Tech

Tough times for Big Tech — except where it counts

LONDON — It sure looks like it’s been a bad year for Big Tech.

Europe’s antitrust enforcers have doled out multi-billion euro fines, politicians have questioned whether tech companies pay their fair share in tax, and lawmakers have raised increasingly uncomfortable questions about social media’s role in elections worldwide. It would be little wonder, then, if Facebook, Google and Amazon were ending 2017 with their reputations far more tarnished than when the year started.

And yet, there’s no sign that anything like that has happened.

Policymakers in Brussels, Washington and elsewhere have been busy ratcheting up the rhetoric (and, increasingly, fines) against many of the tech giants. But the majority of people who use their services — not to mention the global investors who buy and sell their shares — have responded with a collective digital shrug.

The stock prices of Alphabet (the parent company of Google), Amazon and Apple continue to hit all-time highs, making them some of the world’s most valuable companies. And the public still prefers these digital brands to the lawmakers trying to bring them to heel (and, yes, that includes Margrethe Vestager, the European Commission’s competition czar who has become the face of much of the global regulatory pushback against Big Tech).

The inability of regulators to curb either the economic or social clout of these digital companies doesn’t mean that Big Tech got its way all year.

Poll after poll shows that while people are beginning to grow wary of the tech giants’ dominant (and, increasingly, entrenched) positions, they still feel they get more from the digital world than it takes from them.

A recent survey by the European Commission found that two-thirds of Europeans believe that technology has a positive impact on the quality of their lives. They felt the same about tech’s role within the wider society, according to the region-wide poll.

Those are significantly higher percentages than you might expect from a Continent that’s positioning itself as the world’s digital policeman. And it’s a reminder that while European policymakers might see the latest digital gadget or service as a potential privacy infringement or competition issue, most consumers view it as something else: a shiny piece of new technology that makes their lives easier or more fun.

Companies like Google and Facebook have built up their dominant positions through an uncanny ability to get consumers to trust them| Stephen Lam/Getty Images

The inability of regulators to curb either the economic or social clout of these digital companies doesn’t mean that Big Tech got its way all year. Nor does it suggest that politicians have been off the mark when pursuing cases against companies whose practices sailed too close to the wind.

But as policymakers look to 2018 — and a number of potential regulatory fights await, including antitrust, privacy and tax cases — it’s worth asking if they have the right tools to address inappropriate behavior on the part of Big Tech.

Facebook, for instance, was fined three times this year in Europe (€110 million by the European Commission, €1.2 million by Spain’s privacy watchdog and €150,000 by the French data protection authority) for different regulatory missteps; the social network is appealing the Spanish and French decisions.

But for a tech company that pocketed $4.7 billion in quarterly profit in just the three months ending September 30, these fines are a mere rounding error to the company’s accounts, not a serious financial threat to make executives and engineers think twice before acting.

This lopsided situation, at least when it comes to privacy concerns, will be addressed next year through a revamp of Europe’s data protection rules that take effect in May. The changes — known collectively as the General Data Protection Regulation, or GDPR — will allow European authorities to fine companies that flout national privacy laws €20 million or up to 4 percent of global revenue, whichever is higher.

It’s a testament to the potential power of these beefed-up penalties that companies like Google and Facebook are rushing to comply with the region’s data protection standards, arguably some of the toughest rules anywhere in the world.

Tech firms (and non-tech companies, too) have hired, collectively, thousands of new lawyers and coders to revamp how they handle people’s personal data, fearful that one misstep could lead to hefty fines that would force even the most laid-back investor to do a double take.

And yet, it’ll take more than fines to change the public’s perception of these digital giants, especially as people still view them mostly as a benign, if not beneficial, presence in their daily lives.

So far, fears about Big Tech’s role in society have failed to break through in a meaningful way to most of the billions of people who use these digital services.

Companies like Google and Facebook have built up their dominant positions not just through world-leading coding and (sometimes) cut-throat business practices. They’ve also done it through an uncanny ability to get consumers to trust them — often with the most personal data about themselves.

But as the recent fake news and election interfering scandals on both sides of the Atlantic have shown, that trust can be quickly lost.

More than half of Americans, for example, now don’t trust social networking companies or the government to prevent foreign entities from manipulating elections, according to a poll by Axios, a news organization. Just over 50 percent of respondents also felt that social media does more to harm than help democracy.

That’s the major risk confronting Big Tech as 2017 comes to a close.

So far, fears about Big Tech’s role in society have failed to break through in a meaningful way to most of the billions of people who use these digital services around the globe.

But if the digital giants’ growing number of missteps continue to erode consumer trust, the slow drip of anger and frustration aimed at Big Tech by the few could easily (and quickly) turn into a tidal wave of accusations by the many.

Mark Scott is chief technology correspondent at POLITICO.

Original Article

Politico

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