Digital platforms create new marketplaces and prosperity on the Internet, but they are ruled by Silicon Valley despots with little or no accountability. Users and workers have become the hapless subjects of online economic empires. It is only through understanding digital platforms for what they are—institutions as powerful as the state—that we can begin the work of democratizing them, writes Vili Lehdonvirta.
“Is Microsoft a digital nation and does it have a secretary of state?,” asks an article in The Economist. “Apple is basically a small country now,” claims The Atlantic. “Who needs a government when you’ve got Amazon to keep things running,” quips a columnist in The Guardian.
These are not just idle metaphors: The value of the goods traded on Amazon is now higher than most countries’ GDP. The amount of money that Amazon earns as a cut from its merchants’ incomes is far bigger than what most governments are able to raise as taxes. And if things go wrong and there’s a dispute between a buyer and seller, it’s Amazon who steps in to investigate, adjudicate, punish fraud, and provide restitution to victims. In almost every area of life and business—from shopping to job hunting, entertainment to information seeking, social networking to dating—tech giants now function as a kind of digital government that sets the rules that we must follow.
Our digital leaders enjoy immense power without a commensurate level of accountability.
But not all is well in our new virtual “states”. Our digital leaders enjoy immense power without a commensurate level of accountability. And they are frequently discovered abusing that power. As soon as Amazon became big enough, no book publisher could afford to be off it. Founder Jeff Bezos instructed his managers to start preying on the publishers like a cheetah pursues a sickly gazelle. If a publisher tried to resist, then the platform would simply stop recommending its books and direct customers to competitors’ offerings instead. Publishers had no choice but to let Amazon “tax” away their profits.
Or consider Apple, the first trillion-dollar company in history. For many years, the most popular music app in Apple App store was called Spotify. It showed up first in search results for music. Then one day, Apple launched its own music app, and suddenly Spotify fell in search results—not to the second place, not to the third place, but to the 23rd place—even behind apps that had nothing to do with music. Apple had used its government-like power over the global app economy to bend the rules and disappear a competitor.
What is to be done? According to economic theory, if a firm mistreats its customers or suppliers, then they should vote with their feet and switch to a competitor. Insofar as this is not happening, it suggests that competition has somehow broken down and should be restored through regulation. Competition experts on both sides of the Atlantic are busily debating how to update industrial-era competition regulations for the platform era.
As we search for ways to make Big Tech accountable to humanity, what if we took more seriously the idea of tech giants as governments?
An alternative approach is to say that tech platforms are now part of our essential infrastructure and we should regulate them as we would regulate other natural monopolies like water and electricity. This is partly what the European Union’s new Digital Markets Act does: it designates large platforms as “gatekeepers” and lists a handful of things that they must and must not do like favour their own products in search listings. This approach is great as far as it goes, but it is static and doesn’t keep up with new techniques that tech giants come up with for exploiting their power. Regulatory approaches are also only really available to powerful nations that can impose their will on the tech giants, leaving the rest of the world’s Internet users as rule-takers who have no say in the process.
As we search for ways to make Big Tech accountable to humanity, what if we took more seriously the idea of tech giants as governments? Nobody thinks that governments can be made accountable solely by forcing them to compete for citizens with other governments. Neither does anyone think that governments can be made accountable solely by imposing some do’s and don’ts on them. So what if instead of drawing precedent from how our grandparents dealt with capitalists, we drew inspiration from how our ancestors dealt with aristocrats and started applying the tools that humanity has developed over millennia for making governments accountable to their people?
Digital platforms should have a “constitution” that defines what powers the platform’s administrators can exercise and what fundamental rights belong to users. Platforms are already partway there in that they all have terms and conditions that purport to govern the relationship between the platform and its users. But the wordings are purposefully too vague to protect the users or to limit administrators’ powers.
There should be “rule of law” in the platform economy in the sense that administrators’ policies and decisions - including any decisions rendered by automatic algorithms - should be based on the “constitution” and other “laws” of the platform. Users, including individuals and businesses, should have the right to have the “legality” of any decisions affecting them challenged in an independent “judicial” review. And most importantly, users should have a voice in the making and amending of the “laws”—regardless of which country in the world they happen to live in. Through these and other means we could bring digital princes to heel just as we have done with previous aristocrats.
Digital empires have entered a period of revolt, with platform democracy as its logical and formidable goal.
But how could such lofty goals ever be realized in practice? Consider the following. Almost every state in the world was at some point in its history more or less the personal property of some man, woman, or group of people. For example, the proud state of Virginia in North America was literally a venture-funded start-up company at first. Its business model was similar to Amazon: attract artisans from Europe to set up shop and do business, tax them, and pay dividends back to shareholders in England. The whole operation was funded by venture capitalists and public share offerings and governed remotely from London by a board of directors.
Suffice to say these governance arrangements did not last. Tartisansans began to demand a say in how the place was being run. Now the democratic commonwealth of Virginia is one of the constituent parts of the United States of America. In Virginia this transformation from company to commonwealth took a century of strife to unfold. But the Internet so far has zoomed through history at an amazing speed. Already we can see rebellions brewing in the digital colonies—gig workers protesting; app developers rising against Apple; a 20,000-merchant-strong strike at Etsy. Digital empires have entered a period of revolt, with platform democracy as its logical and formidable goal.