Steven Hill: Let's create digital borders

These are companies that started in Silicon Valley 6, 7, 8, 9, 10 years ago, started up rather small and now have grown to unimagineable sizes, so people are still adjusting their mindsets to what it was and what it has become.

We see with Facebook that the way they are mining our data, they are taking our personal data. They are not asking us or sort of ask us through these long end-user licence agreements as they are called to sign off on everything. And people just do it because they thought: Oh, what's the harm? Well, now we know there actually is some harm. They are taking that data, they are using it for advertising. There was a recent disclosure from Facebook that they had produced a report for potential advertising client in which they said: We can target for you millions of teenagers, down to 14 years old, and we know when these teenagers are emotionally vulnerable and when they are most open to certain types of messages that would get them to buy your product because they are emotionally vulnerable. And so using our emotions like this to manipulate us into buying things, and then the next step is manipulating us through the fake news that we know about now. And keep in mind the fake news is not just a matter of steering news to us that is either fake or real but they are steering news that is charged. It is designed to get us angry or upset in some way. And so these algorithms are targeting us and target us emotionally, this is a kind of psychographic messaging as it is been called now. And then the third part of it is they turn that into something where elections are being affected. So advertising, fake news, elections, this is pretty new stuff. And keep in mind again, we are not talking about a social networking company anymore. Facebook is a media platform. It has 2 billion users. It is the largest media platform in the world. There isn't a US media company or European media companies that even comes close to the reach, the audience that Facebook has. Facebook is in the process of replacing television as the most important news, information and commercial portal in the world. That's what we are talking about here. It's a huge ... I mean, a monopoly that reaches 2 billion users.

These companies have become what is called platform monopolies. They don't really fit the classic definition of what a monopoly is. And so even that has to be revised and readjusted. What is the monopoly today in this era? These companies sort of exist everywhere and nowhere, you know. For example, the European Commission fined Google 2.4 billion euros because Google was manipulating their search results. They were sending you to results that favoured companies that they wanted to give a favourite to. They were making money from these companies, lots of reasons. Now, 2.4 billion euros, Google is so big, that is not so much money, so it seems like they have agreed to pay the fine.

But they could say next time or even this time, they could say: You know what, we're not going to pay your fine. And furthermore we can set up our servers in another country. We can set them up on an island in international waters off the coast of Brussels or off the coast of Germany. And we can beam into your public, and there is nothing you can do about it. And, you know, if they were to say this it would just reinforce what we already are starting to figure out that these companies it is hard to enforce regulations against them because they sort of exist everywhere and nowhere. If you think about Ford Motor company. If Ford Motor company wants to come to Germany and set up a plant, an auto plant to build cars, they have to get a whole bunch of licences and permits. If they violate those licences and permits you can be fined, you can even have the permit revoked and be shut down. I mean look what happened to Volkswagen over Dieselgate, they got a lot of trouble because they broke the rules. Well, with these new internet based platform monopolies, they don't seem to think that they have to obey any of the rules, and we will see how they react to the general data protection regulations that are just about to be launched here in Europe. But you know, this a whole new frontier that we are having to deal with.

That's one of the questions: Do we try to regulate Facebook or do we wait Facebook to self-regulate? And after I saw the congressional hearings recently where Mr. Zuckerberg appeared before the House and Senate in the United States, that's when I realized there is no change coming there. He pretty much repeated a lot of things he said back in 2010, 2011 when they were found misusing personal data. And so you know this is a company, they are looking to maximize their profits, and they know how to do it very well. It's hard to imagine that they are going to significantly change their formula which is working so well. I think that they were engaged in damage control, they were looking to see how the public‘s reaction is, how many people sign, you know, get rid off their Facebook pages and these sorts of things. Some did but not that many because there are not a lot of alternatives out there, and people still like that they can connect with one another even if they don't know if the algorithm lets them see all their friends, you know, it's one of these crazy things about it. So I don't think we can wait for Mark Zuckerberg, I really don't, or any of the Silicon Valley companies to self-regulate. I don't ... I mean waiting for self-regulation is sort of like waiting for the auto companies to decide to not pollute.

I sort of looked at Europe almost by default because we can see the United States where it's leading us. The United States' policy is being led by Silicon Valley which means Facebook, Google, Amazon, these are the companies that are leading us into the future. The other third major power in the world is China. China is kind of a black box. We don't really know what they are doing with digital technologies, with algorithms, with their social credit rating system that we hear rumours about but we are not quite sure what they are doing with that yet. So I get encouraged when I look at Europe and I see that for example you have Germany with its Facebook law which was a little clumsy but was a good attempt at saying: Hey, we want to have some rules around this. We see the European commissioner on competiton, Margrethe Vestager, who put the fine on Google, put a fine on Apple in Ireland for creating a tax even there. We see now the general data protection regulation which again is an attempt to put some rules and regulations, so basically we are seeing the vision of a social Europe trying to emerge here between the poles of Silicon Valley, United States and China. But we're only at the beginning of it, a lot of the details has to be filled in, and Europe has only begun down this road, and it is not clear at this point how willing the institutions and the governments are going to be to really do what needs to be done. Right now they seem to be contenting themselves with just tweeking the Silicon Valley model a little bit. And that's not going to be enough.

I'm proposing that we come up with digital licences for these companies. You know, depending on what service or type of company they are licences will be different. But they will have to agree to these licences and permits. Now the question is: What happens if they don't? What if they just say they are going to move to the offshore island, then you can forget your digital licence! Well, that's where the proposal becomes a little bit more interesting. The fact is that when you look at it the only reason that we can regulate auto companies or airlines is because we have the ability now to shut them out of a domestic market. So we have to develop the technology to be able to shut these companies out of the domestic market if they refuse to follow the rules. And what makes this idea somewhat controversial, the only countries that have done this are places like China, Iran, Pakistan, not exactly models of democracy, in fact they have done this for reasons of political censorship and repression and these sorts of things. But the UK has also done it, they have shut down some websites. My point is that we're not them. We can do this sort of thing for better reasons. We can have what I call digital borders to protect digital domestic markets for reasons to uphold values of democracy, to uphold the rule of law. This is the reason that I would propose that we would embark on these sorts of things. In some way it's not that different from what we do with free trade agreements. We do a free trade agreement between Germany and China or Germany and the United States or Europe and the United States. It's two entities negotiating the terms under which they are going to interact. And that's what is always happening with companies compared to national governments, and that's what's not happening now with these internet based platform companies. And so in some ways what I'm proposing is really not controversial it seems to me. It's just ... Let's treat these new companies like we treated the old companies. It's just that we have to come up with new tools, new technological tools in order to be able to do that. And some people say: Oh, then we won't have Facebook anymore, and people liked Facebook. You know what, first of all, I have a feeling that if a credible threat what made, Facebook would change very rapidly. They do not want to lose access to 550 million people in the European Union. But secondly, if it turned out they still refuse, then you know what, it creates a space for new competition. Because the other thing that people have to recognize about these Silicon Valley companies is they are killing competition. If any new company arises that even remotely has something that is similar to them they buy it, and they either incorporate into what they do or they just don't do anything with that company. So we are not seeing the competition that we need, and this would actually bring us more competition. I mean if you just look at China they shut off Facebook, Google and Twitter and companies arose in China to do all three of those, and now two of them are Fortune 500 companies, so they grew rather fast. If Europe did so, I mean, if China can start new companies like this, why can't Europe?