Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Opinion / Internet mall versus town hall
BackBack

Internet mall versus town hall

The cases of FBI versus Apple and Trai versus Facebook have profound implications on the future of the Internet

A file photo of Apple CEO Tim Cook. Photo: ReutersPremium
A file photo of Apple CEO Tim Cook. Photo: Reuters

In December 2015, the US Federal Bureau of Investigation (FBI) asked Apple to open a “backdoor" to break into a phone recovered during the San Bernardino massacre. Apple refused, and is now fighting a battle to overturn a court order that went in favour of the FBI.

In January 2016, the Telecom Regulatory Authority of India (Trai) banned the use of differential pricing by telecom companies, effectively putting an end to Facebook’s plans to roll out Free Basics, a scheme under which subscribers of a partner telecom companies would have free access to a subset of websites.

Both episodes appear to pitch the state versus a technology company. However, as a brief history of the Internet will show, the implications to be drawn for the future of Internet governance are different in each case.

In the 1990s, as the Internet grew in scope, the US government contracted the Domain Name System (DNS) registry, the task of ensuring unique identifiers for the different servers connected by the Internet, to Network Solutions Inc. (NSI), creating a private monopoly of $1 billion. However, in 1992, the Internet Society (ISOC), founded by internet pioneers Vint Cerf and Bob Kahn, created a memorandum of understanding (MoU) to assign governance functions to an entity housed in the International Telecommunications Union (ITU), with representatives from businesses, intergovernmental organizations and ISOC itself. However, the US was critical of the move to give control to the ITU because of its one-country, one-vote structure, and preferred a non-state actor instead. Thus, in 1998, the US department of commerce (DoC) rejected the MoU process and recommended that the DNS system be managed by a non-profit company, leading to the creation of the Internet Corporation for Assigned Names and Numbers (ICANN). In 2006, the DoC signed an MOU with ICANN, giving the former an oversight function into the activities of the ICANN.

The past 15 years have seen a remarkable growth of the Internet, with the number of websites increasing from 12 million at the turn of the millennium to over 1 billion today. The total volume of e-commerce on the Net amounted to $1.6 trillion in 2015. However, traffic is heavily concentrated in websites belonging to a few corporations. The global slowdown and the decline of the BRICS (Brazil, Russia, India, China, South Africa) have resulted in the coining of a new acronym of power—FANG, referring to Facebook, Amazon, Netflix and Google.

As Internet companies have grown in power, one of the main fault lines in the power struggle between “the mall and the town hall" has related to the jurisdiction in which companies register themselves and locate their servers. Many Internet companies are based in the US and place their servers there, thus giving the US government access to data from foreign countries while reducing the control of local governments over their information, and their ability to prosecute the managements of these companies.

So far, the interests of the US and that of Internet companies have not diverged, except in the matter of tax avoidance. Under various acts, the US government has managed to obtain vast amounts of information about usage patterns of individuals across the world from telecom operators and Internet companies.

Apart from legitimate concerns on the ability of governments to snoop on citizens, the reason that Internet companies are strongly pushing back on the US federal government in the Apple case is that the entire Internet economy depends on the ability of companies to use information about users, gained from their usage patterns. So far, users have been willing to give away large amounts of information for the benefit of free services. However, the possibility that the government can gain access to their information may exercise a chilling effect on their usage and create an insurmountable obstacle for the future of the Internet business model.

However, there is another dynamic at play, one which arises from the asymmetry between the sizeable influence of the US government on the global policy on the Internet and its reduced importance as a market for devices and services. In the case of Apple, only 25% of iPhones are used inside the US but a policy decision to allow backdoor entry in the US is likely to make the other countries follow the same course, with the aforementioned consequences on the behaviour of users. Hence, Apple and other Internet companies can no longer afford to sacrifice their business interests to appease the US government.

So far, the US has not been averse to the growing power of Internet behemoths. In the battle between Facebook and the telecom regulator in India, the Indian government may desire to assert its power over an Internet giant, but the US interests are not directly opposed to Facebook’s strategy to increase its subscriber base (although, indirectly, this reduces the incentive of Facebook to accommodate their demands).

For the first time, as the Apple episode shows, the US has specific interests which may be best served by allowing other states the freedom to pursue their own goals with respect to the Internet, thereby giving the US itself similar powers, despite its diminished share of the Internet market. This could mark a turning point in the US position on Internet governance. The demands of states, many of whom have long jockeyed for a greater role in Internet governance, may just have gained a backdoor entry into the international debate on the future of ICANN.

Rohit Prasad and Shashank Gupta are, respectively, professor and student at MDI Gurgaon.

Comments are welcome at theirview@livemint.com

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 08 Mar 2016, 11:01 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App