By Herman Schepers and Walter van der Weiden
Who can imagine a world where we could not watch the next episode of ‘House of Cards’ on Netflix, use an ‘Uber’ to get us around town, share ‘whereabouts’ with our friends on Facebook or buy a new gadget on Amazon – with next day delivery. The companies that make all of this possible are often grouped under the heading “Big Tech”, and they have become omnipresent in our daily lives. But there is a growing perception that these businesses, often based out of Silicon Valley, are becoming too dominant. Is the recent backlash towards some of the world’s biggest technology firms fair or is it based on a misunderstanding of the market context in which they operate and the contributions they make to our economies and societies?
The policy debate on how digital platforms should be regulated is heating up on both sides of the Atlantic. Much of the unease expressed against the practices of firms such as Amazon, Facebook and Apple has its roots in the principles of ‘fair competition’ and the need to create a ‘level playing field’. Often this drives political agendas to protect national champions against the global market power of Silicon Valley. At the same time questions are being asked to what extent social media companies should be held responsible for what their users do and say. One can also not ignore the signs that the Trump administration seems far less supportive towards Silicon Valley these days than the Obama administration used to be.
Europe seems increasingly keen to lead this policy debate, which is no great surprise as it traditionally is more ready to export offline rules into the online world. For example, some governments are moving to restrict what companies can publish online. In Germany a new law will take effect in October requiring social media companies with more than two million users to delete illegal, racist or slanderous comments and posts within 24 hours or face fines up to €50m. And governments across the world are starting to pay more attention to the amount of data citizens “give” to the likes of Facebook, Amazon and Uber. This issue is coming into sharp focus as so much innovation in the data economy is based on the collection and crunching of personal data. Europe is leading the way with its recent revamp of data protection rules, and these are likely to become the global benchmark.
There are undoubtedly important differences in American and European attitudes towards very large – successful to some, dominant to others – Silicon Valley companies but what does this mean for the technology policy agenda on both sides of the Atlantic? Is Europe missing the point and meddling because some of its key traditional industries are under pressure and starting to move into the digital world that is heavily influenced by the US? Are European lawmakers really trying to export their legislative framework to other regions? Other countries may be following Europe’s lead because the US has so far been less ready to intervene in “Big Tech” markets. However, looking through a European lens is likely to have unintended consequences and could easily lead to governments imposing diverging rules on the Internet economy. For example, economic powerhouse China with its homegrown online companies such as Alibaba and Tencent will have a different view on how to regulate its digital champions. Such fragmentation or ‘Internet Balkanisation’ will increase the cost of doing business and hamper the delivery of online services we have come to love and rely on so heavily.
History has taught us that policy and regulation always struggle to keep pace with innovation. However, the temptation to see “Big Tech” as a problem that needs solving could steer some European policymakers towards an interventionist path. This, in turn, risks negatively impacting innovation and consumers, and driving inconsistent regulation of the global digital economy. “Big Tech” must of course do more to improve its accountability and transparency, and it must also get much better at engaging with the communities in which it operates. It has to develop and communicate a positive partnership agenda with the wider industry, and with policymakers and regulators. This reputational work is not rocket science but must be prioritised if the companies central to the global digital revolution are to realise their full potential on behalf of the businesses and citizens they serve. A strong narrative on the benefits of digital will be key and this can help underpin a more effective dialogue between government and regulatory representatives on both sides of the Atlantic. It is time to help smooth over differences, align agendas, and avoid regulatory fragmentation in the digital space.
Herman Schepers is Founder and Director and Walter van der Weiden is an Associate Director of Policy Impact Partners