What we should regulate once we regulate social media platforms
The global debate over how big tech should be governed has intensified after Twitter, Facebook, Alphabet and Amazon pulled former US President Donald Trump and some of his supporters offline after the mob raid on the US Capitol on January 6th . It is clear that transnational technology platforms not only influence politics and markets through actions by users who they do not control, but directly exercise political power themselves. Human society has yet to fully adjust to these new centers of power of the information age, and all states – from autocracies to liberal democracies – struggle in their own way with the challenges of how to limit, restrict, regulate and use them.
The challenge for liberal democracies is particularly great because big tech platforms influence perception. By controlling the content and flow of information, they – and their users – can shape what people think, believe and do. Many business models rely on triggering the instinctive fast-paced brain, causing people to jump from problem to problem and diminishing their ability to pause, reflect, and apply their thinking. The building of liberal democracy – and free markets – is based on the conviction that people are able to reason and make rational decisions after weighing the pros and cons. What we are increasingly discovering is that we are not quite the rational decision makers we believed we were and that we are much more likely to be influenced by what other people think. This applies to personal as well as political and economic decisions. And this gap in human knowledge is being exploited by political parties, religious organizations, companies, and of course big tech. It also raises a philosophical question: if people fail to make rational decisions, what good is liberal democracy and free markets?
Liberal democracies respond to this challenge in two different ways. Both rely on using existing tools to correct a problem for which they were not designed. One approach is to regulate various aspects of the information domain, notably through surveillance, restrictions on freedom of expression and protection of rights. However, the power of governments to step up surveillance and restrict freedom of expression inevitably leads to politicization, partisanship and injustice. If you do not agree to the rules of Facebook, you cannot use them either. However, if you do not agree with your government’s rules, you cannot opt out. The other approach is to invoke competition law and try to contain the market power of big tech platforms using antitrust rules. Aside from the fact that there are almost no barriers to market entry on the Internet, the market power alignment of technology platforms fundamentally destroys value for everyone, including consumers. A large network is many times more valuable than the sum of four small networks per quarter of its size. For example, the liquidation of Facebook Inc. could reduce the political power of the company and its owners and potentially slow the spread of hatred and bigotry temporarily. It is unclear whether these benefits can justify the destruction of global public value that the breakup of such a company will bring.
There may be a better approach. The political power of technology platforms is based more on their “narrative power” than on their market power, on mindshare more than on market shares. Liberal democracies must review this power and are justified in aligning them. Facebook, Twitter and YouTube are seen as “power”. Platforms because they have no editorial control over what is published. However, they control what users see even though they use algorithms that they have sole control over. This is the source of their narrative power and that is what public policy must focus on.
In order to achieve this, as my colleague Mihir Mahajan suggests, technology platforms must be needed to enable algorithmic competition. For example, users on social media platforms should be able to choose how to order their feeds. Facebook doesn’t give you a choice today. Twitter allows you to have an unfiltered reverse chronological feed or a feed generated by a proprietary algorithm. In order to demand algorithmic competition, they would have to open their platforms to third-party providers of algorithms, which in turn are subject to transparency and disclosure obligations. All platforms that exceed a certain threshold of active users could be legally obliged to open up to such competition.
In a similar way, Francis Fukuyama, Barak Richman and Ashish Goel call for a middleware solution: “A competitive layer of new companies with transparent algorithms would take over the editorial gateway functions that are currently being filled by dominant technology platforms with opaque algorithms. “Another colleague of mine, Saurabh Chandra, believes that a simpler approach would be to have platforms open their application programming interfaces (APIs) to access by third-party clients who could then offer competing filtering algorithms. The approaches differ in complexity and attention to detail, but what they have in common is a clear understanding that the problem is political, not economic, and the way to address it is to use competition to limit narrative power, not market power give us reason to believe that we can use liberal democratic methods to protect liberal democracy in the information age.
Nitin Pai is co-founder and director of the Takshashila Institution, an independent center for research and teaching in the field of public policy
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