A new study from the University College London (UCL) explores the rise of centralised digital platforms, laying out a series of recommendations to end the harmful industry dominance of ‘big tech’ – a term used to describe the world’s most powerful players in technology.
The research, titled Decentralized vs. Distributed Organization: Blockchain, Machine Learning, and the Future of the Digital Platform and led by UCL associate professor JP Vergne, analyses the impact of big tech AI platforms such as Google, Facebook, Amazon, Tencent, Baidu and Alibaba.
Using machine learning algorithms as their core technology, these global industry juggernauts are able to transform monumental amounts of personal data into monetised prediction services, monopolising the business of tech in such a way that it’s impossible for smaller organisations to compete. Current regulatory frameworks minimise competition for big tech since the datasets they have amassed can’t be easily shared or accessed by potential rivals, let alone be split as a result of a potential corporate breakup. On top of this, government intent to regulate these corporations is lacking because of the geopolitical and financial benefits they bring.
“Without data, a decision-maker is just a puppet. This is the trick that centralised (yet distributed) platforms have been playing on their users for years and years. And this has been feeding a dystopian scenario built on top of an oligopoly” – JP Vergne, UCL
Intersecting the disciplines of computer science, management and law, the study culminates years of Vergne’s detailed research. While Vergne has held a number of leadership positions at research institutions dedicated to the digital economy, the paper itself is based on a thorough review of recent scholarship on the business applications of blockchain and AI.
Weighing up these centrally-controlled platforms against alternative decentralised approaches, Vergne hoped to uncover an actionable solution to the sovereignty of big tech. The associate professor presents blockchain as a potential solution, lauding its ability to enable decentralised and transparent platforms that are truly neutral.
The study recognises that to overthrow these industry giants, a different regulatory approach which addresses the factors that permit them to dominate must be implemented. Vergne lays out four recommendations for this process, hoping they will help to level the playing without forcing the centralised companies to disband, which, he argues, would be detrimental to the industry at large.
Vergne’s recommendations are as such:
- Regulate data from the bottom-up – a new approach requiring regulators to work up from the data, rather than initially conducting reviews at the corporate level; for example, Vergne references the Google antitrust investigation, in which the US Department of Justice filed a landmark case against the company, alleging that the organisation illegally holds monopolies in search and search advertising. Vergne points out that employing a bottom-up over a top-down approach would support the regulation of company data so that its capture and use is much more heavily restricted. This would mean, for instance, that Google would not be able to feature its own products among search results on google.com, and audio-streaming giant Spotify would not be allowed to launch its own record label.
- Regulators must clearly define and reward the benefits of decentralisation – Vergne insists that antitrust laws built off the 1890 Sherman Act (the first Federal act in the US that outlawed monopolistic business practices) are no longer fit for purpose given the exponential growth and advancement of modern technology. He states that regulators need a robust definition and measurement of decentralisation. On top of this, Vergne feels that favourable tax regimes for decentralised platforms, whose users would have an enforceable right to vote service terms via digital tokens, should be seriously considered.
- Establish a platform utility regulation – big tech corporations currently reap the benefits of exemptions and protections, similar to those given to utility companies – but they do not have to face the same level of regulation and restriction, meaning they automatically possess an unfair competitive advantage. As such, Vergne argues that acknowledging leading digital platforms as essential infrastructure would enable ‘utility’ designations with new obligations, such as fair competition, common carriage, interoperability and non-discrimination. He notes that, overall, slow progress here on the regulatory front could largely be put down to US–China competition, with both countries striving to protect their domestic platform monopolies from measures that could prevent their growth and ultimately give the edge to non-native rivals.
- Education must keep pace with technology – without an intermediate understanding of technologies like blockchain and machine learning, managers’ abilities to successfully lead teams of developers and engineers will diminish over time. At the same time, says Vergne, these sorts of digital platforms do not rely on management structures as much as traditional companies, resulting in fewer job opportunities for them moving forward. Consequently, businesses must review and adapt their curricula or otherwise risk becoming obsolete.
Vergne commented: “Today, centralisation is about data, not decision-making. Centralised corporations such as Facebook can distribute all the decision-making authority they want to platform users but as long as all the data is held on corporate servers, these firms are empowering nothing and no one. Without data, a decision-maker is just a puppet. This is the trick that centralised (yet distributed) platforms have been playing on their users for years and years. And this has been feeding a dystopian scenario built on top of an oligopoly.
“That said,” added Vergne, “trying to understand platform regulation without mentioning US–China geopolitics is like discussing nuclear arms regulation in the 1940s without mentioning WWII. And introducing new regulation that ignores the existence of decentralised platforms based on blockchain is like introducing new traffic regulations that ignore the existence of pedestrians and cyclists.”
Click here to read Vergne’s full study and conclusions.