If it seems insane that Google at one point lobbied hard for so-called "net neutrality," you have to realize that the biggest and most influential players always figure they can benefit when a market becomes more political. That's because they figure they're in a better position to manipulate the market to their benefit.
So imagine Eric Schmidt's horror when he realized that last week's power grab from the FCC was no ordinary bit of regulatory meddling in an otherwise free market. The heavy-handed move of three FCC commissioners to put the Internet under the same federal regulatory structure as decades-old telephone companies will have an absolutely devastating effect not only on the free use of the web, but on innovation and the free working of markets.
And no, Google, you won't be able to use your influence to make sure it works in your favor. Because these people answer to no one and don't even care if what they do makes any sense. Way to create a monster:
FCC Chairman Tom Wheeler justified Obamanet by saying the Internet is “simply too important to be left without rules and without a referee.” He got it backward: Light-handed regulation made today’s Internet possible.
What if at the beginning of the Web, Washington had opted for Obamanet instead of the open Internet? Yellow Pages publishers could have invoked “harm” and “unjust and unreasonable” competition from online telephone directories. This could have strangled Alta Vista and Excite, the early leaders in search, and relegated Google to a Stanford student project. Newspapers could have lobbied against Craigslist for depriving them of classified advertising. Encyclopedia Britannica could have lobbied against Wikipedia.
Competitors could have objected to the “fast lane” that Amazon got from Sprint at the launch of the Kindle to ensure speedy e-book downloads. The FCC could have blocked Apple from integrating Internet access into the iPhone. Activists could have objected to AOL bundling access to The Wall Street Journal in its early dial-up service.
Among the first targets of the FCC’s “unjust and unreasonable” test are mobile-phone contracts that offer unlimited video or music. Netflix, the biggest lobbyist for utility regulation, could be regulated for how it uses encryption to deliver its content.
Until Congress or the courts block Obamanet, expect less innovation. During a TechFreedom conference last week, dissenting FCC commissioner Ajit Pai asked: “If you were an entrepreneur trying to make a splash in a marketplace that’s already competitive, how are you going to differentiate yourself if you have to build into your equation whether or not regulatory permission is going to be forthcoming from the FCC? According to this, permissionless innovation is a thing of the past.”
I say this is a bigger deal than executive amnesty simply because it will have a greater and more direct day-to-day effect on more people. Everyone uses the Internet. Everyone benefits from the innovations that drive it daily. And everyone will pay the price when they're much harder to develop because things get bogged down in regulatory permissions and approvals. What if online streaming had to be approved by federal regulators, who operated at the same pace as those doing that "comprehensive review" of the Keystone XL pipeline - all because they were being lobbied by someone who wants it delayed and made the right campaign contributions to the right people?
The knuckleheads who thought net neutrality was about making the Internet "equal for everyone" about to get bitchslapped by reality. With the Obama Administration, everything is about putting whatever you can under political control.
Congress could stop this, by the way. And if they're as effective in that effort as they've been stopping executive amnesty, God help us all.
