CLASS 4: Business and Ownership

CLASS 4: Business and Ownership

Net Neutrality Net Neutrality

What is Net Neutrality?What is Net Neutrality?

The problem with big media companies The problem with big media companies

The Googlezon agreement The Googlezon agreement

The Googlezon agreement was written partly in response to public interest groups and lawmakers lobbying for the US government to mandate "net neutrality." In a nutshell, net neutrality means that internet service providers like Verizon have to deliver everything – data, services, whatever – in a "neutral" way. For example, if we had net neutrality laws in the US, Verizon wouldn't be allowed to do things like make Gmail run faster than Facebook. Neither would Verizon be able to "prejudice" its consumers against certain services, for example by making any peer-to-peer traffic run really slowly.

The Googlezon agreement was written partly in response to public interest groups and lawmakers lobbying for the US government to mandate "net neutrality." In a nutshell, net neutrality means that internet service providers like Verizon have to deliver everything – data, services, whatever – in a "neutral" way. For example, if we had net neutrality laws in the US, Verizon wouldn't be allowed to do things like make Gmail run faster than Facebook. Neither would Verizon be able to "prejudice" its consumers against certain services, for example by making any peer-to-peer traffic run really slowly.

Googlezon cont. Googlezon cont.

• Google has always been a staunch supporter of net neutrality, since its income depends on people being able to access the company's services quickly online. Imagine if Verizon demanded that Google pay extra to prevent YouTube from giving you the annoying twirly circle. Google's business model would be crippled, and you would probably have to start paying for YouTube access.

• But nobody has successfully implemented net neutrality laws in the US. So if Google wants to protect its business, it has to make deals with companies like Verizon. And here's where things get ugly.

• Google has always been a staunch supporter of net neutrality, since its income depends on people being able to access the company's services quickly online. Imagine if Verizon demanded that Google pay extra to prevent YouTube from giving you the annoying twirly circle. Google's business model would be crippled, and you would probably have to start paying for YouTube access.

• But nobody has successfully implemented net neutrality laws in the US. So if Google wants to protect its business, it has to make deals with companies like Verizon. And here's where things get ugly.

So, what happens to the internet? So, what happens to the internet? • The internet becomes a pay-to-play medium

• The the Googlezon agreement includes a section where both companies pledge to keep the "public internet" completely neutral. Verizon says it won't privilege some services over others (unless they are "special services" or "mobile services," but we'll get to that). And for its part, Google pledges that it will keep all of its services on the public internet.

• What is "public internet"? Isn't all of the internet public? Obviously there are internal business and government intranets that are private, and pay-to-play services, but the internet itself is by definition public. So why all this talk from Googlezon about how they'll keep the public internet neutral?

• The internet becomes a pay-to-play medium

• The the Googlezon agreement includes a section where both companies pledge to keep the "public internet" completely neutral. Verizon says it won't privilege some services over others (unless they are "special services" or "mobile services," but we'll get to that). And for its part, Google pledges that it will keep all of its services on the public internet.

• What is "public internet"? Isn't all of the internet public? Obviously there are internal business and government intranets that are private, and pay-to-play services, but the internet itself is by definition public. So why all this talk from Googlezon about how they'll keep the public internet neutral?

What is “Public Internet?”What is “Public Internet?”

• Googlezon is redefining the internet as a tiered service, like cable. And this new thing called the public internet is the lowest tier. Kind of like network television is the lowest tier in your television service options. From here on out, you will start to see the internet equivalent of cable service online: For an extra ten dollars, you can get the "movie lovers" package, where your ISP privileges Netflix and Hulu traffic, giving them to you super-fast. For another ten dollars, you can get the "concerned parent" package, which blocks peer-to-peer traffic as well as websites that they consider to be pornographic. And so on.

• Googlezon is redefining the internet as a tiered service, like cable. And this new thing called the public internet is the lowest tier. Kind of like network television is the lowest tier in your television service options. From here on out, you will start to see the internet equivalent of cable service online: For an extra ten dollars, you can get the "movie lovers" package, where your ISP privileges Netflix and Hulu traffic, giving them to you super-fast. For another ten dollars, you can get the "concerned parent" package, which blocks peer-to-peer traffic as well as websites that they consider to be pornographic. And so on.

Public internet is for the poor Public internet is for the poor • Pledging to keep the "public internet" neutral is great,

but what happens when companies stop wanting to offer their services on it? Googlezon has the answer: In their proposal, they say that it's perfectly OK for companies and consumers to buy non-neutral, non-public "special services" online. If you're a media company that streams videogames, for example, your customers want a guarantee that the game won't stall out because of a crappy "public internet" connection. So you make your game available only to people with the special service "gamer package." Your customers pay you; you pay Googlezon; now there's a superfast connection for the privileged few with money to burn.

• Pledging to keep the "public internet" neutral is great, but what happens when companies stop wanting to offer their services on it? Googlezon has the answer: In their proposal, they say that it's perfectly OK for companies and consumers to buy non-neutral, non-public "special services" online. If you're a media company that streams videogames, for example, your customers want a guarantee that the game won't stall out because of a crappy "public internet" connection. So you make your game available only to people with the special service "gamer package." Your customers pay you; you pay Googlezon; now there's a superfast connection for the privileged few with money to burn.

Corporations rule the webCorporations rule the web

• Though few businesses start without any seed money, it is still possible for a somebody with a good idea to launch their project online and attract investors once it becomes popular. When the internet is a tiered service, however, this will no longer be possible.

• As Columbia law professor Tim Wu points out in the New York Times:

• Just consider the power and public role of firms like Verizon or Google (especially if they work together). Sitting atop the web, they can influence what firms succeed or fail — by making sites load faster or slower, or end up on page 10 of search results. It goes further — in subtle ways, the information carriers have the power to influence elections and even censor speech they don't like.

• Though few businesses start without any seed money, it is still possible for a somebody with a good idea to launch their project online and attract investors once it becomes popular. When the internet is a tiered service, however, this will no longer be possible.

• As Columbia law professor Tim Wu points out in the New York Times:

• Just consider the power and public role of firms like Verizon or Google (especially if they work together). Sitting atop the web, they can influence what firms succeed or fail — by making sites load faster or slower, or end up on page 10 of search results. It goes further — in subtle ways, the information carriers have the power to influence elections and even censor speech they don't like.

Mobile battleground Mobile battleground

• Perhaps the most disturbing part of the Googlezon agreement is the companies' statement that there will be no net neutrality on mobile networks. Given that mobile networks are the future of how most people will go online, this section of the agreement is the most pertinent to any prediction about how this agreement will affect the internet.

• Quite simply, the Googlezon agreement means that if you access the internet via your Android phone (or other mobile device), there will be no public internet at all. Your access to the web will be determined by your carrier, who may or may not offer special services - and who may decide to block any content it likes.

• Perhaps the most disturbing part of the Googlezon agreement is the companies' statement that there will be no net neutrality on mobile networks. Given that mobile networks are the future of how most people will go online, this section of the agreement is the most pertinent to any prediction about how this agreement will affect the internet.

• Quite simply, the Googlezon agreement means that if you access the internet via your Android phone (or other mobile device), there will be no public internet at all. Your access to the web will be determined by your carrier, who may or may not offer special services - and who may decide to block any content it likes.

INFORMATION is a commodity that is always

in demand.

INFORMATION is a commodity that is always

in demand.

Who is in charge of your information?

Who is in charge of your information?

Zuckerburg says “it’s complicated”

Zuckerburg says “it’s complicated” “Our philosophy is that people own their

information and control who they share it with. . . . One of the questions about our new terms of use is whether Facebook can use this information forever. When a person shares something like a message with a friend, two copies of that information are created—one in the person’s sent messages box and the other in their friend’s inbox. Even if the person deactivates their account, their friend still has a copy of that message. We think this is the right way for Facebook to work, and it is consistent with how other services like email work. One of the reasons we updated our terms was to make this more clear.

“Our philosophy is that people own their information and control who they share it with. . . . One of the questions about our new terms of use is whether Facebook can use this information forever. When a person shares something like a message with a friend, two copies of that information are created—one in the person’s sent messages box and the other in their friend’s inbox. Even if the person deactivates their account, their friend still has a copy of that message. We think this is the right way for Facebook to work, and it is consistent with how other services like email work. One of the reasons we updated our terms was to make this more clear.

• In reality, we wouldn’t share your information in a way you wouldn’t want. The trust you place in us as a safe place to share information is the most important part of what makes Facebook work. . . .

• Still, the interesting thing about this change in our terms is that it highlights the importance of these issues and their complexity. People want full ownership and control of their information so they can turn off access to it at any time. At the same time, people also want to be able to bring the information others have shared with them—like email addresses, phone numbers, photos and so on—to other services and grant those services access to those people’s information. These two positions are at odds with each other. There is no system today that enables me to share my email address with you and then simultaneously lets me control who you share it with and also lets you control what services you share it with.”

• In reality, we wouldn’t share your information in a way you wouldn’t want. The trust you place in us as a safe place to share information is the most important part of what makes Facebook work. . . .

• Still, the interesting thing about this change in our terms is that it highlights the importance of these issues and their complexity. People want full ownership and control of their information so they can turn off access to it at any time. At the same time, people also want to be able to bring the information others have shared with them—like email addresses, phone numbers, photos and so on—to other services and grant those services access to those people’s information. These two positions are at odds with each other. There is no system today that enables me to share my email address with you and then simultaneously lets me control who you share it with and also lets you control what services you share it with.”

Social Graphs & FacebookSocial Graphs & Facebook

• Chris Dixon, co-founder of Hunch.com, says there is more than just one kind of social graph — he argues there are actually half a dozen different graphs, relating to things such as location and recommendations. But one thing is clear: Facebook wants to own them all.

• Chris Dixon, co-founder of Hunch.com, says there is more than just one kind of social graph — he argues there are actually half a dozen different graphs, relating to things such as location and recommendations. But one thing is clear: Facebook wants to own them all.

Social Graphics & Facebook cont. Social Graphics & Facebook cont. • Facebook has popularized the use of the term

“social graph” as a way of describing all the various social connections you have to people in your life, both online and in the real world. But Chris Dixon, co-founder of Hunch.com and an angel investor in a number of web startups, says in a blog post published today that there is more than just one kind of social graph — in fact, he argues that there are actually about half a dozen different kinds, including graphs related to location and recommendations. Whether he is right or not, one thing seems pretty clear: Facebook not only wants to own them all, but is well on its way to doing so.

• Facebook has popularized the use of the term “social graph” as a way of describing all the various social connections you have to people in your life, both online and in the real world. But Chris Dixon, co-founder of Hunch.com and an angel investor in a number of web startups, says in a blog post published today that there is more than just one kind of social graph — in fact, he argues that there are actually about half a dozen different kinds, including graphs related to location and recommendations. Whether he is right or not, one thing seems pretty clear: Facebook not only wants to own them all, but is well on its way to doing so.

Then comes what you might call a taxonomy of graphs, which Dixon says include:

Then comes what you might call a taxonomy of graphs, which Dixon says include:Taste: This is the kind of graph that

Hunch is trying to create, by looking at questions that users have answered about a variety of topics (the company also has a demo that reveals what it knows about you based on your tweets). GetGlue and other services are also explicitly going after this graph.

Financial Trust: Payment services such as Venmo and even Blippy (which lets you share your purchasing habits) are interested in this graph, which relates to financial connections between people and companies. PayPal and other payment companies are also obviously focused on this graph.

Taste: This is the kind of graph that Hunch is trying to create, by looking at questions that users have answered about a variety of topics (the company also has a demo that reveals what it knows about you based on your tweets). GetGlue and other services are also explicitly going after this graph.

Financial Trust: Payment services such as Venmo and even Blippy (which lets you share your purchasing habits) are interested in this graph, which relates to financial connections between people and companies. PayPal and other payment companies are also obviously focused on this graph.

Endorsement: Dixon says that this graph involves people recommending things — or other people — and uses the example of LinkedIn, which is trying to create an endorsement graph for people who are looking for work. Facebook is also going after one aspect of this kind of graph with its “like” button plugins.

Local: Companies and services such as Foursquare, Gowalla and Loopt are obviously targeting this graph, which creates relationships between people and other people — as well as people and services — based on their physical location. As Dixon notes, this graph is highly appealing to advertisers.

Endorsement: Dixon says that this graph involves people recommending things — or other people — and uses the example of LinkedIn, which is trying to create an endorsement graph for people who are looking for work. Facebook is also going after one aspect of this kind of graph with its “like” button plugins.

Local: Companies and services such as Foursquare, Gowalla and Loopt are obviously targeting this graph, which creates relationships between people and other people — as well as people and services — based on their physical location. As Dixon notes, this graph is highly appealing to advertisers.

• Facebook has a massive head start on owning virtually every one of these sub-graphs, with the possible exception of the “financial trust” graph — and with Facebook Credits rolling out, it’s likely the giant social network will get its hooks into that one soon as well. Certainly recommendation-based graphs powered by the “likes” of 500 million users could be fairly powerful. And when it comes to local, Facebook appears to be working on features in that area as well, although it’s not clear what form they will take.

• Facebook has a massive head start on owning virtually every one of these sub-graphs, with the possible exception of the “financial trust” graph — and with Facebook Credits rolling out, it’s likely the giant social network will get its hooks into that one soon as well. Certainly recommendation-based graphs powered by the “likes” of 500 million users could be fairly powerful. And when it comes to local, Facebook appears to be working on features in that area as well, although it’s not clear what form they will take.