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Synopsis- The lawmakers are facing the confusion between managing the misuse of monopoly power by major Internet corporations and the economic income generated by them.
Introduction-
In the US and Europe, governments are using antitrust regulations against Internet giants such as Facebook and Google. This is to stop the alleged abuse of the dominant position.
Some are comparing this case to the prior U.S. antitrust inquiries. At the conclusion of this inquiry in 1982, the break-up of the AT&T was dictated by the Department of Justice.
What are the key differences this time when compared to the earlier antitrust investigations?
There are three major variations relative to the earlier investigation-
- First, Information non-competition– These big industries are based on information or data. There is no competition between 2 similar companies. While earlier telecom companies faced competition due to limited network capacity.
- Second, Jurisdictional issues– Telecom is jurisdictional and regulators have the authority to create guidelines for orderly actions. In contrast, Internet firms operate globally. Thus, it is often difficult for various country regulators to set international laws of obligation and compliance.
- Third, Non-excludable– The nature of goods and services provided by the Internet is non-excludable, unlike telecom. It means it is not exclusive for anyone or anyone can access or enter into it.
How information goods provided by private Internet firms causing problems?
This non-excludable and non-rival model is creating the following issues:
- First, Personalize Advertisement and third-party sharing– Internet businesses are earning through targeted ads by sharing personal information and data to third-party for monetization purposes.
- Second, Monopoly- Tech giants are involved in the wrong means such as takeover or suppression of competition, resulting in an uneven playing ground for other organizations.
However, there are positives externalities too, such as-
- Google Maps API [application Program Interface] use by all logistics and transport companies and Facebook API for advertisement.
- Recently, Google announced to provide accurate and timely information about vaccine distribution.
What are the possible solutions to regulate Tech giants?
- First, need to subsidize the good– Tax subsidies should be granted for tech giant’s orderly behaviour.
- Second, there should be controlled expansion of products and services. This needs to be done without damaging the interests of customers and smaller rival companies.
- Third, as pointed out by the Australian government, the tech giants such as Google and Facebook must negotiate a fair payment for services such as news by the media industry.
- Forth, to use the power of public voice. For example- WhatsApp has delayed the rollout of its updated privacy policy after facing a huge backlash of tens of millions of its customers.
Way forward-
The balance between controlling the monopolistic tendencies of internet giants and establishing an environment of positive externalities must be created.
A secure digital space needs to be established where the human rights of all consumers of digital resources are secured.
Source- The Hindu
