Media Dojo

It’s hard to discuss Google without having a general discussion about Internet Media/Marketing and vice-versa. I’m not sure the same dichotomy exists in the cloud world yet. But it’s safe to say that you can’t have a comprehensive cloud computing policy discussion without referring to Google. Hat tip to the Knight Center for Specialized Journalism for bringing Google’s regulatory policy lead to speak to us about the web giant’s role in policy making.

Alan Davidson is the Government Affairs point person for Google in Washington. Naturally, he’s a computer scientist and a lawyer by training.

Alan believes that we’re currently in the Empire Strikes Back part II of the policy trilogy. The first part of Internet policy had a certain naivete on the policy side, summed up by the thinking that the Internet was a particular “thing”. It was a new technology system to be sure, but one that could eventually be wrestled into an existing policy tool kit. Step change is a nice theory but rarely observed in practice. At the same time, digital utopians believed that all the new users adhered to similar norms that marked the early generation of “netizens”. Given the information asymmetry in favor of the technologists and early adopters, it shouldn’t be surprising that advantage went to the rebels.

However, the last few years have seen regulatory authorities world-wide respond to all the John Perry Barlowesque declarations of cyber-independence with, “You don’t think we can regulate the Internet? Well, watch us…” In the past two years, major Google services in 23 countries have been blocked outright. For example, YouTube doesn’t exist in Turkey ever since a Greek activist posted a parody video claiming that Turkish independence icon Attaturk was gay. The Turkish Government told its ISPs to block all YouTube traffic into Turkey full stop. Similar incidents with various Google services have occurred in Pakistan, China and Bangladesh.

Alan was quick to caution that regulation itself isn’t inherently bad, however. Think for a moment as a U.S. citizen how the 4th Amendment regarding unreasonable search and seizure applies in a cloud-based environment. If you keep your correspondence and/or your business records in your house or on your person, the police or other authorities have numerous procedural hoops to cross before they can seize them. Not so once you port all that stuff into a cloud. People do it all the time with Quicken Finance, which is convenient to be sure, but buried in the privacy policy is the well-worn phrase that the company will protect your information up to the point it receives a “lawful request” from the “proper authorities”.

Knotty policy question often expose the cultural rifts between Silicon Valley and Washington. Alan freely admits that since Google is an engineering company, its first response to almost any problem is to try to figure if there is a technical means to solve it. Washington looks for a law. The Valley builds a tool. Occasionally, the twain need to meet.

The session ended with me asking the obvious question about cloud computing policy—taxation. Privacy is an issue that will require decades of piling mess upon mess until something workable emerges. Taxation of cloud-based commerce is a hear and now that hits all pockets. States are desperate for revenue in a recession. Many are scrambling to introduce Internet commerce sales tax. The issue boils down to a simple question of nexus: where did the “commerce” take place? Did it happen in Google’s data centers on the Columbia river? What about a small publisher in North Dakota using App Engine, Azure or EC2 that’s pulling data from S3 or another data provider in another state? Then you have a customer in New York who’s ordering and accessing the content through their New Jersey-based ISP. The bottom line is that under classic conceptions of nexus, upon which most sales tax theory is based, you could end up with 6-8 states having a claim on the potential sales tax revenue. Amazon and New York State are currently duking it out over that issue as it applies to Amazon’s current business.

Many, if not most, of these issues were argued when Internet commerce could be restricted to specific servers in specific states doing specific things. However, once you start looking into public cloud services that are selling both digital services and digital goods, you fall down the rabbit hole. The smart money right now is talking about a Federal Excise Tax on Internet commerce, which will hit cloud services. But what one hand simplifies (e.g. single rate, single collection point, single collector) the other hand flails about ( does a call to a S3 account in one state count less than spinning an EC2 instance in another). The only sure bet is that if cloud computing reaches its lofty goals for adoption, the bars in D.C. will be packed with lawyers and activists talking cloud policy for some time to come.

I’ll post some more about the D.C. trip with the Knight Foundation after working through some more notes. In the meantime, here’s a shout-out for the upcoming Structure ‘09 conference being put on June 25 in SF by Om Malik’s GigaOm crew. Regardless of the policy hairball that will soon grip the industry, it’s mega important to get all the top players in one room (can still do it for cloud computing infrastructure). That’s what they’ve pulled off. I’ll be there cranking out copy that affects the media and marketing industries.

http://events.gigaom.com/structure/09/

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