The Downside of the Digital Utopia

(source: businesscrunch)

Digital technology is considered the solution to everything in the society we live in. One can do anything from organising a date to making a political decision, from paying bills to posting selfies online, from buying Christmas presents to talking to somebody on the other side of the world. But, with the rapidly changing digital world that is slowly gaining control of our society there has to be some downsides. Can the European Union keep up with our imposing digital utopia before it has the capacity to negatively affect consumers and potentially undermine our old age system of democracy?

Google, Facebook and Amazon are currently thriving in the digital landscape, but as the digital economy grows and anti-competitive behaviour is evident throughout the online sector, this power is now leaking out into our everyday world. These online platforms have now become societal actors’. These companies do not only exist as an online platform anymore, and the EU needs to deal with the power these online platforms are bringing to the table, while focusing on the consequences this could potentially have further down the line.

There has been serious talks, serious allegations and serious decisions being made in regard to major tech companies and their power within the EU. Some even go as far as saying we are “moving away from a state about people, to a state about technology.” These online platforms are avoiding paying taxes, and promoting anti-competitive behaviour which both undermine what the EU was built on since 1957 under the Treaty of Rome. How are we able to protect the values of the EU – fairness, equality, competition, and privacy – in a world moving so fast that current laws and regulations cannot keep up?

This may sound far-fetched, or even dramatic, but on one hand we have these billion dollar companies and on the other we have political institutions which are struggling to utilise their power to help citizens and stop the undemocratic nature that could possibly come out as a result.

There are few concrete examples in place where the EU has shown initiative in combating these platforms. In 2010 the Digital Agenda was launched, and along with it plenty of opportunities for the EU to take control of the situation. But, while the opportunities came in great numbers, so did the repercussions. The digital economy is growing at seven times the rate of the rest of the economy, so this is an important area and a primary role for the EU to be focusing on. The main scope for the EU at the moment is regulating the digital economy and aiming to incorporate a digital single market.

Regulating the digital economy is done by setting rules and laws which regard the economy and all surrounding digital technologies. Currently, the regulations that the EU are working with have an origin that predates the internet era. This is causing real challenges within the digital landscape. The digitalisation of the global economy is happening rapidly, and the EU cannot keep up with it. For example, close to one third of the growth of Europe’s industrial output is due to the uptake of digital technologies online. While between 2008 and 2016, revenue by the top online platforms grew by 32 per cent per year, compared to just 1 per cent in the entire EU retail sector.

Press Officer for Competition Policy, Yizhou Ren, says, “we do not need a whole new competition rulebook for the big data world. What we need to do is pay close attention to these markets and to take action when it is necessary.” Joe McNamee agrees, he says the EU needs to work out what they’re doing, and do it properly.

McNamee, executive-director of the international association European Digital Rights (ERDI), says we risk a lot if these online platforms continue to grow in the way that they currently are. The EU loses credibility, while the citizens lose choice and autonomy. McNamee continues saying that these online platforms are good at making themselves look like the victim.

One example of online platforms overstepping their power is the recent Amazon issue that has gained media attention lately. Amazon has been ordered to pay €250 million by the European Commission over its tax evasion. The European Commission issued a statement explaining the level of royalty payments were inflated and did not match the economic reality, the Commission concluded that the tax ruling granted Amazon an economic advantage over other businesses. This is of course illegal under state laws.

McNamee says that behaviour like this has the power to undermine democracy, and to make sure this does not happen, the EU has to step up its game and do a lot more than regulation. Ren says that the Commission will come down on Amazon, and they will not get away with this behaviour. We can see this through the sanctions that the Commission has place on Amazon. The online platform is still trying for an appeal.

One of the guiding principles pursued by the European Commission is to, “promote a level playing field” for online platforms. Competition policy is strictly outlined within the EU, because a strong ground for competition promotes fairness, equality, and shared power. The Cabinet of Competition, led by Margrethe Vestager, has been in the spotlight recently trying to promote competitive behaviour.

Vestager has an incredibly strong platform when it comes to competition policy. She says, “competition rules cannot solve every problem on their own,” but they are the foundation of keeping the digital market level and open. Anti-competitive behaviour has always been illegal within the EU, even before the digital age began. This is because it encourages, in this case Big Tech, companies to harvest all of the power, money and greed within the EU. The EU ensures competition because if these platforms dominate the market, they leave consumers without autonomy, and gain more and more power as time goes on, and not only within their online space.

The Google issue is the most prominent example of anti-competitive behaviour that has occurred recently within the EU. The EU Commission has fined Google for favouring their results over their rivals which results in a lack of competition in the markets. Vestager says Google, “denied other companies the chance to compete on the merits and to innovate. But, most importantly, it denied European consumers a genuine choice of services and full benefits of innovation.

Ren also added, “we’ve never objected to the fact that Google’s search engine dominates the market. We just don’t want it to use that dominance to squeeze out innovation.”

The Commission fined Google €2.4 billion over this, and the company is trying to appeal it. This fine will help online platforms see that the EU’s stance is serious and that both innovation and competition within the EU are still on the forefront of the agenda. Anti-competitive behaviour, says McNamee, has the power to undermine democracy because consumers lose choice, originality and competitive prices and results.

Ten years ago, it never would have been seen to be possible that data would be worth more than money, but that’s exactly what is happening, says McNamee. This is how online platforms such as Google and Facebook exist on such a large scale. “Facebook knows more about its billions of users than the users know about themselves, and this is what the EU needs to have control over.”

McNamee wants us to think about the online platforms when we are using them. He says, “any technology which increases the number and complexity of social interactions leads to more rules and control being required over a society.”

The EU needs to have a bigger role in regulating these platforms, and current regulations and legislation need to be updated. But it is not all bad, the Commission has made successful action in recent years. Between 2010 and 2017, the Commission imposed over 265 fines on platforms that did not comply with competition policy, says Ren.

What we need is a society where online platforms exist in their world, and politics can run in its own world. A state was created to protect the best interests of the people, and it needs to stay this way without the interruptions from online platforms.

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