CGAS Rising Democracy Conference, Athens 16-19 July 2015

1. A Critique of the Internet Oligopoly!
!
!
Nikos Smyrnaios
Université de Toulouse

2. The commonplace
Since the advent of Web 2.0 in the mid-2000s:
The Internet seen as a “naturally” democratic, inclusive means of
communication
Driven by the ideal of user participation
Offering desintermediated, direct and equal contact with the
public for all producers of content and publishers

3. The reality
Restructuring of the media landscape and the cultural industries
in favour of a small number of Internet multinationals
Concentration of information outlets in the hands of a few players
Complexification of online distribution of information => not
desintermediation, but algorithmic re-intermediation
Intensification of surveillance & exploitation of digital labor
The political economy of this system is based on:
- 2 general conditions (Digital convergence & Neoliberalism)
- A set of sociotechnical & economic logics

4. The Internet was built on public money and against commercial
logic. Also its architecture was originally decentralised
Centralization of infrastructure & concentration of resources
after the privatization of the Internet’s backbone in 1995
climaxed in the Internet bubble of 2000
The Web 2.0 trend was a facilitator of the of commodification of all
online activities
The promised convergence between telecoms and content
industries didn’t take place, but the basis of the oligopoly was set

5. Digital convergence facilitates vertical integration
(an arrangement in which the supply chain and
infrastructure of a company is owned by that company)
Datacenters + networks + hardware + OS + platforms
Google: ISP with Sprint and T-Mobile + Google Fiber, Motorola, Android, Chromebook,
Google Play, Android Store
Facebook: ISP through satellite with Avanti, Facebook Phone with Samsung and HTC,
Facebook Home hybrid between App and OS, Facebook Apps
Amazon: ISP for Kindles (WhisperNet), Fire Phone+Tablet, Amazon Appstore, Amazon
web services
Apple: private content-delivery network for iCloud, iOS, iPhone, Mac, iTunes, AppStore
Microsoft: Nokia, Windows, Windows Phone, Microsoft Cloud
A. The conditions of the oligopoly!
1. Digital convergence !

6. Digital convergence facilitates also horizontal integration
(a strategy where a company creates or acquires production
units for outputs which are alike - either complementary or
competitive)
email + search + networking + e-commerce + personalization

7. 2. Neoliberalism
(financialization, deregulation, globalisation)
Financialization of the world economy drives enormous amounts
of capital to Wall Street => Venture capital, BRICS
This creates an imbalance with companies that don’t have access
to that kind of investors

8. Deregulation of the world economy offers numerous possibilities
for fiscal optimization
Internet companies are in the avantgarde of such methods

9. Globalization allows for outsourcing several activities to countries
with low wages
Material work such as device production :
Apple => Foxconn (China)
But also intellectual immaterial work
such as content moderation: thousands
of oDesk free-lances in Morocco,
Philippines, Mexico etc. working for
Google, Facebook

10. B. The logics of the oligopoly
1. High profitability
The profitability of the internet oligopoly is only second to that of
the financial industry
Q4 Net profit margin rankings:
Google 26.28 %, Apple 24,16, %Facebook 25,04%, Microsoft 22,15%
(10,6% average of S&P 500®)

11. 2. Barriers to entry
The Internet oligopoly can raise high barriers to entry to its markets in
order to kill competition through:
1) Extremely high investments in R&D
2) Building gigantic datacentres
3) Buying out competition
4) Cross-promotion
5) Patent accumulation

12. 3. Segmentation of labour
Production is segmented in distinct layers of labour on order to
minimize costs
1st layer: high value labour (finance,
marketing, engineering), performed
internally, very well paid, privileged
2nd layer: secondary labour (industry
workers, drivers, cleaners etc.), outsourced
with low wages either internationally (China)
or through precarious subcontracts
3rd layer: digital labour/free labour
(communities of developers, ecosystems of
applications, User Generated Content,
personal data)

13. 4. Extension outside the Internet
The Internet oligopoly performs “creative
destruction” (Schumpeter)
It accelerates the destruction of existing activities and creates
new ones (eg. newspaper ads => sponsored links)
In order to maintain high profitability the oligopoly pervades
sectors outside the internet forcing predatory deregulation
(transportation, health services, energy production)
Ex. UberPop
Final frontier: the artificial intelligence

14. 5. Intellectual property
Contrary to the Cultural Industries the Internet oligopoly doesn’t
need to control copyright
It concentrates on the control of patents on digital technologies
It also guarantees copyright implementation on behalf of the
Cultural Industries as well as revenue sharing
(systems of automated copyright infringement detection, revenue
sharing on platforms such as YouTube, AppStore)

15. 6. Control of the Infomediation
“Connecting information supply with information demand and
helping both parties involved determine the value of that
information”.
Infomediaries operate a mix of
aggregation & distribution of 3rd
party content
Based on algorithms and social
interactions, financed by ads
and/or commissions
Google but also Facebook,
Twitter, Apple, ISPs etc.

16. Political issues
The Internet oligopoly has great impact on media, cultural
industries and, par extension, on the public sphere =>
How we perceive the world
The Internet oligopoly incarnates post-fordist informational
capitalism. Therefore it fosters ideology
« Californian Ideolology » (Barbrook & Cameron, 1996, Turner,
2006)
Technological Solutionism (Morozov, 2013),
Radical transparency (Zuckerberg, Schmidt)
US foreign policy/ mass surveillance (Assange, 2014)
Libertarianism

17. What can we do ?
Throw you smartphone and cancel your Facebook and Gmail
account…
But if you can’t, try:
- Thinking of the political implications of the technology you use
- Paying for people’s work you like (culture, journalism)
- Joining collective fighting over the Internet’s control and
regulation