The concept of a “digital economy” is still relatively new, having grown up alongside the World Wide Web (WWW) back in the 1990s. A definitive economic history of the WWW has yet to be written, and what can be said about it is that there are three basic components of the digital economic activities on the WWW. Those are the “digital infrastructure,” “eBusiness,” and “eCommerce.” In addition to the manufacturing of computers and facilitation of Internet access, telecommunications firms were instrumental in overseeing the movement of information across different computer networks, including the ubiquitous proliferation of advertisements on websites and tech platforms. All kinds of firms conduct their economic activities online to supplement their offline ones, their operations coexisting alongside those of eCommerce sites which sell assorted goods and services. And the proliferation of eCommerce entails the implementation of payment and logistics systems for transferring Kapital (or, for our purposes, Geld) and the delivery of the shipment to its destination.
From the preceding paragraph alone, it can be inferred that any digital economy requires two forms of Technology, Information and Financial Technologies. With Information Technology, the establishment of an “Information Sector” as a distinct Economic Sector becomes feasible, the Fintech serving as this Economic Sector’s means of production. Both technologies are what allowed for the rise of an Information Sector in the US economy during the 1990s, which as of late is currently dominated by Apple, Amazon, Facebook, Google and Microsoft, otherwise known as “Big Tech.” Questions over whether the WWW has inherent tendencies toward the development of oligopolies and monopolies has long been a subject among Liberal Capitalist circles for some time now. In the past year alone, the Kapital Accumulation of Big Tech had reached upwards of about $1.4 trillion USD, made possible thanks to the Coronavirus Pandemic consigning the vast majority of economic activities to the digital realm. Much of the Kapital came primarily from selling finished goods and digital services or selling one’s information for advertising purposes.
Compared to other economic industries susceptible to the formation of oligopolies, the speed at which Big Tech rose to prominence over much of the digital economy is staggering. The WWW has only been around for almost thirty years, and yet Big Tech had achieved its oligopoly during the past decade. How did the Internet create such an oligopoly within the span of two decades? Is there anything to be discerned from Big Tech based on what is known about Liberal Capitalist economics? And what is the significance of Big Tech in relation to Digital Sovereignty?
Historically, the rise of Big Tech was made possible through a combination of Deregulation, Globalization, and Speculation throughout the 1980s and 1990s. The Deregulation of telecommunications, together with the expanded reach of Globalization and the enhanced forms Speculation vis-à-vis Fintech, had laid the groundwork for the Internet to be considered a speculative investment into these two aforementioned technologies. The 1990s in particular was also the same timeframe in which an economic bubble, the “Dot-Com Bubble,” emerged and would later burst at the dawn of this century. Monopolization of the US Information Sector occurred throughout the 2000s and continued well into the 2010s. Since the WWW covers much of the planet, the global reach of Big Tech has worldwide implications.
The analogy concerning Big Tech, as far as the Work-Standard is concerned, is hardly the phenomenon of a few technology firms gaining a massive portion of the US Information Sector. Contrary to mainstream neoclassical economics, the rise of Big Tech bears an uncanny resemblance to the taming of a ‘digital frontier’ that was previously ‘uninhabited’ and is just now beginning to become ‘civilized’. At first, the digital realm was undeveloped, unsettled, and had yet to be claimed by anyone. Increased access to the WWW led to the subsequent establishment of online communities that existed like settlements separated from each other under distinct website domains, servers and Internet Service Providers. As the Real World, the physical realm that exists offline, depended more on the WWW, everything became more centralized and organized thanks to the popularization of social media platforms.
The phenomenon I am describing is what has been referred to as “Internet Centralization.” Even though the WWW was designed to be decentralized, the current state of affairs points toward further centralization in the coming years. If the past two decades alone saw the centralization of the WWW into a handful of American technology firms, then the next two decades will only be more of the same. Thus, the question should not be a matter of whether this can be stalled or reversed because the world is already past that point, as the global reach of Big Tech itself can attest. In essence, the coming years will give rise to the question of whether this centralization of the Internet will be realized by technology oligopolies or by central governments.
This conclusion of mine is not too far off from becoming a reality, barring the ongoing efforts of China and Russia to develop their own Intranets. Even if the US and the rest of the Western world were to curtail the excesses of Big Tech through Liberal Capitalist methods, they are still going to redirect the centralization of the Internet along national lines. Such a conclusion does account for why nobody in the Federal government is willing to shatter the oligopoly wielded by Big Tech or try anything that would cause a deviation toward national-oriented Internet Centralization. Doing so would undermine Big Tech’s near-total control over much of the digital realm, thereby undermining not only American preeminence on the Internet but also a few major sources of Kapital for the US economy. It would account for why the issues of censorship and deplatforming remain pervasive concerns: if Big Tech is capable of silencing dissent, why not any central government? And it would even account for why legal jurisprudence on the WWW is under the jurisdiction of the State of California: if the Federal government were to rein in Big Tech, it will result in the American part of the WWW to fall under Federal, not State, jurisdiction.
Should the centralization of the Internet be realized by central governments as opposed to Big Tech, the next logical step involves the gradual establishment of Intranets controlled by different nations seeking to assert national sovereignty in the digital realm. As I have stated previously, such movements are tantamount to the transformation of the Internet into a Splinternet. This will no doubt concur with the reversal of Globalization offline insofar as the WWW was made possible thanks to Globalization’s enabling the movements of Kapital and information across international borders. Always remember that even as a Splinternet, the Internet will continue to exist, but it will no longer encompass the entirety of the digital realm. Outside of the Internet, the legal jurisprudence and political-economic activities of an Intranet fall under the administration of a central government.
Why would Internet Centralization lead to the Splinternet? The moment a nation begins to claim control over its part of the WWW on grounds of national sovereignty is also when it becomes feasible to envisage Internet Centralization as nationalization. That in turn leads to the creation of a national Intranet, and if enough nations begin developing their own national Intranets, the advent of the Splinternet becomes tenable. The Splinternet’s emergence will also diminish the domination of Big Tech in many countries around the world, securing the later rise of future competitors.
I have already discussed about the lucrative economic prospects of the national Intranet in The Work-Standard, wherein I argued that the Intranet will allow any Socialist Nation to implement its own Life-Energization Reciprocity (LERE) Process. Digital Arbeit can be contributed from a wide variety of digital activities on the Intranet, which could then be transmuted into Digital Geld prior to conversion into Actual Geld. An entirely distinct digital economy is capable of being created through its Information Sector, independent from the influences of foreign competitors. It is even possible to envisage the advent of “Internet Tourism” for anyone interested in visiting a foreign Intranet. In short, Internet Centralization should be welcomed as a reflection of the fact that the digital realm is not beholden to itself but a reflection of activities that occur in the physical realm. Whether it leads to the Splinternet or not, besides the governance structures which needs to be created in its wake, is a question that must be addressed in the next post.