All I want for 2021 is to see Mark Zuckerberg up in court | John Naughton

The tech giants’ law-free bonanza is coming to an end on both sides of the Atlantic, but let’s speed up the process

It’s always risky making predictions about the tech industry, but this year looks like being different, at least in the sense that there are two safe bets. One is that the attempts to regulate the tech giants that began last year will intensify; the second that we will be increasingly deluged by sanctimonious cant from Facebook & co as they seek to avoid democratic curbing of their unaccountable power.

On the regulation front, last year in the US, Alphabet, Google’s corporate owner, found itself facing major antitrust suits from 38 states as well as from the Department of Justice. On this side of the pond, there are preparations for a Digital Markets Unit with statutory powers that will be able to neatly sidestep the tricky definitional questions of what constitutes a monopoly in a digital age. Instead, the unit will decide on a case-by-case basis whether a particular tech company has “strategic market status” if it possesses “substantial, entrenched market power in at least one digital activity” or if it acts as an online “gateway” for other businesses. And if a company is judged to have this status, then penalties and regulations will be imposed on it.

Over in Brussels, the European Union has come up with a new two-pronged legal framework for curbing digital power – the Digital Markets Act and the Digital Services Act. The Digital Markets Act is aimed at curbing anti-competitive practices in the tech industry (like buying up potential competitors before they can scale up) and will include fines of 10% of global revenues for infringers. The Digital Services Act, for its part, will oblige social media platforms to take more responsibility for illegal content on their platforms – scams, terrorist content, images of abuse, etc – for which they could face fines of up to 6% of global revenue if they fail to police content adequately. So the US and UK approach focuses on corporate behaviour; the EU approach focuses on defining what is allowed legally.

All of this action has been a long time coming and while it’s difficult to say exactly how it will play out, the bottom line is that the tech industry is – finally – going to become a regulated one. Its law-free bonanza is going to come to an end.

The big question, though, is: when? Antitrust actions proceed at a glacial pace because of the complexity of the issues and the bottomless legal budgets of the companies involved. The judge in one of the big American antitrust cases against Google has said that he expects the case to get to court only in late 2023 and then it could run for several years (as the Microsoft case did in the 1990s).

The problem with that, as the veteran anti-monopoly campaigner Matt Stoller has pointed out, is that the longer monopolistic behaviour goes on, the more damage (eg, to advertisers whose revenue is being stolen and other businesses whose property is being appropriated) is being done. Google had $170bn in revenue last year and is growing on average at 10-20% a year. On a conservative estimate of 10% growth, the company will add another $100bn to its revenue by 2025, when the case will still be in the court. Facebook, says Stoller, “is at $80bn of revenue this year, but it is growing faster, so the net increase of revenue is a roughly similar amount. In other words, if the claims of the government are credible, then the lengthy case, while perhaps necessary, is also enabling these monopolists to steal an additional $100bn apiece.”

What could speed up bringing these monopolists to account? A key factor is the vigour with which the US Department of Justice prosecutes its case(s). In the run-up to the 2020 election, the Democrats in Congress displayed an encouraging enthusiasm for tackling tech monopolies, but Joe Biden’s choices for top staff in his administration include a depressing proportion of former tech company stalwarts. And his vice-president-elect, Kamala Harris, consistently turned a blind eye to the anti-competitive acquisitions of the Silicon Valley giants throughout her time as California’s attorney general. So if people are hoping for antitrust zeal from the new US government, they may be in for disappointment.

Interestingly, Stoller suggests that another approach (inspired by the way trust-busters in the US acted in the 1930s) could have useful leverage on corporate behaviour from now on. Monopolisation isn’t just illegal, he points out, “it is in fact a crime, an appropriation of the rights and property of others by a dominant actor. The lengthy trial is essentially akin to saying that bank robbers getting to keep robbing banks until they are convicted and can probably keep the additional loot.”

Since a basic principle of the rule of law is that crime shouldn’t pay, an addition of the possibility of criminal charges to the antitrust actions might, like the prospect of being hanged in the morning (pace Dr Johnson), concentrate minds in Facebook, Google, Amazon and Apple. As an eternal optimist, I cannot think of a nicer prospect for 2021 than the sight of Mark Zuckerberg and Sundar Pichai in the dock – with Nick Clegg in attendance, taking notes. Happy new year!

What I’ve been reading

Who knew?
What We Want Doesn’t Always Make Us Happy is a great Bloomberg column by Noah Smith.

Far out
Intriguing piece on how investors are using real-time satellite images to predict retailers’ sales (Stock Picks From Space), by Frank Partnoy on the Atlantic website.

An American dream
Lovely meditation on Nora Ephron’s New York, by Carrie Courogen on the Bright Wall/Dark Room website.


John Naughton

The GuardianTramp

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