Breaking up tech giants is likely to fall short of reining in their market dominance, but granting users more control over the use of their personal data could make a stronger impact, an economist said in a new research paper.
“Democratizing” tech companies, such as Facebook, Amazon, Apple and Google, and giving individuals a greater say in how their data is used offers greater promise for reducing monopolistic power than traditional antitrust efforts, the researcher said in a paper published in Economics of Governance.
The best way to put a check on technology companies “is via the ‘currency in which customers buy services’ — the personal data,” ETH Zurich economics professor and author of the paper Hans Gersbach told The Academic Times.
Instead of governments adopting laws for ownership and exchange of data, however, the companies should be democratized, giving users a say in matters that affect them, such as specifications for algorithms, user access and censorship rules.
“While competition, liability and data protection laws are useful to tame the tech giants, democratizing them might achieve significantly more, and would establish a completely new legitimation basis for tech giants,” Gersbach wrote.
The research was published as the U.S. government takes unprecedented aim at big tech companies, including a lawsuit by the Department of Justice and a group of states against Google, and a suit by the Federal Trade Commission and states against Facebook, over their monopoly power. Agencies in both lawsuits have claimed that a breakup of the companies may be warranted.
Breaking up technology companies could be helpful in the short term, but the move might merely result in the development of new tech giants, Gersbach said. Additionally, any new antitrust regulations would have to be international in scope in order to keep pace with technology innovation and remain effective.
In the paper, Gersbach noted that big technology companies pose unique threats to competition as well as to freedom of speech, posing both an economic threat and a political threat. Tech firms can limit communication, influence voters based on user information and interfere with political campaigns and elections, the researcher said.
The companies are also “self-strengthening,” becoming more powerful as their user base increases, Gersbach said. They have grown so large they have come to shape how people communicate and view the world in addition to dominating the marketplace.
“The possibilities to scale and the network effects involved are unprecedented,” Gersbach told The Academic Times. “We also have network effects in the past with telecommunications and a lot of other industries, and we also have scaling possibilities, but never to such an extent because everything is digital.”
As possible solutions, the researcher suggests various forms of democratization. One possibility is installing a voting system, in which a randomly selected group of users would vote on a policy and that decision would be made public, after which the company’s board would vote and make a final decision based on user input.
Another idea entails a user council that acts as a representative body for all users in order to directly communicate and negotiate with the board of directors. Representatives could be elected by the tech giant’s users or, because the global pool of users is so large, representatives could be randomly selected based on a list of candidates.
In either case, voting would be run by a third party in order to prevent interference from the tech giants.
“We are not against strengthening competition laws, et cetera,” Gersbach said, referring to himself and colleagues. “That is also important to see. … But competition law alone can only tackle certain issues, not the broader issues with tech giants and the impact on our democracy and society.”
The closest parallel to the proposal is Germany’s concept of codetermination, which gives workers the right to participate in management of the company they work for. The concepts have not yet been tried on a wider scale, however, according to Gersbach.
“New democratic procedures alone will not eliminate the monopoly of the tech giants, but they might re-balance the market by giving users some degree of decision power within this monopoly,” Gersbach wrote.
Gersbach and his colleagues intend to continue looking into how to democratize tech giants, including methods of organizing secure voting procedures and how to choose adequate voting representation.
“The tech giants’ power to shape communication and handling, including new democratic processes, makes it urgent, actually, to move on this,” Gersbach said. “It’s not something that we can now do research for five or 10 years and then come up with something. So it’s something that should be pursued, actually with great intensity.”
This work is part of Gersbach’s larger research into new forms of democracy intended to increase citizens’ involvement in their government’s decisions. Ideas include a co-voting system, in which a legislative body and citizens vote simultaneously on important decisions, and a streamlined voting system where a randomly selected group of citizens votes on an issue to test its popularity before it is passed to the entire electorate.
Gersbach and his fellow economists are also looking into possible mechanisms for making U.S. congressional races more competitive. One idea is to require an incumbent to replicate their previous vote percentage in order to be reelected, Gersbach said.
“So if you have 60% in the past, you now need to replicate that in the next election in order to get reelected,” he said. “It must now be 60 — you cannot reduce it to 55 or so. You must reach a higher vote threshold than the standard 50%.”
The study “Democratizing Tech Giants! A roadmap,” published Oct. 22 in the Economics of Governance, was authored by Hans Gersbach, Center of Economic Research at ETH Zurich.