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In June, Presidential candidate Hillary Clinton surprised business leaders by issuing a detailed Technology and Innovation platform.  Tech issues rarely feature in Presidential campaigns, but Clinton seems determined to shore up an already strong position in Silicon Valley by promising an administration that recognizes the singular role disruptive innovation has played in driving U.S. economic growth over the last two decades.

Clinton’s plan may have been designed to deflect concern here in California and other innovation hubs about growing criticism of the tech economy from the Obama Administration and Democrats on the left.  Just a day after Clinton released her plan, for example, Sen. Elizabeth Warren, who has taken an increasingly active role in the campaign, directly attacked leading technology companies including Apple, Amazon and Google, hinting that they had grown too large to escape the blunt instrument of antitrust to break them up.

Overall, the Clinton agenda is something of a dog’s breakfast, mixing unlikely promises for significantly increased federal spending in education, basic research, and infrastructure with more specific reforms in such hot-button areas as immigration, intellectual property, and tech infrastructure.

Though nearly every aspect of the plan would require a cooperative Congress, there is still much to admire in the particulars, and, more to the point, much that innovators and their investors have wanted to hear from Washington for a long time:

Immigration - Among Silicon Valley’s highest priorities, for example, Clinton promises “comprehensive” immigration reform, including a pledge to “staple a green card” to the diplomas of non-U.S. masters and PhD students in science and engineering, “enabling international students who complete degrees in these fields to move to green card status.”  No technology company would object to that proposal.

Patents - Clinton also pledges to fix the badly out-of-balance patent system, although here the promised reforms are modest.  Clinton endorses legislation floating around Congress that would break the stranglehold of the notoriously plaintiff-friendly Eastern District of Texas, which openly courts patent trolls and frivolous litigation.  But there is no mention of larger patent issues, notably the scaling back or eliminating patent protection for software and business methods, an invention of the courts and the patent office in recent years.  The consensus, even among many leading software providers, is that those new categories have done far more harm than good.

Copyright - On copyrights, Clinton promises a law that would “unlock” a ballooning number of older written and audio-visual works that, thanks to repeated and retroactive copyright extensions on behalf of Disney and other large rights holders, can’t be licensed or used because no one knows who owns them anymore.  (Liberation of so-called “orphan works” would have been enabled by a proposed settlement in a case involving wholesale scanning by Google Books, but that settlement was scuttled in 2011.  Google went on to win the case outright.)  The Clinton plan is silent, however, on scaling back the expanding copyrights that created the orphan works problem—and others—in the first place.

The Sharing Economy - During the primaries, both Sen. Bernie Sanders and Secretary Clinton raised repeated concerns about new “sharing economy” services, including Uber and TaskRabbit, that help contractors and freelancers coordinate their work through network technologies.  Sanders dismissed these services as “unregulated” and said he had “serious problems” with Uber in particular.  For her part, Clinton said last year that network-based employment raised “hard questions about workplace protections and what a good job will look like in the future.”

Clinton’s Tech and Innovation plan is more measured, if non-committal, about whether she sees the sharing economy as a direct attack on unions and labor regulators.  She promises only to “convene a high level working group of experts, business and labor leaders to recommend how best to ensure that people have the benefits and security they need no matter how they work.”  Depending on what specific “benefits and security” her experts believe casual workers need, that could mean either an endorsement of the sharing economy or its death by a thousand regulations.

Broadband Infrastructure - The recent decision by the Federal Communications Commission, at the urging of the White House, to transform Internet access into a public utility has already spooked investors, who spent nearly $1.5 trillion over the previous twenty years continually upgrading broadband infrastructure even as America’s roads, bridges, water pipes, gas mains and electrical grid—the actual public utilities—fell catastrophically behind.  (D.C.’s own Metro system, once the city’s pride and joy, is largely closed for the summer for repairs.)

On that front, the Clinton agenda gets a mix grade.  On the positive side, the candidate strongly endorses reducing regulatory barriers (largely at the state and local level, however) that unnecessarily deter more and more efficient private infrastructure, including “dig once” and “climb once” policies to encourage faster deployment of, respectively, fiber optic cable and next-generation mobile equipment.

But at the same time, and even as the Clinton plan waves in the direction of continued Internet self-governance under the multistakeholder process that has worked so well, Secretary Clinton “strongly supports” the idea that Internet access should be closely regulated as a utility.  As I’ve argued before, that approach is bound to slow both the speed and size of investments in continued infrastructure improvements.

Radio Spectrum for 5G Networks – On the plus side of the ledger, Clinton promises to continue President Obama’s support for next-generation mobile networks, known as 5G, which utilize densely-packed cellular antennae and higher-band radio spectrum to offer as much as 100 times the speed and capacity of today’s wireless Internet. Secretary Clinton promises to release spectrum warehoused by the federal government itself, and to support a mix of licensed, unlicensed, and shared new frequencies that will accelerate nascent 5G applications including the Internet of Things and autonomous vehicles, as well as increasingly high-definition video.

Internet Adoption -  The Clinton plan also promises to expand broadband entitlement programs aimed at closing what remains of the digital divide.  But these programs, including the troubled Broadband Technology Opportunities Fund, have had limited (if any) success.  So far, they’ve produced little besides wasted taxpayer billions and corruption.

While everyone shares the goal of universal broadband adoption for all Americans, the solution doesn’t come from raising taxes on consumer phone bills (currently approaching 20%!) to fund poorly-managed programs to subsidize rural and low-income communities.  Among those who do not have a broadband connection at home, as repeated surveys make clear, availability and even price are rarely cited as the principal reasons.

Non-adopters—especially older Americans—don’t have a broadband connection, it turns out, largely because they don’t want one.  Rightly or wrongly, digital hold-outs don’t see the Internet as having any relevance to their life.  That was a problem identified as long ago as 2010 in the visionary National Broadband Plan, from which the Clinton agenda cribs frequently without acknowledgment.   And it’s one problem government could play a crucial role in solving through public education and the President’s bully pulpit.  But not from throwing more money at federal contractors.

***

As Secretary Clinton’s wish list suggests, what Silicon Valley really wants from both presidential candidates is not more government, but less.  In many cases, much less.

That desire, of course, distinguishes tech from most special interests, and Clinton’s team deserves praise for getting it at least partly right.  For years, I’ve watched visiting politicians looking to partner with the venture community grow disappointed to hear from tech leaders across the political spectrum that they don’t actually want new federal programs or legislation aimed at promoting innovation.

What they really want most is to be left alone; to be allowed to continue to practice the kind of largely unregulated experimentation that the Mercatus Center’s Adam Thierer calls “permissionless innovation.”  That wise policy has been strongly supported by a bi-partisan coalition since the mid-1990’s.  It has done more than any grant or subsidy could to promote U.S. leadership in the Internet and other emerging technologies, in sharp contrast to Europe, where centralized innovation planning and micromanagement have had the opposite effect.

But Washington’s commitment to permissionless innovation has been under attack, particularly in the last few years.  As the innovation economy increasingly becomes the economy, lawmakers can’t help but refocus their attention there.  Law enforcement and intelligence operations, at the same time, are increasingly wary of open networks and encrypted communications (about which the Clinton plan hedges), generating some very public fights with innovators in the name of both consumer privacy and national security.

The closer the next President--whoever it turns out to be--can hew to the U.S.’s longstanding if battered commitment to let a thousand Silicon Valley start-ups bloom, the better off everyone will be, in the short as well as the long run.  Political pandering aside, what the innovation ecosystem really needs is a reboot of the 1990’s promise to leave the Internet “unfettered by Federal or State regulation” – a policy that now needs expansion to equally high-potential disruptors in energy, materials, robotics, genomics, health care, transportation and manufacturing.

That, in any case, is the lesson of the last election in which innovation policy played a major role—the election, that is, of that other Clinton.

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Earlier this week, I spoke in San Francisco at an event co-sponsored by the Reason Foundation, TechFreedom, and the Koch Institute.  Hosted by my CNET colleague Declan McCullagh, the topic was "DC vs. SF:  A Clash of Visions for Tech Policy."

The discussion ranged widely, from copyrights and patents to NSA surveillance to the failure of the government's Healthcare.gov website.  Although panelists from the political left and right disagreed on some issues, there was as usual widespread consensus that from the standpoint of entrepreneurs and engineers, the core problem in technology policy is that the pace of change for innovation continues to accelerate while the pace of government, at best, remains constant.  Moore's Law, increasingly, trumps legislated law, often unintentionally, and often with unintended negative consequences.

At the same time, as I emphasized, the shift in commerce, social life, civil life and nearly everything else from offline to online media means that future collisions at the intersection of innovation and regulation are inevitable and, indeed, certain to increase in both frequency and the degree of collateral damage.  Governments claim a monopoly on regulating much of this activity, after all, and like any institution that believes in its own mission is unlikely to let itself go quietly out of business as its markets change.

Governments rely for revenue on taxes. As more traditionally taxable activity migrates online, lawmakers are certain to follow. That's been true in the development of any frontier, physical or virtual.

The longstanding Silicon Valley approach of ignoring Washington in hopes lawmakers won't notice what we're doing was always a dangerous policy, and has now become downright reckless.  So how should innovators engage with regulators?

Watch the video below to find out!

DC v. SF: A Clash of Visions for Tech Policy from Charles Koch Institute on FORA.tv

We've added over a dozen new posts to the Media page, covering some of the highlights in articles and press coverage for April and May, 2012.

Topics include privacy, security, copyright, net neutrality, spectrum policy, the continued fall of Best Buy and antitrust.

The new posts include links to Larry's inaugural writing for several publications, including Techdirt, Fierce Mobile IT, and Engine Advocacy.

There are also several new video clips, including Larry's interview of Andrew Keen, author of the provocative new book, "Digital Vertigo," which took place at the Privacy Identity and Innovation conference in Seattle.

June was just as busy as the rest of the year, and we hope to catch up with the links soon.

2012 is off to a fast start, and we're trying hard just to keep up. We've already added over thirty posts to the Media Page, including articles, radio and television interviews, and quotes in a wide range of online and offline publications. There are several video and audio clips for your enjoyment.

The year began with two big stories: the successful fight to halt efforts for quick passage of SOPA and PIPA, two bills that would have added dangerous new legal remedies for government and private parties to tinker with the underlying engineering of the Internet in a fool-hardy effort to curb unlicensed copying by consumers. Larry was front and center, making several trips to Washington to speak with Members of Congress urging them to reconsider the bills, and reported as well from the annual Consumer Electronics Show in Las Vegas, where the tide turned definitively against the bills.  Larry's work, including a controversial article for Forbes on "Who Really Stopped SOPA, and Why," was cited in publications as varied as The National Review, Aljazeera, The National Post, TechCrunch, Techdirt, AdWeek and a radio interview on WHYY's "Radio Times."

The second big story was Larry's barn-burning article for Forbes on the failure of electronics retailer Best Buy to adapt to changing market and technology dynamics.  The original article how has nearly 3,000,000 pageviews, and set off a firestorm of response both positive and negative. The article spawned several follow-up pieces on Forbes, as well as extensive coverage nearly everywhere else, including  The Financial Times, The Wall Street Journal, The New York Times, TechCrunch, Slashdot, MetaFilter, Reddit, The Huffington Post, The Motley Fool, MSN Money and CNN. Some of these articles generated thousands of user comments, in addition to over a thousand that appeared on Forbes.

With the SOPA and PIPA fights temporarily on hold, Larry pivoted back to other important innovation and policy matters, including reform of the FCC's troubled Lifeline program, Internet privacy,  and a fight over future spectrum auctions vital to the future of mobile broadband.  Look for articles in CNET and Forbes as well as interviews in U.S. News, This Week in Law, The Los Angeles Times, The Hill, WebProNews and the Heartland Institute.

Stayed tuned!  It's going to be an exciting year.

Ceci c'est un meme.

On Forbes today, I look at the phenomenon of memes in the legal and economic context, using my now notorious "Best Buy" post as an example. Along the way, I talk antitrust, copyright, trademark, network effects, Robert Metcalfe and Ronald Coase.

It’s now been a month and a half since I wrote that electronics retailer Best Buy was going out of business…gradually.  The post, a preview of an article and future book that I’ve been researching on-and-off for the last year, continues to have a life of its own.

Commentary about the post has appeared in online and offline publications, including The Financial Times, The Wall Street Journal, The New York Times, TechCrunch, Slashdot, MetaFilter, Reddit, The Huffington Post, The Motley Fool, and CNN. Some of these articles generated hundreds of user comments, in addition to those that appeared here at Forbes.

(I was also interviewed by a variety of news sources, including TechCrunch’s Andrew Keen.)

Today, the original post hit another milestone, passing 2.9 million page views.

Watching the article move through the Internet, I’ve gotten a first-hand lesson in how network effects can generate real value.

Network effects are an economic principle that suggests certain goods and services experience increasing returns to scale.  That means the more users a particular product or service has, the more valuable the product becomes and the more rapidly its overall value increases.  A barrel of oil, like many commodity goods, does not experience network effects – only one person can own it at a time, and once it’s been burned, it’s gone.

In sharp contrast, the value of networked goods increase in value as they are consumed.  Indeed, the more they are used, the faster the increase--generating a kind of momentum or gravitational pull.  As Robert Metcalfe, founder of 3Com and co-inventor of Ethernet explained it, the value of a network can be plotted as the square of the number of connected users or devices—a curve that approaches infinity until most everything that can be connected already is.  George Gilder called that formula “Metcalfe’s Law.”

Since information can be used simultaneously by everyone and never gets used up, nearly all information products can be the beneficiaries of network effects.  Standards are the obvious example.  TCP/IP, the basic protocol that governs interactions between computers connected to the Internet, started out humbly as an information exchange standard for government and research university users.  But in part because it was non-proprietary and therefore free for anyone to use without permission or licensing fees, it spread from public to private sector users, slowly at first but over time at accelerating rates.

Gradually, then suddenly, TCP/IP became, in effect, a least common denominator standard by which otherwise incompatible systems could share information.  As momentum grew, TCP/IP and related protocols overtook and replaced better-marketed and more robust standards, including IBM’s SNA and DEC’s DECnet.  These proprietary standards, artificially limited to the devices of a particular manufacturer, couldn't spread as quickly or as smoothly as TCP/IP.

From computing applications, Internet standards spread even faster, taking over switched telephone networks (Voice over IP), television (over-the-top services such as YouTube and Hulu), radio (Pandora, Spotify)—you name it.

Today the TCP/IP family of protocols, still free-of-charge, is the de facto global standard for information exchange, the lynchpin of the Internet revolution.  The standards continue to improve, thanks to the largely-voluntary efforts of The Internet Society and its virtual engineering task forces.  They're the best example I know of network effects in action, and they've created both a platform and a blueprint for other networked goods that make use of the standards.

Beyond standards, network effects are natural features of other information products including software.  Since the marginal cost of a copy is low (essentially free in the post-media days of Web-based distribution and cloud services), establishing market share can happen at relatively low cost.  Once a piece of software—Microsoft Windows, AOL instant messenger in the old days, Facebook and Twitter more recently—starts ramping up the curve, it gains considerable momentum, which may be all it takes to beat out a rival or displace an older leader.  At saturation, a software product becomes, in essence, the standard.

From a legal standpoint, unfortunately, market saturation begins to resemble an illegal monopoly, especially when viewed through the lens of industrial age ideas about markets and competition.  (That, of course, is the lens that even 21st century regulators still use.)  But what legal academics, notably Columbia’s Tim Wu, misunderstand about this phenomenon is that such products have a relatively short life-cycle of dominating.  These "information empires," as Wu calls them, are short-lived, but not, as Wu argues, because regulators cut them down.

Even without government intervention, information products are replaced at accelerating speeds by new disruptors relying on new (or greatly improved) technologies, themselves the beneficiaries of network effects.  The actual need for legal intervention is rare.  Panicked interference with the natural cycle, on the other hand, results in unintended consequences that damage emerging markets rather than correcting them.  Distracted by lingering antitrust battles at home and abroad, Microsoft lost momentum in the last decade.  No consumer benefited from that "remedy."

For more, see "What Makes an Idea a Meme?" on Forbes.

 

On Forbes yesterday, I posted a detailed analysis of the successful (so far) fight to block quick passage of the Protect-IP Act (PIPA) and the Stop Online Piracy Act (SOPA). (See "Who Really Stopped SOPA, and Why?") I'm delighted that the article, despite its length, has gotten such positive response.

As regular readers know, I've been following these bills closely from the beginning, and made several trips to Capitol Hill to urge lawmakers to think more carefully about some of the more half-baked provisions.

But beyond traditional advocacy--of which there was a great deal--something remarkable happened in the last several months. A new, self-organizing protest movement emerged on the Internet, using social news and social networking tools including Reddit, Tumblr, Facebook and Twitter to stage virtual teach-ins, sit-ins, boycotts, and other protests. ...continue reading "How the SOPA Fight Was Won…For Now"