Net neutrality rules: Why they kill Silicon Valley’s startup culture

March 18, 2015, 9:00 AM UTC

A new, more skeptical perspective has begun to emerge over the future of the Internet. For decades, Silicon Valley’s high-tech community, which included the late Apple co-founder Steve Jobs and John Perry Barlow, tended to distance itself from Washington DC regulators. This was largely driven by their deeply embedded libertarian ethos – not political libertarianism, but rather a version that kept big businesses and big government from interfering. This approached helped unleash a torrent of innovation and entrepreneurship that has been the envy of the rest of the world.

More recently, that has changed. In 2012, a coalition of leading web providers rallied grass-roots opposition to two legislative proposals known as the Stop Online Privacy Act (SOPA) and the Protect Intellectual Property Act (PIPA) that would have saddled the high-tech community with the responsibility for preventing copyright piracy. This intervention into the political process was essentially defensive. It was designed to ensure that high-tech businesses retained the latitude to find their own solutions to emerging problems without the guiding hand of Washington.

Although the Federal Communications Commission’s new rules over network neutrality bears some superficial resemblance to previous efforts, it reflects a fundamental change in orientation. The new approach presumes that the creativity and energy of entrepreneurs are no longer sufficient and that Internet businesses need the guidance and assistance of federal regulators. Now, many entrepreneurs who supported the light-touch approach are expressing less comfort with the more heavy-handed approach associated with extending telephone-style regulation over the Internet.

This represents an under-appreciated sea change in U.S. technology policy and one that is fundamentally inconsistent with the high-tech community’s libertarian spirit. Under this new approach, Silicon Valley is now under the protection of Washington and will need to come to policymakers for adjudication of disputes. As such, success and failure will rely more on Silicon Valley’s sophistication in navigating and finessing the corridors of power than on new ideas and business acumen. An ever-increasing number of Silicon Valley companies are establishing D.C. offices. High-tech firms now number among the top spenders in lobbying dollars and have taken a more active role in policy debates both directly and through trade associations.

Will this new approach change that very thing that makes the high-tech community special? Many think so. They are uncomfortable with this change and are questioning whether it represents a positive development. Anyone interested in employing a new practice must now hire lawyers to determine whether the FCC would likely find it unreasonable. This risks making innovation on the Internet slower and more expensive.

Renowned innovators, such as Marc Andreessen, Mark Cuban, and Jeff Pulver have warned that the danger is not that innovation will stop, but rather the innovation that used to occur on the Internet will shift to areas that are less heavily regulated. If so, regulations designed to preserve entrepreneurship on the Internet could ironically have precisely the opposite effect.

Framed in this manner, the key question is whether innovation would be better promoted by decisions by a federal agency or by the decentralized decisions made by the vast range of high tech enterprises that have proven to be so disruptive and so creative in designing round any challenges that emerge. It should come as no surprise that those who have greatest faith in tech community are starting to favor the latter.

Christopher S. Yoo is the John H. Chestnut Professor of Law, Communication, and Computer & Information Science and the Founding Director of the Center for Technology, Innovation and Competition at the University of Pennsylvania.

Read More

Great ResignationClimate ChangeLeadershipInflationUkraine Invasion