Why regulation can help the tech giants to work better

It’s been some time since social networks earned free media exposition for events that promised an everlasting and positive impact on society. Facebook’s dystopic myriad of leaks and misuses, Twitter’s struggles to avoid hate speech to flow through its platform and an increasing number of people with the ability to game the system took away the cool aura that once floated over California. Markets are already showing how their faith in previously considered unstoppable money-making machines dipped by bringing down share prices and optimistic gains forecasts. However, it’s from another sphere that some movement is likely to ring the bells hard enough to hurt the money windfalls coming from user-generated content. Regulation is just a step away to become the norm. Tech giants should welcome to improve their image and get tools to re-take control of the game.

There is very little mystery about the seriousness of the events created by nasty actors when handling user data through system failures to keep information safe. Facebook has been used to win a few elections (although it’s questionable to determine in which extent) and there is not much happening to imagine that the issue is solved.

The agents that took advantage of massive data manipulation had their positions reinforced instead of weakened and due to corporate stubbornness preventing any drastic measure. Examples? Philippines dictator-style president Rodrigo Duterte has more than 4 million followers hearing his vigilante remarks. Brexit headmaster Nigel Farage goes over 1.2 million and the supreme social network puppeteer (also POTUS) Donald Trump has 80 million accounts listening to him via Facebook and Twitter – with no fact-checking of any kind.

Regulation is a word that makes markets feeling chills. Shareholders like to think that demand and supply do an excellent job to get balance over temporary distortions but in this case, it’s pretty clear that they will at least have availability to listen first. Wealthy individuals, corporations and major companies have been demonstrating more sensibility than usual lately. Issues like climate change denial are very bad deals (to use a Trumpian cliché). Dodgy companies manipulating platforms backdoors make very few elements happy and seed havoc everywhere.

More examples? The UK is trying to make cardiac massage on the Brexit corpse looking for a deal with any resemblance to the one that has promised £350 million weekly for the taxpayers’ pockets after getting rid of European feast. In the US, Republicans are tied to a maniac hippopotamus in a porcelain shop taking troops off Syria and throwing America on a trade war with China that can’t be won. Brazilians are set to spend 4 years with a politician that knows absolutely nothing that already has promised take the country off the Paris agreement exactly when Amazon needs to be protected most to avoid a true environmental holocaust, other than publicly defending torturers, rapists and vigilante death squads. These are not some loony leftist alarmism and doing nothing to prevent it will cost so much money that no one – not even evil capitalist sinister-laughter moguls – are ready to bankroll.

The media industry is in an odd position at the moment. Its crumbling business models are pressing the sector over ownership concentration leading to staff, and investment cuts leaving loads of trained journalist out of a job. At the same time, social media morphed the remaining journalists to accept some level of the cult of personality, becoming celebrities themselves. They waste the vast majority if their times to pursue fruitless debates antagonising critics and snapping the phenomenon that gave birth to Infowars-styled journalism, where the applause of niches audiences is more important than the properly update society of what it needs to know. The waning effectiveness of sharp and honest journalism decreases precisely when it’s needed the most.

An intervention from society at the rules of engagement of the sector can be healthy to address the distortions technology brought. Companies can be forced to be more transparent with users about how their data is handled, how much money the company does with it, provide a full deletion of the user information and even deliver it following industry standards for the user carry it out somewhere else, fostering competition and innovation.

Data breaches like the ones that happened on Facebook Yahoo or Marriott would lead to hefty fines, but the most prominent watchdog would come from users themselves. With the availability of competitors, the fear of losing bulks of clients (i.e. users) following a data breach would make companies to happily spend more money on data safety to avoid losses both in cash and market share.

Third-party services accessory to the main activities of the user data industry not only would foster innovation and growth but would make also provide a safer environment, with specific industry subsets to be explored in more depth squeezing the space of possible loopholes. The system could be virtually self-regulated, but if some companies were unwilling to comply with the rules of the game, agencies would have legal firepower to avoid severe punishments quickly, with fines paid in advance while court appeals were still in motion.

It is easy to forget that the data giants themselves were victims of the data breaches. True: their denial to admit their share of guilt following legal advice and the relentless PR war and make them less likeable, but this is just a side effect of their corporate DNA acquired after their IPOs. The legal enforcement that regulation would bring could put some shareholders off at the first moment, but the enterprises wouldn’t be severely hurt. At the same time, CEOs and COOs would need to spend less time begging to directors’ boards do implement changes like the missing ones leading to data breaches.

Facebook, Twitter and Google are, in fact, guinea pigs of themselves and despite all the investment in innovation, their businesses grew up much, much faster than any fully-controlled experiment. No company reached 1 billion clients as quickly as Facebook, and there is hardly an established market that has been so overridden by a newcomer as the one Google did to the ad industry.

User (or better, citizen) information is already a valuable commodity, but very few can extract the profits generated by it – the user least of all. Impose balance to the equation that encompasses the data giants, individuals, businesses and government is not a Marxist idea (albeit there will not be a shortage of distracted observers suggesting so) — quite the opposite. Stable markets with clear rules ubiquitously enforced are much more lucrative than shaky ones and tend to have cyclic crisis less both often and intense. Tech is an industry that strives with innovation and with mechanisms that foster competition. The lack of regulation and the “buy-and-shut-possible-contenders” model plus patent-handcuffing competitors not only hurts growth but serves society worse. There would be a lot to be told about how democracy would gain and society would be fairer with such arrangements, but it’s better not to mention it. It hardly helps things to go further. Money talks and it’s smart for everyone – investors in primis – to listen.