Google and Facebook are the real threats, not the repeal of net neutrality

After the vote to end net neutrality, Federal Communications Commission Chairman Ajit Pai answers a question from a reporter in Washington.
After the vote to end net neutrality, Federal Communications Commission Chairman Ajit Pai answers a question from a reporter in Washington. AP

The FCC’s recent vote to pull back on the previous administration’s approach to net neutrality was greeted by some advocates as a wholesale retreat from regulation of the internet — handing over cyberspace to corporate censorship and stranding everyone but the 1 percent in maddening slow lanes online.

But these critics are wrong on two counts.

First, they erroneously confuse FCC Chairman Ajit Pai’s plan to roll back certain obsolete “utility” rules with an abject surrender to corporate censorship and a toll-gated internet. Second, and more important, advocates for a competitive, vibrant internet need to urge regulators to turn their guns to the real threat — the massive “edge providers” like Google and Facebook whose unchecked monopoly power mocks the very idea of “neutrality” online.

The first issue is straightforward. Pure common carrier style “neutrality” has been misleadingly pitched as the only guarantor of First Amendment rights on the Web. In fact, it’s nothing of the sort. Beyond FCC action, strong enforcement by the FTC and state attorneys general can police internet openness and transparency. And don’t write off the disciplining power of the market itself — a broadband provider that tried to limit user activities online would find its customers departing in droves. That’s why we’ve never seen this kind of censorship in the first place.

The neutrality acolytes demanding that “All traffic always travel at the same speed” fail to recognize that some differentiation can benefit consumers. Should data from a remote heart monitor or a vital climate-monitoring buoy be treated exactly the same as the archetypical “cat playing the xylophone” video or yet another e-mail from LinkedIn? Just like Sears offers “good, better and best,” the internet can too. It’s paradoxical that it took a Republican FCC to restore this common-sense approach, which was first put in place not by nefarious free-market radicals, but by the Clinton administration in 1996.

In the long run, the second erroneous belief could be more troubling. Tech monopoly giants like Google and Facebook are banging the drum to impose the most absolute versions of “neutrality” on their competitors while they themselves profiteer by wantonly prioritizing and discriminating in their operations. The very abuses open internet advocates seek to stop are business as usual for these giants.

Thus, advocates fear “blocking” by the ISPs, but it’s Amazon that recently patented the ability to block customers in its physical stores from using WiFi to compare rivals’ prices. And it was Apple that recently drew Congress’s ire by banning affordable “template” apps from its platform, effectively blocking small businesses from competing with large companies that have custom developers standing by.

Advocates claim to worry about internet providers “throttling” competitors’ services, even as Google speeds up websites that use its own favored coding approach, and Netflix has admitted to deliberately slowing down customers using certain networks.

And while the core worry of neutrality advocates is online discrimination, Google was recently fined $2.7 billion by the European Union for favoring its own products and services in search results. All the big websites use algorithms that manipulate customers, filter news, direct users to favored entertainment options, and monitor our friendships, preferences, and activities in ways that service providers are either restricted from doing or unable to due to widespread encryption.

The big websites enforce this predatory behavior through their market power. Google has 88 percent of the market for search and the same percentage of the operating system for smartphones. Together with Facebook, it accounted for 99 percent of digital advertising growth in 2016. Netflix and YouTube account for over half of peak internet traffic. But of course they do. You can switch readily between a cable, telco, or mobile ISP. But how do you “switch” away from Google or Facebook? These “network effects” make the big website firms “natural” monopolies that cry out for regulation.

The FCC has only limited authority over these monopolists but someone needs to step forward and act — be it the Federal Trade Commission, the Department of Justice or the states. Require that secret algorithms that collect and mine information about you be made transparent and even-handed. Make the giants take stronger action against the pirates who post creative works but to whom they now give a nod and wink. Put firewalls between — or even break up — YouTube, Google Maps, Google Play, Android, and other services that, in concert, prey on user privacy.

It’s one thing to walk away from the Paris Accords, end DACA, gut Dodd-Frank or to put treasured natural wonders up for commercial development.

But don’t lump “net neutrality” into that appalling bag, lest we “resist” ourselves into submitting to Google and its ilk. Instead, let’s refocus our regulatory efforts on the website monopolies that threaten to turn the Promethean gift of the broadband internet into a private reserve.

Ev Ehrlich is president of ESC Co., an economics consulting firm, and was undersecretary of commerce from 1993 to 1997.