Why are governments going to war with big tech? 
25 Oct 2019|

The Australian government loves to hate on big tech. In recent years, successive governments have admonished the industry for its alleged role in hiding the communications of terrorists, its resistance to assisting police, its lacklustre efforts to prevent the spread of hate online and the minimal levels of tax it pays in Australia. But these skirmishes over the amount of power big tech holds and the apparent efforts to entrench it have deeper roots, and global dimensions.

It wasn’t always this way. The dawn of the digital age in the late 1990s and early 2000s was greeted with tremendous optimism about the great promise of the internet. Even the dot-com crash at the start of the new millennium did little to slow the ascent of today’s tech giants. As their market power grew and they became indispensable tools for consumers and businesses, the cost of ‘unplugging’ seemed to be far higher than the cost of ceding some control of personal data.

Governments around the world increasingly view this new reality as insidious and are beginning to crack down.

Enamoured by the customer-centric mantras and the innovation revolution promised by Silicon Valley’s darlings, global regulators mythologised big tech and took their collective foot off the brake. That was until a series of privacy scares brought home the realities of unchecked growth and tech monopolies. And while we have grown more sceptical about what personal data the smartphones in our pockets are capturing, dependence on those devices has only accelerated.

There are apps that tell us where to go and how to get there, what we should listen to, how much money to save and where to invest it—all driven by our data, either handed over for free or for a small fee.

This data, when sold and run through algorithms, can inform advertisers about what we might be persuaded to buy, or, when sold to political campaigns, give insights into what might sway our votes.

The Switzerland-based Global Center for Digital Business Transformation tracks how global tech giants’ activities have expanded, often by using their dominance in data-rich businesses to break into new territory, as Amazon has done by integrating hardware like the Alexa virtual assistant and storefronts like Whole Foods with its e-commerce platform.

The prospect of a society driven by data has been explored in popular culture, often with Orwellian overtones. Black Mirror’s exploration of the topic in the interactive episode ‘Bandersnatch’ unnerved viewers, even as Netflix was tracking their consumption habits in real time.

But while regular consumers are wary, and generally unwilling to remove themselves from these platforms, governments all over the world have indicated that they’re going to step in.

At the same time as companies and individuals began to fear their dependency on the tech giants, politicians were facing the same new reality. Political advertising dollars poured onto social media platforms and, as the Cambridge Analytica scandal revealed, it became hard to determine where the platform stopped and the agents of influence began.

In Australia, the blowback is most visible in traditional news media. Where once the broadsheets controlled how Australians got their news, today it’s largely digital platforms that hold the reins, as an Australian Competition and Consumer Commission inquiry found in July. Who has that power matters for consumers because the choice of news content we see—and the data we relinquish in order to do so for free—is increasingly beyond our control.

Western governments facing budget deficits and disillusioned voters see an easy political target in the digital giants. The result has been a wave of anti-tax-avoidance measures either implicitly or explicitly aimed at tech multinationals, from the tightening of thin capitalisation rules in Australia, to the newly released OECD-led plan for reaching a multilateral consensus on dealing with the taxation problems posed by the digitalised, globalised economy.

The ‘techlash’ is not unprecedented. Each wave of technological advancement, from the railways in the late 19th century to AT&T’s telephone empire in 20th-century America, has been met with populist opposition and calls to break up monopolies and increase competition. But recent global moves to enact sector-specific regulation shows that policymakers are becoming more circumspect about the impacts of our digital dependency.

US presidential candidates like Democrat Elizabeth Warren are using their platforms to call for the breaking up of big tech. Talk of this nature is gaining currency on both sides of the aisle at the congressional and state levels, too. Google, Facebook and Twitter have faced allegations of political bias in their algorithms from conservative figures in the US, including President Donald Trump himself. And last month, a bipartisan coalition of 50 attorneys general of US states and territories (minus California and Alabama) announced their own antitrust probe into Google, in parallel with federal efforts led by the Department of Justice.

The EU’s competition authority has launched multiple inquiries into alleged anticompetitive conduct over the last decade, probing Google’s eBooks platform, shopping search engine and more.

With not-too-distant memories of the ineffective attempts in the late 1990s to break up Microsoft, today’s tech giants are taking proactive steps. Facebook is instituting concrete measures to tie together its family of social media apps, including WhatsApp, Messenger and Instagram.

Unlike some of the giants of the past, big tech isn’t well suited for the precedents and regulations that do exist. US competition law determines consumer harm based on price, but when consumers pay for services with an intangible currency—their personal data—we have to question whether the regulations are fit for purpose in the digital age.

As long as the use of the major tech platforms continues to be free, with no way for users to monetise their own data, these issues are here to stay. And as much as it’s woke to bemoan the illusory promise of the internet giants, will millions of Australians still open Facebook or Instagram first thing tomorrow? Probably. And that’s the best card that big tech holds.