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Big Tech: sector’s ever-increasing dominance leads to tough regulatory questions

Yola VerbruggenThursday 7 October 2021

For the huge companies dominating the fields of e-commerce, social media and online search and advertising – ‘Big Tech’ – the Covid-19 pandemic has brought a significant increase in profits and power. This in turn has consequences for society and the regulation of Big Tech.

‘Today, the sheer power and domination of Big Tech is at a level which may not have been anticipated, and it is expected to rise unimaginably at every level – revenue, market, politics and infrastructure,’ says Sajai Singh, Chair of the IBA Technology Law Committee and co-chair of the Corporate Practice at J. Sagar Associates in Bengaluru.

The digital habits developed by consumers during the pandemic-induced lockdowns of 2020 and 2021 – periods that will for some people have included significant time working from home – are likely to outlast the pandemic. This will benefit the continued rise of Big Tech. The five biggest tech companies – Amazon, Apple, Google, Microsoft and Facebook – reported in April a combined revenue of over $1.2trn.

‘The Covid-19 crisis has the potential to consolidate and accelerate the existing trends pushing Big Tech to become the world’s largest and most powerful organisations,’ says Singh.

Immediately before the Covid-19 pandemic, there was what Singh calls a ‘techlash’, as concerns were raised about the relationship between tech and threats such as disinformation and election interference. This set off ‘a global regulatory crackdown’, says Singh.

Meanwhile, there were debates around issues such as online privacy, data, content moderation and employment rights, which often had tech giants facing off against regulators. The tech companies raised concerns about the impact of stricter regulation in such areas.

Then, Covid came along.

Big Tech is becoming too powerful to be restrained, either by regulation, competition or by breaking them up

Sajai Singh
Chair, IBA Technology Law Committee

The techlash disappeared into the background and, instead, the image of Big Tech was bolstered significantly. ‘They came to the rescue of humanitarian relief, governments and digital literacy,’ says Singh. ‘In many ways, the common man, industry and governments, became even more dependent on digital technology. Issues like privacy and competition were no longer on any political agenda, and respect for Big Tech steadily grew amongst consumers and regulators.’

The pandemic allowed Big Tech to grow their market share, thereby increasing their wealth and power. Debates involving Big Tech – such as around free speech on platforms, and competition – remain unresolved.

‘Tech companies are operating in a vacuum in certain jurisdictions. There is a collective growing concern about how the sector is shaping and the impact of the pandemic has accelerated that,’ says Anurag Bana, Senior Project Lawyer with the IBA Legal Policy & Research Unit (LPRU).

The accumulation of capital resulting from the significant growth of tech companies provides Big Tech with vast resources to fight against stricter regulations that may affect them, including in court – much to the frustration of those who would see the dominance of the sector reduced.

In the US, the demand for legal experts in the field of corporate competition law has increased significantly as regulators file cases against tech companies. In the EU, efforts are underway to level the playing field for competition through the Digital Services Act, which also aims to protect user rights.

‘There is always a balance to strike between innovation and human rights. The UN Guiding Principles on Business and Human Rights give the private sector a big role in ensuring users’ rights and making sure that stakeholders are protected,’ said Maria Pia Sacco, Senior Legal Advisor with the IBA LPRU.

Regulating the sector, however, might not be easy. ‘Legislation becomes outdated before it’s written,’ she says. ‘Platforms need to be willing participants and you can’t step on freedom of expression.’

The US Congress has raised concerns about the growing power of social media companies, in a way that’s reminiscent to how the movie industry was seen decades ago. Robert Balin, former Chair of the IBA Media Law Committee and a partner at Davis Wright Tremaine, refers to the Motion Picture Production Code, which regulated Hollywood until the late 1960s. ‘Instead of being regulated, it started regulating itself,’ he says.

The question of self-regulation for the tech sector is a controversial one. A notable example of a platform attempting self-regulation is Facebook’s creation of its Oversight Board: an independent body for content review that has the power to overrule the platform’s CEO, Mark Zuckerberg, on certain issues. In May, the Board upheld Facebook’s suspension of former US President Donald Trump’s account.

Balin says that while the jury is still out, Facebook has by and large complied with the Oversight Board. ‘There is at least an effort,’ he says. ‘The tech sector know they are going to be regulated, but the question is how. More genuine self-regulation is coming.’

In response to a request for comment, Facebook directed Global Insight to a blog post written in May 2020 by Nick Clegg, the company’s VP of Global Affairs and Communications. The post highlights that ‘the board will play an increasingly important role in setting precedent and direction for content policy at Facebook. And in the long term, we hope its impact extends well beyond Facebook, and serves as a springboard for similar approaches to content governance in the online sphere.’

Elise Groulx Diggs, Co-Chair of the IBA Business Human Rights Committee, says that self-regulation for this powerful sector is not the way forward. ‘We cannot rely on tech companies to self-regulate, they need to be regulated by the state.’

For Groulx Diggs, the major problem is that there is no clear frame and direction for the regulation of Big Tech. ‘The challenge we then face is to decide how to regulate Big Tech and for what purpose’, she says. ‘Big Tech [has] created a new channel of communication that is neither a publication nor a strictly private communication. You can’t stop tech from going forward, but it needs to be regulated.’

Singh agrees that platforms’ increased market share and accompanying wealth creates challenges for regulating the sector. In his view, the circumstances of the pandemic allow Big Tech a unique opportunity to gain ever more market share and dominate new industries.

‘Big Tech controls software platforms, online communication, digital payments and e-commerce’, he notes. ‘Even in the economic recovery after Covid-19, neither competitors nor regulators may be able to dampen the position reached by Big Tech during Covid-19. Big Tech is becoming too powerful to be restrained, either by regulation, competition or by breaking them up.’

Image: Ascannio C / Shutterstock.com

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