Even if big tech firms are increasingly competing among themselves, market forces won’t be enough to regulate their technological and information oligopoly.
After the banning of Huawei, the exclusion of TikTok and WeChat in the United States echoes as a sign of weakness on the part of the American government and democracies in general. It underscores the need to quickly develop a new governance for the digital space.
Has the world emerged stronger from banning Huawei and excluding TikTok and WeChat in the United States? No, it is a triple sign of weakness. First, it demonstrates the weakness of the U.S. in facing China’s economic power. The primary purpose of these protectionist measures, under the cover of security considerations, is to protect American supremacy in a multipolar world that is increasingly challenging it. Admittedly, with $900 billion in combined sales revenue for Google, Apple, Facebook and Amazon in 2019, big U.S. tech firms weigh much more than the $132 billion earned by the Chinese BATAB – Baidu, Alibaba, Tencent, ANT Group and ByteDance. But these are growing rapidly, and most importantly, some key technologies like 5G are now largely eluding the U.S.
Failure of States and Democracies
Second, it signals the weakness of states that seek to enforce, in a more or less brutal fashion, their Westphalian sovereignty on their share of digital space in the face of accelerating globalization and all-powerful big tech firms. These companies, which have a “police right” over this new public space defined by social networks, take on or are assigned, sometimes unwillingly, prerogatives that until now were reserved for the states: controlling hateful content, issuing money, welcoming ambassadors, convening international meetings, etc.
Finally, it signals the weakness of democracies seeking to protect their populations from external meddling, after long considering cyberspace as a technical, global and open environment. The point is not to dismiss both the “clean network” anti-fake news program of Mike Pompeo and China’s sweeping censorship, or to compare the “micro-targeting” darling to big tech to Russia’s “information war,” but these are clearly the first signs of an existential crisis of Western democracies in their relation to the digital world.
A New Governance for the Digital Space is Essential
These three signs of weakness highlight the need to quickly develop a new governance for the digital space. First, in order to promote an “economy for the common good, ” as stated by economist Jean Tirole, and ensure a governance that is not only technically or financially based. Second, in order to preserve the stability and security of the network in a multipolar world, without common rules, where digital space has become the preferred battleground between states. Finally, in order to better regulate the market.
Even if big tech firms are increasingly competing among themselves, market forces won’t be enough to regulate their technological and information oligopoly. And the anti-trust investigation that the U.S. Congress just launched will make no difference: breaking up GAFA is totally improbable given the strategic role these firms play in the confrontation between China and the United States.
Restrictive measures, however, are indispensable: imposing a digital tax on data, a ban on “killer” acquisitions, ensuring product non-discrimination, data portability, solution interoperability, making some data accessible to external players, defining data localization requirements, etc. Only then will we see new “post-digital” players emerge, moving in both directions—from the digital to the real economy, but also from the real to the digital economy, thanks to hybrid business models.
An Opportunity for Europe
From this standpoint, Europe has an opportunity and an imperative. After Snowden’s revelations, the scandal of Cambridge Analytica, the CLOUD Act, naivety and complacency are guilty. A new balance of power—political, diplomatic, legal, technological and industrial—has to be defined for the long term. Of course, the “old continent” is not equally endowed on all these points, but it does have some key assets. And most of all, nothing would be more damaging than a digital cold war between China and America in which Europe is one of the battlefields.
Even if the split between the American and Chinese technological plates will surely do more harm to China in the short term, the consequences will also be dire for the United States and its big tech firms. As economist Joseph Stiglitz said, “The economy is not a zero-sum game.” Especially in a multipolar world.