The Unintended Consequences of the ‘Free’ Internet

Apple criticism of Google, Facebook highlights harmful side effects of ad-supported services

Three weeks ago, Apple Inc. chief Tim Cookripped into technology companies that “carefully assembled, synthesized, traded, and sold” then “weaponized” their users’ data. “These stockpiles of personal data serve only to enrich the companies that collect them,” he told a receptive audience in Brussels.

If executives at his unnamed targets— Facebook Inc. and Google parent Alphabet Inc. —rolled their eyes, you can understand why. Mr. Cook is, after all, talking his book: Apple makes its money by charging premium prices for its products. Google and Facebook make theirs by giving away their products and then selling ads.

Think about why price matters: It’s how the market rations precious resources. A price signals to suppliers how much to invest in a product. It’s how a consumer decides whether that product is the best use of her budget.

A price of zero cripples that rationing role. When it comes to generating volume, free is a dream; when it comes to quality control, it’s a nightmare.

Of course, “free” comes in many forms online: Wikipedia is a labor of love. Many companies offer a free entry-level product in hopes of selling a premium version later.

This was not foreordained. “Free” grew out of tech’s early socialist ethos, according to Jaron Lanier, a computer scientist who was there at the time and went on to pioneer virtual reality. “We, the idealists, insisted that information be demonetized online, which meant that services about information, instead of the information itself, would be the main profit centers,” he wrote in his 2013 book, “Who Owns the Future?”

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