Five tech companies, Apple, Amazon, Alphabet, Microsoft, and Facebook, represent about one-fifth of the U.S. stock market’s total value. And against the backdrop of the global pandemic, these companies have more than held steady – they’ve soared. Year to date, their stocks have collectively averaged a 40 percent growth in value, even as the remaining stocks in the S&P 500 have faltered.
For many in Washington, the meteoric rise of America’s tech giants has renewed calls for antitrust laws and other heavy-handed regulations to curtail their power. But antitrust laws and communications restrictions won’t solve the bigger challenge, which is that technology is evolving faster than regulators can keep up. The solution isn’t to play catch up, but to create guidelines that give tech companies – both the big players and startups – the clarity to innovate.
On Oct. 28, the CEOs of Facebook, Google and Twitter are set to testify for the second time this year, this time before the Senate Commerce Committee, on a range of topics, including liability protections, data privacy and media consolidation. The House Judiciary Subcommittee on Antitrust has held seven hearings in the last 16 months on competition in digital markets and the business practices of Big Tech. And these hearings have been spurred on by the White House, which has been pushing to change communications laws to hold big tech platforms accountable for user content on their sites as a way of reining in their power. Ostensibly, this pressure is designed to give new market entrants more opportunity to compete. But in practice, it’s simply a distraction and deterrent for true tech innovation.
For instance, antitrust regulators have set their sights on Amazon because of its disproportionate share of the cloud storage and computing market; Amazon currently owns about half of the public cloud market. But if regulators were to forcefully break up Amazon’s hold on the cloud market, it wouldn’t address the root of the problem. Amazon grew because our current cloud storage infrastructure, built as it is on centralized server architectures, can only scale up to meet demand precisely by turning some cloud service providers into market giants. Most of us want the fastest, cheapest and easiest way to store our data, and if Amazon leverages its economies of scale to create centralized storage repositories, many of us will take it.
Today’s web isn’t monopolized by a few major companies because of bad politics; it’s monopolized because the technologies it’s built upon incentivize and even rely on centralization of power and value.
But there’s another way, and it starts with changing the underlying technologies that power the web, to create an open, robust, peer-to-peer network that’s not reliant on central servers or clearinghouses.
Web3 is the next generation of internet technology. Also called the decentralized web, Web3 is a collective name for a group of software services and internet protocols that decentralize the way information is stored, shared, and processed online. Web3 will restructure the flow of power and control on the internet so that ordinary users, developers, and businesses can take full ownership of their data. The decentralized networks built for Web3 will make it difficult for central authorities and companies to collect and disproportionately profit off of our data.
Through new web protocols and storage architectures, Web3 enables enterprising tech companies to redesign the tech infrastructure for cloud storage to make market giants impossible, rather than inevitable.
Two projects I’m working on are a part of this new wave of the web. InterPlanetary File System eliminates the need for centralized server architectures by creating a distributed storage network for the data behind our websites and apps. And Filecoin, which launches this week, uses IPFS in conjunction with blockchain technology and a native cryptocurrency to power a secure and decentralized storage marketplace. Taken together, these two technologies bake the values of decentralized, free competition and data autonomy into the software layer of cloud storage.
Cloud storage is just one example. Web3 alternatives exist for everything from social media and content creation to weather insurance and music streaming. And the biggest threat facing Web3 isn’t the legacy competitors it promises to disrupt; rather, it’s the prospect of aggressive regulators stifling this innovation before it can begin its work of disruption.
Much like Web3 today, when the internet first came of age in the 1990s, it changed every aspect of how we do business. And lawmakers had to consider its impact from every angle, including but not limited to copyright law and communications law, tax law and immigration law. They had to scenario plan not just for what was then, but what would or could be thanks to the internet. We’re at a similar crossroads today. Web3 could take us in many directions, transforming industries, improving access to information and lowering barriers to entry for new businesses. But we need to plan for these possibilities – and more – now.
Regulation has to serve the markets it governs. In the case of tech, the fast-moving pace of innovation and the promise of ongoing disruptive change to the market show us that the path forward is to open up competition by initiating the next generation of the web, rather than by regulating outmoded technologies.
Marvin Ammori is an executive at Protocol Labs, a company focused on improving the internet and computing generally through decentralized web protocols such as IPFS and Filecoin, and also served as a technical consultant to HBO’s “Silicon Valley.” His views are his own.
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