January 21, 2013

How France Wants Us All to Pay Through the Nose for a Broken Internet

In his new article Google vs. the press: avoiding the lose-lose scenario, Frédéric Filloux sets forth a cogent review of the current battles between the French government allied with French media firms -- against Google and other large Internet services firms. He suggests that to avoid long-term damage to everyone involved, the parties need to come to an agreement where Google and other successful Internet companies would essentially "share the wealth" with traditional media concerns and the like.

Filloux's argument is not trivially dismissed -- yet in the end remains problematic and extremely worrisome. For the logical extension of the scenario he proposes could easily lead to the global decimation of key Internet aspects on which we depend today, and enormous new costs for ordinary users.

His argument that existing taxation regimes permit large corporations to shield significant income is not one without merit. But this taxation situation has existed in one form or another for quite a long time, and involves large firms engaged in all manner of international enterprises.

Why then, do we see the French focus (and by extension that of the EU in general, other countries such as Brazil, and ultimately far more nations if such proposals are enacted) on Google and other successful Internet services businesses?

A likely answer seems obvious enough. Many so-called "old media" firms such as newspapers are struggling in the Internet era, and the French (and other) governments see both a financial and political incentive to try force successful Internet firms to subsidize rapidly obsolescent 20th century business models.

What's more, some of the new proposed "revenue enhancement" models appear to be specifically designed to be easily "gamed" for maximum government advantage. Concepts such as taxation based on "numbers of users" and "amount of user data collected" -- and similar ideas -- are much more nebulous than regimes based on corporate income or profits. One can't help but imagine the creation of a secret government department devoted to creating as many phantom Google users as possible, and sharing maximal amounts of fantasy data through those accounts -- all adding to the government's taxation take. Since ordinary Google, Facebook, and most other service accounts are free, there are few natural constraints on false account creation by a technically proficient, particularly government-sponsored effort.

Yet just because these services are free now for most users, doesn't mean that this will always be the case -- and it's the global community of Internet users themselves who stand to lose the most under the French proposals.

Already, we've recently seen a French ISP block ads as a form of extortion, to try force payments by major Internet companies to reach that ISPs' subscribers -- who of course are already paying for Internet services, as are those Internet companies themselves. But many ISPs are no longer satisfied with being "mere" access routes to the Net, and charging their customers appropriately for network growth and management. They want a slice of everyone else's pie as well, even though the ISPs haven't earned it, and even though the end result could actually be the death of free Internet services as we know them today -- a potential disaster for all but the most well-heeled users -- a new chasm of an economically forced information divide.

If the French government and its allies succeed in enforcing the kinds of regimes being proposed, the likely result would be a spread around of the world of ISPs charging every Internet service for access and demanding a cut of their profits, all manner of snail slow vs. high speed ISP-enforced Internet "ghettos" and "red light" districts, sites demanding payments from linking sites (or even from users traversing those links), and a cascading collapse of dominoes leading to very much the kind of "pay through the nose" networking environment that many of us have worked for decades specifically to avoid.

I have a great deal of sympathy for traditional media and the challenges they face in the 21st century, and I realize that the associated political and financial issues for governments are significant.

But I strongly believe that to the greatest extent practicable, we should resist attempts by governments to try turn new, successful Internet companies into mass subsidization income streams for old models which cannot find their own way in the Internet age -- with subsidization costs that would ultimately fall devastatingly on the backs of ordinary Internet users around the world.

Otherwise, we may very likely be bidding adieu to the open Internet that has been the life's work of so many, served us so well, and that has such a bright future -- while we'd be self-destructively killing the goose that laid the golden eggs as well.

Ça ne tient pas debout!


Posted by Lauren at January 21, 2013 04:47 PM | Permalink
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