The regulation of Big Tech is much harder than it sounds
The big tech stocks are in the regulatory cross hairs
U.S. regulators must be wary what constraints and limitations they put around Big Tech, given the firms they seek to regulate account for such a huge chunk of stock market value.
Don’t kill the cash cows
The world’s biggest smartphone maker, Apple keeps on working to point to the employment and revenue creation opportunities its platforms provide. Despite this effort, governments continue to confuse the need to tax big tech with the desire to constrain it.
Yes, there’s a need to ensure a competitive market place, but it’s also essential to ensure that any regulation that is put in place doesn’t slaughter the cash cows.
After all, at $3 trillion Apple’s market cap is equal to 14.4% of U.S. GDP. At just shy of $2 trillion, Google contributes another c.10%. Facebook adds around 5%. In other words, these three companies between them account for approximately one-third of U.S. GDP.
That’s a lot of money.
A lot of jobs.
And a lot of political donations.
Follow the money
You can bet your bottom dollar (which is all most of us possess) that regulators will consider this as they think about what they are doing. Surely, they do not want to expose themselves to angry voters who see the value of their retirement funds take a dive because tech stocks fell in response to poorly developed regulation?
They may be less concerned for the privacy and security of Americans, but you can bet they’re pretty concerned about getting re-elected. Everyone out here thinks most politicians only care about us during elections, after all.
[Also read: Apple seems on track for late March/April iPhone SE event]
That’s not to say some regulation shouldn’t take place.
It seems clear that the dominance of the big players in the business may limit the potential for new competition.
But just as there is a need for a fair and rational international tax system that ensures all the world’s big earners pay their share in the nations in which they conduct their business, there is also need for major platform companies to have a certain amount of latitude in how they do their business.
Good regulation is better than bad laws
While a little regulation designed to enable a more open market will probably hurt Big Tech a little, foolish laws drafted in ignorance will hurt us all – technology firms, customers and ultimately competitors deprived of the revenue creation opportunity provided by these great platforms.
Developing regulation that enables competition while protecting consumers and enabling further platform development isn’t going to be something that can be agreed on the back of an envelope.
And in every nation in which these questions are now being asked, one must hope someone in the government has the vision to develop something that enables and empowers a space that works for all, rather than simply trash the party at a time of economic upheaval.
Regulation needs to enable and empower the industry, not knock it down. And I’m extremely concerned the laws that seem to be under consideration at the moment just won’t fit the needs of our time.
Which should concern us all.
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