Tim Wu, the prominent Columbia Law Professor, has a new book out entitled The Master Switch in which he retraces the history of American media industries, arguing that although new technologies can radically disrupt the marketplace, the tendency is towards concentration and, in the most extreme cases, monopoly. I haven’t had a chance to read the book yet, but Professor Wu has an essay in the Wall Street Journal making the case that is worth reading:

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?
Internet industries develop pretty much like any other industry that depends on a network: A single firm can dominate the market if the product becomes more valuable to each user as the number of users rises. Such networks have a natural tendency to grow, and that growth leads to dominance.

Adam Thierer, who has been highly critical of the book, responds in turn questioning the use of the term “monopoly”:

But the problem with his argument that “we are living in an age of large information monopolies” begins with the fact that he speaks of “monopolies” in a plural sense and apparently misses the irony of that entirely.  If so many “information monopolies” exist, then Wu’s thesis is undermined by the very fact that no one company dominates the Internet landscape.  What Wu is really suggesting is that the Digital Economy landscape is littered with dominant firms in industry sectors that he has defined extremely narrowly.

In arguing over semantics, though, we miss the point. Wu is, in essence, arguing that information companies are able to amass significant scale in short periods of time. This scale exerts power upon users, and to Wu, this is very troubling – he cares about freedom both from undue government and corporate power. Thierer, a staunch libertarian, is far more focused on government power, as it is the ultimate arbiter of force.

What we need, though, is a theory of power that can describe the trend towards dominant positions that Wu targets, while making room for the dynamism that Thierer observes.

In his 2008 book of the name, David Singh Grewal outlines a theory of “network power” which marries two rather unobjectionable observations:

1. As a standard – whether linguistic (e.g. English language), technological (e.g. TCP/IP) or otherwise (e.g. Facebook Connect) – scales, it grows in value (so-called network effects).
2. As a standard grows, it “can lead to the progressive elimination of the alternatives” (e.g. TCP/IP has done a good job displacing the use of faxes).

Grewal notes that standards are inherently tension-filled because although they are necessary for communication, cooperation and, therefore, creativity, they also require acceptance of a given set of protocols by many people. That is, to enable some diversity, some uniformity is necessary. In this theory, standardization can arise through three means: reason, force, or chance.

• Reason can be implicit, meaning that the given standard simply works better, or explicit, such as when a standard is attractive for the size of the network it unites;
• Force can be direct, as when there are costs, such as physical harm, for not using the standard, or indirect, when there is an opportunity cost to not joining a given standard;
• And sometimes a standard may be adopted through mere serendipity.

So, standards arise not through force, at first, but after a certain threshold, they take on a life of their own. Network power occurs after this threshold through the marriage of explicit reason with indirect force. When network power is in play, a user adopts a standard because its size will allow them to reach more people and not doing so means they are progressively sidelined. So, the speakers of minority languages will be left behind if they do not join larger networks. Similarly, a teenager hoping to socialize may feel network power in choosing to sign up for Facebook.

The reason this worries people like Grewal is that a choice is not truly free unless one has the freedom to choose freely amongst viable alternatives. That is, although, yes, I could sign up for Orkut or MySpace it is not a viable alternative because no one I desire to communicate with is there; network power pushes me towards Facebook despite personal disagreement with many of its policies. Certainly, this is not the same type of force as the government can wield but it is a form of power that acts on people. Wu, though he does not refer to the theory, is touching on it closely, and I believe that both Thierer and Wu, as people who care deeply about personal liberty, could benefit from understanding Grewal’s theory of how power can arise in a network society.

Furthermore, as Grewal explores in the final chapters of the book, network power is not definitive: strategies for counterpower exist. In today’s world, these might be antitrust regulation or new inventions (forces prominent in Wu’s thinking), but they could also be more varied, such as increased data portability or interoperability. A middle-ground amongst those worried about digital liberties would be to advocate for appropriate counterpower strategies in the diverse, dynamic contexts in which network power exists.