Bookshelf

The Master Switch Book Summary

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My summary of the book The Master Switch by Tim Wu.

A book about the Cycle: the oscillation of information industries from open systems (a freely accessible channel) to closed systems (strictly controlled and ruled by a monopolist). Book explores how the cycle happened to radio, telegraph, telephone, film, and explores the question: will it happen to the internet? Will the internet become a closed system?

The Cycle

Phases of the Cycle:

  • Outsiders, disruptive founders create new tech. Radio, telephone, film (and now internet) all started as mediums accessible to any hobbyist.
  • Tech turns from someone’s hobby to someone’s industry.
  • The system then becomes centralized and closes as a monopolist takes over.
  • Monopoly can end, or continue. Cycle restarts.

Open systems.

Measure how ‘open’ a system is by the cost of entry: the monetary cost of getting into the business with a reasonable shot at reaching customers. Example: If you want to start a competitive mobile phone service, the price of entry was north of 10 billion. So for most of the 20th and 21st-century, the phone market has been effectively closed.

Ways systems begin to close:

  • Capital interests spy the potential for vastly increased profit through monopoly.
  • Monopolies grow from desire to scale, increase quality, or to perfect the medium.

Ways systems can open up again:

  • Disruptive founders invent.
  • Gov intervenes, break up monopolies which can allow innovation to flourish again, can also sometimes allow restrictions on free speech to lift.

“Whatever is closed for too long is ripe for ingenuity’s assault. A closed industry can be opened anew, giving way to all sorts of technical possibilities and expressive uses for the medium before the effort to close the system likewise begins.”

Pros/cons of closed systems:

Cons:

  • Less innovation. Monopolies don’t want to destroy their own business with destructive innovation. Example: Magnetic tape was suppressed by AT&T as AT&T believed it would replace the telephone. Monopoly’s interests can be at odds with the advancement of knowledge.
  • The monopoly can restrain certain ideas and images, which can amount to censorship. Monopoly are also easy targets for extreme actors who want to limit speech. Hollywood production codes. Example) Movie industry at one point had censorship imposed upon it (Motion Picture Production Code), which censored films, but when the monopoly was broken up, these went away.

Pros:

  • Centralized power can be more efficient + make the product better and sometimes cheaper. Monopolies can sometimes provide us with dazzling innovations and conveniences.

Industrial structure and free speech

industry structure determines the freedom of expression in the underlying medium. It is industrial structure that determines the limits of free speech.

Constitution protects gov from limiting our speech, but has no say over the free market for speech. We have a “marketplace of ideas” a space where every member of society is, by their right, free to peddle his creed. Yet the shape or even existence of any such marketplace depends far less on our abstract values than on the structure of the communications and culture industries.

Before any question of free speech comes the question of “who controls the master switch.”

The Internet and the Cycle.

Internet and the web are open systems with billions of users and thousands of firms operating on them. The history of information industries shows that such ecosystems tend to be short-lived.

Yet many would say Silicon Valley targets stagnant monopolists and challenge the existing order, leaving no monopoly dominant for long. And the internet’s structure is inherently more open than other information technologies that preceded it. When a system is open and software can be written for it, more people will use it. Google’s Android, an open-source platform for phones, can reach more customers as Apple’s iOS only works with iPhone and is more closed.

So will the open design of the internet make it insusceptible to the cycle? Does the cycle apply to the internet?

So far, the internet has shown itself to be susceptible to network economies, with efficiencies naturally arising from centralized control.

What now seems possible if unprecedented, is a well-defended Internet monopolist running a mostly open system.

Google is an information empire more committed to openness than any information empre before it, yet faces the paradoxical reality that some of the most effective ways of competing against Apple involve becoming more like Apple. That is, to become more closed. Like Apple, Google has begun to block apps that interfere with the revenue models of itself. If we reach the point of a well-defuned Internet monopolist running a mostly open system, the question is what matters more to a monopoly—openness or supremacy?

The question of the internet’s future is not whether a monopoly is possible—in various markets we have already seen the evidence that it is— but how long such a concentration can endure.

Separation principle & net neautrality.

Separations defined as “an effort to prevent any single element of society from gaining dominance over the whole, and by such dominance becoming tyrannical. Separation principles could make it possible for us to enjoy the short-term benefits of monopoly without the long-term oppression. Net neutrality is a ban on discrimionation and blocking on the internet, but applied only to the wired web — wireless is exempt.

User preferences.

Ultimately, users have an incontrovertible preference for convenience over almost anything when it comes to our information tools. We choose most convenient options and by doing so we collectively concede control to big firms based on a series of tiny choices whose consequences in sum we scarcely consider. Habits shape markets far more powerfully than laws.

“If we do not take this moment to secure our sovereignty over the choices that the information age has allowed us to enjoy, we cannot reasonably blame its los on those who are free to enrich themselves by taking from us in a manner history has foretold.”

Questions after reading:

  • How was internet become more / less closed since book’s publication in 2011? How have the author’s views shifted?
  • Most of us care more about convenience than we do control when it comes to our information tools. Are the events of early 2021 (Trump ban, Parler removal from the app store) causing this to change for a nontrivial number of people?
  • How could/will blockchain technology change the cycle?

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