St. Google and the Dragons

I wrote the following this evening and cross-posted at my Mooreslore blog.

Change is the one business constant. Those who embrace it succeed, those who resist it fail.

But change also dislocates.

Workers threatened by change organize unions and seek protection from government. The Luddite movement was a call by workers to smash the new textile mills that threatened their jobs.

Business calls against change are heeded more often, because they may speak the language of change and back it up with cash. In autocratic societies the cash is called a bribe. In a democracy it’s called a campaign contribution.

History proves that in every case, the public interest governments must follow is to embrace change. This is tough when the threatened industries have enormous political power.

Yet America has done this for 200 years.

19th Century Whigs embraced change as “public works,” ports, canals, and (later) railroads and telegraph companies that needed scarce capital.
Turn of the Century Progressives embraced change as antitrust, worker protection and (perhaps most important) the income tax, which replaced the tariff as the funder of government and made America the world’s business leader.
Mid-century Europeans forged free trade agreements, starting with Iron and Steel, evolving into the European Community. America embraced this movement through the WTO and such treaties as NAFTA.

Cars replaced railroads, oil replaced coal, suburbs replaced cities, and as the American blackboard was erased, rewritten and erased again, incumbents were allowed to wither away.

Today Google is the face of corporate change. Google has become a corporate stand-in for the changes the Internet makes necessary. Thus the incumbents have their knives out for it:

Telephone companies threatened by the Internet’s end-to-end principle, in which services are defined at the edge, want government to give them power to define services within their networks that everyone – including Google – will be forced to pay for.
TV and movie studios threatened by the fact that video can be passed as bits have demanded, and gotten, the power to halt distribution of bits they own.
Newspapers threatened by the Internet’s power to organize everything and make it available through links want government to make Google (and then the rest of us) pay for “linking rights.”

These forces are made more powerful by the fact that networks, studios, and reporters have no new business models to replace what’s lost as Google and its followers (Level 3, Craigslist, eBay, Amazon) march forward.

Google is just starting to gear up against these threats, hiring Alan Davidson to run a Washington lobbying shop, and bringing in Vint Cerf for the public policy knowledge he gained inside Worldcom.

But there’s a dilemma. As it puts money and power behind the imperatives of the Internet Age, Google’s enemies conflate the public interest results we all need – an Internet free for competition and innovation – with Google’s business interests. They seek to make this a battle among dragons in which the public is confused over whom to root for.

More important, consider the forces arrayed against Google in these fights. TV, movies, music, newspapers, magazines, telephone, cable. It’s the entire 20th century American economy, every business interest we associate with American power.

The irony, as I’ve said before, is that this change will win out. All those forces fighting Google in Washington are buggy whip makers, and they know it. The Internet, Google and the companies built in its wake, are the future.

A century ago, when the auto and movie industries were just getting started, Europeans were in the lead. Auto companies like Mercedes and movie companies like Pathe could have won the future. Only incumbent industries sought to throttle those new businesses, and governments tried to control them. The result, after two World Wars, was American domination of all those businesses, and with them the business world.

Embracing change made America the Hyperpower. Rejecting change can take us down again.

The Internet Century does not have to be an American one. So far American policymakers have succeeded in throttling the innovations the Internet makes possible. We have laws against invention, like the DMCA, we have a government-endorsed duopoly on Internet access, so we will soon have less broadband than China, and less per capita than Slovenia.

The Internet doesn’t care, and in the end Google should not, either. The trump card in its public policy hand should be that, if it needs to, it can simply move. It can transfer its incorporation to some country whose laws embrace the changes it makes possible, investing only where local governments protect and nurture change as America a century ago embraced cars, movies, telephony and mass-produced newspapers.

Just the hint that Google might prefer to grow in societies that embraced it, rather than fought it, should be enough. Build a big lab somewhere, a corporate campus near a fiber hub. Have some international lawyers do some investigating. Drop some hints.