About the author: mark payne is Chairman and CEO of Stagwell, a technology-based global marketing services company.
The Wild West era of technology is coming to an end. For decades, the policy of the United States has been to hands off technology and let it develop and innovate. On the eve of artificial intelligence and the metaverse, consumers’ bad taste in social media and its divisions suggest that tougher regulation is on the horizon.
The latest round of layoffs won’t allay consumer concerns that technology is enabling a surveillance state. Their concerns will accelerate progress in technology privacy, censorship, anticompetition and national security legislation in the United States and abroad in 2023.
Half of U.S. consumers worry that technology will destroy their personal freedom in the next decade, and 70% worry that technology will give big companies more power. Younger generations are especially suspicious of big tech companies. Elon Musk gave some journalists access to Twitter records after he bought the social company. The report they produced, known as the Twitter File, is a damning revelation that government officials are pulling the strings while tech companies, for the most part, willingly obey.
Seventy percent of voters in a recent Harvard-Harris poll now support a national law that would prevent corporate censorship. The saving grace for the tech industry may be that many Democrats, who believe they have been benefiting from censorship and would oppose such a law, don’t understand how things will work out. They will regret blocking this legislation when they think they are the ones being censored. I expect this to be a big issue in the 2024 election campaign.
If Big Brother colludes with tech giants to keep consumers up at night, the idea of TikTok being a Trojan horse for Chinese influence and espionage is catnip for Congress looking to get tough on China. Before the end of the year, leaders eased a string of national restrictions on the use of the platform by government officials. The House banned its members and staff from downloading the app. TikTok has dozens of trends against it: Democrats and Republicans largely agree on the need to curb Chinese influence, the Biden administration’s negotiations with TikTok are at an impasse, and hard news about TikTok employees abusing the app keeps leaking , most recently by spying on journalists. The company said it does not share data with Beijing and has fired employees allegedly involved in the espionage incident.
Voters may not be as concerned as your senator about the diplomatic fallout of a TikTok ban, but rest assured consumers will arm themselves if the administration enacts a sweeping ban. TikTok, the fastest-growing social media platform in the United States, has been taking advertising market share from its traditional rivals. Expect a compromise that allows TikTok to function but limits how it uses and distributes information.
Outside the U.S., data privacy regulations will mature in 2023, meaning global businesses will face stricter restrictions when doing business across borders. According to Forrester, since the implementation of the European Union’s General Data Protection Regulation in 2018, countries have begun to enact data privacy regulations, with more than 100 countries now enacting relevant regulations. By 2024, an estimated 75% of the world’s population will be covered by modern privacy regulations.
The good news is that businesses have followed the “they will, they won’t” drama surrounding Google’s plan to phase out user-tracking “cookies” to the point where they’ve found solutions to replace the tool and tweak data privacy standards. But a more optimistic FTC, with a renewed focus on “harmful business surveillance and lax data security,” would mean now is not the time to rest on your laurels. The U.S. is unlikely to gain national standards like the proposed U.S. Data Privacy Protection Act. But the FTC is expected to oppose virtually any tech merger, even if the government loses the case.
This impulse is not unique to Americans. The EU is also taking anti-competitive action against tech giants through the Digital Markets Act, a law aimed at curbing the market power of dominant digital firms. We haven’t seen a similar federal effort come together in the US, but the FTC’s recent intervention in the Microsoft Activision deal hints at more efforts to come. The US Federal Trade Commission (FTC) will also file a lawsuit against Google in September, accusing Google of anticompetitive behavior.
Large technology companies remain important engines of economic opportunity and innovation. But once it started spreading news and political discourse, the industry crossed a line, making it a target for politicians. That erodes their traditionally loyal Republican free-market supporters, as Democrats are moving further left and taking on a more anti-big business flavor. The combination of these trends may only result in the first significant year of industry regulation.
Guest commentaries like this one are written by writers outside of the Barron’s and MarketWatch newsrooms. They reflect the views and opinions of the authors. Submit proposals for reviews and other feedback to firstname.lastname@example.org.