S+B: In The Innovator’s Dilemma, Clayton Christensen makes the case that disruption has been one of the fundamental causes or mechanisms through which our lives have improved. Is there any place in the public policy debate to make that kind of argument?
LESSIG: Well, in one sense, that’s what the Microsoft case was about. It was saying that you, Microsoft, have to leave yourself open to the risk of fundamental disruption. The browser might displace your operating system, but the law doesn’t permit you to use your power to protect yourself against that disruption.
And in a very deep and I think completely isomorphic way, democracy is about that. Democracy says the government in power can’t entrench itself by saying, “Well, OK, votes against us will only be counted at 20 percent and votes for us at 180 percent.” The rules basically say every four years or every two years, you are open to being kicked out. Now people complain about the extent to which incumbents entrench themselves through various devices, but we understand that to be a flaw in the system, we don’t understand it to be a virtue of the system.
What’s weird in the context of markets is lots of times we think it a virtue of the system that the incumbent entrenches itself against disruptive technology. I do think sometimes you can show an economic gain from this entrenchment; I just feel skeptical about its reach, and I think we should be working to minimize the range of cases where somebody could use entrenchment to block disruption.
S+B: Both in the book and in testimony you have given before Congress, you take a relatively soft line on Microsoft. And, indeed, you say you don’t see it as the biggest threat to the Net. That seems to me very different from what most of your friends in the Open Source community might say.
LESSIG: The Court of Appeals has now affirmed that Microsoft engaged in illegal behavior in protecting its operating system against a certain kind of competition. But I also think it is very important not to continue to fight the last war for the next 12 years. Microsoft was an important threat, and I still think that existing remedies are not adequate to deal with that threat.
But what is striking me more and more is, as you look at what Microsoft’s business model could be, you see it could be something that fundamentally reinforces the very best of the Internet. Its model, the “.NET” Web services, does depend upon a nice end-to-end network that doesn’t have in the middle cable companies playing games with what service is on cable and telephone companies determining what service is on telephones. More strongly, to the extent cable companies get empowered to play the kind of game that I’ve been tackling, “.NET” Web services become less and less valuable. So Microsoft has an interest in defending the end-to-end architecture.
In the same way, Disney has an interest in defending the end-to-end architecture, because Disney doesn’t own any infrastructure; it’s just got great content. So it, too, becomes a kind of defender of neutral pipes, which is the most important value here. Now I’m not saying Microsoft will become that necessarily, just that we ought to understand how it could become a force of good and let’s try to steer it to that.
For a lot of other companies, it is not so obvious that their business model is a force of good. What is AOL? It owns content, it owns code, it owns physical infrastructure, and it’s integrated. This vertical integration is not about building a platform for anybody to innovate on. It’s about building a platform where AOL controls what goes on. It’s a company town from top to bottom. I’m not against AOL, but that architecture doesn’t invite the innovation that built the Internet. So between AOL and Microsoft, I at least see how Microsoft could become good; I’m not sure I see how the business model of AOL could become good.