Google's Eric Schmidt bristles at Nicolas Sarkozy call for Internet rules

The French president today called for wider global regulation of the Internet. Tech execs howled, but you know what? Sarkozy is right.

French President Nicolas Sarkozy is calling for wider global regulation of the Internet, and of course techies are in a tizzy, arguing that governments should not try to meddle in their affairs.

No sooner had Sarkozy made his case today at the e-G8 Summit conference in Paris than Google Chairman Eric Schmidt, speaking at the same conference, fired back. “You want to stay away from regulating new industries,” he said. “Before we decide we need some regulatory solution to many of these problems, let’s see if there’s a technological solution.”

This is ridiculous. But it’s the case that tech executives make whenever any kind of Internet regulation comes up.

They argue that the Internet is so new, and so fast-moving, that regulation will only slow things down and hurt everyone. Also, they argue that technology is so complicated that lawmakers can’t understand it, and therefore should just let the smart people in Silicon Valley decide what’s best.

Schmidt delivered a version of that one today, saying, “Nobody would want Internet growth to be significantly slowed because of some stupid rule.”

Maybe I’m a cynic, but I suspect that Schmidt is not as concerned with what’s best for us as he is with what’s best for Google.

The other argument techies make is that technology is not like other industries, that it has some magical properties that make it special and unique and therefore not suited to regulation. Of course, this is absolute rubbish as well. Internet companies should be subject to the rule of law, just like all companies in all other industries. Did anyone argue, at the dawn of commercial flight, that aviation was so new that the government should not try to set standards? Maybe someone did, but let’s all be glad nobody listened.

Tech companies are just like companies in every other industry. Executives like Schmidt argue against regulation for the same reason that power plant operators argue that the government should not impose controls on smokestack emissions. It’s not the principle of the thing; it’s the money.

Any kind of regulation on the Internet means more work for companies like Google, and therefore represents a potential threat to profits. That’s the real bottom line in this debate. All the rest—the stuff about squelching innovation, and hurting consumers—is just kabuki theater.

As for Schmidt, today he’s arguing against government interference, but back in the 1990s he was arguing just the opposite. Then, as an executive at Sun MIcrosystems and then Novell, Schmidt was one of the loudest voices screaming for the government to step in and regulate Microsoft. He was not alone. In those days most of the Valley thought government regulation of tech companies was a wonderful thing—as long as the regulation was aimed at Microsoft.

The thing is, they were right. Microsoft was abusing its monopoly in ways that squelched innovation. And the free market was not going to take care of the problem. Government action was needed.

But now Schmidt is the one running a monopoly, and guess what? Suddenly he thinks governments should stay away and let the free market do the work of keeping everybody in line.

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Well, duh. Of course he feels that way.

Technology may change, but capitalism doesn’t. Neither do capitalists. The guys running today’s big tech companies are just like the guys who ran steel companies and railroads and automakers—they will do anything they can get away with in order to maximize their profits. That’s not because they’re evil. It is the nature of their job. It is their duty to their shareholders.

The guys running today’s big tech companies are just like the guys who ran steel companies and railroads and automakers—they will do anything they can get away with in order to maximize their profits.

Google and Facebook, both of whom are represented at this week’s conference, have created a business model in which the only way they can make money is by gathering data on users and finding ways to mine that data and extract value from it.

They have set things up in such a way that the more data they get, the more money they make. Do you really think that, left to their own devices, these companies will do the right thing when it comes to user privacy? They have no reason to guard your privacy—and billions of reasons to invade it.

Well, they say, but you can trust us. Oh really? Just two weeks ago Facebook got busted running a sneaky, sleazy smear campaign against Google.

Yet these are the people who argue that governments should leave them alone to manage their own business without interference.

Let’s hope for our sake that this doesn’t happen.

Dan Lyons is technology editor at Newsweek and the creator of Fake Steve Jobs, the persona behind the notorious tech blog, The Secret Diary of Steve Jobs. Before joining Newsweek, Lyons spent 10 years at Forbes.