Big Tech is bracing for a wave of regulation
New laws pending in Europe, Asia and the United States could impose strict limits on how big tech companies can deal with smaller competitors and restrict their use of artificial intelligence like facial recognition. Some proposals could prohibit common practices such as companies giving their own products a boost in their own rankings, which could have an operational impact, executives and analysts say.
At the same time, regulators around the world are advancing dozens of competition and privacy-related investigations that could lead to more than just speeding tickets for the tech giants. According to regulators and executives, orders or regulations are being considered that could cut off transatlantic data flows, limit certain types of digital advertising, delay major product changes or force ongoing monitoring of activities.
More difficult to collect
Admittedly, regulation has so far had little effect on Silicon Valley earnings or valuations. The market value of five of the world’s largest tech companies is $9.31 trillion, nearly four times higher than five years ago, nearly double the growth of the S&P 500 index this year. era.
But that could change. The new wave of scrutiny has already made it harder for companies to take advantage of potential growth from acquisitions, says Mark Mahaney, head of internet research at Evercore Inc. In November, the UK Competition and Trade Authority Markets has ordered Meta Platforms Inc.’s Facebook to sell moving image company Giphy, saying the acquisition would limit competition between the platforms and UK advertisers. Facebook says the deal benefits consumers, and it has appealed.
Tech companies are also making other changes. Facebook announced in November that it would shut down its facial recognition system in part because of potential regulations.
“There’s definitely a feeling there’s a new momentum” for regulation, says Sinead McSweeney, global vice president of public policy at Twitter Inc., noting that over the past few weeks the company has had to implement new legislative requirements in at least six countries. . “It’s on a whole other level.”
Alphabet Inc.’s Google, for example, agreed to work closely with the French Competition and Markets Authority on its plan to remove cookies, which track online activity, from its Chrome browser. Now Google executives are looking to create new appeals processes for content removals on the YouTube video service and rework how it handles user and partner information internally, says Kent Walker, vice president. global affairs senior.
“There’s an awful lot on the table right now,” says Walker. “It’s a tough exercise because in many cases the timelines for compliance are short, and we actually need to start preparing now for the rules before the ink dries.”
While tech companies say they agree their industry needs new regulation, they are pushing back on some specific proposals, in part because of the impact they could have. Some tech executives, such as Twitter’s Ms McSweeney, worry that the requirements of the proposed online content rules could encourage companies to remove content they simply disagree with, crippling freedom of expression.
Google’s Mr Walker says he fears defining an online market in a single bill will force the company to notify websites every time their search engine rankings change, a virtually impossible task.
What is the effect?
For their part, proponents of increased regulation fear that big tech companies will emerge unscathed from the new wave of regulation. Gabriel Weinberg, founder and chief executive of privacy-centric search engine maker DuckDuckGo, says three EU antitrust rulings against Google and more than $9 billion in fines haven’t done much. thing to reduce the search leader’s position in the market. (Google says its compliance with EU rulings has resulted in significant changes to its operations that have helped competitors.)
Now Mr. Weinberg fears that policymakers will focus more on passing laws than on ensuring regulators have the know-how and tools to properly implement new requirements for, for example, treat rivals fairly.
“I think something will happen. I hope it will,” says Weinberg. “But it seems the devil is in the details of how the market actually moves.”
Policymakers say they are confident they can make it work. Cédric O, Minister Delegate for Digital Affairs for France, which holds the Presidency of the Council of EU Member States for the first half of this year, says he is convinced that the EU can adopt effective laws and must seize the momentum. He also says he will travel to the United States to push for transatlantic rules to protect children who use social media, following articles in the Wall Street Journal’s Facebook Files series which revealed that ‘Instagram made some teenage girls feel worse about themselves.
“I think there is a European and probably international consensus that Big Tech has an impact on the economy and on democracy and must be regulated”, says MO “There is a will to act which is shared everywhere.”
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