10/28 – Digital Disconnect: Chapters 4 & 5

In this session, we discuss two more chapters from Digital Disconnect: How Capitalism Is Turning the Internet Against Democracy by Robert W. McChesney.

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9 responses to “10/28 – Digital Disconnect: Chapters 4 & 5

  1. A. To

    My question in regards to Digital Disconnect this week is similarly based on the environment I have been in for the past 3+ years. As I wrote last week, being in Silicon Valley and Stanford means that you are constantly surrounded with excitement about new technology and startup culture. I am very interested in where McChesney views startups in this “Empire of the Senseless” he writes about in Chapters 4 and 5. McChesney writes of media giants and forces who “have been able to convert beachheads into monopoly fortresses and generate endless profit” (131) in the realm of the Internet.

    McChesney leaves little hope for a small company who wants to push its way into the realm of the Internet and hopes to succeed. I am not so sure. I was absolutely astounded by some of the figures he delivers, but I feel that smaller companies are able to make an impact, both financially and in the eye of the public. These Internet giants may control a large amount of the Internet capital, but surely there is plenty of room for the explosion of, say, Instagram, Snapchat, and Clinkle. But maybe this is the hopelessly naïve thought that McChesney is trying to battle. Rather than competing with the Internet giants, maybe he sees these startups as fodder for the success of the giants. After all, YouTube was purchased by Google for $1.65 billion and Facebook bought Instagram for $1 billion. These innovators and creators may just be feeding their creativity back into the giants, who, McChesney warns, “with the benefits of their existing monopoly base camp, the empires all try to move into adjacent areas and launch new monopoly services, in the hope that they will eventually pan out” (138). Again, this may all be coming from an Silicon Valley induced place of bias, but whether he thinks they are completely irrelevant to the Internet’s relationship to democracy or they are contributors to monopoly powers, I feel that we need to hear more about these small businesses and what their particular role is.

    • Of these two chapters, I was most interested in McChesney’s arguments in Chapter 4 about how capitalism has “conquered the Internet” (97). McChesney describes the Internet as originally envisioned to be a place where “inequality, exploitation, corruption, tyranny, and militarism were soon to be dealt their mightiest blow” (96). I was very curious to understand how, in his view, the precise opposite has taken place.

      A key observation to be made about how the really existing capitalism of large corporations with close relationships to the government has taken control of the Internet is to understand the origins of the Internet. To corporations, the Internet predecessor, ARPAnet, was not initially seen to be a profitable idea, and “corporations accordingly had little interest in the Internet in its formative decades” (99). Instead, the development of the Internet was largely funded by the government and this was crucial since as Vint Cerf (one of the fathers of the Net) notes, “government-based research has ‘the ability to sustain research for long periods of time’” (100). Moreover, since “in corporate think, the role of the government goes like this: make the massive investments and take the risk” (100), one can understand why, when the Internet appeared to become more profitable in the 1990s, that corporations gained interest in turning it into something profitable.

      Although the Internet community was notoriously known for its opposition to advertising and commercialism, a major turning point was when it was formally privatized in 1994-95 with “no organized or coherent opposition” (104). But why? Clearly, this meant that now market forces could determine its course. One reason was that “press coverage was nonexistent, so the general public did not have a clue…[since] the traditional pattern was for the government to develop new communication technologies and turn them over to capitalists once they could make profits” (104). Not to mention, there was an arrogance among Internet hackers that corporations could not seize control because they believed that “the revolutionary nature of the technology could trump the monopolizing force of the market” (105). Finally, another important factor that undermined debate about this privatization was the economic situation at the time. Due to the stock market crash of 1987 followed by a recession in the early 1990s, the Internet bubble made “policies promoting the commercial development of cyberspace not only appropriate, but brilliant….Capitalism and the Internet seemed a marriage made in heaven” (108).

      Given the above factors, it is not entirely surprising that really existing capitalism was given the green light to conquer the Internet. McChesney goes on to explain how, in response, the telephone and cable industries, two industries most immediately threatened by the Internet, attempted to survive by becoming a “cartel” as ISPs. Working closely together and privately with the government, they have monopolized the entire ISP market. It seems now that these cartels and other private monopolies direct the future of cyberspace, without public awareness or participation – in direct contradiction to the initial expectations of the ARPAnet.

  2. In Chapter 5, McChesney provides an in-depth look into the origins of the privatized Internet and its harmful capitalist dimensions. I was struck by his account of why the Internet transitioned to a privatized sphere in the 90s because of the similarities between that transition and the growth of technology today. Early in the chapter, McChesney references a key insight by Curran into the relationship between capitalism and the Internet: “capitalism shaped the Internet far more than vice versa, that if the Internet were to remain a public service institution, it would likely stay on the margins” (97). On the surface, this seems at the least a reasonable possibility: research into the sciences and technology requires capital investment, and with a world of options out there to turn investments into profits, investment into something that seems purely academic might not draw a lot of interest. McChesney fleshes this claim out through the case of ARPAnet, the predecessor to the Internet. McChesney observes that one of the major early intentions for ARPAnet was to crease a network of “decentralized” control, where original intention was to create a network with “all machines on the network were, more or less, peers. No one computer was in charge'” (99). Yet ARPAnet failed to generate any kind of substantial private investment, and AT&T refused to take control of it when given the chance, citing a lack of profitability. Only later, when people began realizing the ability of services and advertisement to turn the Internet into a profitable sphere, did private investment start flowing in, and McChesney makes a brilliant observation on the nature of corporate investment into innovation: “basic research of the kind that generates innovations like the Internet is a public good, and private sector firms have little incentive to produce it…corporate research labs ‘rarely if ever invest in fundamental technology that will likely undermine the economic dominance they currently enjoy'” (100). Yet the Internet did grow and flourish, and McChesney gives us two key insights to understand why: a huge portion of investment in it and other technology derives from military spending, and the period in the 90s when the government essentially handed control of the Internet to private interests had policymaking processes that were basically dominated by corporations and trade interests (104).

    With this background in mind, I thought back to the discussions on companion robots and social media in the Turkle piece and wondered where we go from here. McChesney’s note on why corporations might not invest in “neutral” technology growth seems reasonable, yet the difference between now and the 80s/90s is that the world now realizes that the kind of worlds that things like the Internet create can be enormous sources of profit and growth, while they were just learning this a few decades earlier. Corporations now do channel funds towards technological growth – think startups and the R/D projects by companies like Google – yet I think McChesney is right in saying that if something doesn’t clearly have a potential for profit to investors, it won’t get much investment, and if corporations spend money on it they might do it in private and wait to see how they can profit from whatever they learn. The question then becomes: what types of investment are people making into media and robotics and why are they making them? Turkle tells us that these things might make us less fulfilled and give us less meaningful relationships. Is this something that private interests are aware of? Even if they aren’t, do these things create new potential for profit by these investors and the private sector in general? A meaningful investigation here requires a synthesis of everything we’ve seen so far in this class. Hopefully the rest of McChesney’s piece gives us an even better set of tools to tackle it.

  3. McChesney delves into the impacting relationship between capitalism and the Internet during the course of these two chapters. He explains how capitalism has affected the Internet more so than the Internet has, affected capitalism and social order. Expectations surrounding the Internet’s roll in equalizing humanity have been proven exceedingly too high for now. However, this is not the end of the Internet’s potential as a total force for social good. We are now in a stage of reassessment. With increasing reports of technological abuse like NSA spying and civilian murder by drones overseas, society is taking another look at how recent technologies are affecting society as a whole.

    In earlier chapters, McChesney made it clear that the political economy should be considered the basis for evaluation of a technology’s utility. In “Empire of Senselessness” McChesney highlights how the United States has changed over the last century. “A recent analysis of economic inequality in the United States concluded that ‘the stupendous gains made possible by the technological advances of the information age have been almost entirely captured by a tiny elite,’” specifically unveils the true wealth distribution currently made possible by the Internet. From his statement, it is clear that the system is not operating optimally and change should be imminent. Who is to say if this change will come, whether it will truly benefit the majority, and whether it is sustainable? It seems like the system is so integrated into our everyday operation that any change can only be arbitrary.

    This pessimistic view the future caused me to consider an alternative way of installing technology into society. Rather than unleashing a technology unto the masses after secret government testing, let’s move toward a more sustainable and interactive model in proactively determining which technologies will harm or hurt us, the people affected. I argue that it would be possible to release technologies into isolated communities either naturally contained by geography or possibly unnaturally contained via volunteer quarantine. The measurable of the community, i.e. health, income equality etc., could then be monitored through time. The analysis of these communities would be much easier to draw reasonable conclusions than the large scale releases we are currently experiencing. Once a technology has been proven to improve a small community, the technology moves on to a larger scale testing community. The process continues until it is deemed useful for society.

    This process would certainly be proactive, but could inhibit what could be ‘necessary’ rapid technological growth in the country.

  4. hramesh2013

    McChesney asserts about the Internet’s beginnings that “basic research of the kind that generates innovations like the Internet is a public good, and private section firms have little incentive to product it”(100). Furthermore, this research, he emphasizes, is heavily funded through government military spending. As telecom corporate giants turned their eyes to the emerging Internet during the 1990s, “the Internet was transformed from a public sector to a distinct, even preeminent, capitalist section” through a number of policy changes. Thus, in a prelude in Chapter 4, McChesney unfolds a story of tension between policy-makers and telecom giants that eventually tilted in favor of the latter. Years before even giants like Facebook and Google came about, the seeds for threat to democracy were sewn. Ultimately, in Chapters 4 and 5, McChesney seems to closely tie a threat to the individual as a threat to democracy itself either through corporate giants or the government (which itself is itself corrupted at hands of the former to some extent).
    McChesney highlights the first threat by pointing out present and possible future advertising practices of corporate giants. He cites Target .com that is able to give “smart or targeted advertising […] because they have so much traffic and collect such extensive data”, data that is gathered even when users are in the privacy of their homes (156). Even worse, “researchers are now working on “sentiment analysis” to see what mood a person is in at a particular moment and what product and sales pitches would be most effective” and “Advertisers are at work developing emotional analysis software so webcams can monitor how one’s face responds to what is on the screen” (157). Users of the Internet, invariably to these advertisers, become the same as consumers. Though McChesney does not explicitly say so, these practices highlight the extent corporations are allowed to go to increase their profits, even at the risk of breaching users’ privacy.
    McChesney is more concerned about the government’s current role in the regulating the Internet and the threat it poses to its citizens’ rights. Despite the benevolent image it had in initiating the development of the Internet through funding, the government, in addition to letting corporations dominate the Internet through monopoly, uses the Internet against its citizens, he says. McChesney does not fail to mention the National Security Agency’s “illegal warrantless wiretapping program on U.S. citizens, monitoring telephone calls with deep-packet inspection technology”(163). And of course, because of the government’s close ties to telecom companies, the NSA “received unconditional cooperation of AT&T, Verizon, and all the other telecom companies except Qwest” (the latter was threatened by the government that it would lose out on contracts) (163). McChesney attempts to show that government, corrupted by the greedy, capitalistic desires, also found motivation in getting private data from its citizens through a technology that it had once helped establish.
    He, by discussing advertising and wiretapping, argues threats to the individual, either through the telecom corporations or the government that they seem to have taken over in some respects, means a threat to democracy.

  5. In chapters 4 and 5, it seems that McChesney’s discussion of the internet and capitalism support the thesis that the structure of the internet dictates how the internet is used. By McChesney’s opinion, then, the capitalism built by the American government influences the way that the internet operates, evolving the internet away from its original construction.

    In McChesney’s argument, Capitalism has drastically altered the structure and intentions of the internet: “The tremendous promise of digital revolution has been compromised by capitalism appropriation and the development of the Internet.” (97). McChesney posits that “The early Internet was not only noncommercial, it was anticommercial.” (101). However, developments in policy, advertising, and other means have reversed the original course of the internet toward capitalism. This is because these developments have shaped the structure of the internet, thereby modifying the use of the internet. McChesney writes that there was “no single policy or coherent set of policies that determined the nature of the internet,” (105), rather, our own influence and policy has given the internet a more distinct figure. This is through lobbying by large corporations, ISPs, advertising agencies, and the need to make money, among other things.

    This sentiment echoes and adds precision to an early claim by Lawrence Lessig in his book Remix. His overarching thesis is that the architecture of the internet shapes the interactions that the enduser has with the web. Lessig argues that, “the invisible hand of cyberspace is is building an architecture is quite the opposite of its architecture at its birth. This invisible hand, pushed by government and by commerce, is constructing an architecture that will perfect control and make highly efficient regulation possible.” (Remix 4).

    By both arguments in both books, the architecture produced by capitalism and government regulation implicitly regulates the manner in which the internet is used. While McChesney does not offer this thesis explicitly, it echoes identical sentiments as expressed in the book Remix by Lawrence Lessig.

  6. McChesney describes the preferential treatment the US government gives internet and media companies through lax regulation and strict copyright laws. He speaks about the danger of cartels and lack of competition. One interesting aspect he mentions is the European Union’s role in shaping policy. The EU has stricter policies on privacy and antitrust than the US, and I wanted to examine Google’s recent antitrust suit under both bodies.

    The outcome of the antritrust investigations highlights differences between the EU and US. Google had allegedly abused its power as a search monopoly by promoting their own products and not linking to competition in certain search results. The probe by the FTC generated no settlement or punishment. However, the European Commission formally charged Google with an antitrust case. They are still in the midst of working out a settlement.

    McChesney seems to be right in that the EU is harder on American-based technology companies because they are not regarded at the “home team” (143). I think McChesney would also argue that this stems also from different political systems and cultural values. I think this is evident in other EU policies.

    For instance, McChesney mentions that advertisers influence the development of the internet by pushing for the creation of cookies. These files allow websites to track your movements online (146). This has allowed websites like Google to provide targeted ads. However, there is an EU directive, the E-Privacy Directive, that requires websites to ask users to opt-in before that website can store cookies that are not deemed ‘strictly necessary.’ This law in effect requires Google to ask you for your permission before it can enable tracking cookies. The US does not have any similar laws. I think policies like this are a good sign. There is a possibility that EU regulations might “embolden American regulators and give them powerful ammunition” (143). Hopefully EU policies that promote users’ rights are adopted in the US.

  7. Week 5
    Digital Disconnect, Chapters 4-5

    For the first reading in a while, I have little to argue with. McChesney makes a strong argument for how much of the Internet’s state thus far has been influenced by capitalism, for better or – as the case usually is – for worse. However, one pitfall McChesney does find himself in occasionally is in adopting a short-term outlook to the state of the Internet, neglecting the long-term perspective that I would argue is necessary when analyzing an industry and technology still so young.

    For example, in Chapter 5, McChesney argues that network effects drive online platforms – particularly information networks – toward monopolies. Citing Metcalfe’s Law, which asserts that the value of a network increases in proportion to the square of its connections, he claims that a tendency towards adoption of one service or platform in particular is natural in the benefit it provides to users to have a larger network. While this makes sense superficially, it does not account for the value of intimacy that users are more recently recognizing as something desirable on the Internet. This same intimacy is what has led to the slowed growth of purely public platforms such as Facebook and Twitter, and which has spurned the exponential growth more private social networks are experiencing. Often, the filtered content users experience in a more intimate platform can provide greater value than its unfiltered counterpart (citation 1). The rise of social platforms such as Path, Dribble, Origami, and more is evidence of this trend.

    Additionally, McChesney observes that claims by industry giants that “competition is a click away” are absurd (136), referring to the incredible barrier to entry present in these large companies’ server farms. I argue here that McChesney’s view is shortsighted, given that most of the Industry giants he mentions were not the first to market with their ideas. Google was not the first search engine and Microsoft was founded several decades after Hewlett-Packard. We’ve even seen disruption recently in the form of innovative design or user experience, with apps such as Clinkle, Square Cash and Venmo overtaking similar products from PayPal or credit card companies (although Venmo was acquired by a company that was subsequently acquired by PayPal last month, furthering another of McChesney’s points regarding large industry acquisitions). Server infrastructure and the end user benefits is yields are only a small part of a potential ecosystem, and there are many other ways a small startup can overtake an Internet behemoth today. I believe, perhaps naively, that competition can still be a few clicks or insights away.

    McChesney’s case is still very strong, and I predict he would respond to my first piece of criticism by claiming that niche social networks are still in their infancy, and will plateau in growth long before presenting any true competitive threat, which I admit is possible. Additionally, he might re-assert that despite the possibility of smaller technical breakthroughs, there is a negligible chance of any Internet giant being dethroned as a consequence of any of countless other advantages and barriers, including lobbying power and patent usurpation.

    (1) Swift, Adam Glen & Spurgeon, Christina L. (2012) Animating and sustaining niche social networks.

  8. maggiesko

    In chapter 5 McChesney paints a bleak picture of a world dominated by monopolies and oligopolies that impose insurmountable barriers of entry for the potential new competition. And while this is undoubtedly true, I will join A.To in her optimism by adding a few more things that might be giving startups some advantage over the already established companies.
    The larger a company gets, the less flexible it becomes, which makes innovation, adaptation to current trends or any change in the current system a longer process compared to the amount of time a similar adjustment would take a smaller company with a smaller consumer base. And in the very dynamic world we live in, being slow is a disadvantage, which in some respects may actually lower the barriers of entry and let some competition with innovative products in.
    Despite the high barriers of entry, there are still startups that manage to claim their place in the market. Since the establishment of Facebook as the dominant social network worldwide, we have witnessed the raise in popularity of other (albeit in many respect niched) social networks like Pinterest and Instagram. Also let us not forget that both Google and Facebook are companies that before becoming the world leaders they are now, successfully competed and beat their rivals (Yahoo and MySpace respectively), which despite having the competitive advantage of being the first on the market eventually lost their first positions.
    But the harsh reality might also be that the already established companies might use their “monopoly pricing power and market muscle to drive prospective competitors out of existence and into submission.” (p.138) And we see examples for this idea in Microsoft crushing Netscape in the late 90s, Facebook disabling the game Critter Island after its popularity reached 14 million users, their acquisition of Instagram or Google’s purchase of YouTube.

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