By William Olausson
During the last decades, the tech giants– that is, companies like Google and Facebook – have grown to become some of the highest valued companies in the world. The technology sector at large has during this time been a major source of growth for the world economy. The rise of the tech giants has coincided with, as well as depended on, the dominating impact the Internet has on contemporary daily life. These companies offer services many people use daily, like browsing the Internet or using social media. Notably, most of these services are also offered free of charge.
Instead of charging money from their users, these companies rely on making money through advertisements. Each individual user, by utilising the services of these companies, gives away personal data that can be used to create a unique profile of that individual. The information thus collected can then be used to create targeted advertising; something not possible by virtue of traditional advertising in print media or on television. Obviously, such targeted advertising is much more effective than its more traditional counterparts. In that sense, it is by collecting personal data on a large-scale that the tech giants have been able to reach such a dominant position in the world of business, with significant power over the economy.
But just as for every action there is a reaction – governments around the world have now begun to react to the power the tech giants have over the economy. Both in the EU and in the US, voices have been calling for measures aimed at limiting the power of these companies. In the EU, the General Data Protection Regulation (GDPR) has been introduced to give individual users more control over their personal data on the Internet. Recently, a global minimum corporate tax rate of 15 percent has been agreed by 136 countries. The taxation is aimed at multinational companies, for example such large technology companies as mentioned above.
Now lawmakers on both sides of the Atlantic face a dilemma: on the one hand, they can choose to be content with the measures that have been taken already, and therefore risk that the tech giants stifle innovation and competition in the technology sector because of their dominating positions. On the other hand, they can crack down on these companies even further, and therefore risk interfering with them offering services that many people across the world want to use, and perhaps even need to use for different reasons. The answer to this dilemma is evidently not quite clear.
If it is true that the tech giants have such a dominant market share that they are negatively affecting innovation and competition in the technology sector – what can be done to solve the problem? Naturally, the means given by competition law to stop such anti-competitive behaviour are one way to curb the power of the tech giants. However, reaching such a solution might be easier said than done. Simply put, regulators would need to prove that these companies either have abused their dominant positions, as in imposing unfair prices versus the consumers or that they have entered agreements with other companies meant to restrict competition. This might be hard to do and leads to an argument against regulating the tech giants: as most of the services they offer are free to use, they can therefore not be said to abuse their dominant positions to impose unfair prices vis-a-vis their users. That the users in some way could be said to pay with their personal data is another question.
All this goes to show that just like any other significant economic or social issue there is no easy answer to the question of whether lawmakers should, and in that case how to, curb the power of the tech giants. Indeed, the means given by competition law might be too blunt of a weapon to solve the problem by itself. More likely, more than one approach needs to be taken regarding how to best handle the problem of the power the tech giants have over the economy, and perhaps over society at large. Herein the amassing and usage of personal data is but one, although important, aspect of the issue. Experience has shown how this question is not purely an economic matter but instead one that is affecting society in several ways. For example, the lack of regulation of social media companies is not only a question of economic competitiveness. A lack of regulation can also enable disinformation to spread- something that has been shown to impact elections around the world which in turn ultimately risks threatening democracy.
The writing on the wall is clear: lawmakers, both in the EU and the US, are going to react somehow to try to curb the power of the tech giants. But only time will tell the force of the reaction against them. Although they for now stand firm on solid ground, the tech giants might very well prove to have feet of clay
Cover: Thought Catalog
