Regulating

the Technology Giants

Companies such as Google/YouTube, Facebook, Airbnb and Uber benefit from strong network effects - the phenomenon through which their services become increasingly attractive as more people use them, to the extent that it becomes near impossible for any other company to compete - or for governments to challenge them. They inevitably become under less pressure to remain efficient, or to innovate, or to be good corporate citizens.

They also share the American 'see you in court' approach to regulation. Regulation, they believe, is for 'the guidance of wise men and the observance of fools'. Uber, for instance, is said to have 'tended to barrel into new markets by flouting local laws, part of a combative approach to expand globally'. According to the New York Times, Uber developed an app which ensured that city officials were not able to book a car and so scrutinise the service. The Times called them the 'Predators of the internet who do as they please'. Facebook certainly seemed unperturbed when it was fined €110m (£94m) by the EU for providing misleading information about its 2014 takeover of WhatsApp.

John Lanchester argued (Sunday Times October 2017)that Alphabet/Google/YouTube and Facebook/Instagram were both walking the fine line between ethical growth and making even more money by 'doing evil'. Quoting an industry insider:-

“YouTube knows they have lots of dirty things going on and are keen to try and do some good to alleviate it, ... “Terrorist and extremist content, stolen content, copyright violations. That kind of thing. But Google, in my experience, knows that there are ambiguities, moral doubts, around some of what they do, and at least they try to think about it. Facebook just doesn’t care. When you’re in a room with them you can tell. They’re” — he took a moment to find the right word — “scuzzy.”

The companies' huge size and international reach certainly make it near impossible for any individual regulator to tackle them with any prospect of success, partly because their businesses are so complex and partly because their resources enable them to out-gun all but the most persistent and well-funded regulators. But their critics are becoming more vociferous. Nick Srnicek has described data as the modern equivalent of oil - essential to the modern economy and maybe needing something like the 1911 anti-trust break-up of Rockefeller's Standard Oil.

There is a related issue in that Google/YouTube, Facebook, Twitter etc. claim to be mere platforms, passively hosting content that they are unwilling to assess. In practice, their algorithms to some extent choose what their readers see, and the companies are financed by advertising, much like traditional media companies. They distribute fake news and other attention-grabbing content, regardless of its quality, veracity or decency, including material which encourages terrorism. It is well established that detailed guides showing how to make nail bombs, and ricin poison are freely available on Facebook and YouTube. The companies claim that it would be too technically complex to tackle the problem, but this is unconvincing. They have shown themselves to be adept at addressing copyright violation when it suits them. And there is no obvious reason reason why they should be exempt from the 'free speech' limitations that apply to the rest of us, and to other media companies.

But they can and do deploy the strong argument that any restriction of their behaviour threatens their customers' right to free speech.

The FT carried this interesting report in in April 2017:

Facebook blamed human error for its failure to remove dozens of images and videos depicting child pornography after they were flagged to the company. The Times newspaper reported that it had alerted the social media giant, using a dummy Facebook profile, to potentially illegal content that was posted on to its website by users, including images of an allegedly violent sexual assault on a child and cartoons of child abuse. The British newspaper accused Facebook of failing to remove many of the images but the company said this was because of human oversight and that its reviewers should have spotted that the content should be removed. ...“We are always looking for other ways to use automation to make our work easy, but ultimately content review is manual,” said Monika Bickert, ‎head of global policy management at Facebook in a past interview with the Financial Times.

This is a clear admission of failure of quality control. I have no doubt that most media organisations would have run into severe trouble - and probably been prosecuted - if they had behaved like Facebook. But I am not aware that any formal action has yet been taken against the company.

Later that month, a man killed his daughter and then himself whilst live-streaming his actions on Facebook Live. Again, the company's attitude seemed to be that its customers' wish to view live video outweighed any moral or other pressure that the content should be pre-approved. Presumably nothing will change unless and until someone prominent is killed by someone seeking Facebook fame.

The company had previously streamed a video which showed that a man chose 74 year old Robert Godwin Snr at random and then shot him.

Evan Williams — a Twitter founder and co-creator of Blogger — was reported as follows in 2017:-

“I think the internet is broken ... And it’s a lot more obvious to a lot of people that it’s broken.” People are using Facebook to showcase suicides, beatings and murder, in real time. Twitter is a hive of trolling and abuse that it seems unable to stop. Fake news, whether created for ideology or profit, runs rampant. Four out of 10 adult internet users said in a Pew survey that they had been harassed online. “I thought once everybody could speak freely and exchange information and ideas, the world is automatically going to be a better place,” Mr. Williams says. “I was wrong about that.”

It must be irritating (to use a mild word) for the established media to watch Facebook and others publish material which would lead to others being brought low. Imagine what would happen if the BBC decided that they would allow the public to broadcast murders and suicides live on one of their channels!

Optimists have suggested that the companies' consumers may become a sort of regulator if they begin to desert the platforms in protest against their content or behaviour. But there is little sign of this happening, and many users are in effect locked into the products as a result of the strong network effects mentioned above. It can only add to commentators' concerns that it is well known in Silicon Valley that 'If you are not paying for it then you are the product'.

But pressure is now being applied by the companies that fund the Giants via advertisements etc. There were two particularly interesting developments in the Summer of 2017. First, Google and Facebook admitted that they could if necessary remove unpleasant content, particularly in order to ensure that it did not appear next to advertisements from its blue-chip advertisers. Second, they discovered that they could, after all, remove illegal streaming of football matches, as well as 30,000 video clips, when required to do so by a court order sought by the Premier League. So 'the Giants' can censor when necessary. It remains to be seen whether the UK or any other government will have the temerity to make similar demands to those made by large commercial interests.

Maybe the EU will collectively be strong enough to take the companies on, encouraged by Germany which has a tradition of strong form-based regulation? A start has been made by the EU's Competition Commissioner who has fined Google for abusing its dominant position in 'search'. But competition authorities are usually well resourced and not scared of companies like Google. It is a lot harder for smaller regulators to tackle bad behaviour which is not anti-competitive.

The European Commission nevertheless fired a shot across Facebook's and Twitter's bows in September 2017 when it issued a proclamation that the companies must do more to remove 'illegal content inciting hatred, violence and terrorism', and threatening additional measures as necessary. But Bird & Bird's Graham Smith pointed out that the EU-preferred systems relied upon 'trusted flaggers' of illegal etc. content, but did not include provisions to ensure that the trusted flaggers were making good decisions and/or should be trusted with such censorship power.

(In his speech 'Antitrust in the Tech Sector' Senator Orrin Hatch argues that it is a mistake to ask competition authorities to take on extra regulatory duties which have little to do with the effectiveness of competition. See also item 14 here. )

And maybe the industries themselves need to be analysed in a different way? Rather than worrying about concentration in particular markets, such as search, maybe regulators should be concerned about customer lock-in - the unattractive obverse of strong network effects. And interoperability? Should we be worried, for instance, that customers are increasingly committed to one or other of the Apple and Android domains.

Artificial Intelligence may one day be the answer to some of the problems, but it cannot at present distinguish between the the video of the of murder of Robert Godwin and that of a fatal shooting by a police officer - which surely should be made available to the public.

There is also the danger that algorithmic news poses a risk to democracy as 1.2 billion daily Facebook users, for instance, mainly listen to louder echoes of their own voices - the so-called filter bubble. But Facebook’s relatively modest efforts to curb misinformation have been met with fury on the right, with Breitbart and The Daily Caller fuming that Facebook had teamed up with liberal hacks motivated by partisanship. If Facebook were to take more significant action, like hiring human editors, creating a reputational system or paying journalists, the company would instantly become something it has long resisted: a media company rather than a neutral tech platform. Facebook’s personalisation of its news feeds would perhaps be less of an issue if it were not crowding out every other source – but as a result it is at least  clear that Facebook must be responsible for finding solutions to its problems.

Active (as distinct from responsive) moderation of their content would also likely open Facebook to potentially massive legal liabilities.

The Home Affairs Select Committee published a report on Hate Crime in early 2017. The committee strongly criticised social media companies for failing to take down and take sufficiently seriously illegal content – saying they were "shamefully far" from taking sufficient action to tackle hate and dangerous content on their sites. The Committee recommended that the Government should assess whether failure to remove illegal material is in itself a crime and, if not, how the law should be strengthened. They recommended that the Government should also consult on a system of escalating sanctions to include meaningful fines for social media companies which fail to remove illegal content within a strict time frame.

Notes

The 'Big Four' technology giants - Amazon, Facebook, Alphabet (i.e. Google & YouTube) and Netflix - were valued on Wall Street at around $1.5 trillion in May 2017.

Facebook has 2 billion users.

Google has 87% of the search market in the USA, and 83% in the UK.

Amazon has 43% of the online retail market in the USA and 16% in the UK.

 

Martin Stanley