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2018-03-04 17:59 by Karl Denninger
in Federal Government , 295 references Ignore this thread
Careful What You Wish For....
[Comments enabled]

There's a lot of noise being made on Twatter and elsewhere related to economic actions against various sites and points of view.  The latest is Infowars, which apparently had CNN contact advertisers to ask what they thought about their ads running on Alex Jones' web properties.

They apparently didn't know they were there and the response was to remove them.

Think about this for a minute though -- if you're some consumer-products company why would you pull the ads if they sell product?  You wouldn't.  So what I suspect really happened is that Nike looked at how many pairs of sneakers they sold via Infowars and the NRA looked at how many memberships.  Both found the number was an effective zero so..... poof!  Think about it -- do you really believe many Mormons watch Infowars?

Let's face it -- the point of advertising is to sell things.  If you're making sales then who cares who's doing the buying?  If you're not then you're wasting money.  The fact is that a huge percentage of so-called "online advertising" is simply flushed down the toilet, especially on properties like Facesucker.

But there are many people who have been blackballed, either temporarily or permanently, from various venues.  Attempting to target advertisers is the most-obvious but hardly the only one.  Twitter bans people, Facebook bans people, I ban people.

There usual screaming is that this is "censorship", but, well, no.  It's not "censorship" if REI wants to banhammer a manufacturer because they also sell guns.  It might be stupid, but it's not "censorship."  If P&G doesn't want its ads for consumer products running on Alex Jones' web site, why should Alex have the right to demand that they pay him to have those ads present?  Do you think P&G would stop running ads if they sold products as a result of that advertising?  Hell no.  Never mind the obvious and very effective retaliation available to Jones' subscribers if they were buying the product or service before and now stop.

The real issue isn't that someone decides to banhammer someone else.  It's that market power has been allowed to accumulate in a small number of hands, which is not supposed to happen by design but it has because anti-trust laws have been ignored by the government.

Let's look at MCSNet in the 1990s.  There were roughly a hundred ISPs in the greater Chicagoland area.  If I banhammered a customer they had 99 more choices.  They might have preferred to use my ISP but that's not the point -- the point is that there was a robust competitive marketplace for Internet service, they had dozens of places to buy from, and they could choose any of them.

There were plenty of people who didn't like my ISP -- or me personally.  There were plenty of people who didn't like one or more of the others too.  We poached each other's customers all the time; indeed, that's what marketing and sales is about in many cases; you try to sell people who don't have the service of course, but at the same time getting someone to switch is just as good from a revenue standpoint!  A customer is a customer when you get down to it and that robust competitive environment drove down prices and drove up service levels provided for the dollar on a pretty-much continual basis.

But what do we have today?  Google, Twitter, Facebook, and..... what?  Facebook owns Instagram, Google owns Youtube, etc.  The majority of Internet advertising goes through either Facebook or Googleso if one of them blackballs you then your ability to compensate is crippled to a severe degree, and if the second does so then you're basically offline from that perspective.  Never mind that they serve different audiences and feature sets, so there's no real competition between them.  In other words there's only one place to go.

If you get banned from a liquor store or bar that doesn't stop you from getting drunk -- you'd have to get banned from dozens of them.  But if they all cooperated to ban you at once, or there was only one bar or liquor store within 100 miles that would likely attract regulatory attention -- or at least it damn well should.

I'm sure you'll say "but booze isn't a necessity."  Ok, fair enough: What happens when it's food or gasoline?  Or, for that matter, internet access.

Most people and businesses have only one or two viable choices when it comes to ISPs these days in the broadband arena.  Many places only have one viable choice, especially if you need material amounts of bandwidth.  While there are allegedly two providers here there really isn't if you want or need more than a few megabits, because that's all DSL can provide in this area.

I argue that the correct approach here is to place a marker at a certain level of market power -- not where competition is gone, but where it is materially impaired as demonstrated by the actions of the firms involved -- and designate all who act in concert in this fashion as common carriers.  Getting listed as one would serve as an absolute bar to such activity and at the same time would bar price discrimination; a common carrier must accept business from all at the same price for the same good or service and cannot turn people away for other than violations of criminal law.

Needless to say none of the existing "big" and exclusionary providers of services in the Internet today would want to be so-designated and as such it would serve as a strong deterrent to blackballing people on any sort of consistent basis.  Anyone that was effectively "de-platformed" or "de-monetized" would have an immediate hammer to hit back with and re-open their operations in the event the firm or firms that did it were able to effectively black out their operation whether from an advertising or operational standpoint.

I'd start by dividing firms by function -- pipe providers and infrastructure (e.g. DNS registrars, SSL issuers, etc) should be black letter common carriers without exception.  Where it gets much murkier is when you start talking about other parts of what makes the Internet work today -- advertising brokerages (e.g. Adsense, DoubleClick, collating services (e.g. Akamai, Cloudflare) and even colocation/hosting businesses.  This is hard to get right and a lot of thought and debate would have to go into it.

Crafting legislation might be tricky but it certainly isn't impossible -- and at least from my point of view is the only rational approach to resolution of this issue.

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