(Click image to enlarge.)

Now, I know this is how people monetize content online. That’s just how the internet works. But, it doesn’t mean I can’t find it incredibly annoying, too…

Note: I originally prepared this essay for a class in mid-October 2006. In the two weeks after its writing, Microsoft and Mozilla both released substantial updates to their browsers. This post, therefore, does not aim to give a rigorous comparison of the two browsers but rather persuade IE users that Firefox is a sensible alternative.

The internet has fundamentally changed the flow of information in our nation and around the globe in little over a decade. This has resulted in an economic transformation and, as Thomas Friedman sees it, a flattening of the world. However, the internet is still in its infancy, and the tools we use to communicate, seek information, and do business via the web are still far from perfect. The web browser – the very piece of software that bridges the gap between humans and network computers – is one such tool. Currently, the global market for browsers is dominated by Microsoft Internet Explorer. However, I believe another product, Mozilla Firefox, is superior due to its social benefit, security advantages, and user functionality.

First, using Firefox has distinct social utility. To understand exactly why this is so, I will first give a brief history of the development of the browser. Netscape was the world’s first commercialized web browser. Released in the early 1990’s, it quickly caught fire as more and more consumers adopted network-based computing. Netscape IPOed in 1994, thereby ushering in the dot-com era. In fact, Thomas Friedman named the Netscape IPO as one of the 10 primary events that spurred the globalization era, proving just how important the company was to the development of the new economy. At this point in time, the company boasted a market-share of over 90%; however Microsoft was prepping for battle.

Microsoft launched Internet Explorer (IE), its Netscape competitor, in late 1998. Bundled with its ubiquitous Windows franchise, IE quickly took the forefront in the browser market. Some claimed that its business practices were unfair, even illegal, but Microsoft made it through court unscathed by antitrust accusations. By the early 2000s, IE dominated the market with a 95% share – a de facto monopoly. This dominance was not ideal for the average internet user, however. Set with an apparent success in IE, Microsoft lacked the incentives to bring new innovations to its browsers. In fact, the company did not release a new version of IE in the period from 2001 to 2006, a lifetime in the fast-paced technology world. By downloading Firefox for free from the web, users encourage innovation with browsers by fostering more competition. More competition, in the end, results in better products for internet users.

Advocates for Microsoft and IE will dispute the benefits of increased browser competition and will argue that the company actually did release a steady flow of new browser enhancements in the period from 2001 to 2006. However, the fact remains that Internet Explorer version 6 was released in March 2001, while Internet Explorer 7 was just made available to the general public last week, nearly five and a half years later. Even Dean Hachamovitch, Microsoft’s general manager for browsers, conceded to CNN that the “company could have done more sooner” with IE.

Second, Firefox offers better user functionality than Internet Explorer. Firefox was the first browser to incorporate tabbed browsing, which lets users open multiple Web pages in a single browser window to eliminate desktop clutter. It also pioneered integrated search capabilities by including a built-in search bar that lets users conduct searches without visiting the actual homepage of the search engine. In terms of speed, Firefox is generally faster than IE in loading web pages and browsing back and forward from a particular site. In addition, “improvements to the engine that powers Firefox deliver more accurate display of complex Web sites and support for new Web standards” (Mozilla.com). Some argue newly released Internet Explorer version 7 offers many innovative features that eliminate Firefox’s functional advantages. However, Colin Teubner, an internet analyst with Forrester Research, comments, “A year ago Firefox was head and shoulders above Microsoft’s current offering, and I think even with IE7 [Microsoft] is mostly playing catch up.”

Third, Firefox is more secure than IE. This is partially due to the open source nature of the browser’s development, which lets any member of the public view and improve the Firefox code. As a result, the browser essentially boasts a vast “community of developers and security experts working around the clock to monitor security issues” (Mozilla.com). These developers and web experts have created a browser that offers better security architecture. Firefox eschews well-known infection paths, such as the ActiveX system. Further, it automatically notifies users when they attempt to download .exe files, commonly associated with computer viruses. All of this has led some experts, such as Wharton professor Dan Hunter, to comment that “The Internet Explorer is a terrible browser and it has security problems. Firefox is just a better browser, but I would argue that its market share gains have come because spyware and other hacks plague Explorer.”

Those who favor Internet Explorer disagree with the premise that Firefox is more secure. They believe that the appearance of security flaws in IE is primarily due to the popularity and pervasiveness of the browser itself and that any software scrutinized as often as IE would undoubtedly reveal flaws. However, backers of this argument commit a straw man fallacy. True, the widespread use of IE correlates to increased security breaches. But, as web expert and writer Paul Boutin points out, hackers will primarily target IE because its user-base spreads viruses more quickly. Rather than a fault in Firefox, though, this is really just another reason to stray from IE.

To conclude, I urge you download and surf the web using Mozilla Firefox. Resist using Microsoft Internet Explorer in lieu of a browser that is socially beneficial, faster, innovative, and more secure.

Granted, Facebook has a lot going for it. It’s the 7th most visited site on the whole internet. It’s adding 20,000 user accounts every day. It’s got a passionate fan-base of over 7.5 million. It’s supposedly generating $1 million in revenue every week. But two billion dollars? It all seems a little ridiculous to me. Didn’t anybody learning anything from the last dot-com boom? You’re telling me that every user on Facebook is worth somewhere over $100 each? I didn’t make a DCF model on Facebook, but suffice to say – I’m skeptical.

Now, Zuckerberg and Co. have a rebellion to squash. Last week, Facebook rolled out News Feed and Mini-Feed, features that made it even easier to anonymously stalk friends. The very fan base that made the site so valuable suddenly turned against it, using [what else?] Facebook Groups to rally for greater privacy controls.

Will Facebook get $2 billion? Despite my reservations on its actual value, I’m not so sure it won’t, especially after the lucrative deals MySpace inked with Google and Yahoo to provide search services. But I do believe the site is in very dangerous waters. Social networking on the web can be a fickle enterprise (ask Friendster), and even the smallest of events can make your site (gasp) uncool. Mr. Zuckerberg, tread carefully.

Network neutrality has recently emerged as one of the hottest issues in Washington. In fact, its popularity reached a peak in early-August when Jon Stewart of the Daily Show fame featured the topic on several successive shows, primarily to ridicule famed porkbarreler, Senator Ted Stevens (R-Alaska).

Senator Stevens is Chairman of the Senate Committee on Commerce, Science and Transportation, a body that holds much of the power in regulating the internet. On June 28th, 2006, as he criticized a proposed bill, the Senator gave this little ditty on the Senate floor,

“Ten movies streaming across that, that internet, and what happens to your own personal internet? I just the other day got…an internet was sent by my staff at 10 o’clock in the morning on Friday, I got it yesterday. Why? [...] They want to deliver vast amounts of information over the Internet. And again, the Internet is not something you just dump something on. It’s not a big truck.

It’s a series of tubes.

And if you don’t understand those tubes can be filled and if they are filled, when you put your message in, it gets in line and it’s going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material.”

Of course, Jon Stewart could not pass up such a golden comedic opportunity, and the following are two YouTube links to a Daily Show analysis of Stevens and net neutrality.

http://www.youtube.com/watch?v=fm3Icamb6yM

http://youtube.com/watch?v=LuZ7Dfd_-Q0

You can’t help but laugh; I agree. But in the midst of all this is a very important issue, one that could dramatically affect the evolution of the internet. After all, regulating the internet is no joke – this technological marvel has has transformed the World economy since the early 1990s and continues to revolutionize the way we communicate, seek information, and do business. Below I attempt to give a brief overview of the issue, one I hope will sift through many complexities provide a basic insight into network neutrality. For more detail, please see my paper Network Neutrality In a Nutshell, linked to here.

What is network neutrality?

It’s a debate over the regulation of the internet. We’ll start from the beginning. A computer network consists of two or more end-user computers that are connected in a way that allows data to be transmitted between them. Those who own the physical wires that connect these computers argue that they should be able to pick and choose which forms of data pass through their property. Others call this discrimination and argue for network neutrality, the idea that all data transmitted over the internet should be treated equally.

What does that mean?

It means that the broadband operators (cable companies like Comcast and phone companies like AT&T) want to charge content providers like Amazon or Yahoo for sending data over their wires. Theoretically, these cable and phone companies could create a tiered internet and auction off the right to higher-speed data transmission to the highest bidder. The could even block access to websites that didn’t pony up enough cash.

Why is this a problem?

Because the internet has always been a platform where all websites were equal. This was why companies like Yahoo or Craigslist could start on a shoestring and end up revolutionizing an industry. Without net neutrality, start-ups may be precluded from ever hitting it big. Who knows how many Googles would potentially be squashed because they didn’t possess the initial capital to reach customers?

What is the counter-argument?

Those against net neutrality believe that it presently poses little real threat. They believe that imposing strong regulation on the internet’s complex technology would probably do more harm than good. In fact, they see the issue revolving around innovation and ask why a government would impede on a firm’s ability to price services creatively.

How could net neutrality affect the average internet user?

Say you use Vonage, a popular service that allows customers to make telephone calls via the web. The problem is, you connect to the internet using AT&T. If it so chose, AT&T could block you from using Vonage, effectively forcing you to purchase its more expensive long-distance service.

Alternatively, AT&T could give preference to users of Vonage (over say, .mp3 downloaders). This would improve the quality and reliability of a Vonage connection. Thus, network discrimination could either be a windfall for VoIP or hinder its growth altogether, depending on the manner of the discrimination.

Have we ever seen a network situation like this before?

Actually, yes. In the late 1800s, Western Union, the telegraph company, essentially generated a monopoly on the transmission of telegraph messages throughout nation. This was problematic in two ways. First, Western Union focused on business customers and failed to bring new innovations to the telegraph. Second, the company directly discriminated when it operated on an exclusive contract with the Associated Press in the 1860s. Other news services lost popularity when they could not afford the steep telegraph prices charged to all but the AP. The result, Tim Wu argues, was a “monopoly that was not just dangerous for business, but dangerous for American democracy,” one that effectively promoted the politicians it liked and engaged in censorship.

What is the current status of net neutrality?

This is complicated. The FCC is delegated authority from Congress to regulate our nation’s communications networks. However, in the 2005 case National Cable & Telecommunications Association v. Brand X, the Supreme Court reduced the power of the FCC to regulate broadband services. Legal scholars now believe that it would take Congressional action to enact strict network neutrality in our nation. This is why the debate has become so heated.

What will happen?

I’m not sure. There have been six bills introduced to Congress since May relating to network neutrality. In general, the stronger the bill’s anti-discrimination language, the further it is from becoming law. In fact, I think it is extremely unlikely that Congress would pass any piece of legislation with rigorous neutrality provisions in the near future.

With that being said, I do not think this is necessarily bad. I believe network neutrality is a solution awaiting a problem, one that attempts to resolve an issue that currently poses little real threat. At present, our nation’s network operators are doing a wonderful job building the high-bandwidth infrastructure that forms the foundation of the internet’s growth. If we see market abuses in the future (similar to those by Western Union), then it would be time to impose regulation. But not before then.

Are you done with this shameless plug of your paper?

Yes.

Grocery stores? Merchandisers? Stock brokers? Travel agents? Obsolete and gone. No longer would you leave your house for one of these institutions – no, heck no. They would be just one click away. Everything you could have ever wanted, they told us, while in your pajamas.

Oh, and if you didn’t recognize the new e-revolution, respect it, and mold your new business model… well, suffice to say, you would be replaced. The new measure of wealth was not cash flow or revenue or even net income, it was the number of click-throughs and hits your site generated. These metrics, they told us, were the new gold standard. And this was the new gold rush.

Of course, it couldn’t last. The web may have changed the way we live, but it couldn’t change the way we do business. And business, in the end, always comes down to providing things that people want to use. Therein lies the tragic flaw of the internet in the 1990’s. No, it turned out, nobody really wanted to buy dog food online and have it delivered to their home. And even if they did, the internet would play only a very small role in the business. In truth, it would be a logistics company.

But nobody really wanted to hear about logistics; building websites was much more interesting. Who really liked talking about supply chains, anyway? So we gave up the pajama dream.

In the end, they were actually right – you could put a price on traffic. Well, partially right. The value of traffic was not in keeping visitors trapped on your website, like a savvy retailer tries to keep a customer inside its doors as long as possible. Instead, traffic was valuable because of one inherent, simple reason.

The link.

Hyperlinks provided popular websites the ability to network with those that wanted more visitors, for a price of course. This tidy arrangement, upon closer inspection, looked an awful lot like something else. It was advertising.

Ironically, the beauty of the internet was not that it created new industries but transformed old ones. The staid, stodgy world of advertising would be no more.

And the birth of Web 2.0 was upon us…

Now, Google vs. Microsoft?

That’s right. The software bohemoth known as Microsoft is preparing for an epic battle against one of the internet’s most beloved little [or not-so-little-anymore] search engines. This all started several years ago when Bill Gates noticed that Google wasn’t looking for the typical information programmers needed to run the world’s best search engine. Instead, Google was trying to hire an increasing number of system engineers. This could only mean it wanted to expand its services well beyond searching, into a new breed of programming — software that lives on a network instead of your PC. This was Microsoft’s turf.

Fast forward to today. Although Microsoft’s bread and butter, its ubiqiuous Office and Windows franchises, are as popular as ever, it is still trying in vain to diffuse the “don’t be evil,” anti-Microsoft buzz that pervades the Internet. This is exemplified in the simply-constructed, user friendly tools of Google, including Picasa, GoogleNews, Google Print, Gmail, and, yes, Blogger. Microsoft still maintains that its Hotmail and msn search sites are on the rise, but they lack the innovation and word-of-mouth surrounding the Google suites.

Despite this, investing in Microsoft might be a better decision, especially with Google’s stock price exponentially increasing to above $400 per share and Microsoft’s valuing at about $27. Looking into market capitalization, Google is now worth about $112 billion on paper, just about half of Microsoft’s total value. And yes, Google may be the new cash cow of the internet, but Microsoft is still king, bringing in over $1 billion in free cash flow each month. Add in the relative EPS for each — $20 for Microsoft and $85 for Google — and it becomes clear that your money might be better served with the folks from Redmond.

Still, what will become of this new e-rivalry? Rumor swirls that Google is developing a new browser, a new operating system, a new word processor, any number of revolutionary tools for “the internets.” Coupled with its reputation for quality, this mystery lends itself to overhyping. But right now, and for the foreseeable future, we must remember that Google sells ads, and Microsoft sells software. Until Google can create new revenue streams, my bet is with the guaranteed future cash flow of Microsoft.