Should Google and Facebook be Regulated?
With the proliferation of fake news bombarding consumers daily, a more sinister issue often sails under the radar. The monopolization of search and content threatens the very essence of free speech, and it’s dominated by the who’s-who of Silicon Valley Big Tech. Google and Facebook, we’re looking at you.
Consider that in the U.S., the Googbook duopoly is now expected to obtain a combined 63.1% of US digital ad investment in 2017, up from eMarketer’s previous prediction of 60.4% just a few months prior. While you may shrug this off as ‘no big deal’ as advertising spending is a private affair, it has crossover entanglements with public policy. None of it bodes well for free-market economics.
Case in point: Just a few days ago, Facebook banned all cryptocurrency advertisements on their platform. The dictate essentially means that no advertiser — legitimate or otherwise — can market their products anywhere on Facebook. When you consider that about 180 million “active” consumer use the platform, that’s a huge competitive disadvantage for the space. In the end, crypto still competes with fiat and credit products for transaction prowess. Facebook has made an active decision to pervert the playing field.
Isn’t that their prerogative? After all, public companies are not the legislative branch of government; they’re allowed to decide the rules of engagement governing their own intellectual property. Fair enough.
But the problem here isn’t principle, it’s size. Just like the too-big-to-fail banks who forced the U.S. government to lend out trillions of dollars and monetize bad debt to save from economic collapse in 2008, Big Tech has become too monolithic. Googbook simply controls too many eyeballs and exerts a disproportionate sphere of influence.
In the cryptocurrency example, we posit that Facebook is actually affecting public policy because less awareness and consumer ownership means less pressure for Congress to enact fair regulatory framework. SImilar to Isaac Newton’s third law, Congress will only pursue policies in relation to the pushback they receive. The old axiom ‘out of sight, out of mind’ is an effective way to keep people in the dark about new innovations, and stuck in old paradigms. Free market capitalism cannot function properly on those terms.
Furthermore, the censorship is extending well beyond marketing and veering into selective enforcement. The internet is littered with stories of conservative websites getting banned or de-monetized for questionable infractions. Facebook admits it alters its news feed in favor of “trusted sources”. But who’s to say Facebook’s version of truth is the correct one? One person’s fake news is another’s absolute truth.
We think it’s dangerous to pick winners and losers when it comes to “trusted sources”. The best arbiter is, and forever will be, the marketplace. If an idea is distasteful or crass or spiteful or nonsensical, let the market vote with their eyeballs. Catering to fringe audiences do not make for a successful business model. In the end, the market always self-regulates itself effectively.
In the case of Google, its market position is so dominant that it requires special focus.
Google Throttles News and Search Results
Ok, who doesn’t use Google? I didn’t need to be present in the room to know that nobody raised their hand. Google web searches are so prevalent, that they literally know more about you than yourself. While you may have forgotten searching for that boutique shoe store last year, or that hot TIFF producer who won best producer in 2012, Google hasn’t. All that data is stored on some server farm somewhere, extrapolated and parsed by some unworldly AI algorithm. The profile it spits out would put Sigmund Freud to shame.
In fact, Google’s algorithms are so good, that almost 20 years after they became the go-to search engine on the web, their market position remains unchallenged.
Ever since the introduction of Google Search in 1997, their worldwide market share dominance has been rather lopsided; unprecedented in fact. Currently, 86.87% of all web searches worldwide run through Google. Its nearest competitor, Bing, only musters 5.11%. If you prefer ratios, that’s about 17:1, which is ridiculously high considering the global nature of search queries.
But having such control over information flow also promotes ideological corruption. After all, what’s the next logical extension after you’ve completely crushed your opposition from a business standpoint? Why, controlling what your consumers read — and by extensive think — of course. Without a peer to keep them honest, Google is simply exerting more and more influence over the information gateways it controls. In many respects, they’ve already gone too far.
In December of 2015, a professor at Northwestern University conducted a study analyzing Google search results. He searched for the names of all 16 presidential candidates at the time, and discovered that democrats (on average) had 7 favorable search results among Google Top 10. Republican candidates had 5.9 positive articles. A second study conducted by the same professor found the vast majority of news outlets that were represented in Google searches were left-leaning.
Obviously, this raises important concerns about systematic bias within Google’s ranks. Could Google be actively prioritizing search and news results from sources more aligned with its ideological perspective? Thousands of additional studies, unscientific reports and anecdotes seem to think so.
Even on the off-chance that cognitive bias isn’t taking place, local news sources are often cast aside for corporate media. That doesn’t necessarily serve the interest of local markets. Why am I forced to read about Canadian cannabis companies in the Wall St. Journal instead of Canadian sources who know best?
Regulation is a double-edged sword
We’ve just scratched the surface on the ravages a Googbook theocracy is waging on the populace. Whether it’s social media ghettos polarizing society, news throttling favoring left-wing sources, or shadow banning messages within SM platforms, we believe Googbook is getting too large. Without real competitors in core markets, expect the drip of tightening control to continue.
The European Union lead the way last year when it fined Google €2.42 billion for abusing dominance as search engine by giving illegal advantage to own comparison shopping service. But so far, U.S. and Canadian regulators seem passive. Perhaps it’s time for government to insist Googbook does better at policing themselves, or face policies which will encourage greater competition.
We don’t normally covet greater government involvement, but strategic exceptions should be made when the public interest is at stake. This is one of those times.
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