Can free choice hurt open Internet markets?

Published at:

http://www.diplomacy.edu/blog/can-free-choice-hurt-open-internet-markets

(January 2012)


Regulation by states, or self-regulation by companies themselves?

There is almost no field of Internet governance that does not involve this debate. The well-known example in the telecom market is, of course, service costs: business opts for an open market that would empower users’ choice to force providers to adjust the costs; regulators are there to take care that this really works, and to intervene in case of market-dominant providers.

Another example is with Network neutrality. Telecom operators argue that introducing economic-driven traffic management (throttling the content that brings fewer revenues, for the benefit of higher speeds to more profitable content) is an option that might suit some users, and that users’ choice would impact the market offers and make providers follow the users’ needs. Some regulators and many civil society groups think that regulation should be in place to protect equal treatment of all the traffic (except for technical reasons like traffic congestion or latency). A good overview of various positions brought by Vint Cerf, Google,  AT&T, Cisco, Verizon, ISOC, and other telcos and regulators, is available within the transcript of the session on Net neutrality that took place at the global IGF in Lithuania in 2010.

Not least, a similar battle exists in the field of privacy and data protection. Companies – especially multinational ones – stand strongly for more general yet more globally synchronised privacy and data protection policies. Besides easing their internal organisation and business offers on various continents, such policies would allow companies to ‘offer different levels of privacy and control for users’ which would give ‘the necessary flexibility without stifling innovation’, as noted by Telefonica in one of its excellent blog posts. Some governments, and again most civil society organisations, would never agree to leave privacy policies to business: referring to privacy as one of the basic human rights, they strongly request clear and detailed regulations on online privacy and data protection.

Free choice can really encourage competition and improve open Internet markets. But how capable are we – the users – of making good and informed choices?

Let’s remember here the famous question in this field: how many of us have ever read the privacy policies when creating new accounts on Gmail, Facebook or Tumblr? Few hands, if any, would be raised in an overcrowded conference room.  Even the lawyers among them would say they need more than concentration to understand what these policies say. Our choice there is free, though limited: we can accept the policy and its consequences, or not use the service; but this is certainly not an informed choice, is it?

Transparency is an oft-used word in these debates, and all agree it is a must: not only as a request for business to make all the information about the service accessible to users, but also to make it available in a comprehensive, short, and easy way.

But let’s imagine that all the information on a particular service is readily available: technical performances, detailed cost plans, traffic management procedures, quality of service details, privacy options, security levels, and much more.

Let's face it: making a choice is not easy anymore!

Simple things like buying a new cell phone have become increasingly complex: we can easily compare the performance of number of models with a single mouse click, but deciding on the right one requires time to browse through all the options and preselect a few to compare; it requires time to analyse the detailed comparisons of all the features; and it requires knowledge to understand what various in-built technologies or options stand for. I bought my Amazon Kindle almost two years after I thought about it for the first time: I kept following the emerging readers with ever new options and in-built technologies, never sure if every next one might be just better than what I had previously thought of buying...

Deciding on privacy or security of our data, or our ability to access a variety of online services, is a way more important and complicated task. For making an informed choice about each new service or gadget on the market, an average user would require:

• clear awareness of his or her user (and human) rights in all formats (including in the online space);
• lots of time to analyse their options and constantly adjust settings at each of the frequent service upgrades that bring more options (just remember Facebook upgrades);
• a high level of (often legal-background) literacy; and
• quite a level of understanding of technology, policy, and the economy.

While we can easily buy another phone if we make a poor choice, the consequences of a poor choice with issues like privacy or security of our data may be long-term and very disturbing.

So here is the paradox to explore: Will greater choice and transparency hurt users and markets?

Lots of choice in today’s dynamic technological environment may appear to be counterproductive. Users may start making rash, uninformed, irrational decisions (as some already do). This can lead to dissatisfaction, and then cyber-activism against some services and providers, even in favour of protection through tougher regulation (which already happens). Induced tough regulation can strike back against open markets and innovations.

Corporations often think of advancing self-regulation through more transparency and building end-user awareness. With 2 billion-and-growing Internet users today, a dizzily rapid evolution of technologies and services, and a lack of fundamental education for billions worldwide, achieving ubiquitous informed user choice is a difficult task – and if not a mission impossible, then certainly a mission that may be way too expensive and protracted.

Perhaps, with a closer look, corporations might see that accepting some light regulations rather than simply pushing free choice and self-regulation, could serve their interests better. Governments and regulators are becoming inevitably more involved with Internet policy. Yet, their capacities are very limited, both in terms of their basic understanding of Internet principles (working and management) and in terms of their capability to follow various policy processes. If corporations were to also focus on developing institutional capacity to enable governments to better understand why tough regulations may harm the development of the Internet and their economies – and if these same corporations made their policies light and easy and convenient for users to make informed choices – perhaps this would bring better results than forcing  the issue of market self-regulation based on free choice?