May 15, 2012

"The Federal Trade Commission charged Myspace [...] with violating federal law by breaching its promise not to share users' personal information [...] with advertising companies" (*). François Hollande has just become President of France and here is Edward Wyatt writing about a company last known when Jacques Chirac was at the Elysée. Either the FTC can travel back in time or progress has left them seven years behind.

Microsoft at least is aware Facebook has long displaced MySpace as the leading social network. It has "introduced a set of changes to [its search engine] that it says will improve searches by tapping into the expertise of friends on Facebook and other social networks" (**).

In search though isn't Microsoft to Google what MySpace is to Facebook? This is uncharitable for MySpace, now focused on music. Meanwhile Microsoft's head of online services, Qi Lu, is still asking "Why Bing?" according to Nick Wingfield. Why indeed would I switch search engines for less than a radical reason, as when I left AltaVista for Google because the latter more clearly segregated paid-for answers from genuine results?

Adopting genuine eprivacy would be just the thing, especially with Facebook as a partner. Qi Lu's other option is to convince Microsoft to buy Comcast and attach an extra gigabyte of redundancy to each Google search page Comcast serves online "to ensure the highest transmission quality". According to Eduardo Porter and much to the annoyance of Netflix, hasn't Comcast "announced that watching its Xfinity TV service on the Microsoft Xbox 360 would not count against subscribers' broadband data allowance of 250 gigabytes a month" (***)? The pleasure of monopoly!

It's a small world after all. AltaVista ended its life at Yahoo last year. Nowadays Yahoo is suing Facebook which is countersuing, one battle in a world wide patent war. The geographically fragmented patent system is such a marvel of efficiency, it is no wonder "both Senator John F. Kerry, the Massachusetts Democrat, and Cameron Kerry, his brother, [general counsel for the Commerce Department], said it was important for the United States to establish its own privacy standard and not let European regulators dictate the industry standard", per Edward Wyatt (****).

I am unjust, I admit. Last year, the FTC did extract a promise of good behavior from Facebook. How nice! Does the FTC really expect its monitors to be better informed than an Eric Schmidt, who left the Google StreetView team sweep any personal data left unprotected, or a Jamie Dimon, whose JPMorgan Chase showed last week every big bank has an Adoboli or a Kerviel in residence?

Aware of his current lack of "direct enforcement authority", Jon Leibowitz is seeking new powers from the US Congress. How bold! Does he have a chance when enough members owe their seats to lobbyists and have "warned that strict new regulations could [...] inhibit [...] economic growth".

I apologize to Mr Qi Lu and Jon Leibowitz. Theirs is an unenviable position. What could they do differently given their circumscribed circumstances, even if they agreed with me and in secret they very well may? More important is to project the overall trajectory beyond the weekly wobbles of our small world. Having done so for six straight years now, I am conscious of repetitions. May my readers find them to be leitmotifs, music to their ears.

Take the challenge of worldwide flows. Not for nothing have I compared privacy violations to pollution. Like air and water, data is a fluid which knows no borders. The Kerrys should think twice before advocating nation-driven rules over international cooperation, a recipe for piracy and protectionism. Money of course is the most closely followed fluid and much can be learnt from Gillian Tett's columns such as the one tellingly entitled "Beware pitfalls of rulemakers pursuing their own agendas" (*****). Writing about specific finance trends, she documents common human behavior.

Another theme I like to hammer is the inherent inconsistency of the American approach to eprivacy.

One would think Americans are all in favor of the invisible hand of the market. Isn't it where the hateful inefficiency of centralized goverment cede to the wonderful efficiency of decentralized participants? Yet do they consider eprivacy as an economic matter? Do they realize that, as a goods, our personal data is uniquely positioned for sustainable growth, since its production is unlimited and the producers, ourselves, the most decentralized operators possible? No, for the FTC, the White House and the US Congress, eprivacy is only fit for protective measures, a brake on growth.

True, protective measures are needed, but as means rather than ends. Despite Jon Leibowitz, no "Do Not Track for American consumers" can be "meaningful". With due respect to the difference between man and data, this is akin to allowing people to opt out of slavery while neglecting to set up a working job market. "Let them die of starvation" is John Kerry's implied advice. "Moses minus manna" is Jon Leibowitz' implicit model.

What to do then? I have no advice on how to advance international cooperation, besides pointing to Europe as a pilot project, however unpromising it may look today. I have often humbly suggested the eprivacy technologies developed at ePrio would enable the free markets needed to replace the current captive ones run by Facebook and "data brokers companies that resell databases of personal information". This is self-serving, I make no mystery about it. But I dare anyone to say the same on my past suggestion on how to organize markets for cooperative endeavors.

Markets implement fair competition. How can they be made to organize fair cooperation is the most intringuing challenge of our Information Age.

Recall the battle between Yahoo and Facebook. In an in-depth article prompted by this and other court cases, Richard Waters puts forward three points (******). A "market in intellectual property" clearly exists. It is highly doubtful "an efficient market [...] is at work", except for patent lawyers. Yet innovation demands as perfect a market in ideas as possible. He estimates "the number of patents that are potentially embodied in a single smartphone" to be 250,000. This is a staggering number. How can one rule out blackmail when companies are hostage to so many dependencies?

My solution rests on two feet. Sort between essential and non-essential contributions. Split responsibility for this determination so as to enforce cooperation between parties by removing the benefits of blackmail. In the Google-Oracle fight over Java, my approach would compel both parties to recognize Java as essential, Google to keep the benefit of the thriving Java developer community, Oracle not to lose out on the upside.

Now Richard Waters detects a deeper threat (*******). Left "with a bigger say over how Android operates", Oracle could then favor its own future mobile phone design. Notice this would imply vertical integration. Such a move should be forbidden on principle, I advised last week, unless interoperability were guaranteed. The latter would constrain both Oracle and Google in as much as each wanted to tie down its own users.

European electors call for more growth. Why not implement the capital conditions for cooperation and competition in the Information Age?

Philippe Coueignoux

• (*) ............. F.T.C. Charges Myspace With Breaking U.S. Law in Sharing Users' Personal Information, by Edward Wyatt (New York Times) - May 9, 2012
• (**) ........... A Revamping of Bing in the Battle for Search Engine Supremacy, by Nick Wingfield (New York Times) - May 11, 2012
• (***) ......... Keeping the Internet Neutral, by Eduardo Porter (New York Times) - May 9, 2012
• (****) ....... F.T.C. and White House Push for Online Privacy Laws, by Edward Wyatt (New York Times) - May 10, 2012
• (*****) ..... Beware pitfalls of rulemakers pursuing their own agendas, by Gillian Tett (Financial Times) - May 4, 2012
• (******) ... The curse of innovation, by Richard Waters (Financial Times) - May 10, 2012
• (*******) . Court ripples could cause waves for the software world, by Richard Waters (Financial Times) - May 10, 2012