Programme Updates

Big Tech – What Is To Be Done? (Part 3)

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In the latest – and final – report from the Social Justice in Tech. programme, supported by Stifel, Matthew Gwyther reports from a January roundtable, hosted by Stifel Europe CEO, Eithne O’Leary, with opening contributions from Damian Collins MP. Further context is offered by the February 12 Government announcements and surrounding debate.

Click here to read the articles from first and second roundtable discussions.

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The rise of surveillance capitalism over the last two decades went largely unchallenged. “Digital” was fast, we were told, and stragglers would be left behind. It’s not surprising that so many of us rushed to follow the bustling White Rabbit down his tunnel into a promised digital Wonderland where, like Alice, we fell prey to delusion. In Wonderland, we celebrated the new digital services as free, but now we see that the surveillance capitalists behind those services regard us as the free commodity.

– Roshana Zuboff, The Age of Surveillance Capitalism 

Just because something is ostensibly free does not appear to mean it doesn’t require regulation. Just think of children’s playgrounds in a municipal park. Or the content within free newspapers. The fact that Big Tech gets its customers – ie. us – gratis does not mean we should come with no regulatory strings attached. Nothing is really “free” (Facebook, among others, of course mines our personal data for their ultimate benefit) and the public requires looking after.

How to rein in unintended consequences in the Digital Wonderland is now exercising governments across the globe. For the past three years, the clamour to better regulate the internet – that is, exercise democratic scrutiny over it – has grown exponentially. But in terms of new laws, the silence has been marked. In the UK eight parliamentary inquiries and four reviews have looked into how better Britain might regulate the internet but have led to as yet very little of consequence in government. As we shall explore, even the most recently mooted legislation was immediately reined in by Number 10.

The then DCMS Minister, Nicky Morgan, said shortly after the 2019 election result and the UK’s exit from the EU: “The first principle is that we will be an unashamedly pro-technology government in all that we do, because we believe that, harnessed properly, technology is an immense force for good.”

Pointing out that digital innovation drives “opportunity, productivity and creativity”, Morgan said the government will put technology first in order to maintain the current competitive position of the UK’s tech landscape and technology’s involvement in society in the future. In early February, the Prime Minister went further and stated that the United Kingdom will seek to diverge from EU data protection rules and establish its own ‘sovereign’ controls in the field. His comments came despite the EU affirming that the UK should “fully respect EU data protection rules.” This is clearly a space to watch.

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This was the third roundtable discussion in the series about Big Tech, Social Justice, Power and Regulation supported by Eithne O’Leary, CEO of the European arm of investment bank Stifel. The guest speaker was Damian Collins who until December 2019 was the high-profile chair of the Commons Select Committee on Culture, Media and Sport. Jericho’s podcast interview with him can be heard here.

In 2018 Collins was responsible for one of the bolder moves by relatively powerless backbench MPs when he used the legal powers of parliament to seize internal Facebook documents in an extraordinary attempt to hold the US social media giant to account after chief executive Mark Zuckerberg repeatedly refused to answer MPs’ questions concerning interference in the political process surrounding 2016’s Brexit vote.

The cache of documents contained significant revelations about Facebook decisions on data and privacy controls that led to the Cambridge Analytica Scandal.  Collins deployed a rarely-used Parliamentary mechanism to compel the founder of a US software company, Six4Three, to hand over the documents during a business trip to London.  A Serjeant at Arms was sent to the man’s hotel with a final warning and a two-hour deadline to comply with its order. When the software firm founder failed to do so, it’s understood he was escorted to Parliament. He was told he risked fines and even imprisonment if he didn’t hand over the documents. They were downloaded.

Collins said at the time: “Democracy is at risk from the malicious and relentless targeting of citizens with disinformation and personalised ‘dark adverts’ from unidentifiable sources, delivered through the major social media platforms we use every day. Much of this is directed from agencies working in foreign countries, including Russia. The big tech companies are failing in the duty of care they owe to their users to act against harmful content, and to respect their data privacy rights.”

In its report on “Disinformation and Fake News”, Collins’ committee claimed that Facebook had deliberately “sought to frustrate” its work, putting up executives who were poorly briefed on areas such as election interference. The social media companies were accused of behaving like “digital gangsters”, abusing its dominant power in social networks, and behaving “ahead of and beyond the law.”

The report called for major changes to the way the UK regulates its elections and technology, including:

  • Stricter rules that will force tech firms to take down illegal content on their site
  • A code of ethics that defines “harmful content”
  • An independent regulator to oversee enforcement of that code
  • New laws around political advertising online

Collins spoke to the roundtable about how data has become the pre-eminent modern tool of power. He also mentioned the huge numbers of inauthentic accounts on social media platforms and recalled the resistance government met from the auto industry when the compulsory fitting and wearing of seatbelts in cars was proposed.

There has until now been little sense of jeopardy on the part of Big Tech that might hold them back from moving into all sorts of areas that have profound influence over people’s lives. They are frequently convinced that they could run – and improve – any sector given the chance. One contributor agreed that Big Tech is “like water – it always finds a way to run downhill.”

Eithne O’Leary of Stifel made the point that a sense of jeopardy had indeed been instilled into her industry since the crash and global depression after the events of 2008. And that while many protest about the hindering effects of compliance, it had some positive effects for the Over Reachers. “I think there is a certain hubris in the world of tech that we’ve seen in financial services in the past,” she said. “And it’s true that within financial services new rules of compliance that have come in since 2008 offer some degree of comfort and protection to those involved. That isn’t really there yet in tech and it troubles me. In my own sector, banking, the physician wasn’t able to heal himself and the same applied to the dotcom bust of the early noughties. History has taught us that self-regulation is a very bad idea.” This feeling was widely supported in the room.

The conversation then centred on how exactly the UK government could set about regulating a world of tech which has become all-encompassing. What business isn’t tech in 2020?  Would you have an overall Internet Regulator? This hardly makes much sense as it would tread on every corporate toe. A break-up of OFCOM was thought desirable by several individuals.

The answer was provided less than a month after the roundtable when (now Baroness) Nicky Morgan announced that Ofcom was, indeed, getting the job. “With Ofcom at the helm of a proportionate and strong regulatory regime, we have an incredible opportunity to lead the world in building a thriving digital economy, driven by ground-breaking technology, that is trusted by and protects everyone in the UK,” she said. “We will give the regulator the powers it needs to lead the fight for an internet that remains vibrant and open but with the protections, accountability and transparency people deserve.” This statement was widely discussed not least because it is very broad brush and remarkably short on detail. Despite this, there was immediate vigorous pushback from Big Tech and defenders of free speech and some immediate caution expressed by the Prime Minister’s office, no doubt sensitive to the likely trade-offs ahead. A huge battle looms, mostly with the US tech establishment, over what precisely future legislation will contain.  And Ofcom itself has to work with new leadership, as the last CEO is now running the John Lewis Partnership.

The degree of specialisation required to comprehend the complexities of, say, internet and telecoms is beyond the averagely-interested Minister with a lot on her plate. Thus regulators – who are never answerable to the voting public – hold much power. The first country to work out how to regulate the tech industry will almost certainly become the focal point for the next chapter of the world’s digital revolution.

With Ofcom chosen to regulate the tech companies, it was felt by contributors that the organisation would have to be split into an infrastructure wing and a content arm. Any regulator could focus on three overarching objectives:

  • safeguarding individuals and society, especially the young, from maltreatment
  • promoting responsible innovation and robust competition
  • establishing understandable and consistent parameters for data privacy and monetization.

Where the Information Commissioner and the Competition and Market Authority would fit in isn’t clear.

These regulatory goals would, the group agreed, probably need to be reinforced by metrics to judge if the regulatory framework and functions within tech firms align with them. Specific powers should also be established to encourage certain behaviours such as “cease and desist” orders, “comply or explain” requirements, fines, and legal sanctions.

The speed at which the tech world moves is an issue in itself: like trying to put a ticket under the windscreen wiper of a car moving at 120 mph.  Tech firms’ innovations and the risks that accompany them are evolving so rapidly that it’s easy for regulators to fall behind. Standards-based regulatory regimes capable of adapting to technological and social change could help a tech regulator to get out in front and stay there.

Standards could be reworked for new risks, but changes to regulations and laws require extensive public consultation. With a standards-based approach, a tech regulator can introduce guidelines to encourage sensible innovation or, conversely, swiftly hold tech firms accountable when unforeseen risks arise.

Similar to conduct standards in the financial services and energy industries, standards-based regulatory regimes can nimbly adjust to grey areas of regulatory compliance. This is most important in the area of artificial intelligence ethics – the next area of enquiry for the Stifel-led programme, in Spring 2020.

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Brexit may well make things more complex for the UK. As The Economist has recently written: “Brussels increasingly sets the rules for the internet. But it is still large American companies that make the money (and the American government which reaps the tax revenue). Indeed, whereas Facebook and Google are big enough to digest whatever regulation they are force-fed, smaller European firms may end up choking. Aside from providing lobbyists with a healthy living and keeping overpriced restaurants in Brussels’ European quarter in business, the benefits of this arrangement are sometimes unclear.”

The issue of tax paid – or not paid – by the big tech companies was again raised. Currently the UK government has said it will introduce a digital tax after Easter 2020, which it hopes will raise almost £500m a year and has included the revenues in public finance projections.  This despite the fact that the French have backed down in the face of threatened heavy tariffs on wine and food exports. The US claims the levy unfairly discriminates against technology companies including Google and Amazon. “We have consulted extensively on our digital services tax and have sought to design it in a proportionate way,” a UK Treasury official said during Davos. This issue is complicated by the fact that the OECD is making significant progress persuading members to agree on a global digital tax.

Regulators are unquestionably on the move. Just after this roundtable, the Wall Street Journal (WSJ) reported that the US Justice Department has “reached out” to more than a dozen companies in its antitrust probe of Google, including publishers, advertising technology firms and advertising agencies. The organisation’s online ad tools are now clearly a major focus of the investigation.

The WSJ reported that the department has been posing increasingly detailed questions—to Google’s rivals and executives inside the company itself—about how Google’s third-party advertising business interacts with publishers and advertisers. That digital business was built largely on the company’s 2008 acquisition of the ad-technology firm DoubleClick.

Many of the questions centre around two moves that Google has made in recent years that publishers and rivals say have helped consolidate its power. The first was Google’s integration of its ad server, the leading tool for websites to put ad space up for sale, with its ad exchange, the industry’s largest digital ad marketplace. The second move was Google’s decision to require advertisers to use its own tools to buy ad space on YouTube. In the same week we held the roundtable Alphabet, Amazon, Apple, Facebook and Microsoft made a combined $55.2 billion in net profit in the most recent quarter. The sun shines. There is hay to be made.

A recent Pew Research Center poll found that around half of Americans think that the tech industry is having a positive impact on society. In 2015, seven in ten thought so. In The UK, when tech. charity doteveryone surveyed people who worked in tech, 45% believe their sector is currently regulated too little and 28% have seen decisions made about a technology that they felt could have negative consequences for people or society. This chimes with Eithne O’Leary’s viewpoint that self-regulation is not the answer. However, in 2019 Google and Amazon came in second and third in a survey of millennials’ favourite brands. In general, people are more concerned about the behaviour of banks and pharmaceutical companies, and most Americans have yet to meaningfully change their habits as tech consumers.

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Finally, a postscript to the discussion occurred in the days following the roundtable. As part of the new Parliament, Chairs of each Select Committee had to stand for re-election. Of the 16 Committee Chairs who sought re-election, eleven were returned unopposed. Of the remaining five who were challenged, four were successful. Only Damian Collins failed to retain the chair of the Committee he had led since 2016—Digital, Culture, Media and Sport.

 

With thanks to all contributors:

  • Felicity Burch, Director of Innovation and Digital, CBI
  • Olly Buston, Founder, Future Advocacy
  • Tara Button, Founder, Buy Me Once
  • Damian Collins MP, Chair,  Select Committee on Culture, Media and Sport
  • John Davies, Economic Research Fellow, Nesta
  • Adam Grodecki, Director, Forward Institute
  • Eleonora Harwich, Director of Research and Head of Tech Innovation, Reform
  • Christopher Hooton, Chief Economist and Head of Research, Internet Association
  • Leo Kelion, Technology desk editor, BBC News
  • Leanne Marshal, Chief Marketing Officer, Yoti Ltd
  • Christina Patterson, Journalist and Author
  • Lesley Smith, Former Head of Policy, Amazon
  • The session was chaired by Robert Phillips, Founder, Jericho Chambers

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