for geographically dispersed communities to coalesce, catalyzed new forms of activism and political engagement, and opened up previously unimaginable avenues for self-expression and exposure to art and ideas. That’s the story told again and again. But if we look from another angle and ask how, precisely, the power of institutions has been eroded, the picture becomes murkier.
Entrenched institutions have been strengthened in many ways. Thanks to digital technologies, Wall Street firms can trade derivatives at ever-faster rates, companies can inspect the private lives of prospective and current employees, insurance agencies have devised new methods to assess risky clients, political candidates can marshal big data to sway voters, and governments can survey the activities of citizens as never before. Corporate control—in media as in other spheres—is as secure as ever. In profound ways, power has been sucked in, not out.
In the realm of media and culture, the uncomfortable truth is that the information age has been accompanied by increasing consolidation and centralization, a process aided by the embrace of openness as a guiding ideal. While the old-media colossi may not appear to loom as large over our digital lives as they once did, they have hardly disappeared. Over the previous decade, legacy media companies have not fallen from the Fortune 500 firmament but have actually risen. In early 2013 they surprised analysts by reporting skyrocketing share prices: Disney and Time Warner were up 32 percent, CBS 40.2 percent, Comcast a shocking 57.6 percent.27
These traditional gatekeepers have been joined by new online gateways, means of accessing information that cannot be avoided. A handful of Internet and technology companies have become as enormous and influential as the old leviathans: they now make up thirteen of the thirty largest publicly traded corporations in the United States.28 The omnipresent Google, which, on an average day, accounts for approximately 25 percent of all North American consumer Internet traffic, has gobbled up over one hundred smaller firms, partly as a method of thwarting potential rivals, averaging about one acquisition a week since 2010; Facebook now has well over one billion users, or more than one in seven people on the planet; Amazon controls one-tenth of all American online commerce and its swiftly expanding cloud computing services host the data and traffic of hundreds of thousands of companies located in almost two hundred countries, an estimated one-third of all Internet users accessing Amazon’s cloud at least once a day; and Apple, which sits on almost $140 billion in cash reserves, jockeys with Exxon Mobil for the title of the most valuable company on earth, with a valuation exceeding the GDP (gross domestic product) of most nations.29
Instead of leveling the field between small and large, the open Internet has dramatically tilted it in favor of the most massive players. Thus an independent musician like Rebecca Gates is squeezed from both sides. Off-line, local radio stations have been absorbed by Clear Channel and the major labels control more of the music market than they did before the Internet emerged. And online Gates has to position herself and her work on a monopolists’ platform or risk total invisibility.
Monopolies, contrary to early expectations, prosper online, where winner-take-all markets emerge partly as a consequence of Metcalfe’s law, which says that the value of a network increases exponentially by the number of connections or users: the more people have telephones or have social media profiles or use a search engine, the more valuable those services become. (Counterintuitively, given his outspoken libertarian views, PayPal founder and first Facebook investor Peter Thiel has declared competition overrated and praised monopolies for improving margins.30) What’s more, many of the emerging info-monopolies now dabble in hardware, software, and content, building their businesses at every possible level, vertically integrating as in the analog era.
This is the contradiction at the center of the new information system: the more customized and user friendly our computers and mobile devices are, the more connected we are to an extensive and opaque circuit of machines that coordinate and keep tabs on our activities; everything is accessible and individualized, but only through companies that control the network from the bottom up.31 Amazon strives to control both the bookshelf and the book and everything in between. It makes devices, offers cloud computing services, and has begun to produce its own content, starting various publishing imprints before expanding to feature film production.32 Google is taking a similar approach, having expanded from search into content, operating system design, retail, gadget manufacturing, robotics, “smart” appliances, self-driving cars, debit cards, and fiber broadband.
More troublingly, at least for those who believed the Internet upstarts would inevitably vanquish the establishment dinosaurs, are the ways the new and old players have melded. Condé Nast bought Reddit, Fox has a stake in Vice Media, Time Warner bet on Maker Studios (which is behind some of YouTube’s biggest stars), Apple works intimately with Hollywood and AT&T, Facebook joined forces with Microsoft and the major-label-backed Spotify, and Twitter is trumpeting its utility to television programmers. Google, in addition to cozying up to the phone companies that use its Android operating system, has struck partnership deals with entertainment companies including Disney, Paramount, ABC, 20th Century Fox, and Sony Pictures while making numerous overtures to network and cable executives in hopes of negotiating a paid online television service.33
Google has licensing agreements with the big record companies for its music-streaming service and holds stake alongside Sony and Universal in Vevo, the music video site that is also the most viewed “channel” on YouTube.34 YouTube has attempted to partly remake itself in television’s image, investing a small fortune in professionally produced Web series, opening studios for creators in New York, Los Angeles, and London, and seeking “brand safe” and celebrity-driven content to attract more advertising revenue.35 “Top YouTube execs like to say they’re creating the next generation of cable TV, built and scaled for the web,” reports Ad Age. “But instead of 500-odd channels on TV, YouTube is making a play for the ‘next 10,000,’ appealing to all sorts of niches and interest groups.”36
Though audiences may be smaller as a consequence of this fragmentation, they will be more engaged and more thoroughly monitored and marketed to than traditional television viewers.37 As Lessig predicted, the “limitations of twentieth-century advertising” are indeed being overcome. As a consequence, the future being fashioned perpetuates and expands upon the defects of the earlier system instead of forging a new path.
Meanwhile, the captains of industry leading the charge toward mergers and acquisitions within the media sphere cynically invoke the Internet to justify their grand designs. Who can complain, they shrug, if one fellow owns a multibillion-dollar empire when anyone can start a Web site for next to nothing? The subject of antitrust investigations in Europe and the United States, Google executives respond to allegations that the company abuses its dominance in search to give its own services an advantage by insisting that on the Internet “competition is one click away.”
Such is Rupert Murdoch’s view of things as well. Not long before the phone-hacking scandal brought down his tabloid News of the World, Murdoch made a bid for BSkyB, a move that would have given him control of over half of the television market in the UK. He assured the British House of Lords that concerns about ownership and consolidation were “ten years out of date” given the abundance of news outlets for people to choose from online. The House of Lords, however, was not convinced, as a lengthy report to Parliament made clear: “We do not accept that the increase of news sources invalidates the case for special treatment of the media through ownership regulation. We believe that there is still a danger that if media ownership becomes too concentrated the diversity of voices available could be diminished.”38
In the United States, however, even the core attribute of the Internet’s openness, so disingenuously deployed by the likes of Murdoch, is under threat. The nation’s leading cable lobbying group has a phalanx of full-time staff campaigning against Net neutrality—the idea that government regulation should ensure that the Internet stay an open platform, one where service providers cannot slow down or block certain Web sites to stifle competition or charge others a fee
