Money makes the world go round. As I have matured and been on my own at college, I have begun to realize how true this statement is. Almost everything we do either costs money or is done to obtain money. It is why I and millions of teens go to college. It is why adults go to their jobs day after day. Interestingly enough, there is no "magic number" for the amount of money one should have. As humans we often desire more than what we have. This is apparent in the many information industries of our society. Cell phone companies, for example, attempt to invent the next big product to keep themselves one step ahead of their competitors and eventually this will bring them the "big bucks." But, what must one sacrifice in the pursuit of industry dominance? This leads us to what is known as the Cycle.
Tim Wu defines the Cycle as "the oscillation of information industries between open and closed" (Wu 6). Open refers to the free markets of multiple, competing companies while, conversely, closed refers to the private markets of monopolies. The information industries of society, such as telecommunications and computer programming, are rarely in an open or closed market for extended periods of time. Rather, they tend to naturally alternate between the two as empires rise and eventually fall to a disruptive innovation and new monopolies rise in their place. It is apparent that the personal, selfish desires of monopolies cause their continuous rise and fall. The driving force for many companies is their hunger for more power and money.
"The Master Switch" focuses much on the rise, fall, and eventual return to power of AT&T. It was in 1875 when Alexander Graham Bell patented the telephone with the purpose to connect every home in America. It only took him, and his Bell Telephone Company, three years to set up telephone exchanges in most major cities. He eventually came to own most of the company's licenses and created the Bell System. Here we begin to see the unending desire to gain more and more. In 1885, the American Telephone and Telegraph Company (AT&T) was formed. Eventually, Bell's patent expired and there was suddenly competition. Competition is good for consumers, but bad for the major companies. Naturally, Bell did what he could to eliminate the competition; he bought out competitors or ran them out of the market. This is known as the Kronos Effect; the efforts of a "dominant company to consume its potential successors in their infancy" (Wu 25). He had created a legally sanctioned, regulated monopoly. Bell achieved his goal; a universal service. But, why stop now? Bell had no desire to. There was a problem, however. The FCC began to realize that maybe this monopoly wasn't best for the market or the consumers. It decided that competition would "yield lower prices and more choices for consumers, rapid technological innovation and a stronger economy" (Wu 243). In 1984, the once great Bell monopoly was broken up into 8 separate "Baby-Bells."
However, this is only half of the story. Further study will show that AT&T did so much more to keep their monopoly alive as long as possible. When their patent expired, there were numerous other companies trying to create technologies that would hopefully catch on. One such idea was the Hush-A-Phone. It wasn't all that popular, but AT&T realized if they allowed it be used on their equipment, other inventors would try to follow suit. AT&T sued the makers of the Hush-A-Phone until they were forced out of business. Similarly, the invention of the answering machine and its magnetic tapes were ignored by AT&T who firmly believed that they would "lead the public to abandon the telephone" (Wu 106). The powerful Bell System chose to only allow its own products to be sold and only its own accessories to be used. In the telephone and telegraph industry, AT&T was your only choice. This desire for exponential income and to become a monopoly would eventually become their downfall.
A more mainstream company who the public quickly embraced and raced to purchase technology from was Apple Inc. The company was started by two men; Steve Jobs and Steve Wozniak. It was actually Wozniak who invented the first two Apple computers, the Apple and Apple II. These machines were designed similar to a car. They allowed the owner to open it and get to the guts of the machine and tinker with its innards and workings. There are no such Apple products like this today. Steve Wozniak began to fade out of the picture while Steve Jobs became the majority, and eventual sole, owner of the company. Soon after, Jobs released his machine, the Macintosh. It was radically different from Wozniak's models because it was "closed." Owners could not open the machine and as a result you could generally only use Apple or Apple approved software or accessories. By doing this, Steve Jobs realized he would create more revenue for Apple. If you wanted a Mac, you had to have their products. All revenue from the Mac went directly to Apple. This significantly left the door open for Apple's biggest competitor, Microsoft. Unlike Apple, Microsoft and its Windows operating system could be used on "any computer, supported just about every type of software, and could interface with any printer, modem, or whatever other hardware one could design" (Wu 279). The public preferred the options with Microsoft and Apple began to suffer. Here we see the important truth; open beats closed, public beats private.
A private company or a monopoly can result in greater personal gains. However, this prosperity is usually short-lived when the consumer is overlooked. AT&T was broken up (later to be reformed) and Apple was losing the battle for computer supremacy. These companies realized that in order to return to their time of prosperity they had to meet the needs and demands of the customer. AT&T is back in the telecommunications market, but they are no longer a monopoly, but one of a few major companies. Apple has begun to allow other applications and accessories to be used on their computers, such as Microsoft Office. Similarly, in 2003 Apple opened up iTunes to Windows (Harris) in an attempt to become more universal. Clearly, the yearning for money and power is what has kept the Cycle going. However, today, there has been the emergence of a new technology that may even be Cycle-proof; the Internet.
The Internet was formed
without a profit motive. There is no single company that owns the Internet; it is a public forum that anyone can use. What you choose to do with it is up to you. The Internet is still a relatively new technology that is still expanding in what it can do. It is hard to predict whether or not it will fall victim to the Cycle like the information industries of the past. The Internet is different mainly because there is simply nothing else like it. It is not controlled by anyone and there are very few substitutes for it. It may be more likely that the major companies that supply the Internet and use it will be the ones to experience the Cycle. If the Internet does indeed continue its dominance in the market for telecommunications, it will support the claim that money and power fuels the Cycle. AT&T and Apple had personal monetary goals and stumbled while the Internet has kept its control in networking because it has no financial greed tied to its success. Money does make the world go round, but it is said to be the root of all evil. Large companies must be aware of the Cycle and not allow too much financial power to blind them in their decisions and thus turn their successes into failures.
Works Cited:
Harris, Mark. "ITunes Store History - Background to the ITunes Store." Digital Music - News - MP3 Downloads. Web. 04 Feb. 2011. <http://mp3.about.com/od/history/p/iTunes_History.htm>.
