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Amazon's Kindle undercuts its net neutrality stance -- Silicon Valley's Layer Discrimination Scheme?

Amazon's support for net neutrality is becoming blatantly hypocritical, given that it is bundling its Kindle e-book reader network in a way that Amazon argues should be illegal for its broadband competitors.

  • The WSJ reports that Amazon now intends to bundle its Kindle e-book reader with exclusive content from leading author Stephen King.   

Don't get me wrong, I strongly defend Amazon's free-market freedoms to bundle its Kindle e-book reader with exclusive content -- it's the American free enterprise system at work.

  • My point here is to spotlight the blatant public policy hypocrisy of Silicon Valley business models that operate "non-neutral" business models, while at the same time trying to pass a law/regulation to make it illiegal for competitive broadband companies to operate non-neutral, bundled business models like Silicon Valley does.
  • The hypocrisy and double standard here is particularly galling and anti-competitive, because Silicon Valley's net neutrality proponents operate in markets that are substantially less competitive than the U.S. broadband market is.
  • Let's review net neutrality's Silicon Valley hypocrisy: 
    • Amazon is positioning to become the dominant network of e-book delivery, following in the footsteps of the successful iTunes model Apple used to dominate music downloads. 
      • E-book networks increasingly look like they will become an Amazon monopoly or at best an Amazon-Google digital books "duopoly."
      • Robert Darton in the NYT Book Reviews has a great piece about how the Google book "settlement creates a fundamental change in the digital world by consolidating power in the hands of one company."  
    • Google bundles its DOJ-determined monopoly search advertising application with the dominant online video distribution network -- YouTube.  Google also has the only non-neutral Internet access browser in the world in that all searches take the user first to Google's ad page -- no matter where they asked to go. Google may be one of the most bundled, non-neutral networks in the world. 
    • eBay bundles its 95% share monopoly in e-auctions in a non-neutral way with its leading Skype communications service, and its dominant e-payment PayPal offering.     

Bottom line:

Amazon and Silicon Valley are effectively asking the Federal Government to formally institute a policy of Internet layer discrimination -- where the Government would be compelled to pick California's dominant Silicon Valley applications providers as winners and competitive broadband providers as losers, by rewriting current competition-driven legislation/regulation to protect the applications layer from competition from the communications/content layers of the software stack.

  • In other words, it would be a perverse one-way innovation policy, where only applications providers could innovate/integrate into communications and content, but communications and content could not innovate/integrate into applications.

In sum, and at core, Silicon Valley application providers seek it to:  

  • Remain legal for application providers to vertically integrate/innovate their applications into communications-distribution and content freely as they do now, but
  • Become illegal for competitive broadband providers to integrate/innovate their networks into applications and content as they currently can now.     

The monster problem with Silicon Valley's anti-competitive scheme is that it is ultimately arbitrary and capricious -- legal speak for an outrageously unfair system.

  • If Silicon Valley claims lack of competition is the standard for justifying new net neutrality restrictions, on what legal or logical basis would net neutrality rules not apply to applications and/or content providers that operate in much less competitive markets than the U.S.' broadband market...
    • Especially when the FCC's broadband/net neutrality principles explicitly state: "...consumers are entitled to competition among network providers, application and service providers and content providers."
Q&A One Pager Debunking Net Neutrality Myths