FB & WhatsApp Outage Shows Why a Centralised Internet Is Dangerous

The social media sector might have evaded meaningful regulation, but regulators are catching up.

The growth of large online social media platforms on the internet has been accompanied by a corresponding rise in the concerns of centralisation and anti-competitive behaviour. After remaining relatively unscathed by competition regulators for over a decade of their existence, there is now an increasing focus on reigning in the influence and market power that is wielded by a small set of companies that fall in the bucket of “social media companies”. The rest of this piece will look into the societal concerns raised by such centralisation, the recent moves by regulators around the world to look into antitrust concerns, and an overview of the various solutions being debated around the world.

The concerns with such centralisation, and the almost tautological monopolistic practices it can lead to, can broadly be split into economic and societal harms. Economically speaking, traditional competition law has always focused on the idea that unfair practices by entities with greater-than-ordinary influence in the market can lead to consumer harm. This consumer harm (which has both monetary and quality of service components) is considered bad for the general health and innovation potential of a societies’ economy as a whole.

Consumers Are Hit Hard

One of the primary jobs of competition regulators is to prevent such economic harm via proactive monitoring and reactive enforcement, which they have increasingly struggled to do with the unique challenges posed by the market dynamics of the new crop of technology companies. The downstream impact of such concentration of economic power, which can decide the fate of entire industries that rely on the infrastructure of large social media, is quite tangible and has led to calls to reduce the risk posed by such centralisation by breaking their varied services into smaller, independent companies that are more amenable to competing with other players.

Societal harms, on the other hand, relate more closely to the actual harm faced by consumers of such services. Locking in users by making it difficult, if not impossible, for them to easily port their data and avail equivalent services in competing platforms is at the core of such concerns.

The vicious cycle of locking in users, harvesting their actions on the internet to target content and advertising and leveraging network effects to drive even more users to the platform makes it extraordinarily difficult for consumers to break out of such platforms, which mimic many characteristics of public infrastructure.

While privacy and algorithmic accountability-related approaches are easier ways to study the problems this creates (such as polarisation, democratic interference and discrimination), the impact of these practices is very much driven by their monopolistic positions as the dominant platforms of discourse in modern society. Researchers and regulators are increasingly arguing that the interface between traditional competition law and issues such as data protection must be looked at more closely by regulators in drafting remedies that can make a meaningful difference in a rapidly evolving landscape.

A Sound Regulatory Framework Is Crucial

The rising tide of regulatory attention in addressing these concerns is now quite comprehensively a global phenomenon. Taking a holistic view of both reactive enforcement action and suggested amendments to laws and regulations to better enable them to tackle these new concerns, every country in the G8 is either considering how to change its laws to address new challenges posed by such companies, or is actively investigating a social media player for its competitive conduct. In particular, efforts by the United States and the European Union on this front are being watched closely as bellwethers of the more systemic global evolution of competition law.

When it comes to solutions, despite many calls filled with the rhetoric of breaking up these companies, tangible proposals on the ground that would empower regulators to take a more contemporary view of their practices remain far and few between. The recent Digital Markets Act by the European Union is taking a rather interesting approach of marking certain companies as gatekeepers within a sector, setting up a radical framework of increased accountability and scrutiny on their actions. These include mandates of data sharing and interoperability with competing services, disincentivising self-preferential treatment within their ecosystems, and ensuring that acquisitions by them are subject to higher standards of legal scrutiny.

Proposals in the United States, where five sets of new amendments were introduced in the Congress with some of the most potent overhauls of antitrust law in a century, are more focused on empowering regulators and providing them with greater leeway than the current legal frameworks allow in practice.

While both these sets of laws are some time away from being binding in practice, they clearly point towards a growing trend of lawmakers responding to increasing pressure from their constituents to address their concerns. While the final form of this brave new world is yet to be settled, it is clear that it will be one that will require a far more empathetic approach from large social media companies than they have exhibited thus far.

(The author is a public policy professional in the technology sector. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)