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24th Jun 2018

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EU to analyse role of Facebook and Google

  • Mark Zuckerberg thinks that the EU's proposed digital single market “would be very good” for his company Facebook. (Photo: European Commission)

Mark Zuckerberg thinks that the EU's proposed digital single market “would be very good” for his company Facebook.

At a recent questions and answers session in Silicon Valley (14 May), Zuckerberg said the multitude of laws in European countries “makes it very difficult to know what you're supposed to do as a company trying to offer services”.

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  • In most EU countries, Google's search engine has a market share of more than 90 percent. (Photo: Trey Ratcliff)

“I think a [digital] single market would just make a lot more sense and would lead to better services for people in Europe and more ability for companies like us to know what we're supposed to do”, noted the 31-year old tech billionaire.

But has Zuckerberg read pages 11 and 12 of the strategy paper on the digital single market, published by the European Commission on 6 May?

If he had, he would have read that the commission has listed a number of concerns over internet services like Facebook, which it calls online platforms.

“Some online platforms have evolved to become players competing in many sectors of the economy and the way they use their market power raises a number of issues that warrant further analysis beyond the application of competition law in specific cases,” the strategy paper noted.

It's cautious language. But the list of concerns (lack of transparency; asymmetrical relations with clients; disadvantaging of competition by promoting own services; and pricing policies which are non-transparent or restrictive) show the extent of the commission's planned analysis.

Assessment of online platforms

It announced it will launch an assessment this year of the role of online platforms, “e.g. search engines, social media, e-commerce platforms, app stores, price comparison websites”.

The research will include a public consultation “to ensure that all stakeholders are able to clearly state their views on the issue of platforms and the sharing economy”.

The increased influence of internet companies has already been the subject of research for several years - one can distinguish a field of 'internet critics'.

In an e-mailed response to this website, the commission said that “despite the existing evidence, the commission considers that there still a need for more information about online platforms, especially taking into account the speed at which developments are happening in the field, accompanied by an independent analysis of that information”.

Nevertheless, here are some of the lessons that can be learned from some of the most well-known publicists on the topic.

Near-monopolies

Many concerns flow, in part, from the fact the most important online platforms - many of them American - have a near-monopoly status.

In most EU countries, Google's search engine has a market share of more than 90 percent, indeed, in many countries the verb 'to google' has replaced 'to search on the internet'.

When the internet became mainstream in the 1990s, it was hailed as a new medium that would permanently decentralise communication and give citizens extraordinary control.

But as Tim Wu, an American professor known for coining the term 'network neutrality', noted in his book The Master Switch in 2010, “...the Internet wasn't the first information technology supposed to have changed everything forever”.

The same optimism existed during the first years of radio, cable television, and film , which all “eventually evolved into privately controlled industrial behemoths, the 'old media' giants of the 21st [century], through which the flow and nature of content would be strictly controlled for reasons of commerce”.

“History shows a typical progression of information technologies: from somebody's hobby to somebody's industry … from a freely accessible channel to one strictly controlled by a single corporation or cartel”.

According to Wu, with regards to the internet too, “there are signs that the good old days of a completely open network are ending.”

Network effect

The reason why, despite potentially enormous possibilities for choice, consumers in 2015 have chosen to predominantly use one search engine (Google), one social network (Facebook), one book seller (Amazon), is partly due to what is called the “network effect”.

Take Facebook, used daily by almost half of the European population. Why is it so popular?

The social medium began amassing members since 2004, when it steadily increased the number of American campuses where it was available.

Zuckerberg understood, wrote author David Kirkpatrick in The Facebook Effect (2010), “that most users are not going to take the time to create multiple profiles for themselves on multiple social networks [and] … that once consolidation begins on a communications platform it can accelerate and become a winner-take-all market”.

“People will join and use the communications tool that the largest number of other people already use,” noted Kirkpatrick.

That's why an alternative social medium to Facebook will only work if a critical mass finds it worthwile to undertake the move, and pressure friends and family to 'come too'.

But one consequence of the popularity of Facebook, is that Europeans are now using a social network that in Kirkpatrick's words “ is resolutely American”.

“Facebook's Americanness is revealed … by its intrinsic assumptions about how people ought to behave. Zuckerberg's values reflect the liberties of American discourse. Facebook carries those values around the world, and that's having both positive and negative effects.”

Neutral algorithms?

But Silicon Valley companies like to believe, or at least tell the world, that the algorithms they use are objective and neutral, notes Belarusian author Evgeny Morozov in To Save Everything, Click Here (2013).

“We must stop thinking of the new filters and algorithmic practices promoted by the new digital intermediaries (and their digerati cheerleaders) as unproblematic, objective, and naturally superior to the filters and practices that preceded them”, wrote Morozov.

He noted that Google's search algorithm – of which its inner workings are a well-kept trade secret – are not necesarrily democratic.

“[Google says] that everybody gets a say by voting for their favorite website with links … but those who have the resources to generate more links, perhaps by paying influential sites to link to them, or to game the system through search enginge optimisation have much more power than those who don't”, noted Morozov.

He added that Twitter does something similar.

“Twitter makes certain assumptions about what aspects of the public discussion constitute a trend, decides on how those aspects are to be measured, and having measured them, feeds them back to the public. The company … actively shapes [the public's interest].”

Timetable

The EU commission said the investigation into online platforms will be begin before the end of 2015, but “the detailed calendar … has not yet been set”.

Only after the research is finished can the commission assess “whether existing regulatory tools are sufficient to tackle [the problems with online platforms], or whether new tools need to be developed.”

And if the commission proposes new rules, they will have to be approved by the European Parliament and national governments.

It may take a few years before Zuckerberg really has to worry about the EU doing something about his company's dominant position.

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