Tim Wu:

"The Master Switch
The Rise and Fall of Information Empires"
(Knopf, 2010)

(Copyright © 2011 Piero Scaruffi | Legal restrictions )
"The Master Switch" is an intriguing history of radio, telephone, cinema and television business in the USA (note: "in the USA", which is not clearly stated in the introduction). The central theme of the book is the "oscillation of information industries between open and closed", a recurring pattern that he finds across those four industries... and that he projects into the age of the Internet. The pattern looks like this: scientific innovation creates an information technology, the information technology opens a new market, an industry is created to serve that market, a monopoly eventually comes to control that market and therefore the flow of information.

Within a few decades of their invention, in the USA the telegraph was dominated by Western Union, the telephone was dominated by AT&T (back then still called Bell), the radio by NBC and CBS, cinema by the Hollywood studios. In the USA the consolidation of information empires took place relatively quickly.

Wu begins with some theoretical notions. Clayton Christensen distinguished between sustaining innovations (innovations that improve existing products) and disruptive innovations (innovations that kill an existing product and create a completely new one). For example, there were many "sustaining innovations" for the telegraph, but the telephone was a disruptive innovation that would rapidly kill the telegraph. Joseph Schumpeter argued that innovation is the main driver of economic growth He changed the concept of competition: competition among companies that manufacture pretty much the same kind of product is not terribly useful, but competition between companies that innovate (create new kinds of products, or create new kinds of organizations) is the one that really matters. Again, this kind of competition is disruptive: it doesn't simply weaken the competition, it destroys it. Later, Wu also introduces Richard Nelson's and Sidney Winter's notion of "evolutionary" innovation, basically an application of Darwin's theory of variation and selection to the field of innovation: innovation often comes from trial and error, from the environment (in this case the market) selecting the winners (the new technologies) out of a vast portfolio of variations of the existing technologies.

The chapters on radio, television and cinema are enlightning.

Wu is interested in what happened to cinema as an information medium. In 1934 Daniel Lord, a Catholic priest, wrote a Production Code to enforce morality on Hollywood films. The reasons why this code was adopted by Hollywood are complex, but during the Great Depression moral pressures tended to work on Washington. Furthermore, there were numerous psychological studies showing that cinema was having a bad influence on young people. Lord's commandements started with: "No picture shall be produced which will lower the moral standards of those who see it". The main target of the censors was "obscenity", a vague word that Lord defined in broad terms. Tim Wu points out the irony that it was "a Catholic movement designed to discipline Jewish producers on behalf of a Protestant majority".
Wu makes a broader statement, that "it is industrial structure that determines the limits of free speech", and not so much the First Amendment. Wu points out that censorship is easier to enforce (as it was) on a monopoly than on an industry distributed among many independents. Since Hollywood ended up influencing public opinion all over the Western world, the point can be made that the movie censors of the USA brainwashed their worldwide public no less than Stalin or Hitler did to their national public with their propaganda.

When it comes to computers and the Internet, Wu's book is less comprehensive.

Surprisingly, Wu ignores the first 40 years of the computing industry and begins his story with Apple, then jumpting straight to Google. That is a pity because there would be much to say about how IBM became a monopoly in mainframe computers, and how the government forced IBM to unbundle software from the hardware, a decision that singlehandedly created the software industry. In 1998 the government did something similar to Microsoft, forcing Microsoft (at the time the largest software company in the world) to unbundle Internet Explorer, a decision that singlehandedly created the open world in which Google, Facebook and thousands of Internet services would soon thrive.
Wu gets into a lengthy discussion on whether Google is becoming the monopolist of the Internet (it does control what information you can access) or not (it does not own content, it parasites on free content enthusiastically provided by millions of websites, and it uses a widely-available communication technology developed by a government agency). Just like the first radio monopolies, Google makes money by selling "advertisement time". Just like with the radio, the medium risks becoming a platform to provide a convincing shopping experience to as many customers as possible. Google does not need to create the kind of media conglomerate that the old telecom companies created because it does not need anybody's content: the content is out there for free (on the Web). Wu correctly points out that what Google does is borderline criminal, except that everybody accepts it because everybody benefits from it: Google's search technology makes a "copy" of the web's content on its own servers, which clearly violates copyrights law. If i make a copy of someone's music and post it on the Web, i may end up in jail. In general, Google has no vested interest in policing content's copyrights: the more content out there, the greater the need for a search engine, and Google makes the same amount of money whether the content (text, images, videos, music) is legal or illegal. So don't expect Google to go out of its way to protect your intellectual property. But i digress...
Wu sees Apple (with its strategy of closed platforms that is can control with dictatorial powers) as trying to reestablish the old monopolies and Google as the defender of the free market. At one point Wu argues that Google is a specialized company doing only one thing: search. I beg your pardon? It does everything from phones to automatic cars. Its spree of acquisitions has few rivals in the history of business. Wu does not discuss Facebook, which is instead the ultimate "closed platform". Facebook is the first communication platform in memory that doesn't allow you to forward a message outside of its platform (like most of us do in Gmail, Yahoo, etc). It offers no "forward" feature. In fact, there isn't even a real "edit" feature: you can't change the text that you wrote on your wall (you can delete it, but then you lose all the "likes" and comments that your friends posted). Facebook doesn't even allow you to back up your "wall", the first time in memory that we are not allowed to save "our" content on "our" home computers. Last but not least, Facebook does not allow search engines like Google to search its vast world. Talk about a walled garden...
Wu's solution to avoid that the Internet falls to a new monopolist (where Apple, as he fears, or Facebook, as i fear) is the "Separation Principle", similar to the separation of powers that most democratic constitutions try to enforce.

Given what a marvelous job he did with these industries, it is deplorable that Wu omits records, newspapers, magazines, books and computers (which represented the vast majority of information in the 20th century) from a survey of 20th century media. It is also a pity that he has focused only on the USA (neither the radio nor the telephone were invented in the USA, nor was cinema nor was the World Wide Web) with only marginal comments on how foreign dictators exploited this or that invention for their political fortunes but virtually no information on what the industry did with those inventions in other countries. By the end of the book, one has to wonder whether this is an analysis of the media or an analysis of the USA.

An important point that he makes early on in the book and should make every historian pause is that large-scale industrial wars within a country may contribute more to the character of that country than its military wars against other countries.