Presented by Professor Ross Anderson with responses by Carl Shapiro, James Aquilina, and Anupam Chander.
The Snowden revelations teach us that many of the world’s governments share intelligence behind the scenes. Thirty years ago, a non-aligned country like India could happily buy its military aircraft from Russia; nowadays, although it still buys some planes from Sukhoi, it shares intelligence with the NSA. A rational actor will join the biggest network, and the Russians’ network is much smaller. This points us to a deeper truth: that information economics applies to the public sector, just as it applies to private business. The forces that lead to pervasive monopolies in the information industries – network effects, technical lock-in and low marginal costs – are pervasive in the affairs of states too, once we look for them; they are just not yet recognized as such. There are many significant implications, from international relations through energy policy to privacy. Network effects make regulation hard; the USA failed to protect US attorney-client communications from Australian intelligence, just as Australia failed to protect its own citizens’ personal health information from the NSA. There are some upsides too; but to identify and exploit them, we need to start thinking in a more grown-up way about what it means to live in a networked world.