Will the unthinkable happen on the internet?

Internet users – myself included – have got used to relying on free online services which rely heavily on either online advertising or investors being willing to put up large pots of money even when there isn’t a clear way of turning users into income.

Many of the services have become such a key part of their users’ lives that their failure is often unthinkable to people. What would happen if you woke up tomorrow and discovered Facebook or Flickr or Twitter or Google or one of a score of other major free services had gone bust?

Well, you’d probably  have more time on your hands to get away from the computer and enjoy a bit of walking in the fresh air … but it would also cause widespread disruption and angst.

Looking at the current economic outlook, it’s hard to see how we can get through the next 18 months without some dramatic fall out.*

There is a double-squeeze building up for internet firms. The credit crunch has not yet had much of an impact in restricting the availability of funds for the high-tech sector, but as it continues to bite and financial institutions look to rebuild their balance sheets, it is easy to see how the flow of new finance could dry up.

Second, there is no reason to think that internet advertising will be immune to general economic slowdowns. In previous recessions the fallout for the advertising industry has been quite vicious in many sectors; for example, a good rule of thumb for local and regional newspaper advertising has been that in downturns you lose 50% of your ad revenue in the first year, and a further 50% the next year for example. The length of time since the last serious advertising recession, combined with the youthfulness of many internet firms and their staff, means it would be no surprise if we find out that several have financial models which are essentially based on the assumption that the bad times are no more.

If a major free internet service faces going bust, it may be bailed out by another firm, but there’s no guarantee – and no certainty that everyone’s data will be seamlessly moved over to any new, merged, ongoing service. So in the meantime – an extra backup or two may be a wise move.

* Note: please bookmark this post and in 18 months time come back to it and either say, “Why, that Mark was a damn fine sage, wasn’t he?” or “Someone must have really disliked Mark to hack into the website and plant such a daft story as that in his name.”

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This entry was posted in Online politics.


  • David Heigham 30th Sep '08 - 11:19am

    Sensible. In many internet services there is a hidden chain of suppliers on whom the service depends. If one goes down or gets temporarily paralysed, Yo uwill be glad of your back-up – and it is low-cost.

  • Using “cloud” or online services to both store and manage large parts of your data is not the wisest of things to do.

    Given how we as a party are placing a big emphasis (and rightly so) on liberty and opposition to the big brother state, I would have thought many (most) of us would be wary of such online services.

    Privacy policies notwithstanding I’m very reluctant to give so much of my personal and sometimes confidential details over to a third party where I have no realistic control over what they do with my data, nor, as has been pointed out, if that data would still be available when things go wrong.

    It’s worse once you add in such twists as secret FBI subpoenas with gag orders, let alone when much of the data might be on servers in jurisdictions with considerably less privacy safeguards than those we have here; yahoo! and google have already delivered human rights activists into the jaws of oppressive governments. Individuals who trusted those companies with their data.

    With emails, calendar information, todo lists, contacts (friends), pictures and even documents/spreadsheets stored on remote servers it’s very easy to build up a complete picture of someone’s life without ever having to go near them or enter their house or place of work. Add that most of the data is not even protected by UK privacy and data protection laws and you have a disaster waiting to happen.

    While no system is safe from compromise, some systems, as Sarah Palin discovered, are much easier to bypass than others, especially those open to everyone.

    I hope that LibDem members and activists are wise enough not to use google docs, email or other such online services for sensitive/confidential party (or even private) correspondence or documents.

    The various services on offer are great and convenient, and I use most of them myself, but I’m also careful to only use them for those things that I don’t consider confidential or private; always keeping any important information on systems I directly control (my own computers) and more critical systems (email) with companies based in the UK (like your ISP) that have to follow our laws and where if something goes wrong I’ve actually got a chance (however slim) of sorting things out or seeking redress.

  • MartinSGill 30th Sep '08 - 6:46pm

    Google is very careful to ensure it operates legally within each jurisdiction but requires court orders, etc to pass over data—can you give me a link?

    My mistake, Google never did that. It’s made worrying decisions in other instances though (see here).

    The point to make though is that Yahoo! essentially received a court order (or it’s Chinese equivalent) and handed over the data. From your own statement Google would do the same if asked.

    I see nothing from stopping someone making up a bogus charge, bribing a judge in some third world dictatorship and demanding data from google, which it would be legally obliged to hand over. You can’t really expect google not to, it’s not really google’s job to judge whether the laws/institutions in one country or another are fit for purpose or morally valid.

    HTTPS does not make your account secure, it merely prevents eavesdropping on your connection (if you remember to turn it on). Who knows how the data is stored at the other end and who can gain access. How secure is your password and the password reset facility? Google indexes (or at least scans) every single one of your email’s contents to provide the ads, just how/where is that stored and what does google retain?

    To ensure I can keep the same email address (no matter the ISP or email service I happen to be with) I pay £10 every two years for my own domain. Much nicer than public email accounts that automatically get higher scores from spam detectors simply because they are publicly available.

    I think the many free services (especially google’s) are excellent. The problem is that most people that use them are never aware of the potential problems they might cause them.

  • MartinSGill 30th Sep '08 - 8:55pm

    All are fair points, and in truth I’m starting to trust google more than the UK government.

    I wonder at which point all the people with money will start leaving to go to more free countries. I don’t think our government’s oppression will stop until they upset big business. Joe public just doesn’t seem to care enough.

    There’s a 2 year prison sentence for refusing to give up a password. Probably one of the most stupid laws I’ve ever heard of. Any serious criminal (terrorist etc) will take the 2 years instead of the 25 for the information the police might find if he hands it over.

    Given how evil and stasi-like the UK government is becoming I’ve been seriously considering fully encrypting my PCs, mostly just to spite them.

    I recommend TrueCrypt for protecting stuff. Great tool.

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