Digital Monopolies and the Threat to Our Democracy

Technology & Society Nov 07, 2020

Prabir Purkayastha

Digital Monopolies are being increasingly recognised as threats to democracy. The US Congressional Committee’s Staff Report [1] this month on anti monopoly practices of the big four—Google, Facebook, Amazon and Apple, who collectively have a market valuation in excess of 5 trillion—stated:

Nearly a century ago, Supreme Court Justice Louis Brandeis wrote: “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.” Those words speak to us with great urgency today.

The Report further says:

“Although these four corporations differ in important ways, studying their business practices has revealed common problems. First, each platform now serves as a gatekeeper over a key channel of distribution. By controlling access to markets, these giants can pick winners and losers throughout our economy...the dominant platforms have exploited their power in order to become even more dominant.”

The Competition and Markets Authority (CMA), UK, in its Report[2] on Online platforms and digital advertising dated July1, 2020, has also come to similar conclusions, that these big on-line platforms are abusing their market power to wipe out competition, and promote point/points of view favourable to their business interests. CMA has recommended,

“Both Google and Facebook grew...are now protected by such strong incumbency advantages – including network effects, economies of scale and unmatchable access to user data – that potential rivals can no longer compete on equal terms...The concerns we have identified in these markets are so wide ranging and self-reinforcing that our existing powers are not sufficient to address them. We need a new, regulatory approach...

The four major tech companies — Google-Alphabet, Facebook, Amazon, and Apple — are globally on the radar for their monopoly power and their ability to drive out competition. The recent hearings in the US Congress Committee on the Big Four were followed by a staff report of the Committee, which recommended appropriate legislative action to break-up or limit these companies. Facebook has additionally come under the scanner for being an instrument of hate speech, helping the formation of violent militias, and promoting conspiracy theories, including Covid-19 conspiracies. A Delhi Assembly Committee—Committee for Peace and Harmony—is investigating Facebook's role in Delhi's communal riots this year (full disclosure: I also deposed before this Committee).

Advertising Muscle and Discrimination

International marketing intelligence service WARC indicates in the nearly $600 billion advertising market, the digital advertising revenue today is equal, if not more than that of all other media combined. Google and Facebook alone command nearly about 35% of the global advertising revenue, and about 70% of the digital ad revenue. The business model’s for Google and Facebook are based on advertising revenue. For Google, advertisements are about 83% of its total revenue, and for, Facebook more than 98%.

The key difference between other media companies and the digital platforms is their ability to micro-target their users. Facebook has 50,000 unique categories in which it places its users. In India, the Free Software Movement of India had found that Facebook has data even on caste of its users. Facebook does not ask for caste of its users but uses algorithms with a database of caste names in a given area to identify caste. A similar exercise identifies religion as well. Just as Facebook has this ability to micro-target its users, so has Google. Google collects all the data of our searches, browsers, android if we use an android-based mobile, location, and all the sites we have viewed, left a comments, the list goes on. It has gigabytes of data on each of us who use Google services or own an Android based mobile phone. It is this ability to micro-target its users, identifying what a person could be looking for and showing them relevant advertisements that make Google and Facebook an attractive platform for advertisers.

Google and Facebook have one similarity. Neither of them generates any content; they show you content generated by others. Their entire business model is capturing our eyeballs so that we, or our attention, can be sold to advertisers. Those who create content may get a small fraction of the ad revenue that Google generates, but the bulk of the digital revenue is appropriated by Google as the major gatekeeper of the digital world. Similarly for Facebook, all its content is generated by its users, with Facebook acting as giant billboard of content that it thinks that particular users would like to see. And because people stay on the platform and Facebook knows its users, it can target ads much better than print or television media can.

Google on the Monopoly Radar of the US Government

The US Department of Justice has recently filed a lawsuit against Google-Alphabet (Alphabet is Google's parent company) for using a range of anti-competitive practices using its monopoly power in the search market. It is the only major action in the US against tech monopolies in recent years, the last one being the 1998 action against Microsoft. Eleven state attorney generals have joined the Department of Justice suit, with more expected to follow.

Google currently has a market share in online searches globally of more than 92% that rises to more than 98% in countries like India. The only market in which it has virtually no market share in China, where it shut shop for its search engine in 2010.

According to the Justice Department, Google uses its monopoly over the search engine and its other Google properties to grab over 30%—$103.73 billion in 2019—of the global digital ad revenue pie. Facebook has a little over 20%.

We may ask how does Google gets so much of the ad revenue? Does its search engine not show other sites, which the person searching on Google would also visit? And therefore would not these sites also get a share of online advertisements?

Visiting other sites via Google searches is decreasing year by year. In 2004, Lary Page, the co-founder of Google had stated in an interview, 'We want you to come to Google and quickly find what you want...We want to get out of Google and to the right place as fast as possible." Rand Fishkin, a leading expert on Search Engine Optimization shows us with that this is not the case anymore; if it ever was.

The majority of searches on Google lead to no further clicks on the links in the displayed search pages (zero clicks). Zero clicks happen because Google increasingly curates the results of the queries, displaying the required information on the search result page itself that most searchers do not go further. Even Wikipedia is worried, as its clicks from Google are dwindling.

In the browser market, around 51% of searches generate zero clicks on the search result page links. If clicks do occur, a significant share of such outgoing clicks is only for other Google sites such as YouTube, Google Maps, etc. Clicks on search pages leading outside the Google universe are dwindling every year. The situation is worse in mobile searches, where Google has an even more dominant position. We might think that Apple mobile phones should be independent of Google and therefore people might fare better in Apple's ecosystem of iPhones, iPad, etc. It is not. Google pays 8-12 billion dollars, nearly 20% Apple’s annual profits, for Apple to carry its search and maps as Apple’s default.

These figures are of search engine outputs and the resulting clicks. What about the proportion of web traffic referrals that sites receive, meaning when sites are visited from other sites, where do they come from? 70% of such web referrals for any site still come from Google properties. Annoy Google and your site will fall into a deep black hole, which only the faithful will visit.

As a result, if we want our sites to be visited, we have to configure the site in a way that Google can catalog all our content easily. If we want our videos to be viewed, our only realistic option is YouTube. And there is no way we can fight with Google even if our share of ad revenue dwindles. Google holds all the cards!

Even when queries lead to other sites, quite often it leads to Google properties as it promotes either sites, or content on its sites, e.g., YouTube videos on the search page, such that people do not visit the world outside Google. The rules of ranking that it imposes on others, do not apply to Google properties and sites, which have consistently higher rankings on Google searches than searches on other search engines like DuckDuckGo, Bing, etc.

According to Rand Fishkin,  the rules of ranking are only for outsiders! As Fishkin puts it, the answer to the question of how to be ranked number one on a Google search is an easy one: be owned by Google!

The European Union regulators have penalized Google on occasions, but Google has been happy to pay the fines, as the monopoly it has achieved through its anti-competitive action cannot be reversed. It is like license fees that telecom companies pay to secure the monopoly of the airwaves! In India too, Google has been fined, but the amount of the fine was a paltry $21 million. It does not even count as a rap on the knuckles for Google.

These tech monopolies are also facing action in the European Union and Australia and even in the UK. In the UK, the Monopoly and Mergers Commission (now renamed as the Competition and the Markets Authority) was replaced with a weakened Competition Commission in 1999, a step which India quickly copied in 2002. Even with this weaker regulatory framework than the earlier anti-monopoly regulations, UK's Competition and the Markets Authority in its recent reporthas argued for a new, regulatory approach to address these monopolies. India has been charting a very different course. Not only has the government and its regulatory agencies sheltered Reliance Jio in becoming the national telecom monopoly, but it has also 'blessed' huge investments from Google and Facebook of $4.5 billion and $5.7 billion respectively, helping cement all three of their monopolies. While all other technology partners bring in their technology tools and platforms, Jio's key to success is its old fashioned monopoly over India's telecom network. India is slated to the world's biggest market after China in the coming decades.

Hate as an Instrument of Facebook’s Virality

Facebook rise has not only led to becoming a global media giant with 20% share of the global digital ad revenue, but also a major carrier of fake and hate news on its platform.

In a UN Report[3] dated 12thSeptember, 2018, Facebook was strongly criticised for its providing a platform for hate speech and its refusal to cooperate with the UN investigations on the genocidal violence against Rohingyas in Myanmar. Even after this criticism, Facebook failed to take action against T. Raja Singh, a BJP MLA from Telangana, whose posts against Bangladeshis and Rohingyas had been flagged by Avaaz in its Report Megaphone for Hate[4]. This was the same Raja Singh who had been widely reported in the media for a Facebook video where he stated[5], "If Rohingya and Bangladeshi immigrants do not leave India, the government should shoot them. Only then the country will be safe."

Equality Labs have also done a detailed analysis[6] of Facebook’s use as a platform for hate speech and its threats to minorities – religious, caste and queer communities – in India. Their Report pointed out that 93% of all hate speech posts reported to Facebook remain on Facebook. This includes content advocating violence, bullying and use of offensive slurs. Nearly half of the hate speech Facebook initially removed was later restored; 100% of these restored posts were Islamophobic in nature. 40% of all casteist hate speech on Facebook India is preoccupied with India’s affirmative action policy, known as “reservation.”

The Wall Street Journal in its news report[7] stated that T. Raja Singh, the BJP MLA was among the three BJP figures,  flagged internally by Facebook’s team implementing its policy on “Dangerous Individuals and Organizations” as worthy of a permanent ban, as was done in other countries including the United States. The other two flagged internally were Anantkumar Hegde, a member of Parliament from Karnataka and Kapil Mishra, a former Delhi legislator. T Raja Singh was only banned on September 4th2020, after WSJ’s expose quoted above and the sharp reaction of a section of the Facebook staff[8] to its India policies.

The Wall Street Journal’s article quoted above goes on to say:

The company’s top public-policy executive in the country, Ankhi Das, opposed applying the hate-speech rules to Mr. Singh and at least three other Hindu nationalist individuals and groups flagged internally for promoting or participating in violence...(She) told staff members that punishing violations by politicians from Mr. Modi’s party would damage the company’s business prospects in the country, Facebook’s biggest global market by number of users, the current and former employees said.

Advertisements depend on the number of views, and the virality of posts, and the engagement—the amount of time a viewer spends on the post or related posts—are the main drivers of Facebook’s revenue model. Facebook has discovered, as MIT researchers did[9], that hate and fake news posts drive virality, and therefore it has no incentive to curb such posts. While it has professed lip service for community standards and healthy discourse, the driving force of its business empire comes from its need to have more eyeballs, and these eyeballs to spend more time on Facebook. This is what an internal study had flagged to its senior leadership[10], “Our algorithms exploit the human brain’s attraction to divisiveness,” read a slide from a 2018 presentation. “If left unchecked,” it warned, Facebook would feed users “more and more divisive content in an effort to gain user attention & increase time on the platform.” The above article quotes another internal study[11]that had found that 64 percent of members who had joined extremist groups did so thanks to Facebook’s recommendation tools.

This pathology of social media is not limited to Facebook. Google’s search engine has shown similar problems, as has its image recognition algorithms. But undoubtedly, Facebook has been the leader in spreading hate politics and fake news in the world.

Media, Democracy and Monopoly

While the digital monopolies do not create any content themselves, their ability of micro-targeting helps them become the key players in advertising. The digital monopolies such as Google and Facebook not only have enormous power to sell goods, but also to sell candidates/parties in elections. Cambridge Analytica had only a small fraction of the data that Google and Facebook have. Their ability to sway peoples opinions are far more than any other media platform in the world. They can destabilise countries and create a climate in favour of a party. Bolsonaro, Trump and Modi have benefited from their WhatsApp and Facebook campaigns. The 2016 elections in India saw Google ads used extensively to sway the Indian voter.

The role that Facebook played in politics was identified by In a 2017 Bloomberg article[12], Lauren Etter, Vernon Silver, and Sarah Frier wrote:

“ ...(that Facebook) actively works with political parties and leaders including those who use the platform to stifle opposition—sometimes with the aid of ‘troll armies’ that spread misinformation and extremist ideologies.” They also wrote that “a little-known Facebook global government and politics team… led from Washington by Katie Harbath, a former Republican digital strategist who worked on former New York Mayor Rudy Giuliani’s 2008 presidential campaign,” has helped specific political parties “from India and Brazil to Germany and the U.K.—the unit’s employees have become de facto campaign workers.”

In 2018, a five-article series for Newsclick by Cyril Sam and Paranjoy Guha Thakurta ahead of India’s 2019 general elections investigated the close ties between Facebook executives and the BJP, particularly Prime Minister Narendra Modi’s team, and found that the ties went far beyond Facebook’s relationships with other political parties in India.

Unfortunately, the interests of tech these behemoth digital companies are less and less often aligned with the interests of society. Thomas Carlyle had called the press the Fourth Estate in a democracy. It has a social role and therefore needs to be regulated[13]for public good. The Press Council of India, however weak it might be in actual practice, has a code[14]that the press is expected to follow. In the U.S., cross-holdings between different kinds of media are regulated.

The global anti-monopoly actions show that we are witnessing is a tectonic shift in the way big tech and their owners are being viewed. Not as Ayan Rand's imaginary captains of industry who through super-manlike powers are creating a new world, but simply as venal and predatory monopolies. Even in the fractured politics of the US, there seems to be a bipartisan consensus that monopolies are inherently dangerous to consumers and competitors alike. Otherwise, why would a Justice Department under Trump file a case against Google-Alphabet, in which, according to its spokespersons, nothing—presumably even breaking up the monopolies as advocated by Senator Elisabeth Warrenis off the table.

(Prabir Purkayastha is the President of the Free Software Movement of India and Editor-in-Chief at NewsClick)

[1]     Investigations of Competition in Digital Markets, Staff Report of the