Paul Laudicina is Chairman, A.T. Kearney Global Business Policy Council.
Since becoming commercially available, the internet has democratized information, enabled global communication and served as a platform for a variety of goods and services.
In its infancy, policy-makers trod lightly in terms of regulating online activity to allow innovation and commerce to flourish. The overwhelming success of Google, Facebook, Amazon and other internet giants evolved in that unregulated space.
But as the internet enters its adolescence, boundaries are being pushed and questions asked about the wide berth historically afforded to such companies. Policy-makers around the world, particularly in Europe and the US, are now waking up to the challenges posed by the internet giants. The allegations of Russian impropriety on platforms such as Facebook and Twitter during the 2016 US presidential election, for example, have ignited a global dialogue about the influence and power exercised by social media and other internet companies.
This scrutiny will reach fever pitch globally in 2018, resulting in new regulations that will shape the future of the internet. Action is particularly likely in three areas: digital content, digital privacy, and antitrust.
1. Digital content
After years of hate speech, trolling, cyberbullying and terrorist recruitment online, “fake news” appears to be the straw that has broken the camel’s back. Europe is leading the regulatory charge against illicit digital content and putting pressure on internet companies to better police the content on their platforms. The US, on the other hand, has long been the most stringent protector of free speech on the internet, but now even Washington is exploring tighter regulations on digital content with the proposed Honest Ads Act and the Stop Enabling Sex Traffickers Act as just two examples.
2. Digital privacy
The EU is yet again the most active in legislating digital privacy protections for its citizens. The European Court of Justice’s 2014 “right to be forgotten” rulingfundamentally changed the way internet search and social media companies handle user data. The EU’s General Data Privacy Regulations (GDPR), which take effect in May, require companies to acquire user consent to “opt-in” to data collection, as opposed to the common “opt-out” approach used today.
US regulation has not kept pace with the EU and substantial changes are unlikely in the near term, but the BROWSER Act, which was introduced in the US House of Representatives in May 2017 and would require users to opt-in to data collection from digital platforms and internet service providers (ISPs), signals that regulatory action may be forthcoming in years ahead.
In recent decades, US antitrust law has focused almost exclusively on protecting consumer welfare, as evaluated by consumer price impact. This was a hard break from the legal ethos on antitrust of the early 20th century when preserving competition and the protection of small businesses was the overriding objective. The EU is already embracing this broader standard of antitrust, as shown by the European Commission’s landmark ruling against Google in June 2017 for unfairly favouring its own services and products over others. Advocates of rethinking US antitrust practices argue that Silicon Valley exercises monopolistic tendencies through the rapid acquisition of would-be competitors and patents, consolidating more market power and stifling the marketplace for innovation.
The internet is at a crossroads. The operating environment for some of the world’s largest and most powerful companies is about to swing from one of very few controls to a patchwork of restraints and constraints in different markets. This will not only affect the internet giants but all consumers and businesses that rely on their services.
Increased policing of digital content could alleviate some of the reputational risks that companies face from “fake news” today and any new antitrust regulations or court cases that rein in the power of the internet giants would enable a greater number of smaller internet companies to compete in this sector. But transitioning away from users automatically “opting-in” to internet firms collecting their data would likely make it more difficult for companies to effectively target online advertising to their customers. While “opting-out” would protect consumers’ privacy, their online experiences would be less customized to their browsing history and preferences, possibly creating a more arduous user experience.
The growing scrutiny of internet companies might prove to be more than just a speed bump on the otherwise relatively unregulated internet highway. It’s more likely that new regulatory actions will have profound consequences for the future of the internet as we know it.
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