Now that the internet has become such an integral part of our lives, it is only natural for the government to reevaluate its relationship with this special technology. Most of the time when public discussion broaches this topic, it is only to demand that government bureaucrats leave the internet as it is. Recently, there was an outcry over SOPA and PIPA, two bills that were being considered by congress to combat online piracy. Critics of the bills said they went too far by forbidding search engines from linking to websites suspected to have pirated material and by requiring Internet Service Providers to block access to entire domains even if only one webpage within that domain contained pirated material. This crude approach was denounced by many popular websites and the bills have been postponed indefinitely.
Another common flashpoint for debate is net neutrality. Essentially, net neutrality refers to the current government regulation that Internet Service Providers (ISP’s) may not block or restrict your access to any website or network. This regulation is meant to prevent ISP’s from favoring (possibly for a fee) certain content or services over others. Ironically, in this case most internet users favor maintaining the state of government regulation, rather than reducing it.
But there is one aspect of the internet that would be improved dramatically by new government intervention: Internet ID. Internet ID can be thought of as analagous to your driver’s license. It refers to any system that certifies who you are to the people you are interacting with online. An effective system could enhance trust and facilitate exchange in the growing online economy. Furthermore, scammers and other criminals would have more trouble exploiting people on the internet. In an environment where everyone knows your name, reputations become important and behavior should improve accordingly. To be clear, I am not advocating for the end of anonymity everywhere on the internet. That certainly has its place as a safe guard for free speech, but the time has come to give internet users the choice to externally certify who they are when they’re online.
Most of us already have a form of an Internet ID: a Facebook profile. Not only does your profile signal to other Facebook users who you are, but many other websites are beginning to use Facebook accounts to verify identities as well. This should concern many people because Facebook is a private company with private interests (namely, maximize profits). Even though Mark Zuckerberg claims that “we don’t build services to make money; we make money to build better services,” color me skeptical. Mark’s intentions may be pure, but as a society we cannot leave such an important service up to the vagaries of a single man. Imagine if one company had a monopoly on drivers’ licenses. Do you really think they would be as cheap as they are today? My intuition tells me that the profit maximizing price is somewhere higher on the y-axis than it is now. But if Internet ID is such a desirable service to provide, then why aren’t competitors able to compete with Facebook?
Network effects. Network effects occur when the value of a service to a consumer depends on the number of other people using the service. As the number of people increases, the value of the service increases (e.g. telephones). Once a network gets going, there is a virtuous feedback loop that makes growth accelerate exponentially. After a network becomes established, people have very little incentive to switch to a new network and therefore no new firms enter the market. To date, Facebook and Twitter have harnessed the power of network effects most successfully, but there is a key difference between the two sites. While Facebook uses real ID, meaning your profile name must be your real name, Twitter allows users to register anonymously. This difference is the reason Facebook is the leader in Internet ID, and Twitter isn’t.
Though government intervention in the marketplace is rarely optimal or efficient, the presence of network effects necessitates the government to step in. While regulators could invoke the Sherman Antitrust Act and move to bust Facebook’s monopoly, I am merely suggesting the government creates a program that allows people to verify who they are online. This idea is already in the works, but progress has been disappointing so far. In April of 2011, the Commerce Department announced the development of a new cyber-identity system called The National Strategy for Trusted Identities in Cyberspace. That was over a year and a half ago. In that time, a Silicon Valley startup could have launched and failed a dozen times. The US government needs to prioritize this program and make it, or something like it, the cornerstone of its internet strategy (after all, people love the rest of the internet as it is). To accomplish this it needs to decrease the timeframes on its pilot projects and iterate quickly the way private firms do. Time is of the essence; Mark Zuckerberg is growing attached to his laminating machine.