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Is it time to rein in the tech giants? What internet regulation could mean for marketers

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Is it time to rein in the tech giants? What internet regulation could mean for marketers

The internet has thrived on the unrestricted and open access it provides for an international community to shop and share, through just a few clicks.

It has revolutionized how we do just about everything, but this has hinged on a free-market philosophy that has thus far seen minimal regulation from antitrust bodies.

This rather utopian philosophy has become increasingly contentious, however. The counter-argument runs that the internet’s innate freedom from censure has also allowed a small group of mega-companies to grow excessively powerful, to the detriment of their competitors and consumers.

Data is arguably the most important universal currency we have today, so these technological monoliths are fighting to secure as much information on individuals as they can. Increasingly targeted and effective marketing efforts depend on entirely the same currency, too.

We are only really starting to make sense of “big data [1]”, but a ruling that data privacy is tied to antitrust competition laws could slow this trend. Although antitrust laws have been in place for decades, there have been renewed calls for regulations specifically designed to rein in the rapacious growth of modern-day tech giants. The potential implications of new regulations for the digital age would be far-reaching.

On one side of the issue, we have the world’s richest companies; on the other, some of the world’s most powerful governments; with consumers somewhere in the middle.

In this article we will summarize both sides of the argument, before assessing the likely fallout of this ongoing debate for both consumers and marketers.

A growing antitrust movement

There are plenty of signs that the antitrust movement is gaining momentum. Just this year, we have seen:

  • Google fined $2.7 billion [2] for a breach of E.U. anti-trust rules, with further investigations into parent company Alphabet’s Android and AdSense products ongoing.
  • Facebook under investigation [3] by German anti-trust authorities for abusing its dominant position in social media to accrue personal data about its users.
  • Google exposed [4] for paying academics to produce research that aligns with its policy and regulatory goals.
  • Tech companies including Facebook and Google push back [5] against Internet regulation, showing their support for net neutrality.
  • The Canadian government ordering Google to remove [6] some URLs from its search index altogether. Google cited “the right to freedom of expression” in its defence, to no avail.
  • Australia passing the Privacy Amendment [7] (Notifiable Data Breaches) Act 2017 in a move that echoed the EU’s approval of the General Data Protection Regulation (GDPR [8]) in 2016. All companies that do business online within the EU will need to comply with GDPR by May 2018.

The arguments for increased internet regulation

“It is time to rein in the influence of the tech giants”

As an inherently neutral platform, the internet brings out both the best and the worst in people. The challenge is not so much with the Internet in and of itself, but rather with the less salubrious human urges that it lets run free.

The unfettered greed that the internet facilitates will see Google, Facebook and Amazon use their powers to further their own agendas, tightening their grip over time. Ultimately, there is the potential for one tech giant to take a monolithic position as the owner of consumer data [9] and, therefore, rule out the possibility of genuine competition.

Some common-sense regulation would allow them to keep growing, but without dominating the competitive landscape altogether through the ownership of personal data.

Source: Statista

“It is the role of politics to intervene on the people’s behalf

“Some people say that it is not for government to regulate when it comes to technology and the internet. We disagree.” With this slightly chilling, curtly-worded statement, British Prime Minister Theresa May outlined her party’s position in their 2017 election manifesto.

Its meaning is quite overt: It is for the government to decide the fate of the market, and they will create and apply regulations as they see fit. Theresa May was very vocal in her calls for Facebook, Twitter and YouTube, in particular, to censure their users after recent terrorist attacks. If they are unwilling or incapable of doing so, the Prime Minister seems quite intent on taking matters into the government’s hands.

“The current laws are too outdated to be effective”

Much of the antitrust regulation we have now was defined in the industrial era and, some argue, needs to be re-imagined for the digital age. Because without relevant antitrust laws, how could courts ever prove that a company has transgressed?

The economic imperative that drives capitalism can only really be deviated from its path by legal intervention. Therefore, Google, Facebook, and Amazon will only curb their attempts to stifle competition if they are forced to by law.

“People aren’t aware of how much tech companies know about them”

Many consumers sign up to terms and conditions without checking the small print – a fact well known to large companies. This is taken advantage of to sneak in clauses that allow them to use sensitive personal data for commercial gain. If people knew the full extent of what went on behind the curtain, they would not be so willing to hand over so much for so little in return.

As we can see from the arguments above, internet regulation could range quite dramatically in its severity. Some commentators would like to see some new regulations to keep antitrust standards up to date with the modern data economy. Others would go much further still, through targeted efforts to make an example of the biggest and richest companies.

The recent EU fine handed out to Google [10] is a sign of this approach, which will be solidified when GDPR comes into effect for all businesses in 2018. How effective this will be remains to be seen, although the historical precedent suggests fines will be insufficient if legislators want to divert companies like Facebook and Google from their path. We can expect their lobbying budgets to increase in lockstep with the specter of stricter regulations.

Arguments against increased internet antitrust regulation

“New regulations wouldn’t have the desired impact”

Some of the challenges antitrust bodies want to address cannot be met through regulatory intervention. If the growth of Facebook, for example, were to be held back by new regulations, that would only open the door for another similar company to use other means to increase their own profits. If that development provided any benefit to consumers, it would only be incidental.

“Innovation should be praised, not punished”

Innovation has been a core driver of the Internet’s mass adoption, so it seems on the face of it that regulatory intervention would be counterproductive. Companies like Google and Facebook are constantly improving their products, and they need consumer data to do so.

The more they know about their customers, the more they can tailor their offering to each individual’s unique needs. We should allow this innovation to reap its own rewards, rather than trying to stunt their progress.

“Who decides how powerful is too powerful?”

If the aim is to break up monopolies, how will we decide on the point at which a company becomes a monopoly? And who exactly will assume this responsibility?

There is no true precedent for what we are experiencing, so any lines drawn will be suspiciously arbitrary and, some will argue, laden with bias.

“Consumers are getting a better product, not a worse one”

If regulation is designed to help consumers but actually results in the latter receiving a worse service, what is the point? Should Google have to operate within stricter confines and with less information on consumers, its products would no longer be personalized, and consumers would lose out.

The internet is so successful because of the freedom it provides. Regulation to protect the privacy of the populace, essentially to save them from themselves, smacks of hypocrisy.

Consumers are willingly offering up this data and they clearly enjoy the improved services they receive in return. Governments shouldn’t insult their intelligence by deciding on their behalf which products or services they should receive.

These arguments point to the fact that many believe overbearing regulation runs counter to everything the internet stands for.

It is also an ineffective way to try and control what is often an anonymized, global marketplace. Any victories the antitrust bodies could claim, whether via fines or sanctions, would be Pyrrhic.

How would Internet regulation affect marketers?

“Sixty-six percent of CEOs globally said changes in industry regulation are the biggest disruptor for their industry” – PricewaterhouseCoopers’ Global CEO Survey 2016 [11].

Undoubtedly, marketers will be watching these developments unfold almost as keenly as Google, Facebook and Amazon will. We depend on open access to consumer data to build sophisticated audience targeting models.

Furthermore, the algorithms that underpin so many of the technologies we use need vast quantities of data to make accurate predictions. Without this, the mechanisms that Facebook and Google use to drive positive returns on advertising budgets would be less effective.

However, there is a growing consensus that the Google/Facebook duopoly is not altogether healthy for the digital marketing landscape and, even with the likes of Amazon on the horizon, some more competition would be a positive development for advertisers.

The role of digital agencies has diminished as they act as middlemen between brands and a decreasing pool of media owners, so some variety would be welcomed by agencies too. As it stands, these two online giants own over 70% of the digital ad space between them in the US.

Regardless of the outcome of this ideological debate, we are required to prepare for new regulations already through the impending launch of GDPR within the EU. This new legislation extends the definition of “personal data” quite significantly, and will provide individuals with a lot more control over their own information.

The wider trends this year so far suggest that we can expect something similar to occur on a global scale in the near future, so we should all be paying closer attention to how we procure, process, and use consumer data.

Related reading

Vector graphic of a laptop surrounded by random items intended to illustrate measurement, such as a crane (which is lifting a video thumbnail into the air), a lightbulb, a pair of compasses, a cog, a ruler and a pencil.

References

  1. ^ big data (www.clickz.com)
  2. ^ fined $2.7 billion (searchenginewatch.com)
  3. ^ under investigation (www.nytimes.com)
  4. ^ exposed (www.wired.com)
  5. ^ push back (www.cnet.com)
  6. ^ ordering Google to remove (www.theverge.com)
  7. ^ Privacy Amendment (www.legislation.gov.au)
  8. ^ GDPR (www.eugdpr.org)
  9. ^ consumer data (www.clickz.com)
  10. ^ recent EU fine handed out to Google (searchenginewatch.com)
  11. ^ Global CEO Survey 2016 (www.pwc.com)
  12. ^ … read more (www.clickz.com)
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