Late last year, I wrote in these pages about technology as a double-edged sword for social progress. Yes, advances in technology continue to underpin sustained improvements in living standards. But, I also highlighted several downsides detrimental to the wellbeing of certain cohorts of the population. One question I posed was whether we need to use anti-trust competition regulation to break up the tech behemoths that have come to dominate the digital economy.
Some tech firms, like Amazon and Uber, have found a new way of doing business that undercuts traditional providers. Others, like Apple, have carved out a dominant market position through in-house product innovation and cultivating brand loyalty. Yet others, like Google and Facebook, operate in markets – internet search engines and social networks – that barely existed two decades ago.
But Big Tech increasingly faces the public wrath, and risks a regulatory backlash. By re-locating their intellectual property, they manage to pay minimal taxes. By putting bookshops and taxi drivers out of business, livelihoods are undermined. By harvesting their users’ data, and then selling it or using it to target online advertisements, they put peoples’ privacy at risk. Recent revelations that the personal data of tens of millions of Facebook users was compromised shows the risks people have been taking without even realizing it.
The question then is what, if anything, should be done about it.
In Barcelona and elsewhere across Europe, we have seen taxi drivers taking direct action by protesting against Uber and other ride-sharing apps. These apps are also a good example, however, of the power regulators still have using traditional means. Uber has not taken off in Ireland, for example, because our regulators choose not to treat them much differently to existing taxi drivers. They are treated as a transport company, not a tech company. In London, meanwhile, Uber has been denied an operating license – pending appeal – due to public safety concerns. Maybe what regulators in other places need is more willingness to act rather than new rules.
There has been growing unease at the rise of cyber-bullying and ‘fake news’ across social network platforms in recent years. Under pressure to tackle them, many tech firms have upped their game (from a previous stance which amounted essentially to ‘no intervention’ and washing their hands of the problem), but it still leaves a lot to be desired. The Facebook CEO’s recent mea culpa before the U.S. Congress is a case in point. On the other hand, it would seem unreasonable to hold a social network to the same standards as traditional media in terms of responsibility for inappropriate or misleading content.
Sometimes, as with firms in other sectors, big tech throws its weight around to bully competitors, with consumers being the ones that ultimately lose out. The European Court of Justice has been to the forefront in enforcing anti-trust legislation promulgated by the European Commission to ensure big tech companies cannot abuse their dominant market position. In a series of judgments between 2003 and 2012, the Court ordered Microsoft to make it easier for its operating system and its Office package to be interoperable with, for example, media players and web browsers offered by competitors. They also imposed fines totaling nearly €1.5bn. In 2009, Intel was hit with a €1bn fine for abusing its dominant position in the market for processors, while just last year, the EU Commission dished out a €2.4bn fine to Alphabet, Google’s parent company, for abusing their dominant market position in internet searches. Last year also saw a smaller fine of €110m imposed on Facebook relating to their takeover of Whats’app in 2014. Of course, all of these pale in comparison to the Commission’s order for Apple to repay €13bn in back-taxes to Ireland.
Size matters, but it’s not the only important variable. Big firms should only be broken up when that is the only way to boost competition, and where other regulatory approaches have failed. As exemplified in the case of the varying fortunes of Uber across Europe, there is still a lot of arrows in the regulatory quiver. Stricter data protection standards can and should be enforced. Social networks could be held account for failing to tackle cyberbullying or illicit activities taking place on their platforms. Agency workers who are direct employees in all but name could be afforded better labour rights. Aggressive tax avoidance can be rooted out. Competition rules can be enforced, whether at national or EU level, to ensure a firm’s dominant position is not abused – and where it is abused, that it is heavily sanctioned. Then, if that doesn’t work, and size is still the biggest remaining issue, then serious consideration should be given as to whether big tech firms need to be broken up.
What is needed is the political will to regulate (or to tax). Of course, political will can be swayed by big money. In the U.S., Silicon Valley is a big donor to political campaigns, particularly of Democrats, while in Ireland big tech is one of the cornerstones of a thriving FDI sector, counting among the country’s biggest private sector employers. So, while Google’s one-time motto was ‘don’t be evil’, the policy of successive governments in Ireland and elsewhere has been more like ‘see no evil, hear no evil’.