Is it time to regulate Big Tech? A growing chorus of critics, ranging from U.S. lawmakers to the press to the public, say yes.
And while there’s no consensus yet on what to do about the vast influence of companies such as Facebook (FB – Get Report) , Alphabet (GOOGL – Get Report) , Apple (AAPL – Get Report) and Amazon (AMZN – Get Report) , it seems inevitable that some mechanism for curbing these companies’ power will soon emerge.
Lobbying expenditures are one way of understanding the specter of tech regulation. VPNMentor, a cybersecurity-focused site, published an analysis of tech lobbying that found that Alphabet is the biggest spender, dishing out more than $200 million between 2005 and 2018 on lobbying. Among the biggest tech names — Amazon, Apple, Facebook, Alphabet and Microsoft — the most frequently mentioned issue in the lobbying activity reports that companies are required to submit to Congress was privacy, followed by taxes. Privacy was the number one issue for Facebook and Alphabet, whereas for Microsoft (MSFT – Get Report) , Apple and Amazon, it was taxation.
There’s a lot going on — so here’s a breakdown of the top regulatory threats to watch.
1. Data Privacy
Of all the potential regulatory threats to Big Tech, privacy may be the furthest along in terms of a regulatory framework. Europe’s GDPR law, which went into effect in May 2018, laid the groundwork for privacy discussions in the U.S. as well as a growing patchwork of state laws, such as California’s Consumer Privacy Act.
As more states have passed their own privacy laws — relatively popular laws owing to the rising awareness of data use and misuse — tech firms have spoken out in favor of a federal law that would be easier to comply with. While the exact contours of such a law aren’t yet known, privacy experts believe it’s only a matter of time before Congress passes a national law. “I wouldn’t be surprised if within two years we see privacy legislation at the federal level,” Matt Dumiak, director of privacy at CompliancePoint, told TheStreet.
Big tech firms make money hand over fist, but have also benefited from favorable tax laws and loopholes in international tax codes. Partly owing to those tax policies, Apple, Microsoft, Alphabet, Amazon and Facebook have the most cash among all U.S. companies (Apple tops the list at $245 billion, according to Moody’s). But increasingly, countries are demanding that these companies pay their fair share.
Ahead of the G20 Summit later this month, G20 finance ministers agreed to compile rules for limiting international tax dodges and for the imposition of “digital taxes” — essentially, geographically-based sales taxes on the “GAFA” group (Google, Amazon, Facebook and Amazon), in European parlance. Joann Weiner, a professor of economics at George Washington University, told TheStreet that building a broad international consensus on tax reforms will likely be a slow process — but that individual states can also enact their own codes. “The one hope for the digital tax is that these big countries, like the U.K. and France, can go it alone,” she said. France and the U.K. have announced their intentions to do just that, with smaller countries, like the Czech Republic, following suit.
When it comes to Big Tech, antitrust is no simple matter. But it also has some basis in relatively recent history, with a U.S. judge ruling in 2000 that Microsoft was a monopoly. (After an appeals process, Microsoft and the U.S. Department of Justice reached a settlement allowing the behemoth to remain a single company that opened up Windows to more software competitors.)
Today’s antitrust discussions focus largely on whether tech firms that operate marketplaces — Apple, Amazon and Alphabet — unlawfully freeze out competitors. A Supreme Court case is also examining the question of whether Apple’s App Store practices are illegal. Even more broadly, some trust-busting proposal, such as one by Presidential hopeful Elizabeth Warren, say that certain mergers — such as Facebook’s purchase of WhatsApp — should be unwound.
Meanwhile, the DOJ is mobilizing for a sweeping antitrust probe, and last week, the bipartisan House Judiciary Committee launched an antitrust investigation of its own. And on Tuesday, Asst. Attorney General Makan Delrahim laid out a framework for modern-day antitrust investigations in a speech, suggesting several different ways digital behavior could be deemed anticompetitive. While any antitrust enforcement will be a lengthy and contested process, these are signs that scrutiny on Amazon, Alphabet, Facebook and Apple is picking up steam.
4. Content Moderation
Privacy and antitrust may dominate discussions of Big Tech regulation, but recent controversies have brought another hot-button issue to the fore: How platforms should keep watch over harmful and inaccurate content. Alphabet’s YouTube recently came under fire for hosting homophobic and other offensive videos, which are promoted algorithmically, and Facebook was recently blasted by House Speaker Nancy Pelosi for declining to remove a clip that was slowed down to suggest she was drunk.
The question of how, if at all, to police how tech platforms police their own content is still in its relative infancy — Congress has held hearings on the subject, including one on Tuesday, with no formal proposals materializing thus far. But the issue of content moderation has an unusual degree of support among both Republicans and Democrats, a sign that some form of regulation is likely to succeed.
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