Reining in Facebook and Google: A Common Transatlantic Project

In recent weeks, two remarkable developments took place affecting Big Tech media. One of them garnered global headlines, the other occurred quietly behind diplomatic doors.

First, Facebook and Google tried to bully — unsuccessfully — Australia over a sensible new law passed there.

It required the digital platform companies to share their advertising revenues with local media companies, whose content the platforms regularly repackage and monetize.

Second, a dramatic shift over approaches toward global taxation rules for Big Tech companies resulted from the G20 finance ministers’ summit. Unheralded though this may be for the moment, it could — and should — have major global implications.

Is the jig up for Silicon Valley?

In a mostly unreported announcement, U.S. Treasury Secretary Janet Yellen told her G20 counterparts that the Biden administration was abandoning the Trump administration’s position on the tax treatment of U.S. technology companies.

The Trump team had demanded that these companies be allowed to opt out of a proposed global digital tax agreement that would force them to pay a larger share of their taxes in the countries in which they operate.

This so-called “safe harbor” provision – a misleading term for what really is an intolerable special interest carve-out – was strongly opposed by the EU, and for good reason.

U.S. insistence has deadlocked progress on new global digital tax rules for several years, even as the Big Tech companies have taken advantage of loophole after loophole.

A united transatlantic front?

For many years, Facebook, Google, Amazon, Apple and other U.S. digital platform companies have based their business model on shopping for tax havens.

For that purpose, they often set up skeleton operations in low-tax countries, booking all sales through that country. The notorious case of Apple’s abuse of Ireland’s tax shelter became known derisively as “leprechaun economics.”

With the Biden administration signaling a new U.S. openness to a common digital tax, as well as a global minimum corporate tax, Big Tech companies may soon be facing a united transatlantic front.

Evidently, the concern over the way in which these digital juggernauts undermine democracy has altered the new U.S. administration’s calculus. It is not just concerned about their Frankenstein-like disinformation machines. Equally bad is the anti-democratic way in which they hollow out the revenues of traditional media companies.

Are the digital media platforms actually publishers?

To be sure, these battles are about far more than a hard-fought debate over their tax treatment.

At the core lies an important, yet unsettled debate: Are digital media platforms like Facebook, Google/YouTube and Twitter the new “public square,” a kind of global free speech Agora?

That certainly is the dope their vast PR and public affairs flaks like to sell, and that civil libertarian NGOs such as the the Electronic Frontier Foundation like to buy.

Or are they, in contrast, just the latest techno variety of old-fashioned publishers and broadcasters? Or a hybrid in between?

The responsibility shirkers

For the longest time, Facebook, Google et al. have tried to evade their societal responsibilities.

They have profited handsomely, even grotesquely, from fomenting highly divisive political and social debates, as their media machines crank out extremism all over the world.

All the while, they have claimed that these toxic impacts were, literally, none of their business.

Too little, too late

Before the U.S. Capitol ransacking on January 6, the platforms tried to deal at best halfheartedly with their gushing pipeline of disinformation regarding the COVID pandemic and racial tensions.

They slapped on warning labels and removed inflammatory content of certain users. That created an illusion of “action,” but it was not very effective

The “coming to Jesus” moment

After the ransacking, which was incited and planned over Facebook, Twitter, YouTube and other digital media platforms, these companies had a bit of a “coming to Jesus” moment.

As the world watched U.S. democracy melting down, the platforms all decided to discontinue publishing Donald Trump’s tweets and postings.

Surreal libertarians

For that, the companies were criticized by “open Internet” advocates for violating their role as digital public squares.

But what the Internet libertarians missed is that it is completely within their rights as global publishers to decide they do not want to publish Donald Trump anymore.

That decision is no different from Rupert Murdoch’s editorial right to feature Boris Johnson on the front page of The Sun, or that of the New York Times to feature Joe Biden.

Publishers will publish…

It’s clear that Big Tech platforms regularly use their publisher power to decide what content and sources they want to amplify or reject.

This became obvious when Facebook pulled the plug on the entire country of Australia. Notably, in 2014, Google had done the same to Spain, after that country had passed legislation requiring Google to pay news outlets for the article snippets in its search results.

So Google closed its new service there. Those are actions that only giant monopoly publishers can do.

“Robot publishers”

As much as these companies would like to claim otherwise, these are no longer passive online chat boards or free speech zones, and the Big Tech platforms are not merely managers of the digital public square.

Perhaps the best way to capture their business model is to describe them as quasi-“robot publishers,” in which algorithms often perform the essential duties of an editor.

Only that these firms’ algorithms are much more powerful than any editor in the world

The Facebook money machine monster

From a liability or accountability standpoint, it should matter little that there is a supercomputer behind the curtain, instead of a human.

Particularly since Facebook, with its 2.6 billion users, is the largest publisher/broadcaster in human history. Google’s YouTube is close behind, with 2 billion users.

And yet existing law in the EU or the United States does not hold Facebook or Google accountable like a publisher.

Needed: Courage on both sides of the Atlantic

There is something basic and fair about the digital media giants paying for the original news content that they use to drive traffic to their own sites.

A lot is at stake in this battle over digital advertising-sharing, and the EU and the United States should lead the way to ensure that Big Tech media respect the sanctity of copyright law and stop undermining the world’s news outlets.

Quiet before the storm: The U.S. side

One can only hope that the fact that the Biden administration has been noticeably quiet on this front is because it has a lot on its plate in its first months.

The hope – and really the expectation – is that the administration is using the current time period to affirm its plans to tackle the GAFA complex in a sensible yet comprehensive way. This can has been kicked down the road for too long.

The umbilical cord between the storming of the U.S. Capitol, the sense of permanent incitement that marks — and mars — the U.S. political debate, and the activities of Facebook & Co., are undeniable.

Quiet before the storm: The EU side

Meanwhile, European Commission VP Margrethe Vestager says the EU’s 2019 Copyright Directive ensures payment to content producers. However, after two years of trying, it has yet to be implemented by 26 out of 27 member states.

But that is not the only problem. As one legal expert says, “The Copyright Directive is already yesterday’s law.”

The EU’s rules are already obsolete because, unlike Australia’s tough law, it does not require binding arbitration between tech companies and news publishers if they can’t agree on terms. So the tech companies will be able to stall and dodge.

Conclusion

A united transatlantic front at the G20 over global taxation rules is a crucial element in this battle.

It provides an opportunity for the EU and U.S. governments to negotiate with other leading nations to establish a new transnational standard that reins in these Big Tech monopolies.

It is not only high time for governments on both sides of the Atlantic to step up their games.

It is especially time for the EU to develop at least as much courage as Australia. The EU, after all, is a much stronger market force.

But because of disunity within it, often it punches below its weight. Big Tech companies have been able to “divide and conquer.”

In a test of political and executive maturity, the EU needs to ensure that its 27 members cannot be manipulated by Big Tech to remove the teeth from the EU’s bite.