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Tech and retail giants face growing scrutiny


Accelerating the transition to an ever more
digital existence, the coronavirus pandemic has tightened tech giants’ grip on
billions of customers’ lives.

Governments and users are belatedly coming to terms with the power held by
the likes of Apple and Amazon, particularly in focus this year thanks to their
role in everything from setting up video meetings to doing our shopping for us.

Most of the planet has spent at least part of 2020 in lockdown, and as
Western consumers clicked through Google and Facebook, hundreds of millions of
Chinese users turned to Baidu, Alibaba, Tencent or Xiaomi.

These “superstars” of online capitalism “have given the impression, in this
world where so many things that seemed solid are now fragile, that they are
above it all and even invincible,” said Paris-based economist Joelle Toledano.

While governments are spending trillions of dollars to avoid widespread
bankruptcies and mass unemployment, shares of these companies have been rising
since January: Facebook’s stock is up 35 percent, Amazon 67 percent and Apple
68 percent.

Zoom, created in 2011 by a Californian engineer, has watched its share
price jump 600 percent in 2020, while Airbnb’s share value doubled on the day
of its IPO.

Meanwhile Chinese apps, long confined to the local market, are exploding in
app stores around the world: notably TikTok but also SHEIN for clothes
shopping and another video sharing platform, Likee.

Taking back control

The pandemic may have strengthened these high-flying digital giants, but it
has also energised calls to regulate the conglomerates which continue to
expand through hundreds of acquisitions.

“Until 2017, the benefits, especially in terms of innovation, were
considered to outweigh the damage,” said Toledano, who has written a book
about taking control back from Google, Amazon, Facebook and Apple.

That has changed, however, as they now stand accused of not paying enough
taxes, unfair competition, stealing media content and spreading fake news.

The European Union has unveiled an ambitious set of new rules to clip their
wings, ranging from limits to their power over the market to cracking down on
hate speech and requirements for transparency over algorithms.

Drawing lessons from past failures — delayed and drawn-out procedures and
weak penalties — the Digital Services Act could see companies face crippling
fines or even bans from the EU market for breaches.

The bloc’s competition chief Margrethe Vestager has said the draft laws
would bring “order to chaos” online, reining in the massive “gatekeepers” who
dominate markets.

The United States is also acting on competition concerns, with US federal
and state antitrust enforcers filing suits against Facebook on December 9
seeking to overturn its acquisitions of Instagram and WhatsApp.

“For nearly a decade, Facebook has used its dominance and monopoly power to
crush smaller rivals and snuff out competition, all at the expense of everyday
users,” Letitia James, New York’s attorney general, said.

In October the Justice Department and 11 states launched proceedings
against Google, accusing it of having illegally strengthened its monopoly on
online searches and advertising.

In China, meanwhile, authorities have been tightening regulation of content
for several months, and recently announced new rules for e-commerce.

November’s dramatic suspension of the IPO for online payment giant Ant
Group — which was expected to raise a record $34 billion — was interpreted
by many observers as a shot across the sector’s bows from the Chinese
government.

And last week, market regulators launched an anti-monopoly investigation
into Ant parent company Alibaba shortly after Communist Party leaders vowed to
crack down on “disorderly capital expansion”.

Little economic damage

Despite public outcry over their failings to rein in misinformation or hate
speech, among other things, tech companies have seen little impact on their
bottom line.

In the US, Facebook was boycotted in July by a hundred or so advertisers
against the backdrop of the Black Lives Matter movement, without any major
economic damage.

Ride-hailing platforms Uber and Lyft, which refused to take on their
thousands of drivers as employees as required by California law, managed to
convince voters there to support them in a crucial referendum in November.

And in France, Amazon is accused of destroying small business, exploiting
its employees and promoting over-consumption with disregard for the
environment — yet the French branch of Jeff Bezos’ company made record sales
during the “Black Friday” sales bonanza.

‘Surveillance capitalism’

Shoshana Zuboff, a professor at Harvard Business School and the author of a
book on “surveillance capitalism”, has denounced the sale of personal data to
advertisers.

Speaking on a European Parliament panel last week, she said Google’s
possible acquisition of fitness wearables maker Fitbit should be blocked.
“Google’s assurances cannot be trusted,” she said.

Some argue that targeted advertising is nothing new, however.

Jacques Cremer, a professor at the Toulouse School of Economics in France,
said it is “normal” that Facebook, Google or Twitter “use the data they have
on me to show me ads”.

“We must regulate the platforms, but be careful not to make scapegoats of
them,” said Cremer, who last year advised the European Commission on proposed
regulation.

“They are incredibly imaginative companies, extraordinarily well managed,
and offer a high quality of service.”(AFP)



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