Charlie Rose Talks to Tim WuBy
What does the recent net neutrality vote at the Federal Communications Commission mean?
It means there's now a federal net neutrality law. And that means it's illegal for a carrier, let's say Verizon (VZ), to block, say, Hulu or Bing. China blocks a lot of stuff for censorship reasons. In America, it's less about blocking and more about wanting to speed things up. You know, so Verizon has a partnership with Google (GOOG); they speed up YouTube, and they slow down Hulu. And the net neutrality rule is supposed to prevent that.
And how did the sides line up in this debate?
Google has favored the net neutrality rule. But slowly, they've gotten closer to Verizon. AT&T (T), the great communications monopolist of American history, has always been opposed to net neutrality. So it's kind of a mixture. Generally, the [Internet] companies like net neutrality, and the phone and cable companies hate it.
What have you learned from your studies—whether it's motion pictures or AT&T, and now the Internet?
Well, this is what's so interesting—you see the same cycle repeat itself. Radio in the '20s, it was the new tech, and anyone could start a radio station. Film in the 1910s opened up. So these industries, once there's this new invention, go through incredible, exciting periods. The Internet had the same thing in the last 20 years...anyone who starts a company becomes the next billionaire.
But what history shows is, over time, what was once a young, exciting new media becomes consolidated, increasingly closed, dominated by a monopolist or an oligopoly. And the question is whether that's happening again; whether, in subtle ways, the Internet itself is slowly becoming monopolized.
What's the case for this happening now?
Do you use Google? Everyone uses Google. They have a monopoly, which is actually quite astonishing in the sense of its penetration. By global search volume, it's in the 80-something percent range.
So the pattern is repeating?
If you look at most of these networks, social networking, Facebook; search engines, Google; downloaded content, basically Apple (AAPL). In most online content, Apple's iTunes has a monopoly. So we're getting to an age where you can talk about a sort of Big Three or Big Four.
Is it because these companies have made breakthroughs? It's the entrepreneur's way, right?
The reason people like Google or Facebook is it's just simpler. If we go back to AT&T in the 1910s, we had a monopoly for 70 years, and why was that? It was easy—you picked up the telephone, and it worked. There's nothing wrong with that. But our desire to follow the leader does tend to lead to monopolization.
This is from a review of your new book The Master Switch in The Boston Globe: "Apple's (AAPL) iPhone and iPad, superb as they are, are each limited by design...each of them can only run software that meets with Apple's approval. It's a business model quite familiar to those of us who recall the Bell System."
Right, I would say that Steve Jobs, of all the men out there heading large companies, has most of the characteristics of the great media moguls of history. He is the most similar: incredibly charismatic, fantastic products, incredible desire to control everything and establish a sort of empire. And so I'd say I would be the most concerned about Apple.
Because it's a closed system?
Yeah, it's completely closed.
Does this explain the rise of Google's Android phones?
Google's idea is that they win if systems are open. So in some sense it's ideological, in some sense it's commercial. They believe, "If we have an open platform we will win because we are better there." And they know that if they take on Apple head-to-head in a closed system they will lose.
What's your opinion of WikiLeaks and its recent impact?
One thing I talk about in the book is how radical the idea of the Internet was. And what WikiLeaks shows is that the Internet still has some weird tricks to play. It's still surprising people.
So is it a good thing or a bad thing?
I think that WikiLeaks itself deserves the full protection of the First Amendment. I don't know whether or not WikiLeaks should have disclosed the cables, but I think they have a right to disclose those cables. I think that's essential.
Watch Charlie Rose on Bloomberg TV weeknights at 8 p.m. and 10 p.m.