The Feudal Lords of the Internet

Who elected Visa, Mastercard, and Nick Kristof?

Alexis de Tocqueville

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I’ve been reading Alexis de Tocqueville’s The Old Regime and the French Revolution (L'Ancien Régime et la Révolution for my francophone readers). One section describing pre-revolutionary France’s system of feudal economic privileges reminded me of some other stories floating around the news recently. Namely what’s happening at Pornhub.

But first, let’s review de Tocqueville’s account of how the remnants of feudalism still structured economic life in pre-revolutionary France. While the medieval system, especially serfdom, had greatly decayed by the time the actual revolution happened thanks to efforts by the French state to centralize authority (this is the thesis of the book), feudal lords still had considerable economic power:

The seigniors still levied a toll upon fairs and markets. It is well known that they enjoyed an exclusive privilege of hunting. Generally speaking, none but they could keep pigeons or own dove-cotes. The farmers were every where bound to carry their grain to the seignior’s mill, their grapes to his wine-press. Mutation fines—a tax paid to the seignior on every purchase or sale of lands within the seigniory—were universally in force. On all land, moreover, ground-rents (cens et rentes foncières) and returns in money or kind were exacted from the proprietor by the seignior, and were essentially irredeemable. One single feature is common to all these various rules: all bear upon the soil or its produce; all are leveled at the farmer.

Considering that the economy then was largely agricultural, any rules that “bear upon the soil...leveled at the farmer,” would have the effect of funneling a large deal of economic activity to and through the aristocracy. It’s not just actual rents that were due to these lords, but the ability to do commerce with the land that non-aristocrats were able to cultivate — a literal toll on the markets and fairs where goods were sold, and a tax on every transaction of land (the most important asset by far in an agricultural economy). Even though these lords’ privileges “had lost their political significance...their pecuniary value had been retained and occasionally augmented.”

So what does this have to do with Pornhub? Last week, after Nicholas Kristof wrote about the rampant uploading of illegal material on the site, Visa and Mastercard essentially exercised their privileges as lords of the internet payment infrastructure and banned the site from its “fairs and markets.” 

This quickly threw Pornhub into crisis and it immediately overhauled its operations in order to address the problem, or at least make a show of addressing it. They also said they would accept Bitcoin.

For a company in the e-commerce business, having Visa and Mastercard decline to service you is a fate second to only death — by which I mean being kicked off the web entirely. Pornhub can, and is, trying to implement a Bitcoin payment system, but they desperately need to get back in the good graces of two companies that, while they may have been OK with facilitating smut as long as no one looked too closely, may be unlikely to make a decision to actively choose to do so again and face the wrath of Nicholas Kristof. 

Notice how the government or law enforcement at no point was a particularly important actor here, despite Kristof making clear allegations of illegality. Instead the media and a certain class of companies operate in an indeterminate zone between marketplace participants and the government, giving them a weaker type of authority over commerce (the Times and Visa can’t put Pornhub executives in jail), with a correspondingly weaker checks and balances against their behavior (there was never a Pornhub trial). 

While I don’t know what the future holds for Pornhub, there are two examples that serve as precedent. 

A decade ago, state attorney generals noticed that Craigslist was being openly used for solicitation. They badgered the company about this until Craigslist shut down its “adult services” section despite the fact that the law at that time pretty clearly protected the website. Following a legal change that limited immunities and legal shelters specifically for websites involved in the sex trade, Craigslist went even farther and scrapped their personals section entirely.

Another classifieds company wouldn’t go down so easily. Backpage, which split off from the parent company of the Village Voice, was known universally as a Craigslist-type listing service that was laden with solicitation — and had seen a huge surge in ad postings since Craigslist got out of the business. 

One of Craigslist’s antagonists, Cook County sheriff Charles Dart, had been unable to go after Backpage using his own legal authority so instead he wrote letters to the credit card processors and they eventually decided to no longer service Backpage. Free speech and internet freedom advocates lept to Backpage’s defense, arguing that Visa and Mastercard were becoming de facto internet cops and Dart was even told to stop with his payments campaign by a federal court. But the damage was done. 

Backpage tried to use Bitcoin and eventually fell into far more serious legal trouble. This helped spark the movement for writing an explicit carveout in Sec. 230 of the Communications Decency Act, a law that (roughly) protects online publishers and platforms that host user-generated content from being legally liable for what their users post and lets them moderate the content without assuming responsibility for all of it. Backpage’s chief executive was arrested for pimping, the website was shut down, and its two founder-shareholders continued to fight in court. 

For better or worse, first amendment jurisprudence protects pornography, even if companies like Pornhub are vulnerable to losing their access to the “fairs and markets” of online businesses. OnlyFans, at least so far, seems to have stayed out of the sights of crusading reporters (instead, VCs tweet about what a good business it is) and credit card companies have no problem processing payments for them. 

Even if Pornhub manages to stay ahead of the law, it has already had to overhaul itself in response to, essentially, Nicholas Kristof and the credit card companies. While it doesn’t seem out of the question that law enforcement and political actors could look into Pornhub as well (I’m sure they already are), the rules of the road are being made, in real time, by an uneasy tripartite coalition of the media, the public, and the for-profit financial infrastructure. 

This post has already gone on long enough, but I wanted to flag this issue as it relates to a lot of the fights people are having over broader issues of free speech and governance. As has been the case historically, what happens in porn is usually happening for the rest of the internet soon enough, and you can easily see parallels between the situation at Pornhub and other companies that don’t — and do — aggressively moderate the content uploaded to their platforms by third parties. 

While the parallels with Twitter and Facebook are obvious, I want to also contend that other types of businesses serve a similar role as the credit card companies or the Times: companies that give their opinion on the creditworthiness of corporate and government borrowers, companies that make lists of stocks and bonds that other people use to create mutual funds and exchange traded funds, and massive companies that invest other people’s money in those listed companies.

In short, who elected Moody’s, MSCI, and BlackRock?