Addressing Big Tech’s Power Through a Geopolitical Lens

By Evan Hills, SVP of Business Development and Strategy, Dstillery

For several years now, the digital ad industry has operated under the auspices that strict privacy regulations could come down at any moment. Make no mistake, GDPR and CCPA have been paradigm-shifting pieces of legislation, but the deluge that advertisers have long expected hasn’t arrived just yet.

In its place, though, have come major policy shifts originating not from governments, but from non-state actors, like technology companies that generate substantial revenue in the digital ad space. In theory, all companies in the industry – big and small – would be equally affected by any kind of privacy legislation, including the tech giants. However, when given the opportunity to define consumer privacy for everyone, the tech giants can and will define privacy in a manner that benefits them, often increasing the size of their competitive moats, as any rational actor would. How did these big tech companies come to be so powerful, and is there any way to curb that power? What are the risks if we don’t?

The answers go well beyond anything that the ad industry has cobbled together to date, and likely well beyond the reach of the industry by itself. When tech giants make these decisions, they’re acting with the power of states. Confronting that kind of power requires moving beyond business and technology conversations to thinking on a geopolitical level.

Government oversight

Now, the reason that big tech is leading the privacy conversation is that there is a real need for action around privacy and ensuring a competitive marketplace. While legislation like GDPR and CCPA have forced changes across the advertising industry, consumer advocates continue to call for better privacy controls, and rightly so. Additionally, the US federal government has, for years, given lip service to anticompetitive investigations, and done even less to establish federal standards and regulations to define what consumer privacy actually means.

Given the absence of appropriate government guidance and constraint on their behavior, household names like Google and Apple have had to step in and try to define privacy guidelines in order to keep their customers happy. After all, these companies are often the first to face criticism because of their standing with consumers.  The drawback is that, even though some of these moves may be in consumers’ best interests, they also underscore the influence that these big tech companies hold, conferring state-like power over the transmission of information. One company can shift the strategic focus of the entire online ad industry with one blog post, and then change the timeline out of nowhere with another.

The international relations theory of structural realism establishes that the anarchic nature of the global order (e.g. there is no concept of one global government) leads states to pursue self-interested strategies, at times, at the expense of other states.

Big tech, acting with state-like power in economic and informational terms, is maximizing its power because the relatively anarchic global system in which it exists allows it to do so. Historically the entities that have defined and enforced social norms like antitrust and consumer privacy are state actors, such as the US or EU. The only way to constrain big tech is for these forces to limit tech’s ability to pursue a strategy of maximizing its power, and the rest of the ad industry needs to be role players in these conversations.

Controlling the message, and information

Governments may be less concerned with big tech’s rise at the moment, but that could change very quickly. Tech companies are becoming the translation layer between the wider internet and consumers, able to control the messaging around what is good or bad about the internet. In the mobile space, operating systems and app stores have the power to allow and deny certain apps and capabilities and control how consumers can access the internet. At what point does it become impossible to circumvent big tech, in order to find information online? Further, what are the societal impacts of this?

Responding to big tech

For years, the advertising industry has found ways to respond to laws and regulations by forming coalitions, working with governmental bodies, and issuing best practice guidelines, so that industry leaders can respond appropriately.

Where the industry hasn’t been so adept is developing a unified response to the growing power of big tech at a scale like this. We’re talking about companies with topline revenues on par with the GDP of EU member nations.

It’s understandable why the response has been slow, of course: these companies are in many ways our peers. And they represent potential acquirers and employers.

Like most things in life, there is no silver bullet to constrain the behaviors of these tech companies and level the playing field to encourage competition and innovation. It will require dedication on the part of governments to define the concepts and guardrails around consumer privacy and competitive marketplaces, and further cooperation among other industry participants to ensure a healthier ecosystem. One of the first potential “battlefronts” will be harmonizing the current focus on technical standards bodies to address privacy, and the resultant changes to identifiers, with a renewed focus on the underlying policy to inform these changes.

However, this isn’t a problem that will be solved with one committee or one meeting. It likely will remain unsolved even by mid-late 2023, when third-party cookies are retired from the digital ecosystem. But it’s critical to start forming the foundation for approaching big tech on a geopolitical level to finally level the playing field. This likely means coalition with members from big tech, federal governments, and smaller tech players, in order to pursue a more harmonious future.

SIGN UP TO SKILL UP
The All Access membership allows you to discover 500+ hours of best in class thought leadership