Rising global concerns over the concentration of power in the hands of Silicon Valley giants do not seem to have dimmed the tech hub’s ambitions. But with the problems now growing too big to ignore, are regulators gaining momentum?
Silicon Valley’s New Offering
While Silicon Valley’s leading tech companies may have had many differences in the past, they have always agreed on one thing: tech is a force for good. And making the world more open, connected, and accessible can make it a better and more prosperous place.
From driverless cars to smart homes — tech today is everywhere, with the potential to grow even further. But making the world easier for us to navigate digitally or otherwise, and giving us the ability to connect to masses around the world in an instant, comes at a cost. Earlier, we were sold a snazzy gizmo, urged to sign up with the hottest social media channel, or use an app that would make our lives easier. But lately, we’ve become aware of the fact that one of Silicon Valley’s newest offerings isn’t just a device, a popular social media channel, or an app. It is you and I — our data.
An Unwitting Trade-Off
The tech giants, through their smartphones and apps, have progressed from analyzing what’s just typed into search boxes, to tracking our every move. The gold rush for data had earlier gone largely unnoticed: after all, it seemed like an acceptable trade-off for the services that were being made available to us at little or no cost. How many of us, for example, would read all the terms and conditions before we agreed to let Google Maps use our location data to give us directions?
On such apparently firm foundations, the tech titans amassed vast troves of data and built ad industries to rake in billions of dollars: Google’s ad business grew from a $1.4 billion per year business in 2003 to one that generated over $95 billion in 2017. According to a CNBC report, Google’s parent company Alphabet made 86 percent of its $32.65 billion in revenue from advertising alone in a quarter in 2018. Once limited in scope, Amazon’s ad business is now worth $125 billion and can be considered a third major component of its business along with its e-commerce and cloud offering. Targeted advertising is also the core of Facebook’s business — one that brings it more than $40 billion in revenue each year.
How exactly the ads have the uncanny ability to show us what we were thinking or talking about remains a mystery to many. According to a New York Times article about a Pew Research Center survey of 963 American Facebook users, half of them who looked at their Facebook “Ad Preferences” — a page with data that lists their personal traits and interests for advertisers — said they were not comfortable with the company’s compiling that information. Such practices prompt questions about ethics and transparency, and fuel debates about whether our phones are secretly listening to us.
While we were once just the consumer, we have now also turned into the raw material that is essential for the tech giants to grow their businesses.
The sheer size and scale of these tech behemoths are another cause for concern. Take Facebook for example — a company that has over 2 billion users around the world. What happens when a fraction of its users’ data is profiled and misused? Or if the platform gives voice to incendiary remarks and unverified news about certain ethnic groups? The Cambridge-Analytica incident and instances of violence in the Philippines and Myanmar showed us exactly how dangerous such infractions can be. Now there are talks of integrating Facebook’s major acquisitions — WhatsApp and Instagram — with Facebook Messenger, sparking fresh antitrust concerns.
With Amazon’s massive market size and the power it has over smaller retailers, antitrust scrutiny of the company would seem inevitable. However, there are challenges even in that.
Full Speed Ahead
While these concerns are sounding alarm bells, the tech giants show hardly any signs of slowing down. A New York Times report revealed that Google is envisioning a campus of eight million square feet with offices for 20,000 workers. Overall, Google’s work force increased 21 percent in 2018. Facebook’s rose by 45 percent in that time, to 34,000, and it is advertising 2,700 additional jobs. Amazon’s head count tripled over the last three years, making it the second company in the US to employ more than 500,000 people — not counting its contractors. Google and Amazon are also looking to expand into other industries.
Checks and Balances
In Europe, there have been some efforts to curtail the advances of these powerful tech companies: Google was recently fined $57 million by the French data protection authority under the European Union’s (EU’s) landmark data privacy legislation, the General Data Protection Regulation (GDPR). The company was also fined a record $5.1 billion for abusing its power in the mobile phone market in the EU. Earlier in 2017, the company was fined $2.7 billion by European antitrust officials for unfairly favoring its own services in internet search results. Facebook was fined $645,000 in the UK for failing to protect the data of UK citizens, and $11 million in Italy over data misuse. France levied a new tax on big tech companies — the type of action that, according to a leading economist, can avoid the concentration of global wealth in the hands of a few thousand people.
Regulators in the UK and EU are chipping away at the colossal power that the tech giants have amassed over the years, but there is still much left to be done before they achieve an acceptable level of compliance. Earlier, Silicon Valley was convinced that tech was a force for good in the world, but lately, the foundations of this belief seem to be shaking under allegations of market monopoly, misleading data practices, election interference, and facilitation of violence. The question is, can this damage be contained by self-imposed good governance or will regulators at home need to take control?