How will Google and Facebook be regulated in response to fear of the tech giants?

For a few years there has been growing calls to curb the monopoly power of Amazon, Google and Facebook.

Previously Republicans have been against monopoly regulation. Recent developments could cause Republicans in the House and Senate to support the White House moves to regulate Google and Facebook.

Fear of a highly politically active Google

Eliana Murillo, the former Head of Google’s Multi-cultural Marketing department, sent an email on November 9th, 2016. The email boasts of the use of Google’s search to ensure that millions of people saw certain hashtags and social media impressions with the goal of influencing their behavior during the election. She called it a silent donation. There were efforts to boost latino voter turnout in Florida, Nevada and Arizona. Nevada was won by Clinton. Florida and Arizona were won by Trump. Only half of the Nevada Latino voters voted in 2014 compared to 2012. 2016 had high Nevada Latino voter turnout.

In-kind donation of services can be made to political groups but have to be reported.

The Russian hacking and political ads had a budget of about $1.25 million per month. The Russian activities were far smaller and less effective than the activities described by Eliana Murillo.

Slot machines perfected addictive gaming. Those techniques have been applied at Facebook and Google and combined with large amounts of personal data and real-time tracking of actions.

Trump has proposed regulating Google and other tech giants.

Videos show the vast majority of Google executives as not just biased but distraught about the 2016 election.

(15:20) CFO Ruth Porat promised that Google will use its great strength and resources and reach to continue to advance really important values.

(34:40) Brin compares Trump voters to extremists arguing for a correlation between the economic background of Trump supporters and the kinds of voters who back extremist movements. He suggests that Trump voters might have been motivated by boredom rather than legitimate concerns.

(49:10) An employee asks if Google is willing to invest in grassroots, hyper-local efforts to bring tools and services and understanding of Google products and knowledge so that people can make informed decisions that are best for themselves. CEO Pichai’s response: Google will ensure its educational products reach segments of the population [they] are not [currently] fully reaching.

(54:33) An employee asks what Google is going to do about misinformation and fake news shared by low-information voters. Pichai responds by stating that investments in machine learning and AI are a big opportunity to fix the problem.

Economic effect of Tech Giant monopolies

Some have complained that reduced competition lowers wages and reduces the numbers of startup companies.

These were arguments for curbing the power of the Tech giants for economic rather than political reasons.

Large Fines, breaking up the companies, regulating as utilities

For more than three decades, regulators ignored the wider economic impacts of monopolization. The only standard that mattered when considering the effect of mergers and acquisitions was what’s called the consumer standard. If a merger didn’t raise prices for you and me, it was waved through, never mind the impact on workers or startup activity. Free services Google and Facebook, all the better–how could something that’s free be bad for America?

But a movement to rethink that standard is now growing, led by the Open Markets Institute and the leadership of Barry Lynn, a long-time champion of greater economic competition.

The EU has fined Google $2.7 billion for bias in its search. The EU fined Google after a seven-year investigation. The bias was because Google systematically favored its own Google Shopping feature.

The EU also fined Google for using the Android operating system and smartphone to boost its monopoly in search and browsing.

Various solutions have been proposed including breaking the companies up into many smaller companies which was the solution to AT&T.

There was a paper written about Amazon’s monopoly in the Yale Law Journal. It considers two potential regimes for addressing Amazon’s power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties [regulate Amazon like a utility].

Regulating Facebook and Google as utilities could also be applied.

Others have called to make platforms open. The protocols, algorithms, software and know-how open, free to all to use, build on and share. There would be some mechanism to allow allocation of profits from the use of the platforms.

One sided information – asymmetric competition

Amazon, Google, and Facebook may require special regulatory attention because of their platform and informational advantages. Amazon, Google, and Facebook control the information.

Amazon’s third-party marketplaces give Amazon special knowledge about sales for other on other companies. Facebook and Google have three-quarters of the advertising market. They get to know more about the entire market and people’s online lives.

Facebook can see what startups are becoming popular allowing them to buy the competition before they get too big. Facebook bought potential competitors Instagram and WhatsApp. Facebook copied Snapchat’s Stories feature on Instagram which stopped Snapchat growth.

Other regulations
* attempt to stop Facebook and Google from spying on competitors
* stopping Amazon from selling products below cost (as a way to kill off its competitors, critics say)
* block or tightly limit the tech giants from buying up startups and other companies
* opening up Facebook’s social graph for third-party development.


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