Information monopolists as cyclic products of network effects: Tim Wu

Tim Wu’s excellent new book, The Master Switch: The Rise and Fall of Information Empires, chronicles a history of communications policy and the long-term behaviour of firms in information industries. His basic thesis is that such firms acquire market power by a combination of network effects and industry consolidation, then exert a form of regulatory capture that allows them to alter the rules of the game so as to drive out competitors and extract rents from their monopoly infrastructure.

A recent piece published in The Wall Street Journal provides a neat summary of these ideas and serves as a kind of postscript to the book itself:

Today’s Internet borders will probably change eventually, especially as new markets appear. But it’s hard to avoid the conclusion that we are living in an age of large information monopolies. Could it be that the free market on the Internet actually tends toward monopolies? Could it even be that demand, of all things, is actually winnowing the online free market — that Americans, so diverse and individualistic, actually love these monopolies?

The article goes on to examine how information monopolies develop. Wu’s basic method is historical, examining how similar patterns emerged in the telegraphy and telephony industries during the late 19th century:  Read more »

Romantic intermediaries and algorithmic normativity

Unsurprisingly, it turns out that online dating websites make algorithmic choices that strongly influence influence (and are tailored to) their users’ behaviour. But are they better?

I asked Yagan whether OkCupid might try tailoring its algorithm to surface more statistically successful racial combinations. Such a measure wasn’t out of the question, he said. “Imagine we did a lot of research, and we found that there were certain demographic or psychographic attributes that were predictors of [successful relationships]. Hispanic men and Indian women, say,” Yagan suggested. “If we thought that drove success, we could tweak it so those matches showed up more often. Not because of a social mission, but because if it’s working, there needs to be more of it.” …

Algorithms are made to restrict the amount of information the user sees—that’s their raison d’être. By drawing on data about the world we live in, they end up reinforcing whatever societal values happen to be dominant, without our even noticing. They are normativity made into code—albeit a code that we barely understand, even as it shapes our lives. … We’re not going to stop using algorithms. They’re too useful. But we need to be more aware of the algorithmic perversity that’s creeping into our lives.

Saudi Arabia blocks Facebook

First Pakistan, then Bangladesh, Iran and — if anecdotal reports are to be believed — China. Now Saudi Arabia has reportedly blocked Facebook, on the basis that the website “crossed a line” in not conforming to the “values” of the country. It could turn out to be just another Mohammed-cartoon incident, but this raises a question: how are non-democratic states to engage with Western intermediary platforms that, if allowed to be accessed, cannot easily be regulated, monitored or controlled? So far, the answer seems to be an all-or-nothing approach: full access, or no access. What’s a social network to do?

The official says Saudi’s Communications and Information Technology Commission blocked the site Saturday and an error message shows up when Internet users try to access it. He says Facebook’s content had “crossed a line” with the kingdom’s conservative morals, but that blocking the site is a temporary measure. The official spoke on condition of anonymity because he wasn’t authorized to speak to the media.

New York author offers struggling writers questionable work-for-hire terms

Pseudonymity, liability, no copyright, and a $250 advance. Sounds like a pretty crappy publishing deal:

It’s an agreement that says, ‘You’re going to write for me. I’m going to own it. I may or may not give you credit. If there is more than one book in the series, you are on the hook to write those too, for the exact same terms, but I don’t have to use you. In exchange for this, I’m going to pay you 40 percent of some amount you can’t verify—there’s no audit provision—and after the deduction of a whole bunch of expenses.” He described it as a Hollywood-style work-for-hire contract grafted onto the publishing industry—“although Hollywood writers in a work-for-hire contract are usually paid more than $250.”




The use of more words than necessary to describe something. Often tautological.




The worship of words or letters.




the deliberate use of equivocal or ambiguous terms




strained or paradoxical use of words either in error (as `blatant’ to mean ‘flagrant’) or deliberately (as in a mixed metaphor: ‘blind mouths’)

Google's "Double Irish" and "Dutch Sandwich" tax strategies under the microscope

Fascinating article on the strategies employed by Google and other multinational technology firms to minimise corporate income taxation by funneling income into tax havens:

Google’s income shifting - involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” - helped reduce its overseas tax rate to 2.4 per cent, the lowest of the top five US technology companies by market capitalisation, according to regulatory filings in six countries.

Income shifting commonly begins when companies like Google sell or license the foreign rights to intellectual property developed in the US to a subsidiary in a low-tax country. That means foreign profits based on the technology get attributed to the offshore unit, not the parent. Under US tax rules, subsidiaries must pay “arm’s length” prices for the rights - or the amount an unrelated company would.

In Google’s case, the US-developed tech is licensed to Google Ireland Holdings Ltd, which sublicenses to Google Ireland Ltd, where 88 per cent of its global advertising income is derived. But 99 per cent of that income is shifted into Bermuda, where the holding co’s “effective centre of management” (two nominee directors out of a Bermuda law firm) is located.

French 3 strikes regime sees ISPs inundated with notices

It’s unclear whether the recent Creation and Internet Act 2010 (FR) is having much of an impact on digital piracy. However, according to copyright owners, around 25,000 notices of alleged infringement are being sent to the state-administered digital enforcement body (HADOPI) each day:

French labels trade body director general David El Sayegh revealed the 25,000 figure. He added that labels were not aware of the subsequent number of warning messages sent by HADOPI to suspected copyright infringers.

The impact of HADOPI on digital sales in France remains to be seen. “It is too early,” says El Sayegh, who is looking towards the end of 2010 for the first indications of how it has worked, and the end of the second half of 2011 for a more conclusive sales impact.