Here is a good real world example - search for "bangalore exodus". Back in August tens of thousands of people thought their lives were in danger in Bangalore thanks to rumors spread both via the social networks and sms. The govt could do nothing for a week to control it. There were ministers standing at the railway station begging people not to leave.

The big difference between anonymity in the 90's and today is scale. Today our networks reach billions of people most of whom, to put it as politically correctly as possible, aren't very sophisticated. I am not talking about education levels. Everyone has weaknesses. Wether its the guy on wall street, silicon valley or McD. It is not a question, of whether their weaknesses will be taken advantage off. This is happening already at a scales never seen before. Whether it is our stock market bubbles or rise/fall of companies overnight or the rise/fall of political leaders/movements overnight or Snooki, Paris Hilton or Gangnum Style, network effects effect everyone in highly unpredictable and uncontrollable ways. Anonymity is a catalyst.

Social networks turn into outrage factories at the drop of a hat these days and we definitely need control rods to atleast slow things down. Anonymity is an obvious candidate.

What chance do they have of creating a new search engine?
imho zero
Using his own patent logic. Besides which no one, forget about the next young Larry and Sergey have the capability of building and maintaining a Google quality index anymore. Isn't that equivalent to saying not many orgs around can match the legal teams put up by the big boys so innovation is dead.
Google needs to open up its index and allow a market place of search apps to be built on top of it returned results. Imagine a Siri or a Wolfram Alpha that had access to the index. That could return analytics on top of the returned results. Now...stop imagining things. Only Google is allowed too and there are no real consequences to that.

There are millions in India coming into the job market. These numbers aren't going to drop anytime soon, as the education sector too has seen a massive boon in the last decade. So the supply of educated cheap labor is endless. When it comes to India the numbers are so large its hard to convey. Even Indians dont fully realize how huge a market India is in human capital.

Quality requirements in IT services aren't as high as software developers like to imagine. And the proof is in the size and scale companies like TCS, Infosys et al have achieved. You cant scale to 300000 employees if your company is producing shit products.

The other issue is the rate of change in tech. When it comes to quality its cheaper to hire the college grad and train him in the latest tech (say data analytics/android/ios etc) than retrain an experienced pro. Cause once you retrain the pro you have to retain him at the higher pay slab he enjoys.

The third issue you brought up is the sad state of infrastructure and high levels of red tape. This definitely an issue in the cities that have boomed like Bangalore, Mumbai, Chennai etc where the cities are getting stretched to breaking point just providing basic roads/power/water/waste disposal etc. But India has a whole lot of tier-2 cities, as they call them, where real estate is still cheap and local governments are bending over to attract industry.

So outsourcing to India of tech jobs isnt going to end anytime soon. I am talking decades.

The main downside here is mainly to those indian devs who are reaching lets say mid life. They are likely to just get pushed out of the market. Whether they all turn into an new entrepreneur class or new homeless class time will tell.

I think it was the other way round. Amazon back in the day while building their data centers had to provision for peak load (i.e. thanksgiving). So for the rest of the year they have all this infrastructure sitting around doing nothing. This is a problem faced by a lot of companies which have seasonal demand. Amazon solved it best by renting out that excess compute/storage capacity as AWS.

What if neither is optimal? Maybe decision making at the highest levels shouldn't involve people at all. However poorly skynet ends up performing, can't be worse than what we currently see in both government and corporations.

All true. I don't think they are being anti competitive either.
The question is can anyone seriously pose a challenge to them?
And if not, how harmful is that lack of competition?
I thinks its very sad for the future of search, if the ability to analyze and build tools around that beautiful index is limited to a few people sitting inside Google.

can possibly happen when developers are allowed to build search engines and analytic tools on top of Google's returned results (a search app store if you will).
If the status quo persists it is highly unlikely Google is going to ever see any competition in search. Given the fine tuning time and investment required to build an index of Google quality, I doubt anyone is ever going to seriously try.

The Wall Street meltdown or the Silicon Valley bubble were not created by psychopaths and antisocials but by the herd mentality. As all bubbles are. People who work for psychopaths leave and fast. Especially true of smart people who can find work anywhere. Both Wall Street and Sillicon Valley are filled with smart people and no dearth of opportunities. What even smart people aren't immune to is peer pressure. Once the herd starts running in one direction however smart you may be it has an effect.

It is not easy to get a license. Which is a good thing imho.
More info here - http://mrunal.org/2012/07/polity-right-to-weapons.html

Interesting way to look at it. In a way parameter adjustments are an ongoing trial and error (chaotic) process. It just doesn't happen as fast as we would like. But from generation to generation there is a lot of positive movement towards that optimum point. Let's hope tech disruptions can speed things along with minimal damage.

lol @ lost in the bushes
But the counter point to the whole distributed local system can be found just a few threads down, where someone from HP says it was distributed full of small fiefdoms, where getting anything done involved herding local chieftans and dealing with their own local culture/bureaucracy. IOW if all the legs in the centipede have a certain level of autonomy good luck getting it to go anywhere.
The larger point I guess is complex systems once they reach certain scale are just hard to administer....by humans.

Now that makes me wonder what happens in government.

It is a good question. Sri Lanka has managed to deal with LTTE (at a high cost to the Tamils in the region) but atleast there is some hope for long term peace for both communities. Isreal has the power to force the peace. Maybe its internal politics has a liberal slant.

the rate of change in technology. There is a different rate for different types of software. But...it does look, like things are changing at a faster rate (than they used too) across the board. There is a degree of stress produced by this rate. So very different scenarios play out depending on what this rate is assumed to be. It's very similar to nature. Survival of the fittest, not the strongest or the smartest but the fittest. i.e. those that can adapt quickly. One thing we do know about nature is 98% of the documented species have gone extinct. Long term stress followed by short term shocks can cause mass extinction events. The tech sector is a very exciting but dangerous place imho :)

engineers it takes to keep such massive infrastructure up and running. If all it takes today is 2000 people, to manage the data of a billion people, then I really can't see a very __large__ need for software developers in the future.