Why Europe needs a digital regulator
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Version 0 of 1. Digital monopolies are growing fast. Investors demand nothing less. But shouldn’t we, as citizens, demand something, too? Shouldn’t we have some recourse if Facebook decides to manipulate an election, or Google disappears a favourite firm from its all-important rankings? Free market fundamentalists have a quick rejoinder at the ready: digital monoliths are simply too complex for regulators to understand. They believe that no one outside of big firms should scrutinise their inner workings, unless the firms have behaved in an obviously illegal way. But suspicious things often happen on social networks and search engines – for example, the downranking of a Google competitor, or the sudden favouring of some friend of Facebook’s on its EdgeRank algorithm. Virtually any reshuffling of online life can be rationalised, post hoc, as an “attempt to improve user experience”. But what if we don’t believe it? Looking the other way In the United States, competition regulators have largely shrugged. They claim to be monitoring big firms’ behaviour, but they lack the technical expertise to do so. Budget restraints hamstring even the best-intentioned staff at the Federal Trade Commission, which enforces many privacy, antitrust, and consumer protection laws. As journalist Peter Maass noted, “The agency can take companies to court, but its overworked lawyers don’t really have the time to go the distance against the bottomless legal staff in Silicon Valley.” Maass concluded that the agency was low-tech, toothless – and defensive about work like his. The European Union is starting to contemplate charting another course. A document leaked to the Wall Street Journal from the office of EU Digital Commissioner Günther Oettinger calls for “a central EU-wide body with the power to monitor platforms’ use of data, and to resolve disputes between the operators and the businesses they serve”. This is far-sighted, important planning. The new economy demands a new regulatory body, with the ability to continually monitor the law-like power now assumed by major digital platforms to themselves. Such a regulator is desperately needed, to make sure digital platforms play fair. Presently, the focus is on how a behemoth like Google might manipulate search results to strangle would-be competitors before they can reach critical mass. A cash-for-profile-raising future? In the future, stealth marketing (secretly taking cash or other consideration in exchange for elevating the profile of sites in algorithmic rankings) might be a big concern. If search engines or social networks remove legal, non-spam entities from their index after they have been included, and fail to give some explanation to the removed entities, that ought to raise alarm bells, too. And European officials have already expressed concerns about monopolistic, US-based marketplaces setting the terms of exchange for their own digital firms. Some wail that vital trade secrets will lose all value if a ham-handed regulator demands their disclosure. But disclosure is not a simple on/off switch: any competent lawyer knows that in a given dispute, or monitoring situation, certain documents may only be seen by a judge, others by a larger swath of regulators, and some may never be seen at all. Transparency can be qualified, to account for commercial interests at stake. Such inquiries do not need to be expensive, relative to the tax-sheltered cash piles accumulating at major Silicon Valley firms. In contexts ranging from privacy rights to false advertising, authorities have recognised the need for fast, flexible “quick looks” at suspect business practices. For example, in US false advertising disputes, 95% of problematic situations are quickly resolved in a self-regulatory fashion. This is not a recipe for the litigation nightmares industry advocates so frequently invoke. Due process, fair play, anti-discrimination Given how much of the internet behemoths’ revenue is driving the purchase of other, smaller firms, isn’t it time some of that surplus was used to fund efforts to assure the competitive process is itself fair? The alternative is frightening: a few giant firms with a vice-like grip over the very marketplaces where their competitors would need to succeed in order to thrive. Competition and privacy law flirt with irrelevance if regulators disdain the tools necessary to understand a modern information economy. We should expect any company aspiring to order vast amounts of information to try to keep its methods secret, if only to reduce controversy and foil copycat competitors. However wise this secrecy may be as a business strategy, it devastates our ability to truly understand the social world Silicon Valley is creating. Opacity creates ample opportunities to hide anti-competitive, discriminatory, or simply careless conduct behind a veil of technical inscrutability. Small startups and innovators deserve better. Europe can’t expect its digital talent to take on the Googles, Facebooks, Amazons and Apples without some assurance that law will prevent the behemoths from handing them an offer they can’t refuse: be acquired, pay hefty fees for ads or placement, or risk total obscurity. As the EU’s internal policy document stated: “Only a very limited part of the economy will not depend on [large digital platforms] in the near future.” Basic principles of due process, fair play, and anti-discrimination must be brought into the digital age, or abandoned to history. |