Thursday, August 24, 2017

Why Is The Web "Centralized"?

There is a groundswell of opinion, which I share, in favor of a "decentralized Web" that has continued after last year's "Decentralized Web Summit". A wealth of different technologies for implementing a decentralized Web are competing for attention. But the basic protocols of the Internet and the Web (IP, TCP, DNS, HTTP, ...) aren't centralized. What is the centralization that decentralized Web advocates are reacting against? Clearly, it is the domination of the Web by the FANG (Facebook, Amazon, Netflix, Google) and a few other large companies such as the cable oligopoly.

These companies came to dominate the Web for economic not technological reasons. The Web, like other technology markets, has very large increasing returns to scale (network effects, duh!). These companies build centralized systems using technology that isn't inherently centralized but which has increasing returns to scale. It is the increasing returns to scale that drive the centralization.

Unless decentralized technologies specifically address the issue of how to avoid increasing returns to scale they will not, of themselves, fix this economic problem. Their increasing returns to scale will drive layering centralized businesses on top of decentralized infrastructure, replicating the problem we face now, just on different infrastructure.

1 comment:

David. said...

Mike Masnick's Nazis, The Internet, Policing Content And Free Speech is a good discussion of the issues raised by platforms denying neo-Nazis access. He's correct when he points out that a decentalized Web would alleviate these issues:

"The early days of the internet were built on protocols -- and the power was in the end-to-end nature of things. But with those protocols, people could build their own implementations and software to work with those protocols. The power was thus at the ends. Individuals could choose how they interact with the protocols and they could implement their own solutions without being completely cut off. You could filter out the content you didn't want. But the choice was yours. Over the last decade, especially, we've moved far away from that ideal (in part because there appears to be more money in locked-in, centralized platforms, rather than more distributed protocols). But, opening things up offers some opportunity to allow good things to happen."

But note that he doesn't seem curious about why there is "more money in locked-in, centralized platforms". Without understanding why this is the case (hint: increasing returns to scale), how can we know whether fixing the protocols is a fix for the problem?