Is Regulation the Next Step for Companies like Google and Facebook?

Search Encrypt/ April 2, 2018/ Tech

In the aftermath of the privacy scandals surrounding Facebook, it seems the logical next step for the tech industry is widespread regulation. If the groups controlling user data are left to do whatever they want, people are forced to adhere to the standards set by the giant companies. The Facebook scandal is a perfect example of a situation when this went awry. There is very little transparency into how these companies collect, store and process our information.

George Soros on Facebook and Google

Soros recognizes the issue with two companies effectively controlling over half of the internet’s advertising industry. What sets Google and Facebook apart is the number of users they each have, and the data they gather from these users.

The Biggest Issue With Google and Facebook

Google and Facebook’s data is what lets them kill it in the advertising industry. What is good for tech companies isn’t necessarily good for consumers. Users are sold the idea that their data helps make products more user-friendly and customized. In reality, it helps the companies efficiently monetize their products. With so much data about purchasing behavior, Facebook and Google can create the ultimate platform for influencing consumers on how to spend their money.

Concerns About Regulation of Tech Companies

The purpose of these regulations would be to limit the powers of companies like Google and Facebook. However, an unintended consequence would be that small startups could also fall under these regulations. Google and Facebooks are huge companies with massive budgets, so they can afford to change their companies or practices to stay within the laws. The smaller companies that are just starting out may find themselves limited by the regulations, to the point that they can no longer operate.

Hopefully the laws put in place to control the industry giants don’t blindly hinder the progress of the industry as a whole The little businesses competing for market share need to be able to grow freely or Facebook and Google will continue to have little or no competition in their industry.

Response from Industry Leaders

It’s interesting that after the Facebook scandal, there wasn’t much commentary from other leaders of tech companies. Even Facebook’s own CEO Mark Zuckerberg took longer than expected to issue a statement about what had happened with Cambridge Analytica. This is likely due in part to the reliance many of these businesses have on Facebook to advertise or market their products. Most of the feedback came from government officials, like French president Emmanuel Macron, and journalists. The major exception is Apple CEO Tim Cook, who has remained very openly opposed to Facebook’s privacy measures (or lack thereof).

“If we monetized our customer, if our customer was our product, we could make a ton of money,” Cook said. “We’ve elected not to do that.” While this sounds great on Apple’s part, the two companies have drastically different business models. While Apple mainly makes devices, Facebook runs a data-centric product that monetizes that data. Facebook couldn’t exist in its current form if it didn’t collect and process data from its users.

Mark Zuckerberg has since responded to Tim Cook’s comments, calling them insincere and shallow. Cook’s argument is that companies offering free services are making their users the product by monetizing their data. Zuckerberg countered by saying “it’s important that we don’t all get Stockholm syndrome and let the companies that charge you more convince you that they actually care more about you.” Zuckerberg is critical of Apple for equating higher prices with caring for their customers. Zuckerberg says Facebook’s goal is to charge users less and “provide a free service that everyone can use.”

We will see what’s to come for these companies as regulation becomes more and more likely. For now, we stand with the companies that value privacy for all users from end-to-end, however rare that may be.

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