Business Unusual

What the Google fine might say about the future control of the internet

The internet was a research experiment by the US Department of Defence in the 70s that was evolved by the scientific community and led to the the creation of email communications and the world wide web.

Initially the engineers that helped connect the machines that created the internet managed the network, but as it grew it needed more detailed control.

On 1 October 2016 the control was handed formally to the Internet Corporation for Assigned Names and Numbers (Icann) following the end of a management contract with the US Department of Commerce. Icann has representatives from governments, business and community organisations and takes its mandate from consensus between those groups.

Their most recently meeting was here in South Africa at the end of June 2017.

This is not about them though, but how they have been created and look after a very complex environment using multiple stakeholders to manage a global resource despite being an NPO.

As more of the globe's operations are managed via the internet it might be worth looking at similar bodies to manage the markets that operate across it.

R35 billion fine

Google was fined 2.4 billion euros (R35 trillion) for anti-competitive behaviour for displaying products from its own shopping comparison service ahead of competitors in search queries.

The fine was brought by the EU itself as individual countries lack the ability to effectively challenge such a large multinational. Likewise, large countries that do have the ability to challenge them may not be the ones that are negatively affected and so do not pursue action against them.

Amazon, Facebook, Apple, Alphabet, Alibaba and other corporations that span multiple countries are now so big and influential that they effectively create monopolies in the markets they operate in. Currently their regulation is managed differently in each region with some elements being covered by international agreements. But as is often the case, the regulations can’t easily keep up or consider what should be prevented so as not to hamper the positive growth to these new marketplaces and economies.

More global regulatory bodies rather than national governments regulating global organisations

The new challenges from autonomous factories, driverless vehicles and decentralised currencies further complicate the notion of how to control corporations that only by definition are still based in a country when their operations occur everywhere and where a practice in one area may be welcome while in another potentially harmful.

Organisations like the United Nations, or the G groupings or the World Economic Forum may prove to be a more practical way to manage challenges and companies that have outgrown the oversight ability of governments.

The world’s reserve banks in almost every country are independent of governments to better align with international best practices than national ones.

This approach may be required in creating a regulatory body to govern access, use and perhaps even the cost of using the internet.

A growing concern in this regard relates to decentralised currencies, not their use, but their power consumption.

The networks' independence is ensured by preventing any one group from trying to control more that 50% of the mining function of the ledger and copies of it (if a majority were reached, the mining group could insert and validate fraudulent blocks) to deter that, as more miners seek to validate a block, it gets more difficult both as a deterrent and to keep the validation of blocks to about 10 minute intervals.

However, in the case of Bitcoin the power consumed to maintain the network would become unsustainable if the currency became widely adopted. Ethereum uses less, but still a considerable amount. Currently those tasked with reducing the power needs are the developer and founder networks that created the blockchains. Government could intervene but, like piracy or hacking, just because a country says something does not mean it can do something.

Might it not be time to look at the benefits of bodies like Icann and set up more to manage the best way to guide the development of blockchains to the benefit of all those involved?

The US debate about how best to maintain net neutrality may be in question following Donald Trump becoming President. Such significant systems are probably best not managed by officials who possibly don’t even understand how the network operates, who actually owns it and how difficult it will be to make drastic changes each time the government changes.

Would antitrust options not be best served by market regulators that function in the interest of the market rather than those in the market or government bodies whose citizens use that market?

It certainly is a messy process and it is not fast. But, in the same way Winston Churchill famously said “democracy is the worst form of government except all those other forms that have been tried from time to time,” a body like Icann might achieve more than an elected government in finding the right balance between regulation and innovation.

This is by no means an attempt to make the case for a specific solution, just that given how much everything else has changed, it would be unwise to not consider the implications of not also exploring the best options to deal with the consequences of those changes.

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