Theater of Cruelty

A digital omnipotence?

The Facebook scandal last year demonstrates how negligent social network providers are bypassing the data of their users – and clarifying what enormous challenges "The Big Four" faces in our democracy.




(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)

Almost all Internet users take advantage of at least one offer from the leading Internet groups Apple, Google, Amazon and Facebook. The market power of these four significant segments of the commercial segment of the Internet has increased significantly in recent years. Consequently, the groups have also gained tremendous social significance. Not only do the users spend most of their internet time on their platforms, but their online behavior is also significantly controlled through standard settings, features and algorithmic sorting and selection functions that are subject to – and hardly manage to avoid.

Public media supervision is needed for the digital age.

An ever more pressing question is how the growing influence of the Internet groups can be limited. The various proposals that have emerged in this debate range from stricter political control and regulation of the groups, to divide them or dissolve them completely. Thus, two points of political influence are the focus: the opportunities to limit their market power, and different starting points for stricter public control of their platforms, which have gradually gained an unparalleled importance for public discourse and processes for forming opinions online.

Economic power

But what does the power of internet groups really consist of? They now have considerable financial resources, which they can keep new competitors at a distance. A glance at the 2017 annual reports shows that the companies have very high sales: Apple earned $ 229 billion, Amazon 178, Google 111 and Facebook 41. The first three are among the 50 largest companies or corporations in the United States – and Facebook is well on its way to become one of them. They have all been very profitable for many years. Last year, Apple earned nearly $ 50 billion in profits, Google 13 and Face-book 16. In addition, their unusually high stock market value comes.

The sum of these puts these groups in a position where they can invest massively in further expansion and further increase the distance to their competitors, and also at all times take over technology companies that are of interest to them or remove potential competitors from the market by buying them up. For example, Facebook bought the WhatsApp messaging service in 2014 for $ 19 billion, in 2017 Amazon took over the Whole Foods food chain for just under 14.

In most Western countries, over 90 percent of all searches are done through Google.

The companies not only dominate important markets such as internet advertising and e-commerce: they also operate their own marketplaces in a large style, according to their own rules. Independent resellers have long been integrated into Amazon's trading platform, where they sell their products under, to them, very unfavorable conditions. Google's video platform YouTube has long since ceased to be a playground for amateurs and is now a commercial advertising marketplace, served both by large companies and professional youtubers and influencers with their own agencies and companies. The app stores run by Apple, Google and Amazon have become the hub for numerous more or less successful developers. The Internet groups are thus no longer moving only in markets that they themselves dominate, but as platform operators organize and regulate market contexts themselves in a large style.

Furthermore, all the groups are significant in the research field and spend substantially more than $ 10 billion annually in this area alone. Among other things, Google has nearly 30 employees working in the Group's research and development departments. And The Big Four has become major employers: by the end of 2017, Amazon employed over half a million workers, Apple 123, Google 000 and Facebook well over 80.

Infrastructural power

But a purely economic consideration of the companies' influence will be cut short, because in addition, the socially more important infrastructural and regulatory power that these groups have achieved. All four currently offer a wide range of services that are interconnected and extend well beyond their traditional field of operation.

For example, Google is no longer just a search engine: through YouTube, they control the clearest web video channel; via Google Play over the largest app store with media content of all kinds (next to Apple); via Gmail over the leading email service; via Maps over the central mapping service and via Android over the main operating system for mobile devices. Facebook and its subsidiaries WhatsApp and Instagram are undisputed masters of networking on social media. Over the past decade, Apple and Amazon have also profiled as a complete supplier of a variety of services and media content, which they have gradually and in part produced themselves.

Today, it is no longer about defending a power- and dominion-free internet.

With the help of these numerous offers, all of which are coordinated with each other, the groups are leading the way in setting and designing the framework conditions for key social contexts online: consumer worlds, information and communication patterns and social networks. They act as "gatekeepers" who make the crucial access to the net available. Thus, they structure the users 'online permission, set the framework conditions for their movements and thus characterize their individual behavior, which in turn is based on the groups' own offers. The groups' socially constructed algorithms and "content moderation teams" determine who and what is relevant to whom – and who and what is not. Through them, all information and interaction processes are structured, user preferences are anticipated and recommendations are given, as well as decisions are made on what is obscene, offensive, politically incorrect, erotic or pornographic – and correspondingly indexed content or statements are downgraded or deleted.

The groups are thus not only neutral dissemination facilities such as telecommunications companies, but rather action-oriented as meaning-making selection bodies and curators of what is to be talked about – and so far largely without public intervention and control. This is the real essence of the problem.

market leaders

Who, or what, can cope with this? Are there new competitors in sight that could be dangerous for the big four? The groups have clear weaknesses. It is perhaps striking that, despite all the efforts to make themselves more versatile, they are still financially dependent on their traditional core business, which accounts for the bulk of their dividends.

Apple's success is mainly due to the sale of the iPhone, ie a single product line with a unique profit margin. Facebook generates its revenue almost entirely from ad revenue, Google up 86%. The misjudgment of a new trend, changing user preferences or a larger product flop may be enough to cause them serious problems. AOL, Yahoo, MySpace, Nokia – the history of the commercial web is full of supposedly invulnerable market leaders that have crashed altogether.

Without political control it will not work.

However, whether this also applies today is not so certain. First, today's large Internet companies have become considerably more established, financially, than their predecessors. In the past decade, they have repeatedly – at an early stage – captured new trends such as streaming, virtual reality and image and language recognition, and have successfully integrated them into their offerings. Second, there are no serious competitors who could challenge their position, in view. Also, highly valued companies from “other ranks”, such as Uber, Airbnb, Spotify, Twitter, Snap and Netflix, operate in contrast to the major ones, only within certain and well-organized segments of online business, employing only a few thousand employees each worldwide and achieved only one-digit billion sales in 2017. Often, the business operations of these companies are not sustainable.

Since its inception, Uber, Spotify and Snap have suffered huge losses and are completely dependent on financial investors and venture capitalists. For example, between 2009 and 2016, Uber, which shook the taxi markets by undermining existing regulations, could request external financials in the amount of $ 11,5 billion from investors – and without them, they would not have survived a month. While music streaming service Spotify has significantly more users than Apple's equivalent, it still can't cross-fund its deficit internally within the company – unlike their biggest competitor, which sees streaming activity primarily as a means of selling their dupits. The snap-hit image service Snap has lost its battle with Facebook's Instagram. In 2017, they had sales of just $ 825 million, lost over $ 3,4 billion – and are now not even considered interesting for acquisitions.

Second Division

By comparison, Airbnb and Netflix, on the other hand, stand strong. Founded in 2008, Airbnb's roommate service, Airbnb, for the first time surpassed its coverage point and has become an increasingly serious challenger to hotel chains and travel portals such as Booking.com and Expedia. The movie streaming service Netflix, which with sales of close to $ 12 billion and a dividend of 600 million in 2017, is currently the largest company from «other
division ”, and is now an important and rapidly expanding player in the battle for Internet-based media content – especially because of their own films and series, which are only shown on their own platform.

Netflix is ​​doing well among young media consumers and has become a growing threat to the classic TV channels. The competition in this area is, of course, enormous: The company will, above all, have to contend with classic media groups such as Disney and the Internet groups, all of which have invested heavily in profiling themselves as media companies for years. And the more progress the company gets, the more interesting it becomes as a buyout candidate – Apple will probably be on the supply side.

All in all, the markets and segments served by companies from other divisions are as clear as the companies' turnover and profit development. Based on this, it is unlikely that the financial power of the internet groups can be solved by the emergence of new competitors, or that one of the companies from the second division breaks through the wall of the big four and becomes a threat to them. The idea that the markets' self-regulation will fix this misses no basis.

If it is true that the Internet groups not only dominate the markets and hardly any competitors, they also control and process large-scale user data, structure actions and influence opinions – then there will be a need for stricter public control and regulation of their obscure enterprises. This must go far beyond the financial framework of antitrust law.

Compete

This idea can be concretized in two directions. One points to the consistent limitation of economic market power. Although the European Commission has initiated a number of attempts to do this in recent years, such as charges against Google and Facebook, it has not been easy to prove the monopoly positions of the groups: With its original financial activities – advertising, consumer electronics sales, trading – the Internet groups admittedly market leaders, but no monopolists. On the other hand, they have a monopoly position on the free part of their markets: In most western countries, over 90 percent of all searches are done through Google. With 2,1 billion active users on Facebook, 1,5 on WhatsApp and 800 million on Instagram, the Facebook group has de facto a worldwide monopoly-
position on social networks and messaging services. Their monopoly position in this part of the market forms the basis for the lucrative advertising business in the other part of the market.

In the ninth addition to the German law on anticompetitive law ("Law against the Wettbewerbsbeschränkungen"), which came into force last year, the free services offered by the groups for the first time are determined as part of their markets – thus making any monopoly positions antitrust law and principle. possible to pursue. This opens up opportunities that – given that they are consistently exploited – can provide a new dynamic in these groups' struggle for market power. Here, it is certainly conceivable that YouTube can be separated from the Google Empire. On this basis, Facebook's acquisition of WhatsApp could also have been banned by European monopoly supervision. The demands of crushing such platforms, as they have been put forward in the public debate1, are easy to travel, but not well thought out. Social networks like Facebook, WhatsApp and YouTube are of interest to users precisely because everyone can interact with everyone. Network effects here almost automatically lead to monopoly formation, which must be politically regulated but which can hardly be prevented. For example, it makes no sense if one billion users should be distributed to two companies, one taking care of them by name from A to K and another about them from L to Z.

The public

The other direction is stronger political regulation and control of social networks, especially Facebook and YouTube. Such platforms do not take over neutral public offers, as telecommunications companies do. Nor can they be compared to classic media empires, which are under the media supervision. For comparison, the platforms produce little content themselves, but they create the central platforms for disseminating content, public discourses, debates and opinions online. So far, these have been structured, sorted and presented to users through algorithms or manually, by content moderators in a (for the uninitiated) totally non-transparent way. These curation tasks, which have so far been in the hands of the companies, must be limited and controlled publicly.

With the Network Enforcement Act (the "Netzwerkdurchsetzungsgesetz"), which came into force at the beginning of 20182, the self-regulation of the groups is legally legitimized and consolidated. Companies like Facebook, Google or Twitter decide – as they did before – what content they delete and don't, and continue to act as a moderator of public opinion and judgments about what can and should not be shared. With its own European Parliamentary Supervisory and Regulatory Authority – filled with reputable and publicly appointed experts equipped with extensive information and control rights – one could revoke the unsustainable privatization of legal tasks that we do on the major internet platforms, at least a piece on the way. Algorithmic filter functions and ranking principles as well as search and selection criteria could also be openly accounted for and checked. This would be a step towards public media oversight for the digital age, which has so far been lacking. Should the social debate develop in this direction, this could be a serious threat to the room of action of the hitherto uncontrolled platforms and the companies that run them.

Of course, as with most proposals, there are risks and side effects to this. Since the disclosures of Edward Snowden, we know that states and their intelligence services also have great interests in synchronizing data with the Internet.
companies. The danger of buying a loan between companies and the political bodies within the framework of such a control authority must be taken into account. And yet, a significant upgrading of the political regulation and control of the network and its key players, as well as specialized state control bodies, are needed. Today, it is no longer about defending a power- and dominion-free internet. These times are long gone. The key question today is: How can we effectively limit the extensive privatization and commercialization of the Internet's public and the uncontrolled activities of the otherwise sociopolitical mission-conscious groups? This is true: Without political control, it will not be possible.


  1. Paul Mason, Defeats those digital Monopolies!, "Leaves", 2/2018.
  2. Daniel Leisegang, Facebook and the long fight against hate, "Leaves", 6/2017

Published by Blätter (blätter.de) and published by the network Eurozine, where Ny Tid is
member. Translated from German by Thomas Kolåsæter.

dolata@nytid.com
dolata@nytid.com
Dolata is a professor of social science at the University of Stuttgart.

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