fault for demanding DRM. That single demand created massive lock-in and network effects that allowed Apple to completely dominate the market. If the record labels had, instead, pushed for an open solution, then anyone else could have built stores/players to work as well, and it could have minimized Apple's ability to control the market. Yes, everyone is now opening up (including Apple), but it took a long time, and Apple had already established its dominant position.

So why are book publishers doing the same thing?

Farhad Manjoo has an interesting article in Slate where he notes that publishers are worried about Amazon turning into "the Apple of the book industry," yet at the same time, they're the ones who are pushing for DRM and limitations that will effectively lock users in to Amazon's ebook platform for a long time. If the publishers had insisted on more open solutions, then a real competitive market could develop. That would be better for everyone. As great as the new Kindle is, it's still rather expensive. Allowing others to enter the market would lead to greater innovation -- making it easier for more people to get into the ebook reader market, and open up plenty of new opportunities for publishers. But the dumb and pointless infatuation with "DRM" and "protecting" works will basically hand the market over to Amazon for many years, and get many folks locked into to Amazon's Kindle platform, even when more open solutions finally start to become popular.

Filed Under: drm, ebooks, kindle, lock-in, publishers
Companies: amazon, apple