By Evelyn Donatelli
Protests against the power of tech companies like Amazon (AMZN), Google (GOOG), Facebook (FB) oppose the massive consolidation of power under the monopolies from which these companies profit in their respective end-markets. Comparisons have been drawn between the current consolidation and the inequality and polarized distribution of the Gilded Age US in the 1920s. Current pushback occurs against the backdrop of increased worries about personal security, caused by privacy breaches on large social media platforms, as well as possible election interference (FB breaches, FB preparation for election interference, Twitter deletes accounts and loses users).
As mentioned in previous posts, the US and, often more aggressively, Europe, are working to regulate social media companies through hearings and legislation. Globally, both activists and governments are working to take power back from big tech. China, another powerful player in the battle between government and big tech, has its own “FAANG” (FB, AMZN, AAPL, NFLX, GOOG) companies, sometimes referred to collectively as “BAT” (BIDU, BABA, TCEHY) - Baidu, Alibaba, and Tencent. Alibaba’s Ant Financial, along with Tencent, applied in February 2018 to create a nation-wide “social credit” score, using a scoring system which it denies stealing from Equifax IP. The Chinese government, aware of the already-consolidated power by its tech giants, responded to the credit score proposal by denying applications from all private companies for a credit scoring system, and instead creating its own. The credit scoring system intersects with China’s pre-existing problem of “shadow banking” - including off-the-books lending to borrowers with low credit. The People’s Bank of China (PBOC), together with the Chinese government, also responded to Tencent and Alibaba’s initiatives by delaying the release of a portion of Tencent’s games this past quarter, for which Tencent cited almost $1bn in losses in its August 2018 earnings. The nationalization of one of the “BAT” companies by the Chinese government has been suggested, but is still considered unlikely.
As US consumers, a silver lining appears in that legislation appears imminent - even the tech giants themselves, Amazon, Google and Facebook, have stated that legislation looks like the next step. The efficacy of this legislation will ultimately rest on the cooperation of tech lobbyists with the US government in creating regulations for platforms, which protect the privacy of consumers and the integrity of the data on the platform as a whole.