End-To-End Encryption is Too Important to Be Proprietary

The EU's Digital Markets Act (DMA) is set to become law; it will require the biggest tech companies in the world (Apple, Google and Facebook, and maybe a few others) to open up their instant messaging services (iMessage, Facebook Messenger, Whatsapp, and maybe a few others) so that smaller messaging services can Plug into them. These smaller services might be run by startups, nonprofits, co-ops, or even individual tinkerers.

The logic behind this is sound. IM tools are the ultimate “network effects” products: once they have a critical mass of users, other users feel they have to join to talk to the people who are already there. The more users who sign up, the more users feel they must sign up.

This gives the big platforms enormous power, for good and for ill. Start with the good: when Facebook turned on end-to-end encryption for Whatsapp in 2016, they endowed billions of users with state-of-the-art privacy.

But then there's the bad: Mark Zuckerberg and his executive team are the benevolent dictators of Whatsapp. Benevolent dictatorships work well, but fail badly. By definition, benevolent dictatorships aren't accountable (that's why they're called "dictatorships") and that means that any time a benevolent dictator messes up (or sells out) you are stuck.

This is much worse when network effects are on the dictator's side. If you object to Whatsapp's administrative policies, you can't just quit — you either have to convince all your friends to quit with you, or give up on the customers, communities and friends who stay behind.

In practice, the “collective action problem” of leaving Whatsapp for a rival service is really hard to solve. In 2021, Whatsapp changed its privacy policy in a way that alarmed many of its users. Millions of these users researched and installed alternative apps like Signal, but only a quarter of those users managed to move some of their WhatsApp conversations to Signal. More than a year later, only 0.5% managed to delete Whatsapp and switch all their comms to a service run by a company they trusted.

Whatsapp isn't infallible. The company makes a lot of tradeoffs for a lot of reasons, and some of those tradeoffs put users at risk, but because of network effects and collective action problems, they stick around. For example, Whatsapp took five years to switch to encrypted backups, closing a giant security loophole that governments, cops and hackers could exploit to attack Whatsapp users.

Even if you trust Whatsapp's management today, you might not like their successors at some point in the future. Remember, Whatsapp is a wholly owned subsidiary of Facebook, a company whose failures — including its role in fomenting genocide — were so grotesque that it changed its name to “Meta.” The people who chose to put profits ahead of the Rohingya will get to decide who manages Whatsapp when the current crop is fired, quits, or dies.

That's where interoperability and the DMA come in. By enabling third parties to plug into Whatsapp, the DMA will lower the “switching costs” of leaving Whatsapp for another service.

“Switching costs?” That's another specialized economics term, often invoked in the same breath as “network effects” and “collective action problems.”

“Switching costs” represent everything you have to give up when you switch from one product or service to another. If you buy $250 worth of ink for your HP printer in an August back-to-school sale and your printer dies in September, then switching to another manufacturer's model will cost you $250 in ink, since those cartridges are designed to work with just one manufacturer's printers.

Companies love high switching costs. Facebook especially loves high switching costs and goes to extraordinary lengths to create penalties for users who disloyally switch from a Facebook product to a rival's.

Interoperability lowers switching costs. When the DMA becomes law, Signal can choose to interoperate with Whatsapp. Note that the DMA doesn't require Signal to do this, rather, it forces Whatsapp to cooperate if Signal chooses to do so.

That means that if Whatsapp changed its privacy policies again, and once again, millions of Whatsapp users installed Signal, they could all immediately delete their Whatsapp accounts and apps — because if Signal interoperates with Whatsapp, then people who stay behind on Whatsapp can remain in contact with users who switch to Signal, even though they've left Whatsapp for good.

In an ideal world, this might discipline the product managers and lawyers who run Whatsapp. The fear of losing users might keep them from further degrading their privacy guarantees, for example.

And in the real world, if Facebook's well-established preference for its shareholders' interests over its users' safety triumphed again, and Whatsapp continued to renege on its privacy guarantees, then users could leave for Signal without being held back by the collective action problem of network effect-driven services.