The tide of public sentiment is closing in on Silicon Valley. We are witnessing market failure at a grand scale. As the leading internet firms have monopolized their subsectors, individual citizen and consumer interests have fallen by the wayside. The Cambridge Analytica revelations, frequent disclosures about privacy and security breaches, and shocking policy decisions implicating democratic processes have become second nature to the internet sector—and have rightly forced our attention fully on the inner workings of Facebook, Google, and Amazon. The vox populi stands squarely against the industry’s interests.
As with any market failure, government must eventually intervene. These firms have inordinate market power in the end-consumer market. Facebook, for example, has monopolies in traditional social media and internet-based text messaging, Amazon has a monopoly in e-commerce, and Google has monopolies in online video, e-mail, and search. These firms are able to rake currency in the form of attention and personal data on one side of the market and charge monopoly rents for it on the other side. They have breached privacy, tampered with markets, lowered our expectations of the open internet, and shaken the very foundations of our democracy.
This hegemony over the market has been shown to trample the public interest. The industry’s disincentive in protecting the public from such negative externalities as disinformation is a mere symptom of its unwillingness to compromise its highly profitable business model along with its use of social power to protect the business model from regulation through influence over policymakers. Installing sleeping policemen to place soft checks on the industry’s practices will no longer resolve society’s problems at this present juncture. What the public now needs is a novel, comprehensive regulatory regime that can effectively rebalance the distribution of power among the industry, government, and citizen—a digital social contract.
Noting the viciousness of unregulated capitalism through affordances of radical property rights, the philosopher Jean- Jacques Rousseau suggested that “if we have a few rich and powerful men on the pinnacle of fortune and grandeur, while the crowd grovels in want and obscurity, it is because the former prize what they enjoy only in so far as others are destitute of it; and because, without changing their condition, they would cease to be happy the moment the people ceased to be wretched.” We are at this stage of political evolution in the context of the internet sector.
Never can one pick a rose without feeling the prick. I, however, do not contend that we should abolish the industry’s targeted advertising business model entirely. Rather, I suggest the development of a novel regulatory regime that effectively responds to the overextensions of the economic logic residing behind the consumer internet. This new regulatory regime must include measures that can effectively hold the industry accountable—new mechanisms ranging from radical economic redistribution policies to automatic stabilizers of economic power. If the industry has converged on the practice of uninhibited data collection with the end goal of refining behavioral profiling, we need consumer privacy. If the industry has largely obscured its core content practices from the public and the regulatory community at the expense of marginalized classes, we need transparency into its corrosive platforms. And if the industry has systemically abused the open markets through engagement in anticompetitive practices, we need robust reinstatement of market competition.
Free market capitalism is the principal hallmark of the American approach to economic design. Open capitalism defines the operation of not only our national economy but indeed our political and social systems. But the American government has never hesitated to strike the industry down when its practices have imperiled the nation’s commitment to democracy.
This is the very situation we now find ourselves in with respect to the internet. To curb Silicon Valley’s capitalistic overreach, the federal government must formulate a cohesive policy response aimed at protecting our privacy from the internet sector, promoting market competition in the industry, and providing us with transparency into its practices. And this regulatory regime can only achieve maximal impact if all of these reforms are passed together, thus treating the current makeup of the industry’s economic logic with a comprehensive regulatory framework to meet the industry head-on.
The political and practical creation and passage of a rights- based digital agenda will be a major challenge for policymakers in the years ahead, and the core of that agenda must be focused on consumer privacy, perhaps the most critical of reforms.
Appropriate privacy protections can do much to blunt the cunning of precision propaganda as disseminated by the Russian disinformation operators, the spread of hateful conduct online, and the drive toward online radicalization. In each case, it is the consumer internet platform’s predilection to algorithmically analyze the behavioral profile of users—including their likes, dislikes, preferences, beliefs, interests, and routines— that leads them down the dark rabbit hole of these negative externalities, sometimes even at the direction of an advertising client, such as a disinformation operator working through a shell organization. Without such a detailed understanding of their behavioral profiles, platforms would be unable to direct customers down a path of hatred, lies, and racism, whereby content recommendations at the determination of the platform lead the user to radical content—as we have repeatedly seen in the case of YouTube.
The reforms necessary to promote strong privacy protection are quite clear. There is a well-established tradition of privacy protection in certain jurisdictions around the world. Indeed, a strong approach is already on the books—a version of the European General Data Protection Regulation (GDPR) packaged with strong regulatory enforcement capacities—one that we could adopt or take as a model.
Privacy protection is the one reform that the industry’s henchmen will fight tooth and nail. Only in special circumstances has it passed. In formulating the new regulations, the European Union sought to bring its fundamental right to privacy, affirmed in the 1996 Data Protection Directive, into alignment with the requirements of the contemporary digital economy. The political impetus was there. Europeans took to the streets in protest following whistle-blower Edward Snowden’s 2013 disclosure of American coordination with Silicon Valley firms and their engagement in mass global surveillance operations.