And the EU Commission joins the party
Eric De Grasse
Chief Technology Officer
15 December 2020 (Paris, France) – I have been reading through “FTC Issues Orders to Nine Social Media and Video Streaming Services Seeking Data About How They Collect, Use, and Present Information.” This does not look like a Section 230 thing that has got right-wing Americans bent out of shape, but seems to be particularly looking at the “children and teens” element. Though of course it’s hard to be sure until the result of the investigation becomes clearer.
In the write up are the names of the entities about which information is sought. The organizations are:
- Amazon
- ByteDance (TikTok)
- Discord Inc.
- Facebook, Inc.
- Reddit, Inc.
- Snap Inc.
- Twitter, Inc.
- WhatsApp Inc. (owned by Facebook)
- YouTube LLC. (owned by Google propert)
What interesting to me is that the FTC is taking action at this time. Here’s the list with the date on which the company began operating:
- Amazon, 1994, 26 years ago
- ByteDance (TikTok), 2012, 8 years ago
- Discord Inc., 2015, 5 years ago
- Facebook, Inc., 16 years ago
- Reddit, Inc., 15 years ago
- Snap Inc., 9 years ago
- Twitter, Inc., 14 years ago
- WhatsApp Inc., 2009, 11 years ago
- YouTube LLC., 15 years ago.
What’s this date information reveal? The mean time for the FTC to recognize a potential issue and begin an investigation is the lifespan of a boxer dog. As I pointed out in a blog post earlier this year, Politico and the Reuters Institute for Journalism did a study of DOJ and FTC cases over the last 20 years and noted:
• A Federal investigation, the legal proceedings, and the appeals if necessary reach an average of 8 years. Thus, it is possible that by 2028, the action begun in 2020 may be resolved. And the digital market will have changed exponentially.
• For our European readers, for EU Commission investigations, the legal proceedings, and the appeals if necessary reach an average of 12 years.
But no need to cry. Legaltech and compliance vendors and a host of law firms will make millions. So what’s to complain about.
And for the tech community: act now, apologize if snagged by a legal hook, and just keep-movin’-on-down the information highway. Because lax regulation and what it fosters will never permit appropriate, prompt resolution.
Not to be outdone, today the EU Commission published its drafts of two major new pieces of tech regulation:
• the Digital Markets Act which aimsto tackle unfair competition in the sector, and
• the Digital Services Act which aims to force tech companies to take more responsibility for illegal behavior on their platforms.
The long-awaited regulations (in development for longer than the GDPR) are the first significant overhaul of the EU’s approach to the internet for two decades. And there is a long history here that the EU is trying to “undo”. My partner, Greg Bufithis (the Founder of Project Counsel Media) noted:
Tech monopoly (“The Euro edition”) was literally enabled by the ‘Double Irish with a Dutch sandwich’ tax structure. It was a wink, wink, nudge, nudge that everybody accepted. Nation-states’ fiscal policies are why the EU is in this situation. You’ve made your bed, now lie in it.
And the reality? None of this is grounded in market power. It’s technical power. Very few people understand how these companies operate, how the digital ecosystem works. Regulators are now preparing to regulate an environment that is disappearing before their eyes as alternative digital intelligence structures take over.
And all of this just reinforces the myriad of problems I have noted over the past 4-5 years:
• It will take two years to enact this legislation demonstrating once again that the EU is still not a capable institution and Big Tech will run rings round them.
• There is an undercurrent that these laws are necessary to allow European companies to compete but there are a host of reasons why there are few consequential tech companies from Europe vs the U.S. It’s because their regulatory system snuffs them out, not U.S. monopoly power. For the EU, the far, far bigger concern is that it has been unable to create an Apple or Google of its own. This is a massive setback and likely not recoverable. An existential crisis.
• I watched the news conference. Vestager (European Commissioner for Competition) argued “the big tech companies have taken over the digital market place”. No dear lady. They created the digital marketplace. It’s a crucial difference and goes a long way to explaining why traditional anti-trust tools are inadequate to address the new reality. What Vestager and her Brussels colleagues are doing in response is to dismantle that marketplace in the expectation that this will facilitate the emergence of new competitors, hopefully of European origin. There is no guarantee this will happen. The only quarantees will be that Brussels will act to stuff its pockets with American corporate cash and this will start the mother of all trade wars between the US and EU. The only winner will be the Chinese.
BOTTOM LINE: Predictable grandstanding that will not lead anywhere. Europe is a demographically declining market with weak growth prospects and poor technological innovation. The U.S. tech ecosystem is pivoting away regardless of who is President. And as the EU has no locus to break-up U.S. companies up all they have is blocking acquisitions that don’t exist, or a money grab through taxation and fines … which is exactly what the U.S. did to European banks.
