April 18, 2022
As an economist I find the whole Parler situation quite intriguing. It is a classic victim of monopolistic power, and it’s survival demonstrates the illusive nature of monopoly. Parler is part of the monopolistic fringe, small companies that eat away at the edges of empire.
Starting January 26th, 2021 I began posting articles on the deplatforming of Parler, a chat service that is in direct competition with Twitter. Accused of encouraging the January 6th events, Apple and Google removed the application from their app stores. While that would definitely be an inconvenience to Parler, they still had a web site where interested customers could download the apps to their smartphones. Then came the dispensational events. First, Amazon Cloud Services decided to suddenly pull the plug on Parler, turning off all the server data. When I first started tracking this issue, Parler was yet to retrieve the data from those storage servers. User data and much of the code was inaccessible. Second, GoDaddy suspended the DNS forwarding1 of the Parler.com web address.
While I have an account on Parler, I have rarely used it for several months because I was not interested in devoting a portion of my life to tracking “tweets.” To be quite frank, the tweets I follow are those of birds. But as an economist and IT specialist I saw the deplatforming of Parler as a tectonic event, a shift in the debate regarding what defines a free internet. While rarely mentioned, GoDaddy’s suspension violated one of the most fundamental “principles,” if you will, of the Internet. Registering a DNS address should be a simple mechanical operation, pointing a web address to an IP address. That’s it. In totalitarian states, such as China and Russia, an IP address can be squashed at a whim if the hosting site is resident within those countries. What GoDaddy did was violate a contractual trust – bringing into question whether it will be a reliable site for registering DNS addresses in the future. I addressed this issue specifically in my article written in September 2021.
Amazon’s actions, like GoDaddy’s, were monopolistic actions of the first order. They will most likely go down in history alongside the robber barrens of the late 19th century. Economists who teach the subject will no doubt use the recent events as a textbook example of monopoly power. Overnight, a company that reportedly hosted over 20 million users, vanished. They vanished not because of bankruptcy or for violation of the law, but because a handful of Big Tech companies decided they should not exist.
Since then Parler has emerged like a Phoenix. It owned the DNS registration so the company found a different registration site. Similarly, the same was done in re-engineering the server platforms, using an alternative cloud provider. But their battle continues on the legal front. They have switched strategies by dropping the federal law suit, redirecting their energy in a suit filed in the Washington state courts against Amazon. I am not a legal expert, but it no doubt reflects a more winnable direction. The federal judge ruled that without ample evidence of monopolistic practices, it was impossible to address this as an anti-trust issue. Obtaining this evidence is the problem. He therefore felt he could not compel Amazon to host anyone.
There is a larger debate surrounding how the federal government can address the Big Tech problem. From following the news, it is apparent that Big Tech is a bi-partisan concern. There is no clear consensus on what to do about it. An interesting twist to the Big Tech problem is that more and more lawmakers are seeing platforms like AWS, Facebook and Twitter as “common carriers”, conduits of information in much the same way that telephone companies carry voice calls and railroads carry freight. Big Tech, telephony and railroads have all had numerous examples of monopolistic practices and each of them generated their own effects on the political landscape.
As the dust has settled from January 6th, and the subsequent FBI investigation has provided findings, it is clearly evident that what Parler was accused of was fabricated hype. Good propaganda is effective because it is based on an element of truth. Parler, in its recent response to Congress, did not hide the fact that some really bad apples were using the platform. What was startling was that Parler had reported to the FBI on 5 occasions postings that were considered a security threat. This was all before January 6th. FBI investigations have established that the primary social media used by the rioters was Facebook and Twitter, with Parler barely showing up on the radar. In essence, the facts clearly demonstrate that the actions of Apple, Google, Amazon and GoDaddy were simply the use of raw monopoly power to destroy a rising competitor to Twitter.
Combined with cancellations across the board to various authors, news services, politicians and public interest groups, the true effects of the Parler deplatforming will resonate into the future for years to come. In a previous article, I discussed how writers and other businesses will need to develop a disaster recovery plan if they consider that anything they do poses a risk of cancellation. At bottom – Big Tech cannot be trusted. It is a sad commentary on how our country has devolved.
To round out this discussion, I recall a friend of mine who returned from a trip to Vladivostok. He and colleagues from the State of Alaska had ventured over to East Russia to explore business opportunities. This was in the late 2000’s when Russia still held out the possibility of being a new place to do business. What they found did not impress them. As one person put it, Russian law was like negotiating with a crime syndicate. “They can’t be trusted.”
Trust is a fundamental component of the capitalist model. That trust is bounded by the Rule of Law, so the law evolves to protect us when that trust is violated. That is where we are today. In my field, which is writing, authors are today experiencing a great deal of angst. They cannot address difficult issues because publishers cannot risk being “canceled.”
Legal cases have a way of transcending politics. It is most peculiar that one of the results of the investigations into the events of January 6th is that a great deal of evidence has been presented. As noted above, Parler was not the only tech platform at the dance. Twitter was a major conduit of communication amongst the crowd that stormed the Capital. One of the interesting outcomes of the investigation is that it makes the Big Tech purge of Parler even more suspicious. Parler filed a subpoena against Twitter to provide the following information for their case against Amazon.
Twitter's Content Moderation policies and procedures.
Documents analyzing Twitter's Content Moderation activities.
Communications with Amazon concerning Twitter's Content Moderation.
Documents evaluating the efficacy of Twitter's Content Moderation relating to the January 6 Capitol Protest.
Alas, at the pace this case is proceeding, the entire marketplace will have changed regarding chat platforms. While Twitter is still the big boy on the playground, nipping at the edges are Telegram, Signal, Gab, Parler, Messenger and Google. Twitter’s stock value has plunged 43% since February 2021.
Just as I was writing this article the Elon Musk affair arose. Musk is portending a hostile takeover of the firm. In the flurry of news coverage, what is coming up to the surface is information commonly available to stock investors but is usually too mundane to notice. Two of the major stockholders of Twitter are Blackrock and Vanguard, what are known as “institutional investors.” The politics of the fund managers is now coming into play, providing some interesting perspectives on how money and power come together, and how censorship in Twitter has affected governance of our country. Twitter buried the Hunter Biden scandal. They had previously censored Donald Trump. Combine those actions with the censorship of conservatives such as David Rubin and the Babylon Bee, you see a major communication platform that is decidedly left-leaning.
Parler is part of the Dan Bongino smorgasbord of alternative platforms to Big Tech. It still lives. According to The Robust Trader, Parler still struggles to regain its active user volume that it experienced in January 2021. It is currently at about 1.6 million active users, about 25% of its peak. Parler revolves in the same orbit as Rumble and Locals. These platforms have now been consolidated under one company, CFVI. A major investor is Peter Thiel, one of the venture capitalists behind PayPal and Facebook. CFVI has a capitalization of $431 million, as compared to Twitter ( $35 billion ), Facebook ( $583 billion ) and Google ( $1.7 trillion). Parler is still taboo on Google’s Play Store.
My guess is that Parler is here to stay unless CFVI suddenly absorbs another chat platform. As noted above, the Gab crowd may be a bit more on the right side of the weird spectrum but the platform is much more vibrant and interactive with other media platforms. Telegram and Signal have the advantage of offering confidentiality, something Parler desires to achieve as well.
As an economist I find the whole Parler situation quite intriguing. It is a classic victim of monopolistic power, and it’s survival demonstrates the illusive nature of monopoly. Parler is part of the monopolistic fringe, small companies that eat away at the edges of empire. The meddling of Big Tech with censorship and demonitization has created a monster that they will not be able to put into a cage. In five years, YouTube will be one amongst many, and Twitter may be reduced to an equal amongst peers in a global market. If Google does not open up the Play Store, it will only be a matter of time before other platforms will emerge to challenge it’s supremacy.
As noted above, I am an old guy who is a bit too asynchronous to get a lot of mileage out of chatty software. But Parler was my first dive into the chat world. It was a bit confusing because the poor engineers were scrambling to reinvent the entire platform. I distribute my articles using the chat platforms and have exchanged information with users. Of the three I currently use, Gab is the most dynamic. Twitter is still being evaluated, but it has fewer features than Gab. Parler, alas, is almost lifeless. One of the reasons for this is the disconnect between actual features it presents versus the past features it provided, and the fact that much of the documentation refers to features that are not present on the platform. I have no ability to participate in groups, no customer support, no ability to verify my account. I found their user document in Duck-Duck-Go, rather than through their platform. It is not to say their user manual was bad. It was actually well written and easy to follow. According to their documentation, verification “badges” are no longer being provided. In my view, if verification is no longer being supported Parler shouldn’t be presenting verification status. It makes it appear that Sean Hannity is “verified”, but other users are not. Last I looked, I am just as real as Sean Hannity.
In conclusion, the Musk threat of a hostile takeover is dispensational for Twitter. If he succeeds, it will result in a total transformation of its corporate culture. If he fails, Twitter will die. What makes chat platforms attractive is the free flow of information, whether it is information we like or not. I can’t find that on Twitter. Parler is on life-support and it will take time before the alternative Internet platforms gain traction. I don’t see a monetization model for Parler at this time. They will need one to survive. I think the verification feature still needs to be pursued so users can distinguish between anonymous contributors and real people and organizations.
The case that is waiting to be tried in Washington against Amazon will also be something to watch, not because Parler may win it, but because of the evidence that is presented in the case. As with the Hunter Biden case, what Americans will see is how powerful individuals controlled the flow of information which influenced a national election. What will be difficult to unravel will be the web of explicit or implicit collaboration between Twitter, Amazon and GoDaddy. The combination of their actions nearly destroyed a competitor to Twitter.
Andrew Torba, owner of Gab, had some very interesting responses to the Musk offer. Stay tuned for what is coming for Twitter.
“Judge refuses to reinstate Parler’s Amazon account,” The Verge, by Adi Robertson, January 21, 2021
“Parler drops federal lawsuit against Amazon — but files another in state court”, The Verge, by Russell Brandom, March 3, 2021.
“Parler LLC vs Amazon”, March 2, 2021
“Parler Just Flipped Big Tech's Jan. 6 Conspiracy Theory on Its Head”, PJ Media, by Tyler O’Neil, March 25,2021
“Parler Letter to Chairwoman Maloney”, Vinson and Elkins, March 25, 2021. Statement to the Committee on Oversight and Reform, U.S. House of Representatives.
“Parler Subpoenas Twitter in Ongoing Case Against Amazon Web Services, Inc. Regarding Anti-Competitive Practices,” TMCNet News, February 23, 2022
"Parler User Stats: How Many People Use Parler in 2022?”, The Robust Trader, April 7, 2022
"Facebook director Peter Thiel invests in conservative rival Rumble”, New York Post, by Theo Wayt, May 19, 2021
1DNS forwarding is a service that is provided by a handful of companies around the world. User-friendly website names (like parler.com) require that their name be registered that provides an IP address for their web site. Parler had their “domain name” registered at GoDaddy. Thus, when GoDaddy suspended their DNS forwarding, it removed Parler from the Internet.
By Eric Niewoehner
© Copyright 2022 to Eric Niewoehner.
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