I think it is useful to think of platforms in the domain of technology and software analogously to infrastructure in terms of society. Core societal infrastructure is provided by the government directly or, in some cases, privately delivered, but under strict regulation. Examples include our transportation systems (roads, airports, ports, rail systems), our energy systems (power plants, dams, distribution grids), our water systems (reservoirs, treatment facilities, stormwater architecture) and so forth.
To every extent possible, this core infrastructure – the platforms upon which society operates – are paid for collectively (through taxation) and shared collectively. Roads do not discriminate about who drives on them, whether it is a vacation drive or a cargo shipment or bicycle commuter. Electric transmission enables any kind of electric use case indiscriminately. There are thousands of use cases that leverage our electricity platform – most of which were not invented or even imagined when the electric grid was first established.
It is important that our civic infrastructure is “open access.” This gives society the freedom to innovate and create – core to an innovation-based economy. We would not see invention and competition and new solutions grow our economy if only some people could use the roads or only a sliver of society had access to water or electricity. This is why even private utilities are required by legal regulation to hook up water systems and power lines to new developments, no matter how rural or inconvenient that might be to a narrow measure of that utility’s return on investment.
Unfortunately we are slowly seeing that equal access diminish in the world of bits, bytes, ones and zeros.
I could focus at this point on our failure to regulate broadband – requiring private industry to connect every resident and business to high speed internet, regardless of profitability – a major problem in the US. In North Carolina, the telecom sector successfully lobbied the general assembly to make it illegal for municipal governments to provide broadband to their residents – it must be provided by private industry, who frequently choose not to provide access to rural and low income demographics. But rather than dive deep into that rabbit hole, today I want to focus on technology platforms on top of broadband infrastructure.
The internet was architected to be a “platform technology” upon which many many applications could operate. Similar to our civic infrastructure, the internet has been governed from its early days to remain a “neutral platform.” In other words, any kind of internet application should have equal access to internet access and data communication.
Note that this almost did not come to be. In 1971, the US government, creators of ARPANET, the predecessor of the internet, attempted to sell it to AT&T, but AT&T declined stating that they had no idea how to use or sell it. Thank goodness the internet didn’t become corporate owned from the beginning, or decades of innovation likely would have been negatively throttled.
Over the years, numerous attempts have been made by internet service providers to throttle internet service delivery by charging different prices for different data. The argument is that some applications are far costlier for our internet providers to deliver. Streaming video, for example, is more expensive than transmitting a text email. Counter arguments express concern that a “pay for play” model stifles innovation as only the richest companies may be able to afford priority access for their services.
Imagine a huge company like Netflix paying for low-latency streaming delivery which an upstart video provider could not afford. It is hard to see a small, independent company succeeding in a market where their videos constantly pause, buffer and delay. The neutrality of delivering data across the internet platform levels the playing field for competition. This is particularly important now, in an era when traditional internet service providers like AT&T are buying major content companies. Without net neutrality, AT&T could charge competing content providers and create an unfair advantage for their own WarnerMedia content.
In more recent years (ARPANET began in 1969), the majority of data-technology platform innovation has been happening in the private sector. A tremendous amount of innovation has been conducted on smartphone platforms, for example. In this space, the market has consolidated globally to just two mobile operating systems – iOS and Android. They have a combined 96% market share (source: Statistica) for mobile operating systems.
If you look at innovation in cloud computing, you have three major choices. AWS, Azure (Microsoft), and Google Cloud Services represent 67% of the market (source: CloudZero) and everyone else in the top 10 has seen declining percentage market share year over year. Even multinational companies like Alibaba, IBM or Oracle are tiny slivers of the market by comparison.
In immersive technology – where the future innovations in VR and mixed reality will occur – developers have about half a dozen, meaningful choices to get innovations in front of customers. Unity and Epic (Unreal Engine) dominate, with Meta (Oculus), Google VR, Valve (Vive, SteamVR) and Microsoft Mixed Reality somewhat competitive. Even a company as powerful as Amazon shut down its VR development platform (Sumerian) for lack of traction.
The core message though – is not so much the lack of choices. That in itself is concerning, as you consider how powerful “big tech” has become. More concerning in my mind is that none of these platforms are managed with the mindset of “civic infrastructure” in the way the internet was.
The future of our global economy is becoming increasingly digital. According to McKinsey, the internet contributes more than 3.4% of the global GDP. To put this in perspective, this is more than the contribution of the energy sector. It is more than agriculture. Think about that – every single human on the planet is a customer of the agriculture sector. Everyone needs to eat. And yet agriculture has a smaller economic impact than the internet.
As more and more businesses conduct operations via mobile devices, cloud services and virtual reality, we will see a significant portion of the global economy pass through and reside on proprietary, corporate platforms.
We already are seeing behaviors that are contrary to the basic tenets of net neutrality. Here in the Triangle, many have watched as heavyweight Epic Games fights Google and Apple over their “less than neutral” policies for revenue taxation on their phone app platforms. In order for users to use Epic content on mobile devices, Epic has no choice but to use Android and iOS platforms. And further, they have no choice but to pay for those platforms, including a 30% taxation of revenue that Epic makes on sales within their applications.
We see this all the time. Credit card transaction platforms tax every transaction conducted around the world at roughly 2.5%. I recently attended an NC State women’s basketball game and paid $18 dollars in technology platform fees to the exclusive (monopoly) tech platform provider that controlled electronic distribution of the ticket. Those fees were applied to a ticket with a face value of just $5!
I’m not arguing that companies should not be compensated for providing products or services. Rather that the underlying platforms should be open and equally accessible to new and at times competitive solutions.
In Europe, the new Digital Markets Act is supposed to force technology platform providers to allow better access to small developers seeking to leverage tech platforms, which are essentially the infrastructure of a digital economy. For example, DMA compels mobile operating systems to allow “side loading” of content directly onto a phone, rather than requiring it to pass through a controlled channel like the Apple App store.
Apple has been in the news for boldly dodging the new regulations, choosing to increase costs and restrict access in highly noncompetitive ways, and in some areas to simply say that instead of complying with new regulations, they will simply close their platform to access. Apple is so rich and so powerful that they are willing to risk major sanctions or penalties, gambling that the EU has no alternative choice to Apple.
When big tech is running societal economic infrastructure (disguised as operating systems and developer platforms), the government must take a stronger stance at regulating “net neutral” style open access. The DMA is a small step, but not clearly enough.
It is time for us to think about Platform Neutrality
In a practical sense it is almost impossible to see how this is done. I believe it would require a re-imagination of antitrust law that would result in the break-up of big tech in ways reminiscent of the break up of the Bell Operating Companies (and AT&T) back in 1984.
Creating authentically open and neutral platforms for mobile and immersive software applications, advanced wireless communications, mobile electronic devices and sensor systems is critical to a diverse and robust future digital economy.
If we don’t take action to govern core tech platforms like civic infrastructure, we have a future where industry is necessitated to build their products and services on a small number of private platforms. This leads to platform providers:
- Having the power to pick and choose the winners and losers of the future economy, based on their own profitability goals.
- Being disincentivized to innovate themselves (an expensive and risky proposition), instead keeping their own costs low via monopoly control.
- Having access to all of global industry’s data, since all applications will host on and pass through their private platforms.
No longer can we rest assured that data communications will be private and encrypted and anonymous like the internet provides today. Companies may make promises about privacy and security, but will be free to choose differently at the push of a software update. We currently are headed towards an absolutely non-data-neutral future. It’s time to take action.
