Page 58 - AC/E Digital Culture Annual Report

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margins, particularly Facebook, which simply sells our likes to hyper-personalized advertising. Economic power generates political power, which is also why FANGs have fought hard, and so far successfully, against efforts and attempts to make their business models fairer and more transparent. FANG companies and many other supporters of net neutrality – including start- ups worried about being winnowed out by big players able to pay for faster delivery of their data – have argued that more power for the ISPs would squash Internet innovation and unfairly penalise small businesses. Others might argue that FANGs themselves are a bigger risk to innovation than TELCO companies, largely because of the network effects that make them natural monopolies.
Concern about digital competition is
acute in Europe because the Social Media platforms are dominated by a few big foreign companies, accumulating volumes of personal data on their platforms.
FANG companies have been the largest corpo- rate benficiaries of net neutrality. The growth and earnings of FANGs have soared, and so has their impact on economies and users. Despite these companies’ near-monopoly status, there has been little public pressure to challenge their dominant position, probably and mostly due to users being very satisfied with the services and convenience they provide.
But these companies have recently attracted greater attention from regulators and gov- ernments. Concern about digital competition
is acute in Europe because the Social Media platforms are dominated by a few big foreign companies, accumulating volumes of personal data on their platforms. Using huge amounts of accumulated data as the raw material for artifi- cial intelligence or machine learning could have an insuperable competitive advantage over new entrants. Users gain good services, and often free of charge, from Social Media platforms but there are also some potential drawbacks: e.g.
using a predominant position to collect data and keeping that data exclusive in order to maintain monopoly power.
In data-driven economy and society, FANGs’ value and power are growing exponentially, and western regulators recently started responding to growing concerns about FANGs. These masters of high-tech disruption may soon find themselves doing business in a more regulated – and more level – playing field. Until now western governments have mainly let these digital giants self-regulate, but it is clear that this grace period may be coming to an end – especially in Europe.
Some analysts say that the existing antritrust approach, based on consumer welfare standards, is outdated in the data-rich Internet age which encouraged natural monopolies, facilitating the emergence of companies such as Amazon, Goo- gle and Facebook, which benefit from “network effects” that favor their expansion, and enable them to offer lower retail prices (Amazon) or free of charge services (Internet search, Google, and Social Media, Facebook). We are witnessing a clear shift towards the feeling there is a need for greater government intervention motivated by the argument that concentration of power is a problem even if there are satisfied and happy consumers with no immediate costs paid by consumers (the “consumers first” approach in pro-market orientation).
Policies based on outdated economic and busi- ness models that do not address the problems of the digital and data-driven economy will not even level the playing field. What we need is an equal and consistent application of competition rules, which will probably mean coming up with new rules.
With new rules and pressure, we expect that the playing field will be levelled further:
• to ensure that these companies are paying their fair share of tax to society;
THE FUTURE OF SOCIAL MEDIA · JOVANKA ADZIC
Digital Trends in Culture