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The web is getting very complicated and messy – like the real world

I read two posts today that left me with the same thought – that the simple days of a free and open web are slowly coming to an end.  In the world we are moving towards individual corporations will have a significant element of control over parts of the web and therefore significant influence over which companies will prosper on their networks, including which startups.

In many ways this is analogous to how most other areas of business work.  If you have a software startup buddying up with an IBM, VMWare, SAP, or smaller vertical industry focused partner is often the best route to market.  Similarly for chip companies working with a company like Cisco or Apple can transform your fortunes.  In most mature industries large companies exist that have large numbers of customer relationships and they can choose to make them available to partners, or choose not to.

One of the charming things about the web is that historically at least it has mostly operated a little differently to that.  Sure partnership deals have helped many a startup, but it has always been possible to grow very fast independently – Facebook, Twitter and more recently Foursquare have all gotten to where they gotten to under their own steam.

But that is now changing. 

The first post I’m referring to was Brad Burnham’s Web Services as Governments on the Union Square Ventures blog.  Brad’s point is that Apple, Facebook and Twitter are kind of like nation states – they have citizens and rules of engagement which dictate which behaviours are allowed.  Crucially, they are not democracies, but rather self-interested dictatorships.  Announcements from these companies over the last month or two and the furore that followed them (including some from me) show just how powerful and important these companies are becoming.  In case you missed them the announcements were Apple’s new terms of service for the iPhone OS 4, that restricted how applications developers could use analytics data, Facebook’s launch of Facebook Credits, new privacy policy, and Twitter’s Blackberry and iPhone applications and plans for its own URL shortener.

Already partnerships with these companies confer a big advantage to startups and I’m starting to see a day when if you don’t have such a partnership people will question your prospects.

The second post was DeWitt Clinton’s Thoughts on URL Shorteners. His point is that they put friction and new points of failure into the web and give the link shortening company control and information they wouldn’t otherwise have.  To me this is the same development as above, but at a micro scale.  If software companies partnering with IBM is equivalent to Apple’s control over its ecosystem then link shorteners are like dealing with retailers, software re-sellers and logistics companies.  They are an important part of doing business and if you don’t get it right you won’t succeed, but they are messy to deal with and take up a lot of time.

I guess this is just the web maturing as a place to do business, but it is a little sad.

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  • http://www.startupboyo.com/ RichardForster

    so taking the government analogy a little further does that mean VC's are funding mercenaries to perform a coup d'etat when backing disruptive start ups :)

  • http://www.theequitykicker.com brisbourne

    :-) Maybe they should make a movie of us at work….

  • John Galt

    These companies are the very best type of democracy: The kind that you can choose to be a part of or not. You can join if you like the rules, leave if you don’t like the rules. Build a competitive product if you get really pissed off, and even succeed if others are just as pissed off as you are, or you build a business that’s better than what people had before. And the best part? The companies can’t do anything to stop you short of marketing. They’re powerless to bribe, extort or blackmail a central power structure to stop competition from interfering with their profit making. They have to compete for each individual customer or they’re dead, gone, done, and without bailout posibilities, simple as that. And that’s fantastic. (See Android outselling Iphone, due to in no small part people getting pissed off with Apple not allowing Flash onto the devices, and Apple being exclusive to a shotty network (ATT) if you need any proof that this is working. Or Facebook compared to Myspace etc. etc.)

    Democracy is just rule of the mob. It is no better than despotism because you’re trading one master for another. Republican forms of government arise out of capitalism as a way of castrating the necessary evil known as government. The sole purpose of a Republican form of government, like the United States had until the 17th Amendment, is to prevent the government from having power outside its monopoly on force and thus the ability to protect you against the use of force against you or your property. Nothing more. Democracy does not and can never accomplish this goal because the Mob rules absolutely for their term in office. Republican government, if properly constrained by a positive constitution that explicitly grants only certain powers to the government without loopholes and reserves everything else absolutely to the people, can accomplish this goal, however the founding fathers were human and made mistakes and had political infighting that caused the “general welfare” and “interstate commerce” clauses to be vaguely worded.

    The internet is capitalism in it’s purest form. The governing necessary is even less than in the real world because force can only be done in the way of attacks on your network and attacks on your identity (DNS and profiles), not physical harm per-say.

    The risk is that government is going to use it’s monopoly on force to set the rules itself. In the process we will lose the right to choose which companies we deal with. We will lose the right to build competing products without government authorization (i.e. corporatism will run-a-muck just like in Washington) and we will have no freedom of movement away or to these services.

    Ironically the founding fathers of the US recognized these same principles. This is why the United States had no immigration rules for over a hundred years. It’s also why there were no controls on contracts other than to be interpreted in civil court as written, and why the constitution specifically allows you to move between states without intervention or limitation and conduct trade between those states without duty or other interference (interstate commerce clause as intended).

    We are definitely at a cross roads: Libertarianism that recognizes that any form of statist or mob rule is evil and takes away our most basic freedom, choice and has elevated the internet to the single greatest device of freedom and prosperity in the world today. Or statism in the name of “societal norms” or in the name of “morality” that has destroyed that which Adam Smith birthed and the United States nourished for almost 100 years before being slowly subverted. That’s what is occurring on the internet right now, just like the early 20th century faced the same battles with notable epochs such as prohibition coming our way too (already happening with China’s great firewall and Pakistan blocking Facebook briefly.) The “progressives” are out to reshape the internet just like they reshaped the United States. Beware. (and no I don’t like Glenn Beck incase your shallow enough not to notice the difference simply because I used the correct word “Progressives”.)

    The question is are we going to allow the politicians to control us and impoverish us the way they did with the Federal Reserve and take away the vast majority of freedoms in the name of “security” or are we going to fight back this time, and use our non-contradictory philosophy of freedom, and it’s political system, capitalism to answer the “progressives” that threaten to take away everything we’ve built, and replace it with a corrupt ponzi scheme all the while lining their, and their friend’s pockets and making us poor, uninformed and enslaved to what the politicians decide is right for us all, simply because a small group of people paid them enough money to buy their vote?

    And in case you’re wondering, capitalism is responsible for the end of child labor in the western world (all children worked almost from birth prior to the industrial revolution and it was capitalism and the wealth that was created for everyone that allowed the luxury of government legislating it away). Capitalism is responsible for every increase in wealth for every single individual in the history of humanity. Capitalism is responsible for the last 250 years of man pulling itself out of the muck and making something of it’s self. Indeed, statism, progressivism, communism, and each and every one of it’s variations on the isms is the norm throughout human history and only in 3 brief instances has the western world ever overcome that. And they, all, without exception, did it with Capitalism. There can be no argument as to which is the better system. There can be no argument that Capitalism is the way to prosperity, there can be no argument that all forms of central planning and control are evil, both in terms of freedom, and in personal wealth and prosperity. There can be no argument, that being anti-capitalist is to be anti-poor (think micro-finance which is lifting the 3rd world out of abject poverty on the back of capitalism of you have any questions, the NY Times thinks it’s horrible, but the alternatives have made nomads stay stationary and then die becaue they had no food supplies and they became dependant on handouts from us instead of taking care of their own lives!).

    To be pro security on the internet is to ensure it’s collapse because the government becomes the critical point of failure instead of billions of individual entities that must all be attacked for the internet to be in danger. It relies on one incompentent instead of billions. Which do you think is more insecure?

    The choice is yours. You know how it turned out the last time. (and it may be the last time’s mistake that makes this conversation pointless anyhow)

    This is what The Matrix was about for those of you that missed it because you’d already taken the blue pill and didn’t notice while you were voting for the same party, either with an R or a D beside their names.

  • Adrian Roe

    There are two sentences that really grab my attention

    Crucially, they are not democracies, but rather self-interested dictatorships

    and

    Already partnerships with these companies confer a big advantage to startups and I’m starting to see a day when if you don’t have such a partnership people will question your prospects.

    I think I agree with your sentiment but very much hope that like government strategies, self-interested dictatorships represents a transition through the corporate dark ages toward democracy rather than the destination. The increasing prevalence of open source on previously closed platforms is something of a hopeful sign.

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  • http://www.theequitykicker.com brisbourne

    You hit the nail on the head here Andrew. The reason I go on about
    Apple so much is that I don't see much evidence of enlightenment
    thinking there.

  • http://www.theequitykicker.com brisbourne

    I believe that capitalism is the only viable system, but it must be
    balanced by government, as it always has been. They are not opposites.

    The other question I would ask is whether leaving Facebook, or a
    developer abandoning the iPhone is getting to be on a par with
    deciding to leave your country.

  • http://www.theequitykicker.com brisbourne

    PS Nice touch signing as John Galt….

  • John Galt

    Capitalism is freedom. It is the right to choose, which is the most basic right of a volitional creature because it is what sets us apart from animals. Not only the right, but the requirement to think, and choose. Government, acting in any other way other than to protect you from physical violence, is anti-freedom. In fact, it must enslave you and steal from you to do anything else. They are very much opposites as practiced in the last 110+ years. Capitalism punishes failure. Government seeks to eliminate failure. Capitalism provides hazard with real consequences for your actions. Government eliminates consequences and encourages moral hazard. Capitalism prevents BP from reckless drilling because the result is bankruptcy and criminal prosecution for their actions. Government encourages it because they put a cap on liability of $75 million and protect it's executives from criminal liability. Capitalism allows stupid, reckless fools to fail. Government gives them $750 billion of our money to protect them from their stupidity. Capitalism requires that nothing can be made without hard work and effort (Newton's first law of motion). Government seeks to make something from nothing, but printing money out of thin air and giving it to their friends thus making every other American poorer in the process.

    Yes, Government as it is today is the polar opposite of Capitalism. It is the enemy of Capitalism, it is the enemy of freedom and prosperity.

    It is a logical fallacy and one used over and over again, to have statism fail and then blame Capitalism for it's failure. We keep doing it, and keep saying we need more government to protect us from the failure of Capitalism. The failure is government, not Capitalism. The failure is the prevention of Capitalism from working, not Capitalism itself. Capitalism is a perfect system. It is the interference in that system that causes failure.

    And yes, leaving Facebook SHOULD be the same as leaving your country. You have the absolute right to vote with your feet and go wherever you wish so long as you don't physically harm another or their property in the process. Government interference makes em/immigration seem like something special. It is not, because the government does not have the right to tell you where you can and cannot live in any circumstance for any reason (with the exception of punishment for physical harm against another or their property).

  • http://www.gamesbrief.com Nicholas Lovell

    Interesting that you brought this topic up when I brought up the same topic with Steam (http://www.gamesbrief.com/2010/05/five-reasons-…)

    I am conflicted. Valve has behaved with integrity and commercial success so far: they've built a product which has a dominant market share basically by giving their customers (both consumers and pubishers/developers) exactly what they want.

    Should they be punished for creating a brilliant business? Clearly not. Does their dominant position lead to potential for abuse? Definitely.

    Unlike Apple and Google, Valve have not shown any signs of this (I felt bad writing that article). But the nature of the web is that it requires vigilance from us (governments, consumers, corporate partners) to avoid monopoly situations occurring.

    In the end, I believe open will win. But only if we shine a light on closed bad practices

  • http://www.theequitykicker.com brisbourne

    *In the end open will win* I agree wholeheartedly with that. The risk is that we take longer than we need to to get there and companies run out of money and go under as a result. This has been the story of the mobile internet under the control of network operators.

    Shining a light on bad practice is absolutely the right thing to do. One thing that has surprised me in doing just that is the number of people who happily take the trade off of great product today versus potential downside and lack of innovation going forward. Or more accurately don't see the risk as very great, instead believing that their favourite brand will do the right thing.

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