Why Tech Companies are facing trust issues?

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Context: After years of blistering growth driven by an ever-growing share of the online ad market and big data, the giants of Silicon Valley, including Amazon, Apple, Facebook, and Google, are facing an unprecedented challenge- calls by lawmakers to curb their market monopoly power. 

Relevance:
Prelims: Current events of naitonal and internaitonal importance.
Mains: GS III- 

  • Awareness in the fields of IT, Space, Computers, robotics, nanotechnology, biotechnology and issues relating to intellectual property rights.
  • Challenges to internal security through communication networks, the role of media and social networking sites in internal security challenges, basics of cybersecurity;


What are the issues with big tech companies?

For the past decade, the technology giants—Facebook, Google, Apple, Amazon, Microsoft, Tesla, Uber- have dominated the business world. Just last year, their stock prices appeared to be on an endless upward trajectory.

  • These tech firms are becoming increasingly controversial.
  • Today, there are growing concerns about third parties accessing and manipulating Facebook user data; 
  • Before that, there was a raging debate about whether the government should be able to unlock devices belonging to suspects of terrorism or other crimes.

There are five interrelated issues that are causing antitrust in these Big companies:

  1. Privacy:
    • The first issue is privacy. The European Union’s far-reaching general data protection regulation (GDPR) does not offer any protection for non-Europeans.
    • In the case of Facebook, that translates into 1.5 billion users, almost all of whom have clicked to agree to the company’s terms of service without having read them.
    • Further, as a result of their metastatic growth, tech giants now have a vast influence on politics, policy and personal reputations across the spectrum, making the cost of data privacy breaches by these firms catastrophic.
    • There are proposals to require tech companies to obtain an affirmative opt-in from users before collecting their data and to allow users to retrieve or erase their data easily. 
  2. Market size:
    • The second issue is market power.
    • In the early years of the internet, an infant tech industry pleaded for a hands-off approach to regulation and taxation.
    • But now, the four largest US firms by market capitalization –Apple, Google, Microsoft, and Amazon– are all tech companies.
    • They may have engaged in anti-competitive behavior over many years thus undercutting smaller potential rivals and holding onto an outsized market share.
  3. Information Control:
    • A third issue concerns the control of information.
    • Owing to the convenience and addictiveness of smartphones and social media, many people now get news exclusively from online platforms such as Facebook.
    • Yet the microtargeted advertising model used by Google and Facebook has disrupted print journalism’s traditional source of revenue, along with coverage of state and local governments.
    • Even worse, social-media algorithms tend to amplify the most extreme material at the expense of more credible sources.
    • But efforts to eliminate material viewed as extreme by some will raise the spectre of censorship. 
  4. Wealth Creation:
    • The fourth issue is the concentration of wealth.
    • The founders of today’s tech giants are among the world’s wealthiest people, with Amazon’s Jeff Bezos.
    • But their growing fortunes stand in stark contrast to decades of slow wage growth, which is creating a political backlash.
    • Still, the creative destruction of the digital era has also enriched many tech workers and investors, while reducing the fortunes of previous incumbents.
    • It has destroyed and created well-paying jobs. 
  5. National Security: 
    • The last issue concerns national security and national economic interests.
    • A number of tech firms, including Microsoft and Facebook, declared that they will not assist any government in conducting offensive cyberwarfare operations.
    • And that they will defend unconditionally any countries or individuals targeted by a cyber-attack.
    • Does that include a cyber-attack against North Korea or Iran to preempt a nuclear event? 
    • With respect to economic interests, all governments look for ways to help their countries’ own industries, whether through regulation, subsidies, or trade barriers.
    • But countries like China have been playing a different game with their alleged theft of intellectual property and forced technology transfers. 

 

All of these issues will shape the future of tech policy, and thus future innovations and the benefits they bring to society.

What are the main concerns with each platform?

Amazon:

  • Amazon is the world’s largest online store.
  • It also sells hardware like the Echo, runs a computing platform, makes television and movies with Amazon Studios, and owns Whole Foods and Zappos.
  • Why it’s a problem: Amazon kills companies by copying their ideas.

Apple:

  • Apple hovers around $1 trillion in market value.
  • Why it’s a problem: It is currently the defendant in a class-action lawsuit alleging that it drives up prices in its Apple Store.

Google:

  • As the most popular search engine by far, Google controls the flow of information.
  • It also owns businesses in navigation (Maps, Waze), video (YouTube), mobile operating systems (Android), and more.
  • Why it’s a problem: Google gives its own businesses special treatment.

Facebook:

  • Facebook has over 2 billion users and owns Instagram and WhatsApp.
  • Why it’s a problem: It has been blamed for violating user privacy, spreading disinformation, and helping incite genocide.

What should be done?

These tech giants are suddenly the target of new scrutiny by the US government. The Federal Trade Commission (FTC),  Department of Justice (DOJ), and Congress have all begun to investigate whether these companies have too much power.

  • But all these companies have a global market. Laws of a particular country may not counter their malpractices.
  • In the age of the internet, which is borderless, regulation of these companies would also require borderless legislation.
  • For this, international organizations like the UN should step in to regulate these companies keeping in mind the vast population they influence. 



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