THE COMMERCIALIZATION OF THE INTERNET AND THE STANDARDS PROCESS

A number of observers have pointed out that the decisions of the IETF are, or can be, influenced by commercial considerations. For example, Crocker has noted that, ‘[t]he IETF’s growth is proving a fundamental challenge to its style of operation...

Lerner and Tirole make a similar point when they note that:

[...] while in the first decades, engineers largely did participate in the IETF as objective indi­vidual experts, regardless of their corporate affiliations, and the agendas of these firms and decisions were largely driven by technological considerations, today this has changed somewhat. The much greater stakes associated with the adoption of particular standards... implies that pressure is put on engineers in some cases to conform to corporate priorities in the decision­making process. (Lerner and Tirole, 2004, note 6)

However, they conclude that ‘efforts by corporations to shape the [IETF] standard-setting agenda were often less successful’ than similar efforts to affect the ITU standards process.

Weiser goes even further by claiming that:

[...] it is important to understand that the common conception of the Internet rests in large part on a community that can enforce norms committed to open architecture and nonpro­prietary development.

Simcoe indicates that the standard-setting process will slow ‘when SSO participants favor specific technologies because of development lead times, proprietary complements, or intellectual property rights’ (Simcoe, 2012, pp. 305-6).²³ Specifically, he notes that ‘the empirical results suggest that the IETF’s evolution from a quasi-academic institution into a high-stakes forum for technical decision-making led to increased politics and a slow­down of consensus decision-making’ (ibid., p. 330).²⁴ He also concludes that:

[...] low level protocols, such as IP, were already established by time of rapid IETF commer­cialization and remained relatively stable as higher level protocols were built on top of them. Rent-seeking was most pronounced at higher levels because that was the locus of innovation, where new applications created demand for new protocols which threatened the profits (or sunk investments) associated with proprietary solutions. (Simcoe, 2012, pp. 329-30)²⁵

Finally, several of the founders of the Internet noted that:

[...] the architecture of the Internet has always been driven by a core group of designers, but the form of that group has changed as the number of interested parties has grown. With the success of the Internet has come a proliferation of stakeholders - stakeholders with an economic as well as an intellectual investment in the network. (Leiner et al., 2003)

The increased importance of commercial interests in the Internet standards process raises three potential issues.

Second, the presence of competing commercial interests within the IETF can make achieving ‘rough consensus’ more difficult, thus slowing the standards process. Moreover, firms that are dissatisfied with the outcome of the standards process can either attempt to have their technologies become de facto standards, by encouraging their adoption by other firms, or seek out other standards organizations that may be more amenable to adopting their preferred alternative, an activity that Lerner and Tirole have referred to as ‘forum shopping’. Although this is an unlikely outcome in the case of the Internet - and, as we have noted, attempts to have proprietary technologies adopted as standards have failed in the past - this outcome cannot be excluded entirely. Indeed, there are a variety of strategies that a firm can pursue that have succeeded in other contexts. These include, as outlined in the introduction: (1) building an early lead over competing standards, perhaps by offering low prices to early adopters, in order to influence the choices of later adopters; (2) attracting the suppliers of complementary products to the standard in order to increase the attractiveness of the standard relative to its rivals; and (3) committing to low future prices in order to provide assurance that the standard will be widely adopted.²⁷ Vendors whose technologies have not been chosen by the IETF may attempt to pursue these strategies.²⁸

Finally, the standards process can be distorted for anticompetitive purposes. Among the ways in which such behavior has been alleged to have occurred in the past are:

(1) exploiting an employee’s position in an SSO to favor a particular technology;²⁹

(2) ‘packing’ meetings of an SSO with new members in order to influence the outcome of a voting process;³⁰ and (3) disclosing the existence of intellectual property rights only after industry participants are ‘locked in’ to a technology that is included in the standard.³¹ Moreover, even the threat of antitrust liability can affect the standard setting process if an SSO fears a legal challenge to its decisions by sponsors of technologies that have not been included in a standard.³² Although the IETF has attempted to anticipate these concerns, they cannot be ruled out altogether.

Most fundamentally, the increasing commercialization of the Internet, which implies that standardization decisions can have significant economic effects, has significantly affected the informal, meritocratic, technocratic, and democratic character of the tra­ditional IETF standards process. Although that process has had a remarkable run, commercial considerations are coming to play an increasingly important role in IETF deliberations.

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