Global tech could be regulated like global banks

Digital platforms like Google, Facebook, Twitter and Amazon form the backbone and are the conduits of the digital economy. We rely on them for search, social engagement and knowledge-sharing, and as labour exchanges and marketplaces for goods and services. They span the globe, serve billions of users, and provide core functions of our society, much like public utilities.

These digital platforms are a ready and often primary source of information for many people and firms, which can improve consumer choice and market functioning.

Yet this information may be inaccurate, by design or not, and used to influence the actions of individuals – and recently the outcomes of elections.

Their operations are global in scope, but regulation, the little that exists, is domestic in nature.

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They help to facilitate our private lives, but can also be used to track and intrude into our private lives.

Their use of private data is opaque, and the algorithms that power the platforms are essentially black boxes.

And while these digital platforms are pervasive in everyday life, the governance across the scale of their activities is ad hoc, incomplete and insufficient. In fact the governance around their functions is not nearly as well developed as it is for our public utilities.

As yet there is no comprehensive global discussion or action. Governance innovation is required to create an integrated framework at national and international levels.

Like the few global banks that dominated financial services before the great recession, there are a few global tech giants that dominate platforms, but how they operate is opaque

This framework needs a broad combination of policies, principles, regulations and standards, and developing it will involve experimentation, iteration and international co-ordination, as well as the engagement of a wide variety of stakeholders.

This week’s session in Dublin of the International Grand Committee on Disinformation and ‘Fake News’ (IGC), which represents a diverse set of countries around the world, is focused on how to respond to these gaps. There is a real opportunity for the IGC to serve as a natural springboard to launch an international effort to govern these platforms.

Dominate

The current regulatory framework around platforms epitomises light-touch regulation. Like the few global banks that dominated financial services before the great recession, there are a few global tech giants that dominate platforms, but how they operate is opaque.

And they are exhibiting bad behaviour more and more frequently through a tangled web of connections so complicated that it would take a machine-learning algorithm to figure them out.

The negative impact of the misuse of information collected by the platforms would make the negative impact of the global financial crisis pale in comparison given how technologies permeate every aspect of our lives.

The greatest benefits arise when all can participate in one global internet economy rather than in a digital economy splintered into different realms

Indeed, the Internet of Things, 5G and digital identities embody systemic risk through their interconnectedness. And the risks are profound: from cyber warfare to state surveillance and privacy invasion, to data breaches and large economic and personal income losses and, ultimately, a loss in trust.

Yet the potential for these technologies to improve the everyday lives of people is substantial. In fact, the greatest benefits arise when all can participate in one global internet economy rather than in a digital economy splintered into different realms.

A way forward is to create a new institution that gives our countries the tools to jointly confront the challenges around digital platforms – let’s call it the Digital Stability Board (DSB) – and give it a mandate by global leaders.

As with the undertaking of financial regulatory reform, undertaking reform in the digital sphere would also signal and acknowledge the importance of setting global standards and policies for big data, AI and the platforms.

The stage is already set to move forward with an organisation like the DSB. Recognising the key role that data now plays in the global economy, as well as the importance of trust to underpin the uses of data, the current Japanese G20 presidency has “data free flows with trust” as one of its key themes.

Resistance

There may be resistance to new forms of regulation and ways of doing business in the technology platform space, just as the creation of the Financial Stability Board (FSB) drew opposition. But as with financial sector reform, these efforts are essential to achieve the full benefits from the platforms. They will build and solidify trust, and trust is ultimately what will attract users to a platform.

In keeping with the open nature of the World Wide Web, the process for reform should be open to all countries and organisations that wish to join, either at the outset or as the reform process matures.

We are at a critical juncture for platform governance. The challenges we are facing require an urgent, thoughtful and co-ordinated international policy response. And the time to start is now.

Robert Fay is the director of global economy at the Centre for International Governance Innovation (CIGI) and has assessed developments and implications arising from the digitisation of the Canadian economy. This article is adapted from Digital Platforms Require a Global Governance Framework, part of a new essay series from CIGI. More information at: cigionline.org/platforms