February 16, 1999
The Promise of the Internet
Of Platforms, Protocols, and Paranoia
by Nico Detourn (TMF Nico)
Throughout its short history as a commercial medium, the Internet has existed in a perpetual state of pending breakthrough, with a jump to the next level always right around the corner. "The promise of the Internet." The phrase turns up time and again in press releases and interviews. Invariably, greater fulfillment of that shining promise comes thanks to whatever new product or service or initiative is, at long last, being "announced today."
Though it is often expressed in more noble terms, probably the most basic promise of the Internet is of a commerce platform of unprecedented scale and efficiency. Looking beyond the extreme behavior Internet stocks can exhibit -- and exciting and hopefully profitable as that can be -- it is the vision of a global and virtualized marketplace that motivates longer-term investors in online and Internet companies. This is also the vision that most powerfully drives the day in and day out development of the medium, with investment dollars playing a central role in their ability to turn company shares into currency for acquisitions, as recent high-profile acquisitions have shown.
There is an irony in play here. On the one hand, there are those who lament that fundamental economic principles are thrown out the window when investing in Internet companies. Yet on the other hand, one of the core principles of Internet analysis holds that the online platform will eventually support or absorb a huge portion of the world's commercial activity. In that case, then, long-term Internet investments could be considered most fundamental indeed. For once we understand the online medium as a developing system for global commerce, an investment in that system (to speak generally here, without respect to specific companies) amounts to an investment in, and thus a statement of confidence about, the economy itself.
Do I personally believe that? Let's say I find this perspective useful in looking at some of the issues currently playing out in and around online space. Some of the most important of these involve the unlocking of -- here we go again -- the promise of the Internet, which is intimately tied to its growth. Common to most if not all of these issues is the idea of standards.
The lack of a standardized means for measuring the effectiveness of online advertising is one such issue, as is the measuring of website traffic and the collection of user profiles. Lack of bandwidth for the delivery of richer content, including multimedia advertising, is seen as a speed bump to the medium's growth -- not that it is growing slowly, mind you. The wide if not universal adoption of standardized methods for presenting bills and paying for products and services purchased both online and offline is yet another breakthrough just waiting in the wings.
With the online medium understood as a global commerce platform, the browser, as our main link to that platform, comes into focus not simply as a program for viewing Web pages, but as a device for commercial transactions. That alone brings the importance of standards into focus, and has been a key thread in the competition between Microsoft and Netscape and the government's antitrust case against Microsoft.
Some interesting things are revealed through a closer look at what "standards" actually involve. This doesn't require getting bogged down in the details of specific technologies, or wading into a sea of computer acronyms and telecom specs that you might have little interest in keeping straight, much less keeping up with. I know I don't. In fact, I think the less technical our view of these things, the more there is to be found.
It is interesting that the standards used by computers to exchange information are called "protocols," a word that originally referred to the ceremonies and rules of etiquette followed by diplomatic representatives and heads of state. In international relations, as in the networking of computers, adherence to established protocol -- a well-defined action followed by a well-defined response -- keeps things running smoothly.
Just as the electrical current passing through our walls helps power and "bring good things to life," the sheer volume and variety of data passing from computer to computer elevates a mere network of machines into an increasingly palpable platform -- not physical, but something much more alive and real than "virtual" typically implies. Similarly, the analogy drawn from diplomatic "protocols" takes a giant step towards literal accuracy when placed in the context of the globalizing influence of worldwide electronic commerce.
As the online medium evolves, we are seeing how the act of defining technical protocols -- that is, the exchange mechanisms and transfer procedures for data of all kinds, but especially and primarily financial data -- can cross over into the regulation and definition of economic processes themselves. In today's economy, control over the channels of data transfer is increasingly a function of the regulation of trade, and of what in less virtual times were the drawing of trade routes and borders, which have traditionally been the prerogative of sovereign entities, and which will be swept away under a wave of silicon.
There are no historical precedents for the real time exchange of information and the conducting of business on the scale made possible by the Internet, and which we are now, barely, beginning to witness. That is an amazing thing in and of itself. But it is the way this technological development is accelerating the shift in power from governments to global corporations that represents the greater change from business, and history, as usual.
I think this is a natural and logical outgrowth of technological and economic processes. Of course, I also recognize that this line of thought suggests yet another paranoid conspiracy theory of corporations out to rule the world. That's OK. I enjoy conspiracy theories as much as anyone. At the same time, the understandable characterization of certain types of ideas as "paranoid" shouldn't prevent the fuller exploration of the ideas themselves.
The idea of "corporations replacing governments," or global corporatism, only seems paranoid if we assume either that it would not happen or that it would be bad if it did. In the first case, I think the basic dynamic I've sketched here is actually rather mild and, frankly, fairly self-evident, barely qualifying as a conspiracy theory, however much one could be built on top of it. (Yeah, I know... that's what they all say!)
It is a more complicated question whether or not what I've described is a bad thing. But given where we are today, and how the lines of power are drawn in terms of what actually happens and gets done in the world, the exercise of government power in the name of economic and often directly corporate interests is routine. Some might even say that is what governments are for. From that point of view, when stated in these and similarly sensational terms, the idea of "corporations replacing governments" will appear far more radical than it in fact is. Indeed, I think it could be reasonably said that something along those lines is one of the more basic promises of the Internet.
What do you think? Share your thoughts here.