Don’t break the giant tech companies
The phrase ‘History repeats itself’ is misleading when taken literally but it is not entirely wrong in a sense that humans sometimes repeat its mistakes. In this regard, learning about a history may not be the crystal ball that everyone is seeking (if it even exists!) but it serves as a great guidance to how some of today’s contentious problems may or should unfold.
One of such contention today is data privacy. Many, especially the hard left Democrats in the US and in Europe, bring up the data privacy issue along with the profits made by the giant tech companies using the data (according to The Economist, 74% of Alphabet’s and Facebook’s profit comes from their user data, amounting to $1.4T). Their premise is that such monopolistic profit made from unfairly obtained data (the giant tech companies deny this) hinder our progress in two ways: politically and economically. Politically, they accuse the giant tech companies of benefiting from advertisement revenues that is positively correlated with content virality, creating a conflict of interest and blurring the truth for the public. Economically, they argue the dominance in data by the giant tech companies is mounting to a level where no rivals (or competition) can compete on a level ground, suppressing any innovation that may challenge the giants. Their solution is to break up the giants.
I agree with the points that there need to be a clearer policy on usage and ownership of private data but I don’t agree with the proposed solution in breaking up the giants because it unfairly disregards the benefit of a healthy monopoly (I wrote a piece about the healthy monopoly here).
The Economist had an interesting analogy in one of its recent articles (link to the article ‘Free the data serfs’ ) on how today’s data privacy issue is similar to the feudalism of the middle ages. As the diagram above depicts, the comparison between today’s data privacy issue to the feudalism is convincing. Then, learning how the feudalism ended may give us a hint to how today’s issue should or may be resolved for the better future. There is no consensus of why and how exactly feudalism ended (it seem to be a multi-variate cause of the Black death, crusades…etc) but the change in balance of power between the classes, effected by the causes, ultimately led to the rise of private ownership of land. This change in the balance of power seem to be the most convincing reason of why and how feudalism faded and transitioned to a Renaissance period where a revolutions in many intellectual pursuits, as well as social and political upheaval occurred.
The analogy can then be applied to today’s world. The contention should be on ‘how to reallocate the balance of power in who and how a private data should be owned and consumed’ and not on finding a scapegoat for the problem and breaking it up. After all, how do we know for sure that we are not killing the “Goose that lay golden eggs”?.