Ought Google, Amazon, Facebook and Apple be broken up? Must anti-trust legislations be invoked against these entities? The issues are being examined by regulatory authorities in the US and has all the makings of an epic stand-off in Washington. In anticipation of the battle that lies ahead, The New York Times reports, the tech giants spent $55 million in 2018 alone on lobbying.
While the debate will reach manic proportions, it is reasonably safe to assume anti-trust legislations cannot be invoked against these entities. Very little of this assumption has to do with the kind of monies they are spending—but because current laws are antiquated. When anti-trust laws are examined in the contemporary world, they offer no solutions. Instead, they create more questions.
- What happens if an aggregator such as Facebook is broken up into the sum of its many parts that now include entities such as WhatsApp and Instagram? In the networked world that we live in, there is nothing to prevent WhatsApp and Instagram from becoming as large (or larger) than Facebook is now.
- Regulatory constraints are being placed in many countries. The EU has imposed stiff fines on entities that resonate with citizens. China has gone to the other extreme and kept these entities out of its market totally. Both approaches sound unreasonable. The EU’s approach stifle’s innovation and entrepreneurship, because it is a protectionist approach under the garb of protecting privacy. And China has an authoritarian political system that can get away with it. Neither approach sounds viable when looked at from an Indian perspective.
- If regulations cannot be imposed the EU or the Chinese way, it raises other questions. How do you protect privacy, promote competition among entrepreneurs and preserve free speech, all at once?
To make matters more complex, as recent events demonstrate, Big Tech is challenging the limits of free speech. Even as the Christchurch Mosque Massacre was happening in New Zealand, a video of the shooting was livestreamed on Facebook. It attracted much viewership and attention in Australia where many gloated over the killings.
The Australian government panicked and passed a legislation that provides the law with teeth to penalise a service provider who streams this content. But it was ill-thought through. How is a service provider to anticipate what is on anyone’s mind?
A new narrative
Is it possible to imagine something like this happening in India? Yes.
And if something tragic does happen and Indian regulators impose an ill-thought through law that places curbs on Big Tech as Australia just did, it is not just freedom of speech that can get curtailed, but creative entrepreneurship can take a hammering as well—and neither will it adequately protect citizens from fake or damaging news.
A case for a better approach is building up. By way of example, consider the business models of food delivery aggregators such as Swiggy and Zomato that have emerged out of India. Their teams are widely applauded for creating a “technology platform” that allows consumers to discover food and have it delivered to them. To do that, their appetite for investor monies to fund growth is insatiable. Both are now out to raise $500-700 million each.
When asked why that much money is needed, a stock answer in the public domain is that it is needed to create a platform at scale.
It is an argument Bill Gates isn’t willing to buy from any of the contemporary tech majors. “That’s a crock of shit. This isn’t a platform. A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it. Then it’s a platform.”
When thought about, Gates is right on multiple counts.
- No entrepreneur can outgrow the ecosystem an aggregator has created. There is no entity that has outgrown Apple’s iTunes and Google Play. In much the same way, no restaurant can outgrow food delivery aggregators such as Zomato or Swiggy. There is a perverse incentive for these entities to ensure no entrepreneur outgrows them.
- The reason an aggregator grows large is because it controls access to the consumer. Much of its investments are spent on extracting data to understand consumer behaviour. As the data gets better, it can nudge consumers subtly towards brands from where it earns the most profits.
That Big Tech can manipulate human behaviour is now well known. Facebook nudges people towards each other. Google helps navigate geographies and discover places that include everything from hotels to hospitals and airline tickets to airports. Amazon suggests books and all else that may otherwise stay hidden.
India-grown tech aggregators such as Swiggy and Zomato nudge people towards restaurants and food they may otherwise not have heard of. Taxi aggregators such as Ola and Uber match drivers at one end with travellers on the other end while their algorithms dynamically negotiate prices between both. Financial services are being disrupted the most where aggregators such as Policybazaar.com, Bankbazaar.com, One97 (Paytm’s parent company), LendingKart and Capital Float can offer customised solutions to large masses of consumers at significantly lower prices.
What can possibly be unethical about this? It is, after all, in the consumer’s interest. There are two issues that occur right away.
- As any aggregator grows larger, it can arm-twist any business that operates on the ecosystem it has created to part with a disproportionate share of its profits as a “fee”. For instance, when an aggregator may want to acquire customers, one way it does that is by offering them discounts or “cashbacks”. Vendors on an aggregator’s ecosystem can be arm-twisted into subsidising a part of this discount. Failure to comply can mean they get ejected or do not show up on search results.
- The choices for consumers contain an invisible cost. They must part with data that tells the aggregator much about their preferences. As things are, all consumer data belongs to the aggregator. The current argument on why things must be this way is that they have worked hard and invested an awful lot to harvest all of it. Their current valuations and future depend on this data.
Technically, this is ground to invoke anti-trust legislation.
But for reasons articulated earlier, as the law stands, any aggregator can argue against it and get away. How, then, does a regulatory body begin to craft a new narrative that balances all interests?
A draft around how to think up a new narrative that seeks to build a “Data Democracy” was presented by Nandan Nilekani and Sanjay Jain in 2017 in Bengaluru.
If all of it be summed up very simply, it is this: If data is the gold everyone is chasing, a good place to begin is to craft laws around who owns the data.
As things are, it is owned exclusively by the miner. But if this narrative be challenged, then the question that comes up is, why must data mined off individuals reside with a private enterprise that profits from it?
An individual’s data belongs to an individual. How he or she chooses to use it is their prerogative. In a free society, they may consent to share data with an aggregator of their choice. If unhappy, they can move their data to another aggregator who promises to offer them a superior experience.
If the terms of data ownership are clear and laws on data portability are thought through, it offers a starting point for aggregators to out-compete and out-innovate everyone else. This is not a narrative the tech giants may like, one that consumers can wrap their heads around right away, or one that answers all the questions.
But it holds the promise to discover where answers may emerge from.