The EU is preparing new regulations for online platforms, with a proposal for the so-called Digital Services Act expected by the end of the year. Along with plans to tackle dominant positions and potential market distortions, it's working with other countries on new tax rules to target international internet companies and looking at whether stricter controls are needed to limit hate speech and misinformation on social media. When self-regulation and the threat of breaking up companies doesn't do the job, state-imposed regulation is inevitable. At the same time, some governments lacking in democratic mores are abusing their power with the spread of disinformation. A boycott by the major internet platforms will probably do little to stop this, leaving the population to decide on the lesser of the two evils. In the end, the choice (and power) is with the consumer. As long as they keep using Facebook, advertisers will keep coming back to the social network. And as long as there's no popular revolution, dictators will keep suppressing people and bombarding then with disinformation.
Human weakness, corporate greed lead to abuse
Platforms are a central part of today's internet. Amazon, Microsoft, Apple and Alphabet all have market capitalisations over USD 1 trillion, and Facebook is approaching USD 700 billion (Pinterest, Twitter and Snap trail at a distance with values of USD 16, 28 and 38 billion, respectively). Circling around them are content providers and consumers, as well as advertisers and public authorities.
To give an idea of the size of the media sector, we note here a few more of the current market capitalisations:
- Content (video): Netflix USD 221 bln, AT&T USD 217 bln, Walt Disney USD 210 bln, Comcast USD 181 bln, Sony USD 84 bln.
- Advertising: Omnicom USD 11 bln, WPP GBP 7 bln, Publicis EUR 7 bln, IPG USD 7 bln, Dentsu JPY 675 bln (USD 7 bln).
Little is going well these days in the interaction between platforms and stakeholders. Misuse is unfortunately rife, due to human weakness as well as corporate greed:
- Between platform and consumer: platforms are violating privacy rules, and consumers are posting disinformation (fake news, hate speech, harassment, etc.).
- Between platform and content provider: platforms abuse their market position, sometimes due to conflicts of interest, and avoid paying copyright.
- Between platform and advertiser: advertisers abuse personal information, often because platforms don't exercise enough oversight.
- Between platform and government: malicious governments post disinformation, and platforms evade taxes.
When markets fail: regulation and self-regulation
There are a number of ways to combat the abuse, divided roughly into self-regulation and regulation. These are remedies that should cure the failures in the market. Whatever your political persuasion, some form of oversight is needed. From the left to the right, everyone is concerned about the market power of the American internet platforms, which without sufficient regulation could develop into a type of 'deep state'.
Governments are developing regulation in various forms in an attempt to combat the misuse. In the US, a discussion has started about the Communications Decency Act (1996), and especially its article 230. This article exempts online platforms from liability for content posted by consumers and allows platforms to moderate what appears on their sites. The debate is especially pressing in the US, where many feel it's time for a change in the liability regime. How fast should a platform take down illegal content after being notified and how much effort can be expected from them to fight disinformation? In terms of moderation, can a platform intervene directly, in what way and to what extent is it then liable?
Platforms use AI, fact-checkers and moderators to combat disinformation. This is a type of self-regulation designed in part to ward off real regulation or more structural measures such as a break-up of certain companies. Corporate social responsibility programmes often serve a similar aim; see the hundreds of millions of euros given to the Black Lives Matter movement by American corporations. Amazon for example is investing heavily in renewable energy and educational projects. A good CSR policy doesn't just help people and the planet, but it also promotes the company's image and helps deflect criticism.
Governments are expected to be subject to democratic processes, but we all know countries where there is little evidence of democracy. In this sense it's increasingly worrying how the practice of disinformation is no longer the domain of just 'banana republics' but also used in the US, countries in Eastern Europe (Poland, Hungary), and the Middle East.
Political perspective: pressure through boycotts
Businesses have discovered the use of boycotts to try and force their way. Platforms are intervening when governments commit oppression. For example, Google long ago gave up its Chinese activities and also stopped developing a local region there for its Google Cloud Platform. Many platforms have refused to provide personal data to China as the country expands its control over Hong Kong. Even the Chinese company ByteDance is trying to protect users in Hong Kong of its app TikTok by replacing it with the Chinese variant Douyin. The population faces not only the threat of the Chinese dictatorship but also the lack of access to Western internet platforms.
India has gone as far as shutting down access to Chinese apps in its border conflict with the neighbour. In this case, Apple and Google were quick to comply and remove the apps from their Indian app stores. The US is considering doing the same in its trade war with China. As part of a border or trade conflict, this type of boycott may have a positive effect, as these types of conflict generally end with a compromise - if they don't escalate into war.
Advertisers are also trying to improve their position with a boycott of Facebook this month. This could lead to better self-regulation, but as long as people don't stop using Facebook, the advertisers will return sooner or later. Facebook has already shown it doesn't plan any major changes in its policies.
It's questionable whether any boycott can really have a lasting, positive effect. In Hong Kong, the boycott by internet platforms seems again to be a form of CSR, to polish their image and avoid regulation.
We conclude that regulation is part of a free market, the same as democracy is part of a free country. Unfortunately that's easier said than done.
