Tech companies must regain trust

Tech giants like Facebook and Google must address the public’s concerns to escape the ire of regulators.

 
What do former White House chief strategist Steve Bannon, Massachusetts Democratic Sen. Elizabeth Warren and the European Commission have in common? All of them are, for different reasons, keen to tighten the regulation of technological giants such as Google and Facebook. For Democrats, the central issue is the uncontrolled proliferation of Russian-sponsored political ads and disinformation. The European Union regulators, in turn, are concerned by a lack of competition – as is, allegedly, Bannon and some conservatives who believe that Silicon Valley firms are biased against right-wing content.

There is some truth to all of those concerns. But before committing to specific regulatory tools, policymakers in the United States and in Europe have to think twice. And lest they actively invite new and potentially burdensome regulation, tech giants themselves have to take concrete steps to regain the public’s trust.

Google and Facebook are not natural monopolies and ought not to be regulated as such. The history of the internet is a history of defunct giants that once oozed monopolistic power: Netscape, AltaVista, MySpace, AOL, among many others. Unlike constructing a news power grid, dislodging an incumbent does not require investing billions into new infrastructure. In principle, it only requires novel ideas.

Of course, reality is often less Panglossian. For one, incumbents can be aggressive in taking over prospective competitors before those competitors can reach a meaningful size (as an example, see Facebook’s recent purchase of TBH, an app that delivers compliments to teenage audiences). Moreover, some of their bigness is an artifact of the U.S. patent system, which has been extendingexcessive protection to software innovations. That creates strong incentives for large companies to hoard patents developed by prospective competitors to shield themselves from future lawsuits.

Bannon’s supposed call to regulate Facebook and Google as public utilities sits oddly with his own ambition of “deconstruction of the administrative state.” More seriously, public utility regulation – unlike patent reforms that would scale back the protection of new software and a more vigorous enforcement of existing antitrust rules – would risk entrenching the current giants and discouraging investment into alternative platforms, making the current situation worse.

However, the lack of competition has implications for how most of us consume news and information, making social media more than just neutral platforms for sharing content. Today, a majority of traffic to top media sites is coming from Facebook (45 percent) and Google.

And upon opening Google News, it is not uncommon to see a story from Russia Today, or RT, sitting near to the top of the page in the company of headlines from The Washington Post, The Wall Street Journal or The Daily Telegraph. That is more than a bit frustrating – RT, of course, is not a news network but a propaganda arm of the Russian government and a reliable source of lies and disinformation.

At the present time, decisions such as whether to include the likes of RT in newsfeeds cannot be left entirely to algorithms. Google and Facebook need to deploy transparent criteria and good judgment of paid, human editors to distinguish between credible sources of information on the one hand and propaganda and disinformation on the other. The goal is not to censor but to provide users with trusted means of identifying dishonesty, nonsense and lies.

If social media companies do not start doing it themselves, governments will inevitably step in. In Germany, a new hate speech law already threatens tech companies with hefty fines if they fail to promptly delete illegal posts and comments. That sounds heavy-handed, but even in the United States, First Amendment protections are not without any qualifications. News organizations do have a degree of responsibility for the content that they make available to the public – although there are solid reasons to limit such liability in order to protect press freedom.

Using content regulation to limit the ability of tech giants to shape public debates is a double-edged sword. Tools that may appear as a good idea when “our” people are in charge quickly become less appealing when the other side controls levers of power. In contrast, looking for ways to encourage competition between platforms, including by revisiting the current level of patent protection, should be largely uncontroversial regardless of one’s politics or ideology.

Furthermore, tech companies themselves can do a lot themselves in order not to actively invite onerous regulation. If they can invest in editorial judgment and quality control, crack down on bots and increase the transparency of their advertising schemes, the political case for new rules will become much weaker.

 
Dalibor Rohac is a research fellow at the American Enterprise Institute (AEI), where he studies European political and economic trends. Specifically, he is working on Central and Eastern Europe, the European Union (EU) and the eurozone, US-EU relations, and the post-Communist transitions and backsliding of countries in the former Soviet bloc. He is concurrently a visiting junior fellow at the Max Beloff Centre for the Study of Liberty at the University of Buckingham in the UK and a fellow at the Institute of Economic Affairs in London.