A Critique of the Internet Oligopoly


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CGAS Rising Democracy Conference, Athens 16-19 July 2015

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A Critique of the Internet Oligopoly

  1. 1. A Critique of the Internet Oligopoly! ! ! Nikos Smyrnaios Université de Toulouse
  2. 2. The commonplace Since the advent of Web 2.0 in the mid-2000s: The Internet seen as a “naturally” democratic, inclusive means of communication Driven by the ideal of user participation Offering desintermediated, direct and equal contact with the public for all producers of content and publishers
  3. 3. The reality Restructuring of the media landscape and the cultural industries in favour of a small number of Internet multinationals Concentration of information outlets in the hands of a few players Complexification of online distribution of information => not desintermediation, but algorithmic re-intermediation Intensification of surveillance & exploitation of digital labor The political economy of this system is based on: - 2 general conditions (Digital convergence & Neoliberalism) - A set of sociotechnical & economic logics
  4. 4. The Internet was built on public money and against commercial logic. Also its architecture was originally decentralised Centralization of infrastructure & concentration of resources after the privatization of the Internet’s backbone in 1995 climaxed in the Internet bubble of 2000 The Web 2.0 trend was a facilitator of the of commodification of all online activities The promised convergence between telecoms and content industries didn’t take place, but the basis of the oligopoly was set
  5. 5. Digital convergence facilitates vertical integration (an arrangement in which the supply chain and infrastructure of a company is owned by that company) Datacenters + networks + hardware + OS + platforms Google: ISP with Sprint and T-Mobile + Google Fiber, Motorola, Android, Chromebook, Google Play, Android Store Facebook: ISP through satellite with Avanti, Facebook Phone with Samsung and HTC, Facebook Home hybrid between App and OS, Facebook Apps Amazon: ISP for Kindles (WhisperNet), Fire Phone+Tablet, Amazon Appstore, Amazon web services Apple: private content-delivery network for iCloud, iOS, iPhone, Mac, iTunes, AppStore Microsoft: Nokia, Windows, Windows Phone, Microsoft Cloud A. The conditions of the oligopoly! 1. Digital convergence !
  6. 6. Digital convergence facilitates also horizontal integration (a strategy where a company creates or acquires production units for outputs which are alike - either complementary or competitive) email + search + networking + e-commerce + personalization
  7. 7. 2. Neoliberalism (financialization, deregulation, globalisation) Financialization of the world economy drives enormous amounts of capital to Wall Street => Venture capital, BRICS This creates an imbalance with companies that don’t have access to that kind of investors
  8. 8. Deregulation of the world economy offers numerous possibilities for fiscal optimization Internet companies are in the avantgarde of such methods
  9. 9. Globalization allows for outsourcing several activities to countries with low wages Material work such as device production : Apple => Foxconn (China) But also intellectual immaterial work such as content moderation: thousands of oDesk free-lances in Morocco, Philippines, Mexico etc. working for Google, Facebook
  10. 10. B. The logics of the oligopoly 1. High profitability The profitability of the internet oligopoly is only second to that of the financial industry Q4 Net profit margin rankings: Google 26.28 %, Apple 24,16, %Facebook 25,04%, Microsoft 22,15% (10,6% average of S&P 500®)
  11. 11. 2. Barriers to entry The Internet oligopoly can raise high barriers to entry to its markets in order to kill competition through: 1)  Extremely high investments in R&D 2) Building gigantic datacentres 3) Buying out competition 4) Cross-promotion 5) Patent accumulation
  12. 12. 3. Segmentation of labour Production is segmented in distinct layers of labour on order to minimize costs 1st layer: high value labour (finance, marketing, engineering), performed internally, very well paid, privileged 2nd layer: secondary labour (industry workers, drivers, cleaners etc.), outsourced with low wages either internationally (China) or through precarious subcontracts 3rd layer: digital labour/free labour (communities of developers, ecosystems of applications, User Generated Content, personal data)
  13. 13. 4. Extension outside the Internet The Internet oligopoly performs “creative destruction” (Schumpeter) It accelerates the destruction of existing activities and creates new ones (eg. newspaper ads => sponsored links) In order to maintain high profitability the oligopoly pervades sectors outside the internet forcing predatory deregulation (transportation, health services, energy production) Ex. UberPop Final frontier: the artificial intelligence
  14. 14. 5. Intellectual property Contrary to the Cultural Industries the Internet oligopoly doesn’t need to control copyright It concentrates on the control of patents on digital technologies It also guarantees copyright implementation on behalf of the Cultural Industries as well as revenue sharing (systems of automated copyright infringement detection, revenue sharing on platforms such as YouTube, AppStore)
  15. 15. 6. Control of the Infomediation “Connecting information supply with information demand and helping both parties involved determine the value of that information”.   Infomediaries operate a mix of aggregation & distribution of 3rd party content Based on algorithms and social interactions, financed by ads and/or commissions Google but also Facebook, Twitter, Apple, ISPs etc.
  16. 16. Political issues The Internet oligopoly has great impact on media, cultural industries and, par extension, on the public sphere => How we perceive the world The Internet oligopoly incarnates post-fordist informational capitalism. Therefore it fosters ideology « Californian Ideolology » (Barbrook & Cameron, 1996, Turner, 2006) Technological Solutionism (Morozov, 2013), Radical transparency (Zuckerberg, Schmidt) US foreign policy/ mass surveillance (Assange, 2014) Libertarianism
  17. 17. What can we do ? Throw you smartphone and cancel your Facebook and Gmail account… But if you can’t, try: -  Thinking of the political implications of the technology you use -  Paying for people’s work you like (culture, journalism) -  Joining collective fighting over the Internet’s control and regulation