Faceoff with Facebook: What have the regulators learned?

Last week, the world media was flooded with the news of the faceoff between Facebook and the Australian parliament. Australia passed a landmark media law that compels Google and Facebook to pay news publishers and broadcasters for displaying their content. The media companies have long argued that Google and Facebook make money from news and analysis provided by them. According to them, the users mostly go to google to search for relevant news and link them on Facebook when they want to share it with others. The proponents of this law argue that due to this practice, users find the news sites less helpful if no news appears on their Google search results or Facebook feeds. The Australian Competition and Consumer Commission after an 18-month long inquiry concluded that there is an imbalance in power between the platforms and the media companies.

However, this is only one side of the story. Folks who believe that the Internet is best left unregulated think that Australia has gone too far. Tim Berners-Lee, credited to be the founder of the World Wide Web (WWW), thinks this idea of making the tech giants pay for displaying news is tantamount to saying that the platforms will have to pay to host a "link". For him, the ability of web users to freely link to other sites is "fundamental to the web".  The problem with upholding a pay-for-link regime is that it can distort the market. The big platforms will make deals with their preferred media outlets making lives difficult for the less connected media outlets just because there is "no deal" with them. Already, Google has launched products like "news showcase" and started to make deals with various media outlets. Facebook's first response came as a threat—they first threatened to boycott the Aussie news media, but then after "negotiations", they made a "deal" with the authorities. They have got what they wanted, no one is going to take away their right to make "deals". Now the competition commission in Australia is "expecting" that Google and Facebook will "strike a deal with small publishers".

The connectivity marketplace started as a monopoly. For almost 100 years, late into the 20th century, most of the countries were served by a national or by a government-sanctioned private entity. Things changed as in the USA, the monopoly company AT&T, that once used to boast "One policy, one system, universal service (i.e. one company)", was broken down into regional "Baby Bells". Soon after, other countries started to open up their marketplaces as well. The rise of mobile telephony changed the marketplace from a "natural monopoly" into an "oligopoly" where several companies rule the marketplace. Conceptually speaking, having healthy competition is the prerequisite to ensure a thriving market that protects both the producers and consumers. Regulatory organisations were set up in almost all the countries to ensure competition in the marketplace and to uphold the resident's right to connectivity. Over time, once access was ensured, regulators started to adopt regulations to ensure the quality of access.

With the advent of the WWW and the Internet, new technologies started to inundate the marketplace. This prompted a change in the way the regulatory regimes handled the marketplaces. In many cases, the age-old telecommunications rules and regulations seemed obsolete. Mobile telephony, different data services, voice over IP (VoIP), etc., disrupted the peace of the slow-changing regulatory regimes. Regulations that were directed to the network owners now needed to be updated as service givers were no longer the network owners. People started to call using "WhatsApp" or other services which are not governed by the mobile phone operators or the Internet service providers (ISP). Who should be held responsible for the abusive use of the call—the network operator, or the service giver? This is a challenge that most regulators do not want to face. But things have gotten even more difficult.  

The rise of platforms such as social networks has created the next most difficult regulatory challenge. It has become difficult to regulate the status quo with the age-old SMP (significant market power) regulations. The network owner may not be generating a lot of money as the various over the top (OTT) applications such as Facebook may have become the dominant reason behind the use of the network. In many countries, with zero rating deals with the network providers, the social media platforms are helping the service providers to attract new customers. Apparently, we may see that a particular carrier is getting more customers, not due to the network's better service delivery but because of the free access to the platform. Now the question is, whom or how should the regulators regulate? Or should they even regulate?

To us, it seems like Australia tried to force Facebook and Google but failed as the giants threatened to leave. Australia had to revise the law to Facebook's liking. Regulators around the world are being bullied and threatened as they make decisions against the big techs. On the other hand, this shows how we are misunderstanding the platforms and how our decisions concerning one platform may disrupt the whole web. Simply making someone pay for "linking" might mean that sometime soon, everybody will start charging everybody or make deals. People may move from the world wide web to the dark web where things are still free!

Access to  the communication tools have become a right of the residents that the governments must ensure. In today's world, these tools are not only helping us to "keep in touch", but they also are now our "information source", "life-style guide", "transportation provider", "entertainment engine", what not! Imagine a day without your cellular phone—I doubt many would like to take up the challenge! The platforms are ruling our lives whether we like it or not. We must make them accountable. However, before making any decisions we must be clear about the consequences.

It is therefore time to ponder and to hold conversations to shape the decisions. We need to make sure that the fundamentals of the web are not compromised. We also need to make sure that the big techs or big media do not crush the small and new entrepreneurs and media. For a country like Bangladesh, there are temptations for following Australia's path. India is already making new rules for Facebook, WhatsApp and Twitter. However, making rules and regulations before scrutinising the technologies and economics of these platforms may result in failure. Disruptive technologies will make things ever more difficult. To tackle it we need to be prepared. Our regulators need to learn, concentrate on capacity building, and take a light-touch approach while keeping a vigilant eye on the way these platforms and communications networks are playing in the marketplace. Before we engage in policy skirmishes, we need to build a strong fortress. Our regulators should start the process now.

Moinul Zaber, Ph.D. is a Senior Academic Fellow at Operating Unit on Policy-Driven Electronic Governance (UNU-EGOV), United Nations University, Guimares, Portugal. His Twitter handle is: @zabermi

The views and opinions expressed in this article are those of the writer and do not necessarily reflect the official policy or the opinions, beliefs, and viewpoints of the UNU.