The Plot Against Section 230 Is Being Run By Big Legacy Companies Who Failed To Adapt To The Internet

from the the-plot-against-the-internet dept

Last summer, we explained how it was not crazy to think that the narrative being pushed about internet companies and Section 230 was a manufactured narrative by Hollywood and other old legacy companies jealous of the success of new internet companies. Now, the NY Times has a detailed article on exactly that. It's about how a broad coalition of big, old, legacy companies are conspiring to punish Google and Facebook by convincing the media and politicians that Section 230 of the Communications Decency Act is bad.

The headline lists three companies: IBM, Marriott, and Disney. While that might seem like "an unusual constellation of powerful companies" -- as the article puts it -- there is a simple thing tying them together: all three failed to adapt to an open internet. And now they're trying to kill it.

Disney and its powerful trade association have fought to stop the law’s spread abroad.

Marriott has asked Congress to amend the law.

IBM has a plan to slim it down.

An unusual constellation of powerful companies and industries are fighting to weaken Big Tech by limiting the reach of one of its most sacred laws. The law, known as Section 230, makes it nearly impossible to sue platforms like Facebook or Google for the words, images and videos posted by their users.

We've discussed each of these companies and their motivations in the past. Disney, of course, is a stand-in for the MPAA and all of the big Hollywood movie studios. Indeed, while Disney led the copyright lobbying charge in the 80s and 90s, the company leading the way against the internet and Section 230 over the past decade has been Fox. But, of course, Disney recently bought Fox. Hollywood has been fighting against the open internet for years, and its lobbyists have been planting false narratives about 230 for years, and eagerly fan the flames at every opportunity. Their hope has always been to chip away at 230 to make Google and Facebook more vulnerable, and to force them to negotiate some sort of huge transfer of money.

Marriott, somewhat famously, has been screaming bloody murder about Airbnb for years, because it can't stand having competition that actually offers better service. Its hatred of 230 is because Airbnb has argued (though not always successfully), that 230 protects it from liability over user listings -- which, if successful, would block some of the laws Marriott and the wider hotel industry have been pushing to hinder Airbnb.

Finally, there's IBM. And while the article doesn't mention it, it's really IBM and Oracle teaming up here. Last summer we wrote about IBM's sad attack on 230, a law that it doesn't rely on. Once again, with IBM and Oracle, we see two giant, lumbering tech companies, that made bad bets on the internet, and rather than recognizing that they messed up, they're using lobbying and the political process to harm the competitors who built the products people actually want. Neither IBM nor Oracle rely on Section 230, since they don't run consumer facing internet services. Both bet that the enterprise market and data would be where the market was -- but it actually turned out to be in consumer facing services. In both cases, the bottom-up open internet has also enabled smaller enterprise focused offerings to chip away increasingly at the bottom of their markets.

A decade ago, we wrote about writer Andy Kessler's concept of political entrepreneurs v. market entrepreneurs. One of them builds better, more innovative products that increase consumer welfare and increase the overall size of the pie by making things people want. The other uses its enormous power and political connections to pass regulations that hinder competitors who have innovated. One becomes successful through building services that make money from happy customers. One makes money by creating a restrained market in which they can collect monopoly rents above and beyond what an open market would bear.

The latter -- the old legacy companies using lobbying to stomp out competition -- are a form of dangerous "unproductive entrepreneurship." It does not make the world a better place. It limits innovation and limits consumer welfare.

So the next time you hear about the "techlash" and the "problems" of Section 230, consider who actually stands to benefit from chipping away (or removing entirely) Section 230. It is not you or me. It is not those who rely on a wide variety of internet services to express ourselves. It is the legacy companies which have fallen behind, which have not adapted, and which are using their political will to try to suppress and destroy the open systems that the rest of us now depend on.

Filed Under: competition, lobbying, market entrepreneurs, political entrepreneurs, section 230, techlash
Companies: disney, facebook, fox, google, ibm, marriott, oracle

Why Is The Hotel Industry More Focused On Harming Airbnb Than Improving Their Own Product?

from the innovate-and-compete,-guys dept

It's no secret that the hotel industry hates competition from Airbnb. Hell, politicians have even admitted to crafting anti-Airbnb policies to keep hotels from being disrupted. But, now, the NY Times has got its hands on a specific plan from the hotel industry to basically hamper Airbnb and burden it with legal and policy challenges (I should note, by way of some sort of disclosure, that I'm typing this while sitting at a desk at an Airbnb apartment in Washington DC -- and, similarly, that it's much nicer and significantly cheaper than comparable hotels, but I digress...).

Last year, Airbnb underwent a rough regulatory patch.

The short-term rental company became a Federal Trade Commission target last summer after three senators asked for an investigation into how companies like Airbnb affect soaring housing costs. In October, Gov. Andrew M. Cuomo of New York signed a bill imposing steep fines on Airbnb hosts who break local housing rules.

The two actions appeared unrelated. But one group quietly took credit for both: the hotel industry.

Years back, we wrote about writer Andy Kessler's concept of political entrepreneurs v. market entrepreneurs, which (loosely defined) were those who basically used policy making to lock up markets for themselves and restrict competitors as opposed to entrepreneurs who innovated and created more value in the market by serving customers. In more traditional economics, it's rent seeking v. market innovation and growth. Most people recognize how rent seeking is bad: it's using the levers of regulations and politics to limit competition and innovation, in order to extract a greater share of the revenue/profits (since there's less competition, if any) while similarly limiting innovation and economic growth that improve people's lives.

And the hotel industry seems like a prime example of this right now.

Both were partly the result of a previously unreported plan that the hotel association started in early 2016 to thwart Airbnb. The plan was laid out in two separate documents that the organization presented to its board in November and January. In the documents, which The New York Times obtained, the group sketched out the progress it had already made against Airbnb, and described how it planned to rein in the start-up in the future.

The plan was a “multipronged, national campaign approach at the local, state and federal level,” according to the minutes of the association’s November board meeting.

The NY Times report has many more details, but all of it is basically summed up as "annoy Airbnb and limit their ability to grow as much as possible." There doesn't appear to be anything in there about "providing a better experience to our customers so they might prefer us to Airbnb." There doesn't seem to be anything in there about "better competing with Airbnb." Nope, it's entirely about trying to undermine Airbnb. I've noted in the past (and in this post!) that I've used Airbnb a bunch, and have found it almost universally better than hotels. The experience is more unique, but also just... better overall. And I've spoken with many Airbnb hosts. It's true that some are running "businesses" renting out multiple units on Airbnb, but isn't opening up more people for running successful small businesses a good thing?

And, yes, I know lots of people like to claim that Airbnb is driving up rent -- even if the data doesn't currently support that claim. But even if true (and, again, it's the hotel lobby that has mostly been pushing this narrative, though plenty of well meaning folks have picked up on it), that's an issue to deal with in other ways (such as increasing housing stock, rather than limiting it with other regulations) rather than shutting down a useful business that opens up new opportunities, and can also increase tourism and local business.

Again, it's perhaps no surprise that the hotel industry has been fighting Airbnb, but with the NYTimes getting its hands on the actual strategy documents from the hotel industry, that industry has made it clear that it's seeking to shut down and limit competition, rather than innovate themselves.

Filed Under: competition, hotels, innovation, political entrepreneurs, rent seeking, startups
Companies: airbnb