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Now that history has come back with the vengeance of the long-ignored, few analyses of our current situation are complete without making fun of Fukuyama’s naive ideas. Samuel P. Huntington’s “The Clash of Civilizations” and Robert D. Kaplan’s “The Coming Anarchy,” which were not as popular in the 1990s, both predicted a world with more chaos, more tribalism, and less state authority. These ideas now seem more accurate than Fukuyama’s.

But nearly thirty years later, when we read what Fukuyama actually wrote instead of the dismissive summary of his ideas, we see that he was right all along. Huntington and Kaplan thought that the threat to the Western liberal order would come from outside its cultural borders. On the other hand, Fukuyama saw the weak spots from the inside and predicted our current situation with shocking accuracy.

Think about this part of the book:

Experience shows that if men can’t fight for a righteous cause because it won in a previous generation, then they will fight against the cause. They’ll fight just because they want to. In other words, they will fight because they are bored. They cannot imagine a world without fights. And if most of the world where they live is a peaceful, prosperous liberal democracy, they will fight against that peace and prosperity as well as against democracy.

It was hard not to think of that paragraph when news came out about the invasion of the U.S. Capitol last week to try to change the results of a democratic election, especially when members of the mob carried out a special forces military operation and when it became clear in the days that followed that many of the mob were otherwise well-off people. Was the belief that President Trump had won the election enough of a reason to attack the Capitol, or was there something else going on?

I won’t pretend to know the answer to that question because this blog is about technology and strategy, not philosophy and history. The things that happened after Wednesday, though, make me think of Fukuyama’s warning that people who don’t like how history ends might try to start it all over again.

The Beginning of the End
I wrote “The End of the Beginning” a year ago. In it, I argued that the history of information technology is not a series of epochs interrupted by new paradigms, as most people think. Instead, it is a continuous shift along two parallel axes:

We used to do our computing in a central location, but now we can do it anywhere. We used to do our computing in batches, but now we do it continuously. The idea that the change from mainframe computing to personal computing on a network to mobile connections to the cloud were all part of the same trend was just as strange.

The way things are now could also be seen as the inevitable economic endpoint of the technology that makes the Internet work.

Internet 1.0: Technology
Most of the technologies that make up the Internet were actually made many years ago. TCP/IP, which is the foundation of the World Wide Web, email, and a lot of other common technologies, was first described in a paper in 1974. DNS, which converts domain names to IP addresses, came out in 1985, and HTTP, the application layer for the Web, came out in 1991. From a user’s point of view, though, these technologies came together in 1993 when Mosaic, a graphical web browser made by Marc Andreessen at the University of Illinois, came out.

Over the next few years, there were a lot of websites, and people had a lot of ideas about what this new technology could do. This craze led to the dot-com bubble, which was very important because it caused a lot of money to be put into telecom infrastructure. Even though companies like Worldcom, NorthPoint, and Global Crossing that made these investments went bankrupt, the groundwork for widespread high-speed connectivity had already been laid.

Internet 2.0: Economics
Google was started in 1998, in the middle of the dot-com bubble, but I think Internet 2.0 started with the company’s IPO in 2004. This time on the Internet was about the economics of zero friction. Specifically, contrary to the assumptions that supported Internet 1.0, it turned out that the Internet does not spread economic power but instead concentrates it. Aggregation Theory is based on this idea: when services compete without being limited by geography or marginal costs, the winner is the one who controls demand, not supply, and gets most of the market.

But Google and Facebook weren’t the only winners. The smartphone market was so big that it could support two platforms with networks of developers, users, and original equipment manufacturers (OEMs) (in the case of Android; Apple was both an OEM and platform provider for iOS). Public cloud providers, on the other hand, could offer back-end servers to all kinds of businesses. This was possible because of scale economics, which not only reduced costs and increased flexibility but also made it possible for businesses to invest much more in R&D that they could use right away.

The network effects of iOS and Android are so strong, and the scale economics of Amazon, Microsoft, and Google are so strong, that I came to the conclusion in The End of the Beginning:

Megalothymia is the desire to be seen as better than other people. It can be seen in both a tyrant who invades and enslaves neighboring people so that they will recognize his authority and a concert pianist who wants to be known as the best interpreter of Beethoven. Successful liberal democracies channel this desire into fields like entrepreneurship or competition, including electoral politics.

In the case of the Internet, we have reached the logical endpoint of technological development. However, the problem here is not the nature of man but the question of sovereignty, and the potential re-liberation of megalomania is the likely refusal of people, companies, and countries around the world to be ruled by a few American giants.

Big Tech’s Power
Last week, in response to the violence at the Capitol and the fact that it was started by Trump, Facebook and then Twitter kicked him off their platforms. The next day, Apple, Google, and Amazon kicked Parler, another social network where Trump supporters gathered and planned Wednesday’s action, out of their app stores and hosting services, effectively killing the service.

After defending Facebook and Twitter’s decisions to keep Trump on their services for years, I called for him to be kicked off last Thursday, and I explained yesterday why tech’s collective action in response to last Wednesday’s events was a uniquely American response to a real crisis:

So Facebook, Twitter, Apple, Google, Amazon, and everyone else was all wrong, right? Well, again, the context is important, and in this case, an elected official told his supporters to storm the Capitol to change the results of an election, and his supporters did just that. I think what happened this weekend was a uniquely American way to deal with Trump’s refusal to give up and his attempts to stir up violence: all of corporate America decided that enough was enough and did what Congress hasn’t been able to do, effectively ending the Trump presidency. To be honest, Parler was more of a bystander casualty than a direct target. What makes the tech industry stand out is the fact that it is the only one that can really make a difference.

To be clear, I’m not saying that this is the best way to do things. As I said last week, the way this should go is through impeachment, and I hope that still happens. And, as I said last week, it would be great if this made people talk about the power of tech companies. But this solution was practical and worked in the end, even though the full costs won’t be known for years (again, more on the long-term repercussions soon).

Soon has become today. This article isn’t about whether or not these decisions were right or wrong; for that, please see the two articles I just linked. Instead, it’s about what it means that tech companies did what they did last weekend.

Start with Europe. This is from Bloomberg:

Germany and France went after Twitter Inc. and Facebook Inc. after U.S. President Donald Trump was blocked from using them. This was part of Europe’s ongoing fight with big tech companies. German Chancellor Angela Merkel didn’t agree with the decisions. On Monday, she said that lawmakers, not private tech companies, should set the rules for free speech.

Steffen Seibert, her main spokesman, said at a regular news conference in Berlin, “The chancellor thinks it’s a problem to completely close down the account of an elected president.” “Rights like freedom of speech can be taken away, but only by law and within the limits set by the legislature, not by a business decision.”

The French government agreed with what the German leader said. Clement Beaune, the junior minister for European Union affairs, said he was “shocked” that a private company made such a big decision. “Citizens, not a CEO, should decide this,” he told Bloomberg TV on Monday. “Big online platforms need to be watched over by the public.” Finance Minister Bruno Le Maire has said that the government, not “the digital oligarchy,” should be in charge of rules. He has also called big tech “one of the threats” to democracy.

Europe is much more restrictive on speech than the U.S., with strict anti-Nazi laws in Germany, the right to be forgotten, and other bans on broadly defined “harms.” The difference, from the German and French points of view, is that these restrictions come from the government and not from private companies.

As I said yesterday, this is a completely foreign idea to Americans, who, no matter how they feel about how much online speech should be regulated, all agree that the legislature is not the right place to start. The First Amendment is not just a law but a way of life. But the fact that American tech companies serve the whole world suggests that most Europeans have no choice but to adopt American culture, which is so familiar to Americans but so strange to them.

Similar concerns were raised by politicians from India’s ruling party. From The Times of India:

On Saturday, leaders of the BJP voiced concern over Twitter’s permanent suspension of US President Donald Trump’s account. They said that this sets a dangerous precedent and should wake up democracies to the dangers of big tech companies that are not regulated.

“They can do this to anyone if they can do it to the President of the United States.” “The sooner India reviews the rules for intermediaries, the better for our democracy,” said Tejaswi Surya, the president of the BJP’s youth wing, in a tweet.

Tech companies would surely argue that the context of Trump’s removal was exceptional, but when it comes to sovereignty, it is not clear why U.S. domestic political considerations are India’s concern, or any other country’s. All that matters is that their own leaders can be silenced by an executive in San Francisco who can’t be reached or held accountable, and it’s easy to see why countries would find this status quo unacceptable.

Companies, on the other hand, will watch what happens to Parler. Even though most people don’t want to deal with user-generated content, the shift has already begun. For example, most retailers have been moving away from AWS for years. This will be another reminder that when push comes to shove, cloud providers will look out for themselves first.

Nonetheless, tens of millions of Americans supported Trump, while a significantly smaller number supported Parler. They may be back on Twitter or Facebook, but this episode will not be forgotten soon. Congress may not have made a law that limits freedom of speech, but Mark Zuckerberg and Jack Dorsey did, and Apple, Google, and Facebook soon followed suit. It shouldn’t come as a surprise that all of these companies will be looked at with a lot more suspicion.

Internet 3.0: Politics
This is why I don’t think Internet 2.0 is the end, even though its economic logic is based on the technology that makes the Internet work. When I called the current status quo “the end of the beginning,” it turns out that “the beginning” I was referring to was history. Fukuyama wrote in the book’s introduction:

What I proposed had come to an end was not the occurrence of events, even large and grave ones, but history: history understood as a single, coherent, evolutionary process, taking into account the experience of all people at all times…

Both Hegel and Marx thought that the evolution of human societies would come to an end when people found a way to live together that met their deepest and most basic needs. So, both Hegel and Marx thought there would be an “end of history.” For Hegel, this was a liberal state, and for Marx, it was a communist society. This did not mean that the natural cycle of birth, life, and death would end, that there would no longer be important events, or that newspapers would stop writing about them. It really meant that there wouldn’t be any more progress in developing basic ideas and institutions because all of the really big questions had already been answered.

It turns out that very little is set in stone when it comes to information technology. After decades of building the Internet and realizing its economic potential, the whole world is now waking up to the fact that the Internet is not just a new medium but a new way of making a reality. In The Internet and the Third Estate, I wrote:

What is the difference between the Internet and the printing press? When I’ve written about this topic before, I’ve usually focused on marginal costs. For example, books and newspapers may have been made for a lot less money than handwritten manuscripts, but they still cost something. On the other hand, what’s published on the Internet can reach anyone, anywhere. This drastically increases supply and puts a premium on the discovery, shifting economic power from publications to aggregators.

But the big drop in fixed costs is just as important, especially in terms of how it affects society. Publishers can reach anyone, and anyone can also become a publisher. Also, they don’t even need a publication. Thanks to social media, anyone can send a message to the whole world. Read once more what Zuckerberg said about the Fifth Estate:

People’s ability to say what they want to a large number of people is a new kind of force in the world. It’s a Fifth Estate that works with the other forces of society. People no longer have to rely on traditional gatekeepers in politics or the media to get their voices heard, which has important effects.

It’s hard to say enough about how much that is an understatement. I just told you how the printing press overthrew the First Estate, which led to the creation of nation-states and the rise of a new nobility with power. If commoners were given more power, they could overthrow the Second Estate. This is a very radical idea.

It’s hard to believe that people will only talk about these effects on niche sites like Stratechery. The printing press changed Europe from a continent of loosely connected city-states to a continent of nation-states with their own state churches. If the Internet is as big of a change as I think it is (and I do think it is! ), then how far along we are in the change that will come after it shows that we have just started? And after what happened last week, everyone knows how important this is: the Internet will be decided by politics, not economics.

The Return of Technology
Here, technology will come back to the fore. If a growing number of people, companies, and countries want to avoid centralization, the answer won’t be more centralized entities but rather a return to open protocols. This is the only way to match, and maybe even beat, the research and development (R&D) advantages of centralized tech companies. Open technologies can be worked on together and forked individually, gaining both the benefits of scale and the certainty of independence and control.

Internet 3.0 will bring back open, decentralized technology.

This will take years, and I think governments in Europe, in particular, will try to build their own centralized alternatives at first. But these efforts will fail due to a lack of research and development (R&D) capabilities, and they will be passed by open alternatives that, at least in the short to medium term, may not be as full-featured and easy-to-use as big tech offerings, but have the killer feature of not having a “San Francisco kill switch.

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