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The power of democracy and the challenge from big tech

The power of democracy and the challenge from big tech

1. CONTEXT OF THE NEWS

Recently, four of the United States' big tech companies viz. Amazon, Apple, Facebook and Google appeared before the US Congress Antitrust Subcommittee to defend their business practices.

This editorial analyses the challenge from big tech companies and the power of democracy to address those challenges.

2. BIG-TECH HEARING AND DEMOCRACY

2.1 The giant four

  • The four companies in question have a combined market capitalization of $5 trillion, which is twice India's GDP.
  • The leaders of the four companies were confronted by the US Congress Antitrust Subcommittee, for
    • using their market power to crush competitors
    • amassing data and customers to realize the sky-high profit
  • All four executives testified virtually at the 'big tech hearing'.

2.2 The power of democracy

  • The 'big tech hearing' reflected the power of the US Congress as a co-equal branch of government in a presidential system.
  • The four CEOs viz. Sundar Pichai, Tim Cook, Mark Zuckerberg, and Jeff Bezos who are technology and management behemoths in their own right behaved with the utmost deference, being aware of the power of the US Congress to affect their businesses through acts and new regulations.

3. UNIQUE DISPLAY OF BIPARTISANSHIP

Both, the Republicans and the Democrats criticized the companies in a unique display of 'bipartisanship', albeit for different reasons.

3.1 Criticism from Democrats

  • The Democrats criticized the tech giants for:
    • monopolistic practices
    • buying up potential rivals
    • disadvantaging competitors on their platforms
    • impacting small business negatively
    • using data generated by rivals for developing their own competing products
    • deriving profit from user data, often without explicit consent
    • not paying for news content carried on their sites

3.2 Criticism from Republican

  • The Republican criticism of the tech giants focused on:
    • perceived censorship of conservative viewpoints - these tech giants was perceived to be influenced by Left-of-Centre views of their employees
    • A case in point is the incident at Google when it backed out from participating in Project Maven of the Pentagon at one stage.
    • The reason for walking back by Google was backlash faced from the employees since the project involved of the use of AI for drone strikes.
    • Furthermore, Facebook was criticized for not taking enough measures to keep a check on the proliferation of fake accounts which are to the tune of nearly 6.5 billion every year as investors and advertisers are lured by the user base

3.3 Remarks by David Cicilline

  • The chairman of the subcommittee, David Cicilline, held that "these companies are so central to our modern life, their business practices and decisions have an outsized effect on our economy and our democracy. Any single action by any one of these companies can affect hundreds of millions of us in profound and lasting ways....Their ability to dictate terms, call the shots, upend entire sectors, and inspire fear represent the powers of a private government".
  • Cicilline concluded by saying that these tech giants wield unacceptable power and there is an urgent need to break up these companies or further regulate them.
  • Instances from the bygone times were cited to illustrate how the Rockefellers and Carnegies of yore had used their monopoly to extract huge profits and trample competition.

4. WHAT IS THE DEBATE ABOUT?

4.1 Need of further regulation

  • Today, there is an urgent need to put more regulations on these tech giants, especially on their data usage practices.
  • The debate around the use of data by these technology behemoths has been centered around privacy, but now has gone beyond privacy and there are talks on putting bulk anonymized data tin the public domain for competitor use and to stimulate innovation.

4.2 Similar debate in India

  • A similar debate regarding non-personal data and its use for a public purpose beyond private profit and market power of the data aggregator is presently underway in India as well.
  • There could be opportunities for Indian companies as well in case there is an attempt to unravel some of the acquisitions of these companies.
  • The restrictions put on Amazon from using the competitor data from its platform is very similar to the restrictions put on Amazon in India on its inventory-based model.

4.3 Measures taken by other countries

  • Other countries are also taking various measures on the issue, some of which include:
  • Australia
    • Australia has granted three months to Google and Facebook to negotiate with Australian media regarding fair pay for news content.
  • There are several measures being considered in Europe as well. Some of which are:
    • making the preferential treatment given by Amazon and Apple to their own products an illegal act
    • mandating Google to share search data with smaller competitors
    • requiring Facebook to make its services work more easily with rival social networks
    • levying a digital tax on the tech giants to enable a revenue for government and society where data is being generated and then using it to earn profit

5. PROLIFERATING CYBERSPACE

51. Impact of COVID-19 pandemic

  • The concerns regarding data privacy, data security and unfair business practices are much more relevant today.
  • This is because, due to the COVID-19 pandemic, the digital space in making further inroads in our daily lives.
  • Given the increased role of cyberspace and digital in public life, it is very likely that the power of there companies will come under further scrutiny.

5.2 Underlying personal interest

  • The probability further increases as Europe will want to promote competition through its own champions.
  • China will also need to assess the impact on its own companies, as there is an increased debate on security and data privacy challenges globally.

5.3 Breaking up – not an easy task

  • However, breaking up these companies or putting them under effective and strict control and regulation is not going to be an easy task because:
    • these companies have a tremendous power of lobbying Congressmen and Senators and
    • these companies will make a case for the need for size and flexibility to meet the challenges thrown by Chinese companies who have the backing of their government
    • many regulations that were imposed on banks and financial companies in the US aim the wake of 2008 financial crisis have slowly been eased out

5.4 Need of national champions

  • There are talks in India as well, of the need of national champions across the sector to address the competition from China, South Korea, the US, Europe and others.
  • While there is a definite need of indigenous tech giants, this needs to be balanced by ensuring :
    • the due power to the consumer
    • space for the innovator
    • due diligence by elected representatives.

6. CONCLUSION

The 'Big tech hearing' has shown the true power of democracy.

It has also shown that despite the technological and financial dominance of these tech giants, smaller businesses and consumers have the power to make their voices and concerns heard through their representatives.

Source: Money Control