George
Soros.
Win McNamee/Getty
Images
Facebook and Google are a "menace" to society because
of their failure to protect against "the consequences of their
actions," billionaire investor George Soros said.
Speaking at Davos, Soros launched an aggressive and
multi-pronged attack on the tech giants, accusing them of
"monopolistic" and anti-competitive behaviour.
He said the companies are encouraging "addiction" like
gambling companies, and of being "obstacles to
innovation."
Billionaire investor and philanthropist George Soros has launched
a blistering and multi-pronged attack on Facebook and Google,
arguing the tech giants' size and "monopolistic behaviour" has
made them a "menace" to society, damaging democracy, and
encouraging "addiction" akin to gambling companies.
Speaking at the World Economic Forum at Davos, Switzerland on
Thursday, the Hungarian businessman argued that "social media
companies influence how people think and behave without them even
being aware of it," with "far-reaching adverse consequences on
the functioning of democracy, particularly on the integrity of
elections."
The size of Facebook and Google, he argued, means they have
become "obstacles to innovation," and he called for significantly
more regulatory oversight of the companies — holding up
European Union competition commissioner Margrethe Vestager as a
model that other regulators should emulate: "The fact that they
are near- monopoly distributors makes them public utilities and
should subject them to more stringent regulations, aimed at
preserving competition, innovation, and fair and open universal
access."
(You can read his full remarks below.)
Facebook and Google threaten the concept of "freedom of mind,"
Soros says
He was also critical of the two companies' impacts on people's
minds, accusing them of deceiving users by "manipulating their
attention and directing it towards their own commercial purposes.
They deliberately engineer addiction to the services they
provide," he went on.
"This can be very harmful, particularly for adolescents. There is
a similarity between internet platforms and gambling companies.
Casinos have developed techniques to hook gamblers to the point
where they gamble away all their money, even money they don’t
have."
Even more than this, he argued, "social media companies are
inducing people to give up their autonomy," with the scale of the
firms meaning "the power to shape people's attention is
increasingly concentrated in the hands of a few companies,"
threatening the very concept of "the freedom of mind."
Facebook
CEO Mark Zuckerberg.
Drew
Angerer/Getty Images
'A web of totalitarian control'
Elsewhere in his speech, Soros railed against the dangers of
nationalism and rising threats to democracy. He argued that the
power and technical capabilities of tech firms means they risk
contributing to this, undermining liberalism.
"There could be an alliance between authoritarian states and
these large, data-rich IT monopolies that would bring together
nascent systems of corporate surveillance with an already
developed system of state-sponsored surveillance," he said. "This
may well result in a web of totalitarian control the likes of
which not even Aldous Huxley or George Orwell could have
imagined."
He also drew a line between the growth of tech company fortunes
and rising inequality — while arguing that the profits of
Facebook and Google are largely because they refuse to take
responsibility for ("and avoid paying for") the content on their
platforms.
But greater regulation is just around the corner, Soros said:
"The owners of the platform giants consider themselves the
masters of the universe, but in fact they are slaves to
preserving their dominant position. It is only a matter of time
before the global dominance of the US IT monopolies is broken.
Davos is a good place to announce that their days are numbered.
Regulation and taxation will be their undoing and EU Competition
Commissioner Vestager will be their nemesis."
A Facebook spokesperson declined to comment. A Google
spokesperson did not immediately respond to a request for
comment.
Google CEO Sundar
Pichai.
Justin Sullivan/Getty
Images
The relevant section of George Soros' speech is republished below
(emphasis added):
I want to spend the bulk of my remaining time on another global
problem: the rise and monopolistic behavior of the giant IT
platform companies. These companies have often played an
innovative and liberating role. But as Facebook and
Google have grown into ever more powerful monopolies, they have
become obstacles to innovation, and they have caused a variety of
problems of which we are only now beginning to become
aware.
Companies earn their profits by exploiting their environment.
Mining and oil companies exploit the physical environment; social
media companies exploit the social environment. This is
particularly nefarious because social media companies influence
how people think and behave without them even being aware of it.
This has far-reaching adverse consequences on the functioning of
democracy, particularly on the integrity of elections.
The distinguishing feature of internet platform companies is that
they are networks and they enjoy rising marginal returns; that
accounts for their phenomenal growth. The network effect is truly
unprecedented and transformative, but it is also unsustainable.
It took Facebook eight and a half years to reach a billion users
and half that time to reach the second billion. At this rate,
Facebook will run out of people to convert in less than 3 years.
Facebook and Google effectively control over half of all internet
advertising revenue. To maintain their dominance, they need to
expand their networks and increase their share of users’
attention. Currently they do this by providing users with a
convenient platform. The more time users spend on the platform,
the more valuable they become to the companies.
Content providers also contribute to the profitability of social
media companies because they cannot avoid using the platforms and
they have to accept whatever terms they are offered.
The exceptional profitability of these companies is largely a
function of their avoiding responsibility for-- and avoiding
paying for-- the content on their platforms.
They claim they are merely distributing information. But the fact
that they are near- monopoly distributors makes them public
utilities and should subject them to more stringent regulations,
aimed at preserving competition, innovation, and fair and open
universal access.
The business model of social media companies is based on
advertising. Their true customers are the advertisers. But
gradually a new business model is emerging, based not only on
advertising but on selling products and services directly to
users. They exploit the data they control, bundle the
services they offer and use discriminatory pricing to keep for
themselves more of the benefits that otherwise they would have to
share with consumers. This enhances their profitability
even further – but the bundling of services and discriminatory
pricing undermine the efficiency of the market economy.
Social media companies deceive their users by
manipulating their attention and directing it towards their own
commercial purposes. They deliberately engineer
addiction to the services they provide. This can be very harmful,
particularly for adolescents. There is a similarity between
internet platforms and gambling companies. Casinos have developed
techniques to hook gamblers to the point where they gamble away
all their money, even money they don’t have.
Something very harmful and maybe irreversible is happening to
human attention in our digital age. Not just distraction or
addiction; social media companies are inducing people to give up
their autonomy. The power to shape people’s attention is
increasingly concentrated in the hands of a few companies. It
takes a real effort to assert and defend what John Stuart Mill
called “the freedom of mind.” There is a possibility that once
lost, people who grow up in the digital age will have difficulty
in regaining it. This may have far-reaching political
consequences. People without the freedom of mind can be
easily manipulated. This danger does not loom only in the future;
it already played an important role in the 2016 US presidential
elections.
But there is an even more alarming prospect on the horizon. There
could be an alliance between authoritarian states and these
large, data-rich IT monopolies that would bring together nascent
systems of corporate surveillance with an already developed
system of state-sponsored surveillance. This may well result in a
web of totalitarian control the likes of which not even Aldous
Huxley or George Orwell could have imagined.
The countries in which such unholy marriages are likely to occur
first are Russia and China. The Chinese IT companies in
particular are fully equal to the American ones. They also enjoy
the full support and protection of the Xi Jingping regime. The
government of China is strong enough to protect its national
champions, at least within its borders.
US-based IT monopolies are already tempted to compromise
themselves in order to gain entrance to these vast and fast
growing markets. The dictatorial leaders in these
countries may be only too happy to collaborate with them since
they want to improve their methods of control over their own
populations and expand their power and influence in the United
States and the rest of the world.
The owners of the platform giants consider themselves the masters
of the universe, but in fact they are slaves to preserving their
dominant position. It is only a matter of time before the global
dominance of the US IT monopolies is broken. Davos is a good
place to announce that their days are numbered. Regulation and
taxation will be their undoing and EU Competition Commissioner
Vestager will be their nemesis.
There is also a growing recognition of a connection
between the dominance of the platform monopolies and the rising
level of inequality. The concentration of share ownership in the
hands of a few private individuals plays some role but the
peculiar position occupied by the IT giants is even more
important. They have achieved monopoly power but at the
same time they are also competing against each other. They are
big enough to swallow start-ups that could develop into
competitors, but only the giants have the resources to invade
each other’s territory. They are poised to dominate the new
growth areas that artificial intelligence is opening up, like
driverless cars.
The impact of innovations on unemployment depends on government
policies. The European Union and particularly the Nordic
countries are much more farsighted in their social policies than
the United States. They protect the workers, not the jobs. They
are willing to pay for re-training or retiring displaced workers.
This gives workers in Nordic countries a greater sense of
security and makes them more supportive of technological
innovations than workers in the US.
The internet monopolies have neither the will nor the
inclination to protect society against the consequences of their
actions. That turns them into a menace and it falls to the
regulatory authorities to protect society against them.
In the US, the regulators are not strong enough to stand up
against their political influence. The European Union is better
situated because it doesn’t have any platform giants of its own.
The European Union uses a different definition of monopoly power
from the United States. US law enforcement focuses primarily on
monopolies created by acquisitions, whereas EU law prohibits the
abuse of monopoly power irrespective of how it is achieved.
Europe has much stronger privacy and data protection laws than
America. Moreover, US law has adopted a strange doctrine: it
measures harm as an increase in the price paid by customers for
services received – and that is almost impossible to prove when
most services are provided for free. This leaves out of
consideration the valuable data platform companies collect from
their users.
Commissioner Vestager is the champion of the European approach.
It took the EU seven years to build a case against Google, but as
a result of her success the process has been greatly accelerated.
Due to her proselytizing, the European approach has begun to
affect attitudes in the United States as well.
Source link
No comments:
Post a Comment