Thread by @doctorow

You know how the Curse of the Monkey's paw works: a cursed object grants all of your wishes, but in the worst way possible: "be careful what you wish for."

That's what we're living through with Big Tech right now.

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I'm all for regulating Big Tech, but not all regulation is created equal. Some regulation can dampen the power of Big Tech, while other regulation can make it permanent, even creating powerful stakeholders for monopolies within government.

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Every monopolist's first preference is to be totally unregulated, but every monopolist's SECOND preference is to be regulated in a way that only a monopolist can comply with, thus foreclosing on the possibility of competition from an as-yet-nonexistent upstart.

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Look at AT&T, or, as it was known in its monopolistic glory days, "The Bell System." From its earliest days, AT&T was a bully, pulling all kinds of dirty tricks on small carriers and rural telephone co-ops that grew out of the New Deal electricity co-ops.

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Regulators and the DoJ often had stern words for AT&T, and at various times, the company was subjected to legal penalties and court-ordered conduct remedies to make it behave.

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But this was as far as it all went: no one was going to break up AT&T, take away the power it was abusing. AT&T was too important, "too big to fail," part of the national emergency and security infrastructure.

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AT&T leveraged the fact that cops or fire marshalls could (and did) coopt its infrastructure to argue for special rules to protect the Bell System, because if nefarious competitors were to compromise the system, America couldn't fight crime, fires, floods and other disasters.

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Which is how it was that AT&T was able to get the government to ban connecting anything to the Bell System that they hadn't manufactured. It's hard to overstate how ridiculous and abusive this rule was, but here are a couple important court cases that give a taste.

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Take the Hush-A-Phone, a plastic cup that fit over your mouthpiece to make it harder for people to listen in or reading your lips. AT&T argued that attaching a plastic cup to a phone handset put America itself in danger and must be banned.

en.wikipedia.org/wiki/Hush-A-Ph…

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Or the Carterfone, a gadget that let you retransmit phone audio over short-range radio, so that ranch-hands could take calls when they were out on the range.

en.wikipedia.org/wiki/Carterfon…

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Hush-A-Phone and Carterfone represent the endpoint of AT&T's venality, the instances in which the company overreached so thoroughly that a court finally limited its power. But they are also emblematic of the costs AT&T exacted from its customers.

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Before these decisions, AT&T customers had to rent phones, paying for them dozens or hundreds of times over. To make things worse, AT&T used its regulated monopoly status to block innovators, holding back the answering machine, the switchboard and (crucially) the modem.

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By 1956, AT&T's conduct was so odious that the DoJ was ready to break it up. But at the last instant, AT&T got a stay of execution: the Pentagon intervened to say that without AT&T, the US would not be able to prosecute the war in Korea.

en.wikipedia.org/wiki/Bell_Syst…

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AT&T had been "punished" for its prior bad acts by being made a de-facto, privatized arm of the state, and now the state was intervening to keep AT&T intact. It worked. AT&T stayed intact for another quarter-century, during which time its conduct steadily worsened.

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This is what happens when we "tame" monopolies instead of breaking them up: the monopolist makes some cosmetic changes to its conduct, coopts its regulators, and reverts to its wicked ways as soon as the attention shifts, using its monopoly profits to fight any consequences.

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Today, there are many proposals to fix Big Tech, but far too often, these proposals start from the perspective that Big Tech is permanent and there is no need to consider the way that new rules would impact potential competitors, because they're already doomed.

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Last year's EU #CopyrightDirective, for example, with its mandate for expensive copyright filters for online services (how expensive? Google spend $100m developing Contentid, a toy version of what the EU rule requires).

eff.org/deeplinks/2019…

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Not only is this a disaster because filters are garbage and block all kinds of legitimate speech - it's doubly awful because it prevents competitors from entering Big Tech's markets that might be more respectful of their users - co-ops, EU-based SMEs, etc.

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And it makes Google and FB and other Big Tech companies an arm of the state, part of the apparatus of copyright enforcement (not just copyright, the EU's Terror Reg makes them filter "extremist" content too).

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And it prevents a future Hush-a-Phone moment for Big Tech: Youtube will say that if it is responsible for fighting extremism and infringement, it MUST block competitors who interoperate with its service to provide fairer, better alternatives.

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Tellingly, while Youtube and Facebook started off as staunch opponents of a filter mandate in the Copyright Directive, they quickly switched sides and began arguing in FAVOR of filters - after all, they already had filters, and nascent competitors did not.

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Big Tech's latest cursed monkey paw moment comes from Amazon, who, after losing key court cases over selling dangerously defective goods stop arguing that it wasn't responsible for its sellers' goods.

mattstoller.substack.com/p/why-jeff-bez…

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Instead, they started demanding that state legislative proposals, like California's AB 3262, be made FAR stricter, so that just making an ecommerce platform (like the scrappy Canadian Amazon rival Shopify does) makes you responsible for anything sold on that platform.

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It's gonna be burdensome for Amazon to check out all of its sellers' goods, but Amazon is arguably the only company with enough excess capital to do that checking, and they've got a patent on forcing sellers to expose their entire supply-chain in machine-readable formats.

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Which means that Amazon - who are under antitrust scrutiny for spying on their sellers and then knocking off their best products and driving them out of business - could be LEGALLY OBLIGATED to spy on its sellers.

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Which means that if the DoJ or Congress decides to force Amazon to STOP spying on its sellers, they will have to override California's consumer protection rule that makes Amazon undertake this surveillance.

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It also means that sellers who are worried that Amazon will spy on them in order to drive them out of business will have few (or no) alternatives to giving Amazon its data, because Shopify and other ecommerce platforms CAN'T comply with California's proposed liability rule.

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Amazon is REALLY good at this kind of regulator monkeypawing. For a long time, Amazon maintained the fiction that all its European digital goods sales were consummated in Luxembourg, where there was no VAT. That let it sell ebooks for 20% less than, say, UK competitors.

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When the EU decided to fix this, Amazon enthusiastically cooperated, producing a harmonized VAT rule that only the largest companies could comply with: a rule that required sellers in the EU to gather and retain two pieces of address-confirming info from every customer.

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Then sellers would have to calculate how much VAT to charge based in 28 different countries' VAT laws, and would have to remit that VAT every quarter, regardless of how small that remittance was. I was living in the UK then, and selling my ebooks online.

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The VAT rule meant that if I collected EU0.01 from a single Polish customer in a quarter, I would have to pay to wire the Polish tax authorities EU0.01, and pay accountants to prepare the paperwork. The first quarter, I paid £750 to remit £17 in VAT.

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Of course, there was a way to get around all of this! All I needed to do was shut down my independent ebook store and shift to selling on Amazon, and pay them 30% of every penny I brought in. Amazon has a whole building full of accountants and programmers to make that work.

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(The issue became moot when I moved to the US and shuttered my UK Limited Company; today you can shop at my ebook store and I don't have to collect VAT at all)

craphound.com/shop

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There are monkey's paw proposals everywhere, like killing #CDA230, which shields tech platforms from liability for users' speech - sure, the Big Tech platforms wouldn't like to pay for more moderators and filters, but in return they'd get to wipe out all small rivals.

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But the monkey's paw is not inevitable. There are plenty of ways to make Big Tech less powerful while encouraging alternatives, including co-ops and nonprofits. Instead of copyright filters, we could have blanket licenses that directly pay artists.

eff.org/deeplinks/2020…

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Instead of moderation mandates, we could have interop mandates that let users choose what is and isn't allowed in their own conversations:

pluralistic.net/2020/08/27/cul…

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And, as @matthewstoller points out in his article on AB3262, we don't need Amazon's extensions to an otherwise sensible consumer protection statute that would extend liability to Shopify - we can craft a rule that catches Amazon's bad conduct alone.

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If we are going to tame Big Tech, let us tame them - by reducing their power, not by demanding that they exercise it wisely. If Big Tech has too much power, let's take some of it away - we'll never get them to use it for good.

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We can (try to) fix Big Tech or we can fix the internet. Big Tech will either figure it out and survive or it won't. Their products are optional, but we NEED the internet.

eof/