From antitrust suits to restrictive new laws, the world’s digital behemoths are in hot water. So who’s on the naughty list and why? Hal Crawford explains.
All around the world, governments are moving against big tech companies. The US government last week filed a suit against Google in an era-defining antitrust case. The European Union, having levied eye-watering fines on Google, is now targeting all big tech with a Digital Services Act that will set unprecedented restrictions. The Australian government is hoping to skewer Google and Facebook with competition law, trying to force them to hand over money to news companies. Amazon and Apple are in anti-competitive hot water in several places.
The government action is a reflection of popular disaffection with pervasive digital platforms that have become unavoidable for anyone living a modern life. There’s a rift here, between what people do and the stories they listen to, with digital consumption increasing even as documentaries like Netflix’s The Social Dilemma tell blithe one-sided tales. Can we believe that big tech is basically evil while continuing to use it every minute of every day? Yes we can!
The big one: United States vs Google
The home of free enterprise has a history of strong regulation of monopolies, and the lawsuit filed last week against Google will go down in that history as a milestone. The US government alleges that Google’s payment of phone manufacturers to use its search engine amounts to an abuse of monopoly power and unfairly excludes search competitors. The eye-opener here is that Google has been quietly handing billions to Apple to ensure it remains the default search on the iPhone: the case claims between $US8-12 billion ($NZ12-18 billion) every year. That’s a Fonterra-sized business in what Google is claiming is a business-as-usual kickback.
For the record, Americans call competition law “antitrust”, because it originated to counter 19th-century trust monopolies in oil, steel and railways. The last time big tech was chastened with the antitrust whip was back in 1998, when Microsoft was found to have broken the law by forcing everyone to use Internet Explorer. That punishment marked a turning point for Microsoft, preceding an ebb for the company only really dispelled in the past three years under CEO Satya Nadella.
The Google antitrust case has been cheered on by left and right. What both politicians and news outlets have discovered is that there is almost no downside to bagging big tech, and plenty to be gained. The tech narrative has transformed over the past two decades as digital networks have seeped into lives, suffering first from familiarity and now the resentment of compulsion. There is almost no incentive to counterweight stories of tech wrongdoing. Contempt for wealthy companies that don’t offer many local jobs or pay much tax seems a natural development.
Nowhere has tech contempt been better illustrated than in Australia, where news companies have made a play for Google and Facebook revenue on the basis of “unfair use” of news stories in search results and social feeds. In my view the claim is ridiculous, but such is the power of the “bad tech” story the competition regulator has intervened. Truth – such as the fact that both companies dominate online advertising – is meshed with self-serving delusion in a powerful mix that may get some pretty dodgy legislation across the line.
Meet the family
The CEOs of Facebook, Google, Amazon and Apple were hauled before US Congress in July to face a public inquisition. What could have been a historical spectacle was overshadowed by the Covid epidemic and undermined by the divided and often incompetent inquisitors. The difficulty in pinning the bosses down was fundamental: Facebook, Google, Amazon and Apple are not actually the same kinds of companies. To say they are technological is not saying much in the modern era. Instead they are like a family, bearing resemblances and a series of overlapping attributes. This is natural in a networked economy where most direct competitors are beaten or eaten.
Most big tech businesses run primarily on servers. Almost all make some hardware. But there’s nothing that really sets the “naughty list” apart beyond their connection to our everyday lives. The more interface between the general public and a company’s product, the more likely they are to attract the new opprobrium.
Of the current list of tech targets, Facebook is probably the most interesting. If you forget share market valuations for a moment and look at a generally ignored measure of company size, total revenue, Facebook isn’t all that big. In 2019 it made just over $US70 billion ($NZ105 billion), not in the world’s top 100 companies.
What Facebook does have is users, by the billion. About half the world’s adult population uses the social network every month. This gives the company unprecedented influence, and has involved its network in modern atrocities such as the 2017 slaughter of the Rohingyas and the 2019 Christchurch shootings. It is hard to see how a world-spanning network could avoid the sins of its members, and perhaps that’s Facebook’s biggest problem: it’s on the hook for humanity. The Christchurch Call to eliminate violent extremist material online is a howl of protest rather than a plausible action plan.
I would argue the company that holds the key to human relationships should be both bigger and much more regulated than Facebook currently is. CEO Mark Zuckerberg seems to agree with the latter point, saying two years ago, “I think the real question as the internet becomes more important in people’s lives is what is the right regulation, not whether there should be (regulation) or not.”
The anodyne antidote
There’s another point here, one that Facebook learned late: the last thing you want from people who control the world is to be interesting. This is well-illustrated by a conspicuous omission from the bad books. Microsoft, the villain of 1998, has been through the wilderness and come back with the corporate equivalent of a thousand-yard stare. Microsoft makes software, some hardware, competes fiercely in cloud computing and speaks earnestly of services. It’s a massive company that makes more money than Facebook and no one is calling for its head. Satya Nadella is a calm and insightful leader, and it helps that company founder Bill Gates has become the world’s most generous philanthropist. Under Nadella’s leadership Microsoft has moved away from its street-fighting roots and minimised anything – like MSN, its massive and almost unacknowledged content network – that could draw negative public attention.
Fleeing the content curse
A few years ago MSN featured original content. Microsoft got out of that, and began paying for and aggregating news and feature content from other publishers. Earlier this year it moved even further from content by firing most of its human editorial staff and entrusting the job to AI. I see the flight from content as more than simple cost-cutting. “Content” is a convenient word, but what we are really talking about here are stories, the primary driver of belief and action. To tell stories is to be responsible for what they make people believe about the world, and that comes at a high price, literally and figuratively.
Facebook can’t avoid content and has been dragged to responsibility kicking and screaming. Many stories told on its network have been lies, or incited violence, or otherwise been damaging. Facebook, along with Twitter, has moved to flag and censor untruths even by high-profile users such as US president Donald Trump. This in turn has led to accusations of bias and restriction of free speech: many of the posts now censored are not illegal (for example, Holocaust denial is not illegal in the US). As a coding company, Facebook would like to be able to algorithmically determine truth, and thus apply a filter cheaply and one step removed from its own agency. In the absence of that disturbing possibility, it has settled for a hybrid model involving AI triage, partnerships with fact-checking organisations and “down-weighting” of posts that contain important lies.
The tech cuckoo
There is an element of naivety in the current backlash against big tech. It’s as if we nurtured this sweet baby bird and it turned out to be a cuckoo that is now big, scary, and demanding huge chunks of our lives. But the cuckoo has been present and obvious for some time now, with profit-seeking corporations making and controlling devices that never leave our sides. Big tech is still currently incentivised to do things none of us really want: spend more money, more time and mesh our lives ever more tightly with the network. The world will see a wave of “Digital Service Acts”, and it’s important to get the form of the laws right. How we regulate, restrain and moderate the forces of big tech matters. After all, there are darker forces in the world than the desire to make a buck.
The Spinoff Weekly compiles the best stories of the week – an essential guide to modern life in New Zealand, emailed out on Monday evenings.