Statements made at the recent World Economic Forum by businessmen such as George Soros, and by CEOs of tech giants (Salesforce and Uber) show these companies are starting to recognise that stronger regulatory oversight of their industries is inevitable and, to some extent, beneficial. This should be seen as a significant change in direction compared to the time when big tech was warning against the risks of regulating too heavily. While regulation in this space is still in its infancy, and will require adjustments over time to ensure it is sensible and effective, market evolution has shown that businesses require regulatory oversight to improve accountability.
Even business is now waking up to the need to regulate big tech
“[...]as Facebook and Google have grown into ever more powerful monopolies, they have become obstacles to innovation, and they have caused a variety of problems of which we are only now beginning to become aware.
[...]The internet monopolies have neither the will nor the inclination to protect society against the consequences of their actions. That turns them into a menace and it falls to the regulatory authorities to protect society against them.”
With such powerful statements made at the recent World Economic Forum in Davos, George Soros took a clear stance on the need to regulate tech giants and limit the increasing power they have. His remarks were echoed, perhaps surprisingly, by some key executives of large tech organisations themselves. “In the tech industry, we have been clear of those regulations for the entire lifespan of the industry (but) we are seeing signs, especially this year, especially with the elections, especially with social networks, and especially when you see CEOs who abdicate their responsibility and say ‘I didn’t know.’ ”, said Marc Benioff of Salesforce, who even went as far to say that social media could require regulation in the same way as the cigarette industry.
It is striking that some tech giants are now starting to say that they welcome regulation; while this could sound counterintuitive, it shows that these businesses acknowledge that regulation can not be avoided, which pushes them to seek cooperation rather than conflict with those who regulate them.
While regulation of big tech seems certain, it lacks a clear direction and the exact form of regulation is unclear
Regulation of big tech is still, by and large, a question mark, in that regulators around the world are still trying to figure out how to go about it properly. We are still at a stage where regulatory authorities seek a clearer picture of the market failures they are seeking to address; to this end, the fast pace of technology and market evolution will make this a difficult job. In turn, remedies to address any market failures are still seen as either inadequate to address long-term problems, or extremely burdensome to enforce and complicated to police.
This all became apparent in recent competition cases in the EU, in which the European Commission fined Google and Facebook for anti competitive behaviour; however, these fines make up a very small proportion of these companies’ revenues, and are not always accompanied by structural remedies to tackle the network effects on which big tech relies.
At the same time, regulation of big tech is also a certainty: for the last few years, we have seen increasing signs that it is coming – something which is not going away. As tech giants continue to harvest individuals’ data to provide new and better services, the large amount of information they hold gives them ever stronger power, which governments are becoming keen to limit. What is striking though, is that some of these tech companies are now starting to say that they welcome regulatory oversight.
The push to improve trust comes from regulators, not always from end users themselves
Recognising that regulation can help companies be more accountable is a somewhat new direction tech companies themselves are taking. Not long ago, they were pointing to the risk of over-regulating their industry which relies on flexibility and lack of red tape to thrive; and were also arguing that, in the long-run, technology, particularly around accountability, could make regulation redundant. While this could still hold true in the future, that moment is still far away. At present, regulation is still needed to make up for the shortcomings on the front of trust, in the absence of regulatory pressure.
While companies and regulators continue to convey the message that trust is key for tech industries to continue flourishing, evidence suggests that the trust factor is not as important as stakeholders often make out, as the case of TalkTalk in 2015 demonstrated.
