The Master Switch: The Rise and Fall of Information Empires

by Tim Wu

while the Bell Company may have invented the telephone, it clearly didn’t perceive the full spectrum of its uses. This is such a common affliction that we might name it “founder’s myopia.” Again and again in the development of technology, full appreciation of an invention’s potential importance falls to others—not necessarily technical geniuses themselves—who develop it in ways that the inventor never dreamed of. The phenomenon is hardly mystical: the inventor, after all, is but one person, with his own blind spots, while there are millions, if not billions, of others with eyes to see new uses that had been right under the inventor’s nose.

As the historian Lewis Jacobs writes, “Independents fled from New York, the center of production, to Cuba, Florida, San Francisco, and Los Angeles.… The safest refuge was Los Angeles, from which it was only a hop-skip-and-jump to the Mexican border and escape from injunctions and subpoenas.”20 Whatever it stands for today, Hollywood was once a place for industry outlaws on the lam.

The Trust’s rules controlled not just costs, but the very nature of what film, as a creative medium, could be. In an information industry the cost of monopoly must not be measured in dollars alone, but also in its effect on the economy of ideas and images, the restraint of which can ultimately amount to censorship.

the history of American culture is as often a story of financing as of artistic merit.

The beginning of the First World War in Europe gave the Americans a wide-open path to global supremacy. The European film industry, like other aspects of the culture, would never fully recover from the Great War, and Paris lost its place as the world capital of film.

This was not Adam Smith’s vision of competition, nor even Schumpeter’s, but rather American industrial policy gone amok.

Lord believed that the aim of any cultural product should be an improving one: to inform and to educate as well as to entertain.

Sarnoff and his firm decided simply to use Armstrong’s technology and wait for him to sue. RCA’s official position was that in-house engineers had invented and patented a “different” FM. In reality, there was no such thing, and Armstrong, like Alexander Bell in the 1870s, was forced into litigation that would last the rest of his life.

“the business of America is business.”

while television is supposed to be free, it has in fact become the creature, the servant, and indeed the prostitute, of merchandising.”

an impractical, highly abstract academic project became, eventually, the first universal network: the Internet.

Licklider addressed his memo to “Members and Affiliates of the Intergalactic Computer Network,” as a sort of joke. But in this message he sent around to the nation’s top computer networking scientists, Licklider argued very much in earnest that the time had come for a universal, or intergalactic, computer network: “It

In the early 1960s, Baran, a researcher at the RAND Institute, was thinking about how America could survive a nuclear attack. His goal, as he wrote at the time, was to “do all those things necessary to permit the survivors of the holocaust to shuck their ashes and reconstruct the economy.” Chief among his concerns were communications systems.

The idea was to try to turn the telephone infrastructure, a point-to-point system, into a highly redundant network—that is, one with various paths between any two points, so that if one route were taken out, the others would survive.† Baran’s inspiration was the human brain, which can sometimes recover from damage by reassigning lost functions to neural paths still intact.

“In a few years,” Licklider wrote in 1968, “men will be able to communicate more effectively through a machine than face to face.”

Concurrent with Engelbart’s design efforts was his participation as a subject in trials to evaluate the effects of LSD on human creativity.

Zamenhof’s idea for a standardized international language was an ingenious idea poorly implemented. Consequently, his noble ambition is often forgotten: to dissolve what he considered the curse of nationalism. If everyone in the world shared a second language, “the impassable wall that separates literatures and peoples,” he wrote, “would at once collapse into dust, and … the whole world would be as one family.”

It was an Austrian economist who would provide the most powerful critique not just of central planning but of the Taylorist fallacies underlying it. Friedrich Hayek, author of The Road to Serfdom, is a patron saint of libertarians for having assailed not only big government, in the form of socialism, but also central planning in general.8 For what he found dangerous about the centralizing tendencies of socialism applies equally well to the overbearing powers of the corporate monopolist.

Another Austrian, the political scientist Leopold Kohr in the 1950s, began a lifetime campaign against empires, large nations, and bigness in general. As he wrote, “there seems to be only one cause behind all forms of social misery: bigness. Oversimplified as this may seem, we shall find the idea more easily acceptable if we consider that bigness, or oversize, is really much more than just a social problem.… Whenever something is wrong, something is too big.”10

Kohr’s student, the economist E. F. Schumacher, in 1973 wrote Small Is Beautiful: Economics As If People Mattered, developing the concept of “enoughness” and sustainable development.11 Jane Jacobs, the great theorist of urban planning, expresses a no less incendiary disdain for centralization, and as in Hayek, the indictment is based on an inherent neglect of humanity. In her classic The Death and Life of Great American Cities, she relies on careful firsthand observations made while walking around cities and new developments to determine how Olympian planners like Robert Moses were going wrong.12 There was no understanding, let alone regard, for the organic logic of the city’s neighborhoods, a logic discernible only on foot.

In the final draft of the TCP protocol, Jon Postel,* another Internet founder, inserted the following dictum: Be conservative in what you do. Be liberal in what you accept from others.14 It may seem strange that such a philosophical, perhaps even spiritual, principle should be embedded in the articulation of the Internet, but then network design, like all design, can be understood as ideology embodied,

The fact of his having launched it shows the marvelous plasticity of Turner’s theories of programming. His original station carried almost no news, and he had once declared “I hate news. News is evil. It makes people feel bad.”

“cable networks and TV shows were designed not only to appeal to those in a targeted demographic group but also to send clear signals to unwanted eyes that certain media products weren’t meant for them.” The alienation was, in a way, the message, and the product.8

For the purposes of our narrative, the conclusion is clear: an open medium has much to recommend it, but not the power to unify the country. For a fully united national community, nothing succeeds like centralized mass media, a fact not lost on the Fascist and Communist totalitarians. With an open medium, one has diversity or fragmentation of content, and with it, differences among groups and individuals are accentuated rather than elided or repressed. None of this divisive power was plain to cable’s early visionaries, who saw only good in a proliferation of diverse subjects and points of view rather than the diffusion of American identity that commentators like Sunstein lament.

In contrast, Ross’s answer to the problem of entertainment failures was far more imaginative: he hedged the Warner Bros. film studio volatility with the steady revenues that came from unrelated businesses. Through the 1970s and 1980s, his acquisitions in the name of cash flow also included, at times, cleaning services, DC Comics, the Franklin Mint, Mad magazine, Garden State National Bank, the Atari video game company, and the New York Cosmos soccer team.

These inducements are of course related to what economists call the will to “empire-build,” but strictly speaking the phrase refers to an activity that is its own reward, the fulfillment of an innate desire as expressed by someone like Theodore Vail. While Ross certainly had such “pure” yearnings, he was also unquestionably drawn to what we might term imperial prerogatives, and these lures account for why he was attracted in particular to the film industry when he was already running a very solid business. It can be astonishing how much some executives prove willing to spend or sacrifice—particularly of other people’s money—to enjoy visible proximity to and power over the world of the idolized. Few are the media executives who admit to the emotional need behind that vainglorious magnetism.

From a twenty-first-century perspective, the problem with these films as a business proposition is clear: they don’t build the value of an underlying property. A film like Cleopatra either makes money or it doesn’t (it didn’t—despite being the highest grossing film of 1963!). It doesn’t leave the consumer with a desire for ancillary consumption once the experience is over. Stated in advertising terms, it wastes the audience’s attention. In contrast, a film like Transformers or Iron Man doesn’t just earn box office revenue, but it demonstrably drives the sale of the associated toys, comic books, and, of course, sequels.

The monopolist’s tools are lawyers and local statutes; his tactics are delays and court challenges, all deployed with an eye toward unraveling firms with lesser resources.

It may be impossible to say for certain that the reconsolidation of AT&T fundamentally enabled the National Security Agency’s surveillance program, but the need to involve so few companies in the conspiracy undoubtedly made things much easier. Suffice it to say, as the Cold War made clearest, the federal government has usually found an integrated telephone system more malleable to its needs than a fragmentary one.

The resolution of this matter has little to commend it. In July 2008, during the presidential campaign, Congress passed a law granting AT&T and Verizon full and retroactive immunity for any violations of the laws against spying on Americans.

AOL was the dinosaur limping into the new age. Getting its own cable wires was a matter of life and death, and merging with Time Warner was a way to get those. More cynically, you might say that Steve Case, who understood AOL’s problems, picked his moment to cash in on his company’s literal and figurative stock at the moment when it could go no higher.

In 2010, Levin described to me the condition of being a CEO as “a form of mental illness,” with the desire for never-ending growth as a kind of addiction. As he said, “there’s something about being able to say, ‘I’m the CEO of the world’s largest media company.’ ”

Their corporate mottoes, “Think Different” and “Do No Evil,” while often mocked by critics and cynics, were an entirely purposeful way of propounding deeply counterintuitive ideas about corporate culture.

Tim Bray in 2010 described Apple’s iPhone as “a sterile Disney-fied walled garden surrounded by sharp-toothed lawyers.…

Jobs’s modus operandi as one of “unrelenting control over his employees, his image, and even his customers” with the goal of achieving “unrelenting control over his products and how they’re used.”

Computers, it turns out, can indeed benefit in some ways from a centralizing will to perfection, no less than French cuisine, a German automobile, or any number of other elevated aesthetic experiences that depend on strict control of process and the consumer.