The Next Digital Decade: How Will the Internet Change by 2020?

Ideas in Action with Jim Glassman is a new half-hour weekly series on ideas and their consequences.

A new book of essays, "The Next Digital Decade: Essays on the Future of the Internet," by some of the most insightful observers of the internet age, asks what the next decade will bring in technological innovation, cultural change, regulation and the role of the government in the next phase of the evolving internet. Two guests who contributed essays to the book discuss their views about the effect of innovation and the role government will play in the evolution of the internet.

Transcript

JIM GLASSMAN:

Welcome to Ideas in Action, a television series about ideas and their consequences. I'm Jim Glassman.

This week: the ever-evolving Internet. Where will this hugely influential, unruly, and ever changing force take our society over the next ten years? A new collection of essays examines the cultural, economic, and legal questions "we the Netizens" will face. Joining me to explore this topic are Larry Downes, business consultant and author of The Laws of Disruption: Harnessing the New Forces that Govern Business and Life in the Digital Age, and Geoffrey Manne, professor at Lewis and Clark Law School, who argues the need to keep the Internet as unfettered by regulation as possible.

The topic this week: the Internet by 2020. How will it change over the next digital decade? This is Ideas in Action.

ANNOUNCER:

Funding for Ideas in Action is provided by Investor's Business Daily. Every stock market cycle is led by America's never ending stream of innovative new companies and inventions. Investor's Business Daily helps investors find these new leaders as they emerge. More information is available at Investors.com

JIM GLASSMAN:

Larry, is the age of Internet utopianism dead?

LARRY DOWNES:

Well, it's not dead but I have to say nostalgia for it is getting to the point of being pretty dangerous. I was there back in the mid '90s, we were all hanging out in the hot tubs at Esalen, talking about the potential of technology. A lot of it has happened in ways that we didn't necessarily expect but the social networking revolution in particular, the ability of these technologies to be used for political change as well as for betterment of our lives. This is a lot of what we wanted. The problem is that a lot of people who were also with me back then wish for those simpler times when it was a wide open frontier, there were just a few websites, you could really become an overnight sensation only by getting 10 or 20 people to look at what you were doing and the reality is that the technology, thank goodness, has moved hugely since then in really tremendous ways. But it's become a commercial enterprise, it's become an industrial driver, utopianism isn't the only value that's important anymore.

JIM GLASSMAN:

And utopianism, I guess, means that there's this great kind of wide optimistic view that anything can happen and you're saying that's changed.

LARRY DOWNES:

It would be about, you know, personal enlightenment, and you know really pretty - pretty out there stuff, which amazingly a lot of it does happen but of course, you know, there's only so much limit that you can put on personal growth. We want to see economic growth as well.

JIM GLASSMAN:

So Geoffrey has the Internet grown to the point where it needs more government intervention to manage this gigantic and unruly and chaotic instrument?

GEOFFREY MANNE:

It seems to me that anything that's grown so massive and complex is almost by definition something that is not particularly susceptible to government regulation rather than something in intense need of it.  And I think that we almost have no idea what the Internet's going to look like 10 years from now nor did they know 10, 20 years ago. That fact alone makes the ability to regulate both extremely difficult and pernicious. Because by-- almost by definition your fighting last year's battles and the next year's battles may be taking place on a front that you never even knew could possibly exist.

JIM GLASSMAN:

Do you think the Internet has become as successful as it is because of a lack of regulation?

GEOFFREY MANNE:

I wonder if it's really true to say that the Internet, you know, sort of hasn't been regulated. At the minimum you have to think of telecommunications regulation. Telecommunications regulation is now growing into directly regulating the Internet. We've seen recent action by the FCC in that regard. But before that happened the FCC was regulating the pipes that brought the Internet into people's houses. That had to affect the way the Internet developed and who developed it and other aspects of it. I think your question really revolves around the direct regulation of content and the mechanics of the Internet and it's true that hasn't been particularly regulated and that has to be counted as a good thing I think.

JIM GLASSMAN:

And do you agree with that?

LARRY DOWNES:

Yes, well it's not that congress hasn't tried and certainly other jurisdictions outside the U.S. haven't tried. It was in the very first 1996 Communications Act that Congress tried to outlaw indecent content on the Internet and of course it was thrown out by the Supreme Court, as were several later attempts at the same kind of regulation. But yes I think Geoff's right the Internet has thrived largely because of a lack of direct regulation and in fact one of the ways in which regulation has affected its development is working around it. So Geoff mentioned the regulation of telephone companies. When you had dial up Internet in the 1990s that was heavily regulated by the FCC and it's one reason why alternative forms like cable television, which didn't have those regulations, or broadband connections, all of the things that were outside of the FCC's jurisdiction were the ones that actually became the dominant technologies.

JIM GLASSMAN:

But there are a lot of people now who feel, partly because of the-- I guess the complexity or the commercialization that you described earlier, that their access may be limited or that some people may get better access than others get and therefore government needs to step in and make sure that it's a-- I don't know level playing field. What do you think about that?

LARRY DOWNES:

It is true, especially in the United States with its broad geography and large rural areas, there are people who have no Internet access and certainly people who have less options than others for high-speed access. It doesn't necessarily follow though that the federal government is the entity that's going to solve that particular problem. I think in general what I would say is that when you are dealing with a disruptive technology, a technology that is changing business, changing society rapidly and in unpredictable ways, it's probably the worst possible case you can make for government intervention because government is by design, it's deliberative, it's slow, the process by which we regulate or legislate takes a lot of time and in the course of a one year even in congress I'll have trashed five or six start ups back in Silicon Valley.

GEOFFREY MANNE:

There's a common theme to all regulation, the Internet is no different in this regard although perhaps it's a bigger problem, the identification of a problem of course does not mean that a particular solution is appropriate for that problem. Even if it's true as Larry said there are people in this country who don't have access to the Internet it doesn't necessarily follow that the solution is therefore to apply some any particular or even any regulation by the federal government in order to mandate or find a way to ensure that particular access if the cost and the consequences of that intervention are not worth the benefit. And I think there's a typical problem that is certainly developing as we're moving into more and more regulation of the Internet that folks are identifying problems but not doing a sufficiently good job identifying why the proposed solutions are actually better than the problems or won't degenerate into much more problematic outcomes than the problems they're trying to solve.

JIM GLASSMAN:

And I guess a good example is it's not just people having access but also making sure that infrastructure itself becomes more and more scarce, if that's going to happen, that small companies will have fast access, the companies themselves, to all the millions and billions of people who use the Internet. Will the next Facebook ten years from now or three years from now be able to get started?

GEOFFREY MANNE:

As far as I know that scarcity that you mentioned hasn't quite arrived yet--

LARRY DOWNES:

Well it has arrived in one area, which is the mobile Internet. We're already at a point--

GEOFFREY MANNE:

The scarcity.

LARRY DOWNES:

-- yes, where the scarcity of available cell towers and available radio spectrum is already starting to affect, I mean, all--

JIM GLASSMAN:

You can tell with your iPhone.

LARRY DOWNES:

You can tell, that's right. As long as local authorities are hesitant to allow new infrastructure to be built, cell towers, and as long as the FCC proves unable to figure out how to allocate spectrum more efficiently than it has, we only have one set of radio waves somebody has to sort of be the traffic cop here to make sure that left turns and right turns happen in an orderly way, I think that is an appropriate role for government.

JIM GLASSMAN:

So you think, is that a role for-- I don't want to get too deeply into the weeds here, we are in Washington-- but is that a role for the FCC, the Federal Communications Commission or should there be some new entity?

LARRY DOWNES:

Oh please not a new entity.

GEOFFREY MANNE:

Please no.

LARRY DOWNES:

The FCC has been responsible for better or for worse for the radio spectrum almost from the beginning of its existence. No one would say it's done a great job, even I think the FCC recognizes that. But I think again if the costs and benefits outweigh the alternative of creating a new agency for spectrum versus giving the FCC the authority to deal with it in a 21st century way I'd opt for the FCC on that one.

JIM GLASSMAN:

Do you think there's a real role for the FCC in an Internet age?

GEOFFREY MANNE:

Not much of one. I mean, this is a long-standing debate. The FCC takes it upon itself under its very broad mandate to enforce antitrust rules. So do the antitrust agencies and arguably most-- I shouldn't say most-- a lot of people agree the FCC does a much worse job than the agencies.

JIM GLASSMAN:

But here's the concern going forward, I mean, the Internet has been a boon to the United States economically. I think most people would agree with that. And part of that is the ability of small businesses, individuals in many cases, to launch these amazing commercial enterprises where they've got access to millions of people and really billions of people around the world. But you're implying that that's going to end.

LARRY DOWNES:

No I don't think so, I didn't mean to. In fact I think I would take it even further for looking out into the next ten years. I was just at the Consumer Electronics Show a couple weeks ago and what amazed me most about the show floor was it's not just people in small businesses that will be connected on the Internet - it's devices, it's appliances, it's refrigerators, it's cars, it's the energy grid, it's all these things, the Internet of things, that'll be sharing data just the same way that you know you and I share data between ourselves today.  I don't think that's going to run out. I don't think it's a problem. Without government regulation in some sense what happens is that the engineers, the ones who designed the Internet, the ones who maintain the Internet, the ones who build it, you know, they figure out ways to squeeze more out of the existing infrastructure, to make the new infrastructure fiber optics and so on. And any time in fact governments, particularly outside the U.S. try to impose onerous restrictions on what people can and can't do on the Internet the engineers just figure out a way to work around them.  

JIM GLASSMAN:

Right.

LARRY DOWNES:

No one actually owns the underlying standards and protocols that make up how the bits move around on the network. No government owns it, no private company owns it, there's no patents on it, and because of that openness, any device, any individual, any thing that wants to connect all it has to do is follow those relatively simple rules and it's automatically part of the Internet. That's why it's grown to billions and trillions and increasingly other kinds of things--

GEOFFREY MANNE:

Why would ownership necessarily change that? I mean I agree that that's an enormous benefit but I'm not sure why private ownership of those standards, for example, would preclude exactly that same outcome?

LARRY DOWNES:

Well, the Internet before the Internet was a set of very siloed private networks, IBM had one, Dek had one, Unix had one, and they were all designed to optimize the kind of behavior that IBM wanted.  So it was all very regimented and hierarchical. Only big computers could pass data down, small computers couldn't pass data up. There was no technical reason for that - there was a business reason for that. And because they owned the standard, they said we're going to set the standard up so that it sells for mainframes and fewer PCs. And of course ultimately that was what - it was downfall.

GEOFFREY MANNE:

But it's hard to say which came first; it's a chicken and egg problem. But if the demand and the capability for the kind of Internet and conductivity we have now was apparent to IBM then as a business decision I have no doubt they would have said, 'hey this might be good for our mainframe business but I see billions upon billions of dollars over here by licensing this technology for other uses why don't we go ahead and try that?'

JIM GLASSMAN:

And of course that's what happened in the end it was-- the PC beat out the mainframe--

GEOFFREY MANNE:

Sure and IBM failed to capitalize on that but they also very well could have capitalized on that.

LARRY DOWNES:

No you're right. Rationally of course that's what people would have done, but Silicon Valley is littered with the corpses of companies that did not make rational decisions especially in that important transitory period.

JIM GLASSMAN:

Let me move from these economic issues to some legal and social issues like privacy and free speech. I mean, as the Internet becomes more pervasive these issues I think become much more urgent. Should people worry about the free and open exchange of ideas on the Internet, as more and more people are able to basically say and do whatever they want?

GEOFFREY MANNE:

What do you mean worry about? Worry about that as a problem--

JIM GLASSMAN:

Well you have issues like-- you have privacy issues. For example it wouldn't be-- it's probably not too hard in the distant future when you're talking about machine connectivity for someone to broadcast what you're doing in the privacy of your own home all over-- to the rest of the world.

GEOFFREY MANNE:

You know I think that there's a sense in which the privacy concerns are dramatically overstated. You've sort of identified a potential dystopian world and I have no doubt that there's a whole host of forces that would come into play to minimize that particular outcome--

JIM GLASSMAN:

Well they would have to be legal forces wouldn't they?

GEOFFREY MANNE:

They might. I don't know that they'd have to be legal. There could be market forces too I mean there's obviously some incentives on a lot of people's parts. If somebody really doesn't want that to happen there is money to be made by either finding and developing the technology to prevent it from happening or else wise the company that can do it-- you could call it extortion or something like that-- but you know they have an incentive to get payments from folks for that to not happen. But you're right, it could be that the most efficient way to preclude that outcome is through the application of certain laws and we may not even have those laws right now so that's a possible development in the future. I think the issue that I was trying to get at though was that we are in the process of trying to figure out the right laws and the right form of regulation of privacy on the Internet right now and I'm afraid that we are dealing with a-- you know a set of-- speculative set of outcomes, possibilities like that that aren't here now. And we're regulating something that doesn't need to be regulated and that most people don't want to be regulated. 

JIM GLASSMAN:

Well actually that's a good point. I mean do people-- people talk about privacy concerns. I mean always you see these-- you see these surveys 'are you worried about your privacy'-- on the other hand of course you know hundreds of thousands of millions of people are on Facebook revealing their intimate lives all the time. So how important is privacy to individuals?

LARRY DOWNES:

No two people agree on what they mean by privacy and what they consider private and what they don't consider private. And that's what's confounded legislators and regulators for at least the last ten years because they've been trying to figure out a privacy bill of rights or some set of privacy regulations both here and in the EU as well. But I think what almost everybody doesn't give enough credit to is the fact-- now put my utopian hat back on-- one of the things that the Internet has done is it has empowered consumers and citizens in a way that simply wasn't possible ten years ago. You just watch. Every time, particularly you know the most popular applications are the ones that have the most intimate information like Facebook, when they make a change to their privacy policy, you know, it doesn't take two years of litigating and legislating for consumers to let their concerns be known. They will hear about it immediately.

JIM GLASSMAN:

But there are some parts of the world where Internet use is quite heavy and yet-- the hand of government is very heavy and one of those is China. So can the Internet economy, the global Internet economy continue to prosper where a country like China, and there are other examples, wants to put and has effectively put constraints on the flow of information?

GEOFFREY MANNE:

I don't think that the fact of Chinese censorship or Chinese heavy-handed control of the Internet is going to bring down the Internet, as we know it. As I go through in my head about the number of people in China and as they get increasingly wealthy and they're on the Internet more and more and their government becomes more and more relevant, international governance of things like the Internet, I guess I can see a world in which things could change substantially. I also think that if that started to happen, by the time that starts to happen we'd be talking about a China that looks pretty different than it does now and a Chinese government that probably has a lot less interest in and concern for maintaining that kind of heavy handed censorship, precisely because they have a much more empowered citizenry and they realize that the potential benefits for their citizens, their economy, and even for the government itself of a generally more open Internet.

JIM GLASSMAN:

And then the opposite side of this coin then is will the Internet itself become a force to bring down repressive governments?

LARRY DOWNES:

Yeah. If you're going to have a fight between engineers and bureaucrats I'm going to bet on the engineers every time. May take a while, it may not be pretty, and there may be losses along the way--

JIM GLASSMANS:

Bureaucrats can have their own engineers - I mean there is this constant battle.

LARRY DOWNES:

They won't get the good ones. [Laughs] The good ones will stay out of the government.

JIM GLASSMAN:

Well they seem to have pretty good ones in China.

LARRY DOWNES:

Well what's leaked out or what's been discovered by various advocacy groups is they spend a tremendous amount of money to censor the Internet. Armies of engineers, huge rooms of servers all trying to pick things out. It's very expensive and you know it's an arms race of course and every time they get a leg up the other side gets another leg up.

JIM GLASSMAN:

But is there a particular leverage point with search engines? Search engines have become so important that if you can-- as a government can say well if you're going to try to search you know 'revolution' or 'freedom' or, you know, we're going to make sure that you only see the kinds of things that we want you to see. I mean isn't that the kind of government powers that you need to worry about?

LARRY DOWNES:

Well yes of course we had that in this country, it was called the television networks, we only saw what they wanted us to see and we didn't like that. So when the technologies came around that made it possible for cable television, and then for Internet, and now for mobile computing what did we want to do? We wanted to see more stuff; we wanted to see what we wanted to see when we wanted to see it. Governments were unable in this country to stop it. We weren't willing to spend the money that China's willing to spend and now we have, you know, 6000 channels and maybe that's a good thing and maybe that's a bad thing. But when the technology gets together with consumer demand, I don't think governments really stand a chance.

JIM GLASSMAN:

Do you have any worries about government trying to restrict freedom of speech on the Internet? Even our government in any way.

GEOFFREY MANNE:

Well I-- no but I think Larry's point is a good one. Yes I think they will try. I think even our government will and probably has tried. It's just going to be harder and harder for them to do so. It was probably pretty easy to censor the television networks when there were 3 television networks and they were under heavy-handed control by the FCC. What can the government do now on the Internet? Whatever they can do it's going to be a lot harder. They may develop the tools to do it. China has through brute force and development of technology and enormous expense been able to do it to some extent. But they will continue to lose this arms race - I mean it'll be a red queen game and I think it can only get harder and harder.

JIM GLASSMAN:

Do you think the effect of the Internet on culture has been good or bad?

LARRY DOWNES:

Oh I think-- well I wouldn't say unquestionably good but almost unquestionably good. We get to find out what consumers actually are interested in and it turns out what a wonderful thing - they're interested in an incredible range of things from very, very high art to very, very, very, very low like below, below art. They really want to see everything and they want to see it all the time. What really takes off on YouTube now is videos produced by, you know, essentially amateurs or maybe no one's an amateur anymore.

JIM GLASSMAN:

America's Funniest Home Videos. I mean, isn't it really-- hasn't the Internet to some extent become a kind of a-- the opiate of the masses? People watching you know little babies fall down and stuff like that. Is that good for culture?

LARRY DOWNES:

Well-- it would take individual cat videos and say they're either good or bad.

JIM GLASSMAN:

I forgot about the cats.

LARRY DOWNES:

Right. The cats that's all the traffic. They have a whole team of servers that are just devoted to cat videos over at YouTube headquarters - that's actually true.

JIM GLASSMAN:

Oh I thought it was a joke.

LARRY DOWNES:

No when they actually-- when they do stress testing of the network they always start with cat videos. At least that's what they told me a year ago and now may moved on to baby videos.

JIM GLASSMAN:

Ok but seriously. Is that good for the culture? The fact that you have access to virtually any cat video that you can-- that you want to watch? Is that great?

LARRY DOWNES:

Yeah, well, it's good for me. I'm not sure how much further I can take it. I know that people are happy and they're consuming more and more content all the time. As a content producer do I wish people were reading my, you know, 10,000 word treatise on the net neutrality order? Yes. Do I know that they're not? Of course. But at least a few people are and the fact that it can get out there quickly and get to the people who actually do care about it-- it gives me a channel I certainly wouldn't have had ten years ago and definitely not 20 years ago.

GEOFFREY MANNE:

The Internet allows a group of consumers around the world, each one of those singular and unique set of preferences to be satisfied. That has to be a good thing. Anybody can find something that matches their preferences somewhere on the Internet.

JIM GLASSMAN:

Ok last question. Just really quickly. What's the most important question or issue that would affect the future development of the Internet over the next ten years?

GEOFFREY MANNE:

The application of antitrust laws to Internet companies. Now I am an antitrust lawyer-- law professor so-- but I think that there's a real potential danger in how we have and will continue to apply the antitrust laws. But I think there's a real threat there not only from the U.S. but from the EU and potentially China, Korea, and Japan as well.

JIM GLASSMAN:

So the ability of companies to combine is something that would move the--

GEOFFREY MANNE:

Not just to combine, you know I think you look at Google who has issues with combining but you know we're talking about companies that are claimed to be dominant companies, the ability of those companies to undertake decisions about pricing, business model, product, you know the sorts of things that businesses have to have control over maybe so significantly curtailed by the threat of an actual application of antitrust laws that we'll have a, you know, a seriously diminished Internet.

JIM GLASSMAN:

Right. So you're not worried about Google becoming so big that it completely dominates the Internet or can set rates and can do all sorts of things that--

GEOFFREY MANNE:

Right.

JIM GLASSMAN:

Ok.

GEOFFREY MANNE:

I'm worried about the government thinking it's too big--

JIM GLASSMAN:

You're worried about the opposite.

GEOFFREY MANNE:

--And killing the innovation that would come from that.

LARRY DOWNES:

And I would say the privacy problem. As we do rely more and more for our non business life or our personal life, our social life, our spiritual life, on the Internet and all of the technology to go with it the privacy problem is real and it has to be addressed. Now my sense is that the nature of the solution will come in recognizing that privacy is a form of commodity, consumers own rights, they can sell those rights, they can license those rights, that there's a back and forth. That kind of market for private information if you will has begun development, it's in very primitive form now, it needs to develop in a much more quick and robust fashion in order to continue the development that we're seeing and I expect that it will but that to me is the issue that I'm most worried about.

JIM GLASSMAN:

And you're worried because it would trigger government intervention? More concerns about it?

LARRY DOWNES:

Well that but also that if consumers become more concerned about their privacy and don't think there's either a market solution or a government solution they will be less likely to use the--

JIM GLASSMAN:

They'll drop out.

LARRY DOWNES:

Yeah they'll do less, they'll drop out and then we won't, you know, continue to have the incredible growth.

JIM GLASSMAN:

Great. Thank you Larry and thank you Geoff. And that's it for this week's Ideas in Action. I'm Jim Glassman, thanks for watching.

Keep in mind that you can watch Ideas in Action whenever and wherever you want. To watch highlights or complete programs just go to ideasinactiontv.com or download a podcast from the iTunes store. Ideas in Action because ideas have consequences.

ANNOUNCER:

For more information visit us at ideasinactiontv.com. Funding for Ideas in Action is provided by Investor's Business Daily. Every stock market cycle is led by America's never ending stream of innovative new companies and inventions. Investor's Business Daily helps investors find these new leaders as they emerge. More information is available at Investors.com. This program is a production of Grace Creek Media and the George W. Bush Institute, which are solely responsible for its content.


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Featured Guests

Larry Downes

Author of “Unleashing the Killer App” and senior fellow with TechFreedom

Larry Downes is a consultant and speaker on developing business strategies in an age of constant disruption caused by information technology.

Downes is author of the business bestseller, “Unleashing the Killer App: Digital Strategies for Market Dominance” (Harvard Business School Press, 1998), which has sold nearly 200,000 copies and was named by the Wall Street Journal as one of the five most important books ever published on business and technology.

His latest book, “The Laws of Disruption: Harnessing the New Forces that Govern Business and Life in the Digital Age” (Basic Books, 2009) offers nine strategies for success in the emerging world of information law. It combines Downes’s unique perspective on economics, law, and innovation in the digital age.

Downes is also a Partner with the Bell-Mason Group, which works with Global 1000 corporations, providing corporate venturing methodologies, tools, techniques and support that accelerate corporate innovation and venturing programs.

Downes has held faculty appointments at The University of Chicago Graduate School of Business, Northwestern University School of Law, and the University of California-Berkeley’s Haas School of Business, where he taught courses on corporate strategy and technology law. From 2006-2010, he was a nonresident Fellow at the Stanford Law School Center for Internet & Society. He is currently a Senior Fellow with TechFreedom, a non-profit, non-partisan technology policy think tank.

Geoffrey Manne

Professor, Lewis & Clark Law School and Executive Director, International Center for Law & Economics

Professor Geoffry Manne is the Executive Director of the International Center for Law & Economics (ICLE), a global think tank, and also serves as Lecturer in Law for Lewis & Clark Law School. In this capacity he lends his expertise to various law school endeavors and teaches the school’s Law and Economics course.

Manne was an Assistant Professor of Law at Lewis & Clark from 2003 to 2008. From 2006 to 2008 he took a leave of absence from the school to direct a law and economics academic outreach program at Microsoft, and was Director, Global Public Policy at LECG, an economic consulting firm, until founding the ICLE at the end of 2009. Prior to joining the Lewis & Clark faculty he practiced law at Latham & Watkins in Washington, DC, where he specialized in antitrust litigation and counseling. Before private practice Manne was a Bigelow Fellow at the University of Chicago Law School, an Olin Fellow at the University of Virginia School of Law and a law clerk to Judge Morris S. Arnold of the U.S. Court of Appeals for the Eighth Circuit. While clerking he taught a seminar on Law & Literature at the University of Arkansas at Little Rock.

Manne’s research has focused broadly on the economic implications of legal constraints on business organizations, particularly in the contexts of antitrust, nonprofit organizations and international law. He is a member of the Virginia bar, as well as the Bar of the U.S. Bankruptcy Court for the Eastern District of Virginia. He is also a member of the American Law and Economics Association, the Canadian Law and Economics Association and the International Society for New Institutional Economics, and a Senior Fellow with TechFreedom, a non-profit, non-partisan technology policy think tank.

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