June 29, 2010

"The forms of protectionism being used today are far more subtle and insidious, and are not captured by traditional measures of trade barriers." Taking advantage of the so-called Group of Twenty meeting in Toronto, Alan Beattie wonders whether this position is pessimistic or realistic (*).

Not for me to risk a judgment in macroeconomics, a science which vies for accuracy with the likes of long range weather forecasts. But part of my remit is to understand our Information Age, the only scale at which questions of eprivacy can be properly addressed. And given its advent is so recent, it would be surprising it did not come with underdocumented forms of protectionism. I would call them obvious rather than insidious but then Cassandra saw through the Trojan Horse.

Take Joseph Menn's story on how "senior law enforcement officials have objected to AOL's pending sale of [ICQ] to a Russian investment firm" (**)? Yet a year ago the same Digital Sky Technologies "bought stakes in Facebook" without any apparent difficulty despite my warnings Facebook was at least as strategic an asset as the mines of Rio Tinto.

Wait, the real story is not whether the deal will go through, as seems likely, but why "the Committee on Foreign Investment in the US" chose to make a fuss over ICQ and not Facebook. Maybe it raised an alarm about Facebook that I missed. Maybe it read my fillip and took my warning to heart. A much more convincing explanation is that nowadays physical access to data is more capital than an equity stake without corporate control.

For all his bluster about sharing, Mark Zuckerberg is in no hurry to open his massive store of personal profiles to Yuri Milner, the CEO of Digital Sky Technologies. It may come to pass, still Russian spies must do for now with using Facebook in other ways. But if Yuri Milner acquires ICQ and moves its computers to Russia, what prevents him to tap the traffic of "one of the largest instant-messaging service" for surveillance purposes?

Conversely Mark Zuckerberg cannot be so naive as to believe what he says about his expansion plans in China. As Tim Bradshaw remarks, the "Chinese government [is] deeply suspicious of foreign [...] internet companies" (***). I would be surprised to see China accept Facebook befriends its citizens by the millions, let alone its activists, when it refused to let Google's diabolo compete for control with its own diabolo.

Three years ago the Financial Times made fun of the French security services' banning of cabinet members' Blackberry phones (1). Where is the server, there lies the power, I declared and, even if hackers seem as clever as ever to wrest access to datastores from afar, there is no reason to facilitate the life of would-be listeners by giving them proximate physical access under cover of corporate control.

Thus concerns about cyberwarfare give rise to new trade barriers. If this be a consolation, the same factor can play against domestic corporations. According to an AP dispatch, the Pentagon has suspended a contract with New York based L-3 Communications as it "[investigates] whether [L-3's] employees were inappropriately monitoring and copying e-mail traffic" (****).

Whatever the nationality and employment of their listeners, the lesson for individuals is the same. Ours is "a culture of exposure". "The cautious and calculating will remain" David Brooks writes after General McChrystal fatally lowered his guard in front of a journalist (*****). Privacy deprived, the Information Age calls us all to adopt a permanently prudent profile, the studied blandness of the spy, I predicted four years ago.

But privacy is not the only casualty to the inebriating power of control over information. The flip side of surveillance is censorship.

Censorship too can thwart free trade, witness Google. I am not referring to its failed search for Chinese market share but the fact that "new policies for the iPhone 4 bar Google and AdMob from selling ads on the device" as Miguel Helft explains (******). The conflict between Apple and Google is a domestic matter but give it to Steve Jobs he would be as impartially adamant were Adobe, his pet peeve, a foreign software developer.

As a recommender of applications, Steve Jobs has every right to share his expert opinions with us. As Apple's CEO, he has every right to safeguard his company from the suffocating dominance of Google's diabolo. The issue though is well defined by Miguel Helft. "Now that Apple has grown from a niche player into one that leads the fastest-growing segment of the industry - mobile computing - its actions are far more consequential".

I continue to bet on Google to defeat Apple's challenge in view of the superiority of the more open approach of the former. But Miguel Helft's diagnostic is correct. Were Apple to be successful, its vertical integration between the roles of application recommender and computing platform manufacturer would become an even worse abuse of power, leading to the closing of the minds Jonathan Zittrain has warned us about.

Actually censorship comes in two types. Apple and China victorious kind is based on control over their own channels. The censorship to whom Viacom and other content providers aspire relies on defeating the channels they do not control. Judge Louis L. Stanton has sided with You Tube and hence Google, its corporate owner, against Viacom which wanted their video channel to be liable for the acts of digital piracy by its users.

I agree with the judge and hope he be confirmed on appeal. But I can but lament at the revelations in what Miguel Helft described as "documents produced as part of the case [...] embarrassing for both companies" (*******). YouTube founders knowingly exploited how copyrighted content boosted their traffic. But even Viacom employees took advantage of YouTube to upload stolen contents. With piracy the flip side of lack of privacy, the whole coin is an economy of plunder.

In this information plunder economy, the states participate rather than protect but they draw the line at their international borders. The privilege of preying on their own citizens is to be reserved for domestic corporate interests, as protectionist US gambling laws have abundantly made clear.

When information is free for the taking, free trade is Newspeak for might made right. It rings as hollow as the Trojan Horse, .

Philippe Coueignoux

• (*) ............. Pantomine villain fails to materialise, by Alan Beattie (Financial Times) - June 25, 2010
• (**) ........... US raises objections over ICQ sale plans, by Joseph Menn (Financial Times) - June 16, 2010
• (***) ......... Facebook eyes China expansion, by Tim Bradshaw (Financial Times) - June 24, 2010
• (****) ....... $5 Billion Contract Is Returned to Lockheed, AP dispatch (New York Times) - June 23, 2010
• (*****) ..... The Culture of Exposure, by David Brooks (New York Times) - June 25, 2010
• (******) ... Rotten Apple Or Sour Grapes, by Miguel Helft (New York Times) - June 24, 2010
• (*******) . Judge Sides With Google In Viacom's Video Suit,by Miguel Helft (New York Times) - June 24, 2010
• (1) BlackBerry fools, editorial column (Financial Times) - June 19, 2007