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Time to Pay the Piper for Tech Giants

Government agencies look to regulate “anti-competitive” tech giants.

“Antitrust” and “anti-competitive” are the new buzzwords surrounding Silicon Valley, as major tech companies increasingly come under scrutiny over their dominance in not just the marketplace, but the lives of internet users across the globe. Whether in the realms of acceptable speech and opinion, the universe of data collection, or the dimension of pushing smaller companies out of existence, it appears Big Tech is setting itself up to control every aspect of our lives – it has yet to be seen how the public and government will react, but prominent figures are considering their next moves. Already under pressure from a range of U.S. and European investigations, Google and Facebook are also set to butt heads with the U.K. government.

Britain’s Competition and Markets Authority (CMA) has published an update in its ongoing study of digital advertising, and the accusations are not pretty. While the agency contends that tech companies have provided valuable and innovative services, and that “‘Big’ is not necessarily ‘bad,’” it has voiced concern over a lack of competition to Google and Facebook especially. Last year, Google earned over 90% of revenues from search advertising in the U.K., while Facebook accounted for almost half of all display advertising revenues; each company earning billions from advertising in that country alone.

Squashing the Competition?

According to the CMA, Google and Facebook hold increasing advantages over competitors as an inherent trait of their dominance. Less popular competitors are provided with a smaller share of market information on which to tailor their future services. Each year, it says, about 15% of queries on Google are completely new. Other search engines, such as Bing, will not have access to these searches, giving them less information to feed their algorithms and, therefore, less accurate search results and less market power.

Another area of concern for the CMA is imbalance caused by default settings that may limit users’ choices and exposure to other service options. Last year in the U.K., it reports, Google “was willing to pay around £1 billion [$1.3B] – 16% of all its search revenues – where it was the default search engine on mobile devices such as Apple phones.”

The agency also suggests that Facebook and Google place high demands on users in terms of personal information. It reports that “social media platforms such as Facebook do not allow consumers to opt out of personalised advertising: rather, people are presented with a take-it-or-leave-it offer, forcing them to share considerable amounts of personal data as a condition for using the service. And it is difficult to access privacy settings on these platforms, which are often only visible after navigating through multiple menus.” By pressing for such high levels of access to users’ personal information, these companies earn a market advantage by gaining the ability to formulate highly targeted ads.

The CMA’s fourth and final major concern is the lack of transparency with which Big Tech seems to operate. “Most of us visit social media sites and search on the internet every day, but how these firms work can be a mystery,” said CMA Chief Executive Andrea Coscelli. How Google and Facebook algorithms influence public behavior and perception is still largely an unknown and somewhat ignored field. The report points out that websites – particularly newspapers – that rely heavily on Google and Facebook to drive their traffic have expressed concern over sudden changes in the numbers of people viewing their sites, due to algorithm changes, as well as a limited ability for advertisers to evaluate the effectiveness of the ad services.

Representatives from Google and Facebook defended their business practices, claiming that in-built settings allow users to alter their privacy or ad preferences.

Do Not Pass Go

In terms of solutions, the U.K. agency has joined others in proposing government regulation. “This could include rules governing the behaviour of online platforms and giving people greater control over their own data,” it suggests, pointing to nations’ efforts across the globe to curb the ever-increasing influence of Silicon Valley.

Is regulation and government action the answer to what could be the preliminary stages of a monopoly, however? Andrew Moran, Liberty Nation’s economics and financial expert, is skeptical that government intervention would be a successful move, writing:

“Zuckerberg and Bezos are not sitting in a dark room somewhere plotting to take over the internet. But you should be concerned when these two billionaires begin to advocate heightened regulation, more government intervention … Milton Friedman quoted an old expression that to catch a thief, you should unleash a thief. If you want to stop a businessman’s monopoly, then you set a businessman to break it down. You never send a government bureaucrat after it. Throughout history, contrary to popular opinion, some of the biggest U.S. companies that have gotten immense have been through state regulation, intensive lobbying, and government-led barrier to entry efforts.”

As well as looking into the company’s advertising business, the CMA has announced it will begin investigating Google’s intended acquisition of software company Looker Data Sciences.

Regardless of whether the U.K. accepts the agency’s final recommendations, which are scheduled for release mid-2020, it appears the global trend is marching toward regulation of the internet – what form that will take is yet a mystery.

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Read more from Laura Valkovic.

Read More From Laura Valkovic

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