Part 2: The Internet and Capitalism

           After setting up the political economy and introducing us to the thoughts that prevailed at the time of the creation of the internet, McChesney moves into his main argument; that the internet is fostering monopolies in every corner of its existence, which is leading to increased marginalization and a collapse of democracy as we know it.

          The birth of the internet gave rise to the network society as we know it today, and according to Jan A.G.M van Dijk, The network society will create all kinds of new communication groups
between mass and interpersonal communication that are characterized by a mixture of public and private aspects (van Dijk, 2006, 189). With its popularization, it was heralded as the way that consumers would finally take back control from the corporations. Advertising looked like it was to become obsolete, and the easy access that Americans would soon enjoy would allow the easy and cost-free disbursement of information and multiple different forms of media (movies, songs, etc.). However, as McChesney points out, the monopoly holding companies that controlled the telephones and media realized the risk that the internet posed to their bottom lines, and they acted to prevent it from happening. McChesney also points out the irony of this, as many large corporations were given the change to control the internet and its advances in the late 80s and early 90s, but all declined thinking that it wouldn’t be profitable.

          The first way that McChesney states that corporations fought the celebrants of the internet was over advertising. Early internet users were very excited as the idea of ending advertisement. For the first time ever, it seemed that consumers would have to power to beat advertising, as they thought they would be able to leave a website that showed ads for a similar one that didn’t. When the first commercial email was sent to nearly every inbox that was present at the time, users responded by spamming and blocking the sender. However, companies saw the potential for email advertising, and the advertising system we see now on the internet was born. McChesney also discusses the road that the internet may have gone down. The United States Postal Service offered to administer the online mail service, but was beaten out when AT&T and other large corporations lobbied to privatize the service. Some websites from the era of no advertising remain however, such a Wikipedia, who has not run an ad on its website since its creation, and remains one of the top ten most trafficked
Internet destinations in the United States (Goldman, 2006, 159).

          The internet also threatened media and telecommunication giants. These companies were forced by law to rent out the underground pipes that they used at non-discriminatory prices, and were also not allowed to deny access to anyone attempting to join. With the expansion of the web, these large companies were forced to watch new internet service providers (ISPs) pop up and take over their markets. Fearing that the internet would completely replace telephone communication, these companies lobbied to get the law repealed, which they were successful in doing. McChesney then discusses the takeover of telecommunication companies in the internet, as they were able to muscle out competition by having complete control over their own pipes. Today, twenty percent of Americans have access to only one broadband provider. In addition, for the first time since the creation of the internet, no ISP plans to upgrade their service, as they have no competition in their areas that could make a better network than already exists. Now, McChesney says, these companies are attempting to further profit from their monopolies by ending Net Neutrality, where ISPs cannot offer different speeds of delivery to websites at different prices. This would allow ISPs to mark up prices on larger websites, or they would cause their sites to be transmitted slower over the internet. McChesney exposes these blatant monopolies and their practices, and continues to how they have affected the internet’s policies of media-sharing.

          After discussing telecommunication companies responses to the internet, McChesney addresses how media corporations dealt with the potential to distribute all media for free. Media companies saw how the internet would quickly converge all forms of media into one medium, and recognized that they needed to merge and grow to survive the coming competition. In order to achieve this, these companies lobbied to repeal ownership regulations, and in addition, strengthened laws and harshened punishments related to copyright infringement. Also, due to fear of being replaced by new internet startups, media conglomerates proceeded to buy nearly any form of new, online competition in order to prevent being outflanked. Some companies also adapted the internet to support the continuation of traditional capitalism, by creating ways to legally buy media content online. These sites, such as the iTunes Store, Netflix, and Amazon have reaped extraordinary benefits from the internet, and have created their own monopolies online.