Internet brings new freedoms worldwide

By Arthur I. Cyr

Groupon, the Chicago company that just spurned a takeover bid from Google, is expanding rapidly. According to a regulatory filing, the company's board has authorized raising up to $950 million in new capital. Groupon's last investment infusion came from Mail.ru Group, formerly Digital Sky Technologies.

The company's initial niche, which has grown into a chasm of cash, has been to offer reduced rates on specific consumer items. If enough people sign up, the deal is consummated.

Vendors involved secure sufficient customers, including many new ones, to make a profit, even at cut rate prices. Customers are reminded that there is strength in numbers.

Groupon executives provide a particularly dramatic reminder that the art of good business _ indeed, the art of staying employed _ is positioning yourself to address the needs of others. Persistence is also important. Founder Andrew Mason experienced some frustration before the great Groupon breakthrough.

Overall, the evolution of Google, Groupon, and commerce generally on the Internet is encouraging regarding freedom as well as prosperity for average people worldwide, not just in the United States and other economically advanced countries. The wedding of information and technology by means of the Web is proving to be liberating. This is a dramatic reversal of major historical trends.

For much of the 20th century, technological innovation seemed especially useful for dictators and demagogues, a means to vastly strengthen state control of the individual. For decades after World War I, dictatorships seemed to thrive using modern technology.

Motorized transport provided police and troops the capacity to move quickly and effectively over long distances. Radio, newsreels and national newspapers provided powerful propaganda tools. Film, photos and wiretaps became malicious means of monitoring people.

Nazi Germany and Imperial Japan are the most murderous, extreme examples of the totalitarian state; the Soviet Union and Communist China were less aggressive in military terms, but for that reason more durable. Given this history, positive developments where totalitarians formerly ruled are especially noteworthy.

Last year, Facebook announced a partnership with DST, a sizable but also at that time relatively unknown Russian firm founded in 2005. DST principal Yuri Milner headed Mail.ru, Russia's largest Internet portal. Another main player is Alisher Usmanov, a billionaire from the metals industry.

For Facebook, the deal brought money but also veteran expertise. The Russians have survived and prospered in a particularly rough and raw newly emerging capitalist environment. Always keep in mind that communist control ended there only two decades ago.

Mail.ru Group reportedly has stakes in approximately 30 Internet companies in Eastern Europe as well as Russia. While arguably there are fewer strong potential competitors in these markets than in more advanced economies, there is also less risk-oriented capital available.

The Russian Internet entrepreneurs have been able to attract money in challenging times in part through alliance with a traditional commodity business. Additionally, there is considerable expertise in that part of the world concerning applied as well as basic science, a positive legacy of the intense Cold War competition in space exploration, arms production and technology development.

The Russian marriage also has helped protect Facebook from less desirable suitors closer to home, including Google.

Odd couple DST and Facebook demonstrated that the Cold War was truly over in the former Soviet sphere. Groupon will find a Russian role as well.

Arthur I. Cyr is Clausen Distinguished Professor at Carthage College in Wisconsin and author of "After the Cold War" (NYU Press and Macmillan). He is also a columnist for Scripps Howard News Service (www.scrippsnews.com). He can be reached at acyr@carthage.edu.