Technology giants such as Facebook, Google and Amazon have become new “world superpowers” that governments including Canada have to rein in and regulate, while at the same time ensuring economic progress isn’t derailed, says a prominent analyst.
“The 20th century tools we have for protecting a free society won’t work for 21st century giants,” says technology guru Brian Hopkins, vice-president and principal analyst of U.S.-based consulting firm and think tank Forrester Research, in an interview with the Star on how Canadians can thrive in the digital economy. “At the end of the day, each country including Canada has to set up safeguards. That’s the grand experiment that we are living with. The thing is, we don’t know what the right balance of regulation versus economic enablement is.”
Hopkins, whose clients have included the World Bank, the International Monetary Fund and the U.S. Federal Reserve, says the scale and speed of the big tech companies, which constitute FAANG (Facebook, Apple, Amazon, Netflix, and Google) plus Microsoft, are going beyond what regulators can keep up with.
“Regulators move too slowly, and the tech giants are one or two steps ahead,” says Hopkins. “The answer is you have to learn how to be flexible. That’s difficult to do and some of these decisions will be hard to make.”
Canada’s Finance Minister Bill Morneau was in Chantilly, France last week meeting with his G7 counterparts to talk about how to tax and regulate big technology companies.
ARTICLE CONTINUES BELOW
A Canadian federal legislative review panel struck under the Heritage and Innovation departments is also working on that very question. And what they determine will have an impact on whether future generations of Canadians sink or swim in the digital economy.
There have been particular concerns with Facebook from government regulators. MPs earlier this year voted unanimously to issue a standing summons for Facebook CEO Mark Zuckerberg and COO Sheryl Sandberg after they refused to testify before an Ottawa committee on digital regulation. The privacy commissioner is also suing the company over data-related breaches. And in the U.S., the company was fined a record $ 5 billion this month over privacy violations.
There is also concern over foreign influence in the upcoming federal election using social media. Facebook has said it will regulate itself and take down any accounts that try to interfere.
“So much of public opinion is now shaped, not by curated trusted news sources, but the stuff that gets posted on Facebook, and that’s powerful when you have 2.7 billion users of their apps,” says Hopkins. “Facebook has more of a reach on what we think and the implications are huge.”
Another issue is that much of the “news,” or what comes onto newsfeeds on social media platforms, is developed by artificial intelligence.
“Do you want what you know about the world to be based on what an algorithm thinks you should see?” Algorithms are developed by humans who have inherent biases, says Hopkins.
Still, he insists the tech giants are “not evil. They are simply forcing us to rethink what the digital ethics of the 21st century should be.”
ARTICLE CONTINUES BELOW
One big discussion currently is whether Toronto should give the go-ahead to an ambitious plan by Sidewalk Labs, a subsidiary of Alphabet, Google’s parent company, to build a new smart city on the Toronto waterfront. The company has committed $ 1.3 billion to the project, but critics say the collection of data and how it will be used is concerning.
“I think it’s easy for us to villainize these companies, but ultimately I believe they are good for us,” says Hopkins. “Money is certainly at stake, but most of these companies have a socially progressive west coast ethic, and at some level aren’t purely corporate profiteers. But they are certainly pushing the bounds of digital ethics and the notions of what is public and what is private. And that’s what we have to figure out: How do we let them innovate but without surrendering the rights we hold dear?”
Canada and other western democracies are being leapfrogged by former developing countries as the new technologies are being implemented, says Hopkins.
Part of the issue, he argues, is political and cultural. That’s where the debate over regulation gets murkier. And that has implications for projects such as Sidewalk Labs in Toronto.
“China is doing surveillance in a way that is not acceptable to western democracies. Are we disadvantaged because of that, and will it hold back economic development? There are sets of values that we hold dear while other countries are accelerating and growing economically because they violate our norms. We have to decide how to maintain that balance.”
Hopkins says, in reality, Canada has no choice but to let tech giants self-regulate since government doesn’t have the tools to “work at their scale and speed.”
“You have to essentially put in checks and balances that ensure that Facebook is regulating itself properly. The stick is that as a country you can cut Facebook off if they don’t abide by those rules,” says Hopkins. “But to actually do the policing and regulation for them would be very tough.”
Facebook meanwhile, announced recently that it is looking at launching its own cryptocurrency called Libra, which Hopkins says is both “brilliant” and dangerous at the same time.
“It’s a brilliant move because they already have such a big reach but now they would be in charge of a system that will turn them into a bank with responsibility for potentially billions of dollars worth of payments. Look at the requirements and scrutiny that banks have to go through. We would have to rethink the rules once again.”
Tony Wong is the Star’s technology reporter covering big tech, disinformation and regulation. Follow him on Twitter: @tonydwong