I'm having trouble accepting that 9/11 was really an inflection point in internet freedom. Throughout human history, whenever a new frontier opens, as soon as it's shown that one can make money at it, the established interests rush in and take over. I can't see how 9/11 accelerated or changed this.
The problem with the woolly decentralized frontier is that certain functions really are better when network effects come into play. In the 90's, our biggest problem with the internet was finding things. Google solved that better than just about everyone else. Facebook later solved the problem of finding people we'd lost touch with (remember the first wave of its use and the huge number of divorces as people connected with old flames?). Decentralization can't do network effects efficiently. Otherwise tech wouldn't be concentrated in Silicon Valley and a few other hubs. It'd be everywhere.
Which raises the question of how one pays for the network and who manages it. The problem of the "bit economy" was identified in the mid-nineties. How do you make money when replication if free? (Unlike the atom economy where replicating a bunch of atoms has a manufacturing cost). The easy solution is advertising and so "easy" beat out better and drove us to the structure we have now.
The "winners" were coming regardless of the involvement of intelligence agencies. I find it difficult to believe that the Government picked Facebook over MySpace and all the other proto-social networks. If the intelligence agencies actually are involved in Facebook (which I find very doubtful given how it's used frequently by people actively trying to overthrow the government, who would be quashed if the intelligence agencies were actually involved), then they're doing a crappy job.
Perhaps if you fleshed out the micropayments argument more, I could accept that. It's pretty clear that the collusion of the major credit card companies have effectively strangled them by ensuring that they get their "cut" of everything (as well as creating a non-governmental method of suppressing "undesirable" economic activity).
But advertising was clearly way ahead of micropayments as a way of funding the digital economy. So again, I'm struggling to see how the slowing of decentralization was anything but inevitable.
Also, the argument that America had lost its taste for liberty and was arguing over which form of authoritarianism to embrace is worth its own separate long discussion. I agree that it happened, but understanding the contributing causes may help us push back against it better.
It's a fair set of points you make. To hit them in order:
1) Advertising was already in play in the late 1990s, but it was on a much more direct and limited basis, not a big-data aggregation basis that we later got from the Googles of the world.
2) You're correct about the trade-offs with network effects, and the consequent tendency for networks of all types to lurch between highly distributed and highly centralized for ecological reasons. If you haven't read Ferguson's The Square and the Tower, I recommend it on this point.
3) Because of this, the winners were coming regardless of gov't interference. They already existed, even, embodied in Microsoft, Oracle, IBM, and Sun. The newer players that came in in the last 90s destabilized them horribly, and there were new winners already on the rise (or at least new fights shaping up for who the new winners would be). Some of the early thinkers of the era, Theil in particular, spotted that some of the new niches (online payments, search, and social networking) were so dependent upon network effects that they would eventually come to be dominated by a single player or a very small group of players--and spotting this is one of the things that made Theil a very wealthy and powerful dude.
But there were two changes in the ecology which *really* helped determined *who* those winners would be, and how they would behave when they got there. The first was the Microsoft Anti-Trust trial, which (though VERY justified and oh man was I rooting against Microsoft) was intended--and received--as a shot across the bow to the tech industry by the fed with the following message attached:
"If you don't start paying us our lobbying money and playing ball with our pet projects, we're going to make life suck for you." That event changed the culture from one divided between established military contractors and those who wouldn't do business with the government (Silicon Valley grew where it did because of the confluence of hippies and old NASA/Strategic Missle program people living in the same place) to one divided between those who would ONLY do business with the US government and those intent on doing business with ALL the governments, everywhere.
The response to 9/11 changed that situation further, and massive sums of money flowed into the valley from both the US gov't and its allies in the "War on Terror"--especially China and the UK. It was in this period that the Gov't started picking the winners and subsidizing them based on which ones were most pliable and willing to act as unofficial arms of the state. Facebook and Google were easy pickings because of the pedigrees of their founders. Palantir was founded specifically to take advantage of that situation.Amazon was a much harder sell--it wasn't until Amazon started selling web services as a side-line that they got captured. For a long time there was talk around the valley about maintaining "neutrality" in geopolitical matters by providing bare-metal services to any government around, but for most of that time FB&Google were actively colluding both with China's plans to genocide and in building out the US Surveilance grid.
Fun side fact: Though this is all stuff you can piece together from the tech news over the years, I got to see a lot of this up close and personal. The thing that killed one of my startups was our inventor's resolution never to sell weapons to the military, nor do business with China. He more-or-less tore up a seven-zeros check for startup costs for a minority buy-in because it was attached to conditions of giving China and US intel services right-of-first-refusal on our encryption product. After the deal fell through I was taken aside and exhorted to try to change his mind, and I got a deep history lesson from someone whose name some of the readers here would know. Baisclly, by 2005 nobody, the capture was so complete that nobody in the valley had the option of NOT working for the security establishment--either they took cash or they got FISA'd, a rather American version of the "plata o plumo" technique popular with Pablo Escobar. Any business that remained recalcitrant in the face of that dilemma got quickly buried and/or shoved out of town.
4) On micropayments, there were a few competitors early in the space, and had the situation not changed I think PayPal would have wound up running the thing with direct interface to the banks. The credit card companies did get in the way as you describe, but they wouldn't have been able to enforce the issue without the direct backing of the Fed, and their interest in choking down the viable channels of fund transfer so that all monetary activity could be surveiled. Without their help, PayPal et.al. would have had a real uphill battle for several years, probably including antitrust lawsuits, but in the end I suspect they'd have won (especially given their early alliance with eBay putting them on solid and profitable footing, unlike their competitors in the space which tended to run high burn rates). The issue would have probably remained somewhat fluid, all other things being equal, until Satoshi shook everything up--but now I'm getting ahead of the story :-)
America's losing taste for liberty does deserve it's own installment--thanks for the suggestion!
Anyhow, those are my quick-and-dirty thoughts. Would love to hear your response
I'm having trouble accepting that 9/11 was really an inflection point in internet freedom. Throughout human history, whenever a new frontier opens, as soon as it's shown that one can make money at it, the established interests rush in and take over. I can't see how 9/11 accelerated or changed this.
The problem with the woolly decentralized frontier is that certain functions really are better when network effects come into play. In the 90's, our biggest problem with the internet was finding things. Google solved that better than just about everyone else. Facebook later solved the problem of finding people we'd lost touch with (remember the first wave of its use and the huge number of divorces as people connected with old flames?). Decentralization can't do network effects efficiently. Otherwise tech wouldn't be concentrated in Silicon Valley and a few other hubs. It'd be everywhere.
Which raises the question of how one pays for the network and who manages it. The problem of the "bit economy" was identified in the mid-nineties. How do you make money when replication if free? (Unlike the atom economy where replicating a bunch of atoms has a manufacturing cost). The easy solution is advertising and so "easy" beat out better and drove us to the structure we have now.
The "winners" were coming regardless of the involvement of intelligence agencies. I find it difficult to believe that the Government picked Facebook over MySpace and all the other proto-social networks. If the intelligence agencies actually are involved in Facebook (which I find very doubtful given how it's used frequently by people actively trying to overthrow the government, who would be quashed if the intelligence agencies were actually involved), then they're doing a crappy job.
Perhaps if you fleshed out the micropayments argument more, I could accept that. It's pretty clear that the collusion of the major credit card companies have effectively strangled them by ensuring that they get their "cut" of everything (as well as creating a non-governmental method of suppressing "undesirable" economic activity).
But advertising was clearly way ahead of micropayments as a way of funding the digital economy. So again, I'm struggling to see how the slowing of decentralization was anything but inevitable.
Also, the argument that America had lost its taste for liberty and was arguing over which form of authoritarianism to embrace is worth its own separate long discussion. I agree that it happened, but understanding the contributing causes may help us push back against it better.
It's a fair set of points you make. To hit them in order:
1) Advertising was already in play in the late 1990s, but it was on a much more direct and limited basis, not a big-data aggregation basis that we later got from the Googles of the world.
2) You're correct about the trade-offs with network effects, and the consequent tendency for networks of all types to lurch between highly distributed and highly centralized for ecological reasons. If you haven't read Ferguson's The Square and the Tower, I recommend it on this point.
3) Because of this, the winners were coming regardless of gov't interference. They already existed, even, embodied in Microsoft, Oracle, IBM, and Sun. The newer players that came in in the last 90s destabilized them horribly, and there were new winners already on the rise (or at least new fights shaping up for who the new winners would be). Some of the early thinkers of the era, Theil in particular, spotted that some of the new niches (online payments, search, and social networking) were so dependent upon network effects that they would eventually come to be dominated by a single player or a very small group of players--and spotting this is one of the things that made Theil a very wealthy and powerful dude.
But there were two changes in the ecology which *really* helped determined *who* those winners would be, and how they would behave when they got there. The first was the Microsoft Anti-Trust trial, which (though VERY justified and oh man was I rooting against Microsoft) was intended--and received--as a shot across the bow to the tech industry by the fed with the following message attached:
"If you don't start paying us our lobbying money and playing ball with our pet projects, we're going to make life suck for you." That event changed the culture from one divided between established military contractors and those who wouldn't do business with the government (Silicon Valley grew where it did because of the confluence of hippies and old NASA/Strategic Missle program people living in the same place) to one divided between those who would ONLY do business with the US government and those intent on doing business with ALL the governments, everywhere.
The response to 9/11 changed that situation further, and massive sums of money flowed into the valley from both the US gov't and its allies in the "War on Terror"--especially China and the UK. It was in this period that the Gov't started picking the winners and subsidizing them based on which ones were most pliable and willing to act as unofficial arms of the state. Facebook and Google were easy pickings because of the pedigrees of their founders. Palantir was founded specifically to take advantage of that situation.Amazon was a much harder sell--it wasn't until Amazon started selling web services as a side-line that they got captured. For a long time there was talk around the valley about maintaining "neutrality" in geopolitical matters by providing bare-metal services to any government around, but for most of that time FB&Google were actively colluding both with China's plans to genocide and in building out the US Surveilance grid.
Fun side fact: Though this is all stuff you can piece together from the tech news over the years, I got to see a lot of this up close and personal. The thing that killed one of my startups was our inventor's resolution never to sell weapons to the military, nor do business with China. He more-or-less tore up a seven-zeros check for startup costs for a minority buy-in because it was attached to conditions of giving China and US intel services right-of-first-refusal on our encryption product. After the deal fell through I was taken aside and exhorted to try to change his mind, and I got a deep history lesson from someone whose name some of the readers here would know. Baisclly, by 2005 nobody, the capture was so complete that nobody in the valley had the option of NOT working for the security establishment--either they took cash or they got FISA'd, a rather American version of the "plata o plumo" technique popular with Pablo Escobar. Any business that remained recalcitrant in the face of that dilemma got quickly buried and/or shoved out of town.
4) On micropayments, there were a few competitors early in the space, and had the situation not changed I think PayPal would have wound up running the thing with direct interface to the banks. The credit card companies did get in the way as you describe, but they wouldn't have been able to enforce the issue without the direct backing of the Fed, and their interest in choking down the viable channels of fund transfer so that all monetary activity could be surveiled. Without their help, PayPal et.al. would have had a real uphill battle for several years, probably including antitrust lawsuits, but in the end I suspect they'd have won (especially given their early alliance with eBay putting them on solid and profitable footing, unlike their competitors in the space which tended to run high burn rates). The issue would have probably remained somewhat fluid, all other things being equal, until Satoshi shook everything up--but now I'm getting ahead of the story :-)
America's losing taste for liberty does deserve it's own installment--thanks for the suggestion!
Anyhow, those are my quick-and-dirty thoughts. Would love to hear your response
All the best
-Dan