Owning digital devices is vital to a thriving free society
A few weeks ago, Bloomberg’s Mark Gurman reported that “Apple Inc. is working on a subscription service for the iPhone and other hardware products, a move that could make device ownership akin to paying a monthly app fee… The program would be different from.” an installment program where the monthly fee is not equal to the price of the device, which is split over 12 or 24 months. Rather, it would be a monthly fee to be determined, depending on which device the user chooses.”
Wall Street analysts and management consulting firms have advocated such a business model for some time, but my intuitive reaction reading the news was appalled. And after further reflection and discussion with my colleagues, I have no reason to change my mind: hardware subscriptions are a bad idea for society. This business model must be questioned and discussed publicly and in parliament. Public order must exercise great caution and insist on regulatory safeguards.
That’s not an overreaction. We have over two decades of empirical evidence showing that information economy business models mean that a few firms can acquire massive global market power and use this to suppress competition, even when the industry itself has few barriers to entry or exit . A future where a handful of large global corporations own the phones, laptops, modems and servers everyone needs to take part in activities is far worse than today’s world of “you have to be on WhatsApp and Facebook” order being in society Tech oligarchs don’t like you, your company or your government, they can flip the kill switch and your fancy smartphone becomes a useless piece of glass, metal and silicon. Isn’t that what they did to the Russians?
A scenario in which a political-corporate decision halfway around the world paralyzes hundreds of millions of smartphones in India is certainly far-fetched, even if it is possible. But there’s good reason to be suspicious of hardware subscriptions on less drastic but no less consequential matters.
Avinash Mani Tripathi, an economist at Azim Premji University, told me that hardware subscriptions are an answer to the “durable goods monopolist problem.” Ronald Coase had suggested that the durability of goods limits a manufacturer’s market power due to its present and future products competing with each other. Renting out iPhones instead of selling them outright could be a way for Apple to reduce competition with itself to make a profit.”
That could be good for Apple and its shareholders. However, ownership of the means of production and participation is the bedrock of economic freedom and liberal democracy. There is a strong correlation between property societies, wealth and egalitarian culture. A landless peasant in the Agricultural Age was poor and subject to the feudal Zamindar. In the Industrial Age, communists and socialist regimes that prevented individuals from owning machines ended up poor, desolate and unfree. Information Age societies that deny individuals the ability to own essential hardware and software will fare much worse. If you’re just renting a phone from the manufacturer, the owner can dictate what you can and can’t do with it. Economic freedom and the ability to innovate would then shift away from the individual to tech oligarchs.
Elon Musk’s attempt to take over Twitter shows what’s at stake. There are legitimate concerns that his personal views on freedom of expression and censorship could influence world politics. And in their response to the takeover bid, Twitter’s directors said they would determine their course of action based on the “best interests of the company and all Twitter shareholders.” It is not surprising that they do not mention the interests of users or society.
Therefore, in the information age, human affairs must not be left to the design decisions and business models of technology companies. They certainly deserve a say, but not at the expense of citizens and democratic governments. What liberal democracies around the world need is a cautious and measured path forward, not a mindless techno-deterministic path that willy-nilly ends up in a California hotel.
Technology policy is dynamic, challenging, specialized and thus confusing for politicians and the public. But once we take economic freedom as a touchstone, things become much clearer. In addition to opposing hardware subscriptions, policies that encourage repairability and openness of app stores, and also restrict hardware-software lock-in techniques, are desirable. Economic freedom will also ensure that India’s vibrant tech and media industries are not dependent on tech oligarchs. Western democracies are already considering legislation to protect consumer interests against big tech. India should be doubly vigilant.
With the Ukraine war, ensuring network and device availability has become a national security issue in these politically volatile times. India should not allow tech oligarchs to become the irresponsible and inevitable gatekeepers of this age.
Nitin Pai is co-founder and director of The Takshashila Institution, an independent center for research and education in public policy