The State vs Big Tech battle involves crucial questions of democracy

Written by Sarthak Agarwal

2021 has been one long showdown between governments and Big Tech. What started off as a glaring example of the power wielded by social media companies – Twitter permanently banning US President Donald Trump from its platform – later suffered several reversals.

Facebook’s unprecedented news blackout in Australia was met with widespread criticism. The controversial-yet-disruptive firm took this extreme step against a then impending legislation Down Under that obliges itself and Google to pay news publishers for content circulated on their platforms.

Google complied but Facebook protested, threatened and traded angry barbs with the Australian government. The tech company’s heavy-handed purge — clashing with the onset of the official vaccination programme — has left a bad taste around the world.

Big Tech fared no better in the other hemisphere as Uber lost a crucial court case in the UK. The Supreme Court upheld a lower-court verdict and dismissed Uber’s argument that the ride-hailing firm’s drivers are independent contractors; given the power exercised by the parent company and the extent to which their autonomy is circumscribed by its policies, the Court held that it is absurd to view drivers as anything other than Uber’s workers.

This judgment might entitle UK drivers to several employer-provided benefits like minimum wages, social security and a cap on maximum hours of work.

Closer home, the central government also tightened regulation on Uber and its domestic rival, Ola in November last year. From limiting the commission charged by these platforms to regulating hours of work, the Centre took steps to promote the interests of drivers and commuters while dampening profitability for the ride-hailing companies.

Twitter has also been caught in an ugly battle with the Indian government over censorship and free speech. While it initially pulled down accounts of various farmer groups on Centre’s behest, the Silicon Valley firm later reversed course inviting the ignominy of a government increasingly at feud with protesters.

Amendments to Section 79 of the IT Act 2000 – that otherwise grants immunity to social media companies from content on their platforms – will tighten the noose around their managers’ necks to remove objectionable material sooner and may also roll back certain protections.

All of the above implies that States are acting with urgency and boldness to win back their receding power. To give but one example, as most conversations shift online, social media platforms become the air that carries our words to those we communicate with. But who decides when to cut-off oxygen from certain people? At present, democratic states – and by consequence their citizens – lack any significant say in this crucial decision so governments are fighting back to regain their voice.

Democracy must also prevail because of its versatility and capability to self-correct. In November 2020, “Proposition 22” was upheld at a referendum in California, US. Uber and its competitors together spent over $200 million to successfully argue that their drivers are independent contractors and not workers. A corporate victory in a left-wing state against the influence of powerful labour groups as well as then presidential candidate Joe Biden reminds us of the power of money in winning elections. Thankfully for democracy, another chamber of power in the form of the judiciary in Britain came to the drivers’ rescue when it reached a conclusion opposite to California’s vote.

Another dimension to this dispute is more mundane. Governments around the world have complained ad nauseam that Big Tech is not paying its fair share in taxes. Extracting monies from 21st century business models is inherently hard; the world’s best lawyers and accountants being on rolls of these companies have further shortened the arms of the taxman.

India has tried to fight hard by imposing an equalisation levy on advertising revenues earned by tech firms. Australia’s new code also expects Facebook and Google to pay a share of their earnings from users Down Under to support independent publishers that are increasingly starved of funds. Uber drivers becoming its workers will shift the burden of social security from governments to their employers, as it is with other sectors of the economy.

Last year’s hit Netflix film, The Social Dilemma, and the continued popularity of the Black Mirror franchise also reflects the fact that people are waking up to Big Tech’s increasingly dark shadow on their everyday lives. Demands on elected governments to scold, regulate or even break-up these behemoths are growing louder. Indeed the US Justice Department is set to hear an antitrust case against Facebook, which also owns and controls Instagram and WhatsApp.

Those wary of State power might fear censorship if governments are allowed to meddle incessantly with tech companies. That remains a concern – and we must remain eternally vigilant to preserve our freedoms – but at least democratic states carry a semblance of accountability that is blatantly absent when Big Tech firms take decisions that should normally be left to the people to decide.

However, if you ask Mark Zuckerberg, he will vehemently oppose the claim that Facebook is unaccountable. In a market economy it is easy for users to punish bad companies by shifting to their competitors, he might say. The young billionaire might later recite a list of competitors whose success keeps him up at night.

But even though alternatives may exist, incumbent giants in the social media business retain their first-mover advantage and thus face little competition. This is partly due to network effects – no matter how much you are offended by WhatsApp’s new privacy policy, it isn’t worth shifting to an alternative unless most of your contacts are there already.

The Indian government is taking a stab at this lacuna. Popular cabinet ministers are publicly urging users to shift to Koo – a desi Twitter alternative. While their express intention might be to promote ‘Atmanirbharta’, they are also galvanizing people to vote with their feet en masse against these platforms and achieve the kind of coordinated action necessary to eat into their monopoly power.

But while citizens can do their bit, it is ultimately up to governments and their agencies to level the playing field. After all, what stops a paranoid Facebook from taking over its rivals once again, as it did with Instagram in 2012? Ultimately the buck stops with competition authorities – the Competition Commission of India too must prove ready to the task when its turn arrives.

(Sarthak Agrawal is an economist from the University of Oxford and previously a researcher with the London-based Institute for Fiscal Studies.)
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