We have a war brewing in tech land. Tech giants Facebook and Google have become too powerful and influential and need to be regulated.
Traditionally, regulation is introduced when companies control vital infrastructure. For example, cable and telephone operators are regulated.
The purpose is to discourage monopolies and encourage competition.
Given that the two tech giants provide basic necessities of everyday life and have enormous power, an argument is being made they should be regulated like public utilities.
While Google and Facebook don’t control physical infrastructure, and the barrier to entry is very low – anybody can start a social networking site and no one is prevented from developing a search engine – the mere scale of the two tech giants make it difficult for new entrants to compete.
Scale itself is a barrier to entry.
Across the pond, discontent with the dominance of Google and Facebook has also been brewing. In May this year Fortune reported that the News Media Association, which represents more than 1,100 British newspapers, launched a complaint with the government asking that the country’s communications and competition authorities to regulate the two tech giants because of their dominance in the media and advertising industries.
You want to define dominance?
Google and Facebook together accounted for no less than 99% of revenue growth from digital advertising in the US in 2016, according to The IAB’s Internet Advertising Revenue Report.
The NMA is asking for regulations that could include potentially forcing Google and Facebook to pay newspapers a licensing fee for using their content, reported Fortune.
Google has already felt the wrath of the EU regulators who hit the company with a $2.7 billion antitrust fine at the end of June for giving its own services preferential treatment in search results.
Apparently internet users and internet service providers don’t need to worry about Big Brother like tight controls.
Ryan Grim explains in his article for The Intercept that regulating a company as a utility does not mean that the government controls it. It is just much more tightly regulated in what it is able to do and prices it is able to charge. Nor would every aspect of a company be regulated.
It’s not hard to see these internet services as utilities, but it’s really hard to imagine how such giants who already have so much power, could be regulated.
And in the middle sit consumers – how would regulation affect them?