Beyond Big Tech: A Framework for Building a New and Fair Digital Economy
Can we imagine a world where the digital economy works for people, not power and profit?
Welcome to The Counterbalance, the newsletter of the Balanced Economy Project.
The Balanced Economy Project, IT for Change and People vs. Big Tech have just released a flagship White Paper, Beyond Big Tech: a framework for building a new and fair digital economy.
The report accompanies a manifesto, signed by over 70 organisations around the world.
As a package, this report and manifesto constitute a powerful anti-monopoly blueprint for a digital future, laying out a clear and simple vision in two parts.
First, Break Open Big Tech, where the goal is to break up the big tech firms, block more big tech mergers and acquisitions (M&A), break open their ‘walled gardens’ so that users are free to move and choose between different platforms and other services, and also break open their “moneyboxes” – by taxing them effectively.
Second, as breakups and other measures open this locked-down terrain for the possibility of fundamental change, stimulate and develop a new and fair digital economy. This will involve a departure from a “gatekeeper” model run by a few big tech firms astride chokepoints across the digital economy, towards a more distributed, democratic, vibrant and resilient model. Under this model data and digital infrastructure is repurposed and designed to serve the public interest, and a “digital commons” can evolve, providing public digital infrastructure where a wide diversity of players – for-profit, non-profit, and public – can develop digital tools and services, free from big tech’s democracy-bending powers.
This is not utopian: in a sense it is already here, in a rising proliferation of successful initiatives already enjoyed by hundreds of millions of individuals around the world. Examples include the “India Stack,” or Brazil’s Pix payments system, or Estonia’s longstanding X-Road, All escape big tech domination, and each has safeguards for privacy, rights and accountability.
A shift in the zeitgeist: breakups are now fully on the table
These key civil society texts mark a potentially significant change in the digital zeitgeist, as a diversity of civil society organisations and individuals in countries around the world now advocate the break-up of dominant firms.
Until now, public discussions of how to tackle the harms that flow from big tech have tended to engage more in tackling these firms’ behaviours and actions, and trying to influence how their centrally-planned digital systems work. In the public realm generally, there’s been an assumption that breakups are too disruptive, too difficult, or too unlikely to happen. Unlike Big Oil or Big Tobacco, Big Tech firms are not widely reviled: they provide convenient services, and people recognise convenience more readily than they see the harms resulting from monopolising business models. Others reckon breakups are merely a neoliberal trick to introduce more raw competition into markets. There’s also a fatalism: nobody was really pushing breakups, so even for those who backed the ideas, it seemed like pie in the sky.
Yet these efforts at reforming behaviours were always undermined by these companies’ raw political and economic power to block the change we need. Now, these texts also directly seek to tackle the structural roots of the problem, to seek transformative change: not least, breaking them up, to reduce their size and power directly. As the White Paper says, this means:
“going beyond regulating the gatekeepers in an attempt to keep up with rapidly accumulating harms, [and] to abolish digital gatekeeping altogether.”
This follows our report Breaking Up the Giants of Harm, which explains why we need to break up dominant and abusive monopolising firms, when to break them up (and when not to), and how to do so.
The sands are now shifting, and breakups are moving steadily onto the menu.
A digital commons, and public digital infrastructure
Breakups are never enough on their own, as the new White Paper and Manifesto make clear. This is not about smashing things into pieces then pitching the fragments into a deregulated competitive race. Instead, we need to imagine a better digital world, with strong guardrails. A new, decentralised and democratic digital world must include a “digital commons” and “Public Digital Infrastructure,” geared to the wide public good.
The “Public” part of this does not involve simply transferring Big Tech’s power to states and governments, but something more interesting. Power should flow to a more diverse, decentralised “digital commons”, a democratically-governed space of digital public infrastructure enabling a diversity of players – private, non-profit and public /state – to flourish.
Still, states must be a crucial ingredient as drivers of change. They must, for one thing, break up the giants and block more mergers. They must commit significant investment to developing public digital infrastructure, based on free and open source software and the digital commons. They must use public procurement to encourage the adoption and scaling of inter-operable alternatives to the Big Tech incumbents. They must ensure strong human rights safeguards and accountable governance frameworks.
Utopian? Not at all - the future is already here
Is such major change possible? It certainly is: in fact, it is to some degree already here. On the one hand, regulators are now, after a decades-long slumber, starting the efforts that could very well see the break up the big tech firms, beginning with Google.
Moreover, alternatives are fast emerging. For example, the Financial Times reports on one such initiative, in its article The India Stack: opening the digital marketplace to the masses:
Some of the technology in the India Stack has been made public, unleashing private and public creativity and innovation that can hook into the systems, largely free of both big tech and state control. Banks in India have opened hundreds of millions of accounts helped by this low-cost and accountable approach, India is developing out further elements, and other countries are looking to India to develop their own systems.
There is also a well-established worldwide movement that has done extensive work on Digital Public Infrastructure (DPI) that anchor digital ID systems, payment systems, and data exchange systems, in ways that are inter-operable, based on open standards, and which seek balance in the complex trade-offs between privacy, rights and security.
India’s system is far from perfect, of course, but it is superior to the situation in many countries dominated by big tech firms. Europe’s Digital Markets Act and other regulatory efforts to contain Big Tech contain many useful features, such as trying to promote fairness and inter-operability, but they fall short on directly tackling big tech’s power.
Endnotes
Why Google should be broken up now – Ulrich Müller, Rebalance Now
This article by Ulrich Müller, our former Network Co-ordinator, is in German (but a (Google!) translation is available here.) Looking at how US regulators have declared Google to be a monopolist, and on the growing international regulatory push to break it up. This article gained good traction in Germany.
The Antitrust Revolution: Liberal democracy’s last stand against Big Tech – Barry Lynn, Harper’s
A big, rich, fundamental piece digging into the long international history of how the universal rule of law arose to challenge the arbitrary, controlling power of both monarchs and monopolists. Donald Trump, if elected, potentially poses a threat of tyranny. But this article is about a tyranny that lies “in a different place—in the reach, knowledge, interests, and prerogatives enjoyed by the interlocking network of private corporations that control our online communications and commerce. It is Google, Amazon, Microsoft, Facebook, and Apple that today enjoy the power to create and destroy, to censor and punish, to “make and unmake” who they will.” The core danger lies in these corporations’ unique capacities to manipulate every person and company that depends on them, individually. Yet there is hope: in an “antitrust revolution” now firmly underway, with the potential to re-invigorate the rule of law, applied universally and fairly to all.
How EU forced Ireland and Apple into a €13bn tax defeat – The Times (UK)
“In a nondescript room in the European Commission’s competition offices in Brussels, Helena Malikova uncovered the scale of a multibillion-euro tax avoidance scheme involving the world’s richest company.” The EU ruled that Apple’s tax avoidance schemes amounted to illegal State aid and ordered it to pay €13 billion to Ireland. It was “the mother of all cases,” as one official put it. But in 2020 the EU’s General Court threw the case out. Ireland’s government and elites rather bizarrely fought for years not to receive this money, in order to preserve Ireland’s reputation as a tax haven. Meanwhile, as The Times reported, “Malikova’s daring efforts to catch multinational tax avoidance were opposed by some inside the Commission, including colleagues who had been responsible for helping to devise the tax planning schemes that were under the microscope.” (As we reported in an earlier Counterbalance, Malikova suffered apparent efforts to sideline her.) But now, in a stunning and unexpected move, the European Court of Justice overruled the General Court, in a final judgement that Apple must now pay Ireland €14 billion, including interest – worth €2,700 per Irish inhabitant. This is a far bigger sum in both absolute and per-capita terms than any big tech fines to date. Crucially, securing this victory involved financial analysis, in contrast to most competition cases that rely on outdated Industrial Organisation (IO) economics, which has made it very hard for the Commission to rein in corporate power. (More on IO versus Financial Analysis soon.)
Between the lines: corporate interest shapes the narrative over Draghi’s Report – Corporate Europe Observatory, LobbyControl
The two watchdog organisations looked at the list of meetings and written contributions towards Europe’s landmark “Draghi Report” on Europe’s competitiveness, and raise concerns about corporate interests shaping it. Only five percent of the submissions came from civil society organisations, trade unions, or consumer and patient organisations, they found. In May, we joined other civil society groups criticising the lack of transparency and inclusiveness in an open letter. “Draghi, however, did not even bother to respond”. We also co-authored a recent piece arguing that competitiveness is a dangerous and incoherent framework for understanding and responding to the very real challenges that Europe faces.
Draghi got it wrong on Telecoms – Duso, Motta, Peitz, Valletti, CEPR
The Draghi report’s main recommendation for telecoms markets is to relax merger control and encourage cross-border consolidation within the sector, claiming that larger companies could boost investment in network infrastructure. This goes against all the evidence: consolidation will result in higher prices with no improvement in quality, speed or investment. The Balanced Economy Project last week made a submission to the UK’s Competition and Markets Authority (CMA) on telecoms, looking at around 20 studies on the topic, all pointing to the same conclusion: telecoms consolidation, and in particular a proposal to merge two of the country’s four Mobile Network Operators, will hurt businesses and consumers and the economy. We will publish our submission soon.
The Big Fix: How Companies Capture Markets and Harm Canadians – Denise Hearn, Vass Bednar
Beyond the obvious examples of airlines, telcos, grocery chains, and banks, The Big Fix shows how corporate concentration is growing across many industries, leading to higher prices for consumers, lower worker’s wages, more inequality, fewer startups, less innovation, and lower growth and productivity. Canada has quite a bad case of monopolisation. But welcome change is coming - as we have noted before – thanks in part to the efforts of Hearn, Bednar and their allies in a vibrant and growing Canadian anti-monopoly scene.
Nvidia is a big tech monopolist too – Max von Thun, The Guardian
Nvidia is the new Big Tech kid on the block - and it is a monopolist. “Like other tech giants, Nvidia is laser-focused on dominating every market it enters. It sells 88% of the world’s GPUs, and has elbowed its way to domination in AI, too, which according to some estimates will be a trillion-dollar market within just a few years. Some analysts estimate that Nvidia already controls 98% of the market for data center GPUs. . . Like the rest of big tech, albeit with less scrutiny, Nvidia has risen to the top by exploiting its market dominance to lock in customers and marginalize competitors. It bundles everything its customers need (chips, software, and networking services) as a package, and prohibits those companies from doing business with its competitors.” Nvidia has become a gatekeeper controlling how technology evolves.
