SOCIAL MEDIA FAANGS 2019

Rather than posting multiple blogs, I'll gather new events/points in this hub post. The clear theme is an EU-led backlash against the wild west non-regulation of the web giants (FAANGS: Facebook, Amazon, Apple, Netflix, Google, Spotify), though US lawmakers won't necessarily be fooled by the millions being spent by FAANGS lobbyists to convince them this is a conspiracy against US business by a jealous EU which failed to produce companies/apps that appeal globally.

SOME FAQS/THEMES

Will there be statutory regulation?
Yes, its already happening: GDPR; Germany will enforce $20m fines if hate speech isn't removed within 24 hours, and it + France are leading the way on taxing the tax-dodging giants. Apple has already been forced by the EU to pay the Irish government €13bn in back-tax.

Will the FAANGS conglomerates be forced to break-up into smaller companies?
Probably, but the timescale is uncertain. EU pressure will be a factor, but it will be US regulators/politicians who ultimately decide if, like the film industry back in 1948 (Hollywood giants were forced to sell off their cinema holdings), they legally form monopolies and therefore competition + consumer protection law insists they must become smaller. The FAANGS are spending $millions to persuade US lawmakers that the EU are trying to undermine USA dominance, and that any attack on them is bad for the USA.

However, with deregulation being the long-term trend ever since Reagan back in 1980 (same for the UK from 1979 when Thatcher was elected, two very right-wing, 'free market' politicians), the film industry may actually see its anti-trust laws scrapped in 2019! Right-wing governments (eg Trump/Republicans, May/Tories) are reluctant to regulate the 'free market'.

The right-wing press may also be very free market, but they do frequently campaign for tighter regulation of other media (just not the press), which will add pressure to right-wing politicians to act.


Are children (+ how they are monetised) a factor?
Absolutely!!!
Protection of children, arguably even more than protection of democracy, is a (the?) key driver behind media regulation. The age rating system (film, games), TV watershed, multiple clauses in the press industry's Editors' Code, much of the ASA's policymaking, all are dominated or even defined by protection of children. The ASA's ruling that apps must not contain gambling if they're accessible to kids is just the start of what promises to be a tough EU-led fightback against the non-regulated, wild west approach of the 'digital gangsters' of new media.

Phone hacking was a scandal to Guardian readers until the Milly Dowler case broke, and within weeks the highest-selling Sunday paper was closed and a multi-year formal commission (Leveson) was set up to investigate newspaper malpractice, while the self-regulator, PCC, scrapped itself and announced IPSO would replace it.

Expect Facebook and Google/YouTube's lax age controls to become a major issue.

The non-regulated monetising of freemium apps (Lara Croft Go, Kim Kardashian's Hollywood) and vlogging social influencers like Zoella is already facing restrictions.




2019 STORIES

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FACEBOOK + SOCIAL MEDIA TO GET STATUTORY REGULATION? UK MPs CALL FACEBOOK 'DIGITAL GANGSTERS'
Read more on the Feb 2019 'digital gangsters' statement + call for statutory regulation, which was quickly backed by the Labour party (but the Tories are unlikely to agree).

A 'digital gangster'? UK MPs are furious with Zuckerberg

Facebook (and Google/YouTube) are facing ever growing scrutiny over their (mis)use of user data and facilitation of anti-democratic forces (in US presidential election, Brexit vote, spreading of anti-vaccine ideas, etc). They have grown into vast global conglomerates with little or no formal regulation.

GDPR, laws passed within the EU to insist on minimal standards of privacy and registration of user data, was an early sign of this wild west era ending, though the lobbyists (PR, campaigners) employed by the FAANGS have successfully argued to US politicians that this is the EU trying to damage American business.

There remains the distinct possibility, though, that US regulators will get tough on them. Facebook is facing multi-billion fines for misuse of user data, which could lead to a re-think on regulation there.

ANTITRUST REGULATION Should new media giants be broken up?

Google, Facebook not playing by the rules, News Corp tells ACCC

https://www.theguardian.com/media/2018/may/04/google-facebook-not-playing-by-the-rules-news-corp-tells-accc?CMP=Share_AndroidApp_Copy_to_clipboard

TERMINOLOGY - very useful neologism/mnemonic below: GAFA...

UPDATE: MURDOCH'S FOX RAIDED BY EU ANTI-TRUST AUTHORITY OVER SPORTS RIGHTS
The Murdoch press enjoys a dominant market position in the UK with no hint of any regulatory action (unless left-wing Labour leader wins the next election) from government or the self-'regulator' IPSO. Yet his corporation's handling of sport rights once more sees clear evidence of the tough regulatory environment for broadcast media compared to 'print' media.
Guardian: 21st Century Fox's London office raided in market abuse inquiry.

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A useful primer, including a quote from Adam Smith, on the history of and current clamour for enforcement of antitrust laws.

In a nutshell these exist to combat market dominance by single companies (or colluding cartels), seen as to the detriment of customers.

Elliot, the Guardian Economics editor, references historical cases of oil, and 1980s action on AT+T (US equivalent of BT in the UK or Post in Luxembourg), but he could also have referenced action against a forerunner of the modern cinema big six, forced to vertically DE-integrate before gradual deregulation allowed this dominance to return.

Microsoft were desperate for Apple to survive during its 90s crises, as it helped put off antitrust action against them.

Elliot cites the GAFA crew, Google, Apple, Facebook, Amazon, but Comcast and Disney also are worthy of such consideration as they clamber above even global media barons such as Murdoch, who faces Disney buying his film empire and Comcast his prized TV empire.

(See Guardian article, Is it time to break up the tech giants such as Facebook?, for more on this)

The argument goes like this. Data is as vital to the modern digital economy as oil was a century ago. The tech giants have the same sort of monopoly power that Standard Oil once had (Google and Facebook accounted for two-thirds of online advertising spending in the US last year and Amazon was responsible for 75% of online book sales). Mark Zuckerberg might wear chinos rather than the top hat sported by Rockefeller but a robber baron is a robber baron. It is time for anti-trust legislation to be used to break up Facebook, Google and Amazon.

The charge sheet is a long one: the tech giants are exploiting their monopoly power to stifle competition; they are spreading fake news; their fantastically rich owners portray themselves as right-on yet go to a great deal of trouble to minimise their corporate tax bills; they are ripping the heart out of communities through the closure of bricks-and-mortar retailers. To the list can now be added (in Facebook’s case) the harvesting of the personal data of 50 million Americans and its use for political purposes. 

No question, Big Tech is more vulnerable to a backlash from Washington than it has ever been. Companies have outgrown management systems that were not designed for systemically important businesses and have used their market power to gobble up rivals. It is this charge – that the disruptive startup companies of yesteryear are today’s anti-capitalists – that creates the biggest risk of anti-trust action.