LONDON — A new year is upon us, and when it comes to tech, 2018 is shaping up to be a doozy.
Google is on deck to be hit by one, if not two, antitrust fines over claims that it favored some of its own services, notably linked to the search giant’s popular Android mobile software, over those of rivals. Both Apple and Amazon will head to court to fight charges that they did not pay enough tax on their corporate activities in Ireland and Luxembourg, respectively. Both companies deny any wrongdoing.
And social media giants like Facebook and Twitter face a slew of domestic legislation to force them to combat potential online hate speech and extremist propaganda, including in Germany, where these companies from the first day of the new year must respond to people’s concerns and block illegal material within 24 hours or face hefty fines.
Such regulatory pushback comes amid years-long trends that are reshaping the tech world. These include Europe’s (arguably naive) effort to become the world’s digital policeman, and the Balkanization of the internet as we know it, as lawmakers in Brussels, Washington and elsewhere pass increasingly different rules dictating what can, and cannot, take place online.
When it comes to the underlying business of tech, Europe increasingly finds itself outgunned by the United States and China.
These digital themes aren’t going anywhere. But as we gear up for the new year, here are four predictions for 2018 that will underpin the tech world’s intensifying clash with policymakers worldwide.
The Continent enters the new year with a skip in its step.
Tech investment is expected to hit a record $19 billion in 2017, according to preliminary statistics. The upcoming public listing of Spotify, which may value the Swedish music-streaming service at up to $20 billion, also shows that European startups can mix it with the best Silicon Valley has to offer.
But when it comes to the underlying business of tech, Europe increasingly finds itself outgunned by the United States and China — the world’s two largest economies that now dominate their respective digital fiefdoms, leaving the Continent in the online slow lane struggling to keep up.
For while Europe’s tech sector is growing like gangbusters, those of the U.S. and China — fueled by heaps of domestic cash — are expanding even more rapidly. In the third quarter alone, American startups raised $19 billion, or roughly what Europe’s fledgling companies will pocket for all of 2017. That seemingly unassailable head start, particularly as tech firms fight each other for global dominance, will only become more entrenched in the months to come.
Scrutiny turns to Facebook
The social networking giant is about to go through a rite of passage once faced by Google and Microsoft. Just like the intense scrutiny targeted at these previous generations of tech giants, regulators — both in Brussels and across national capitals — will this year turn up the heat on Facebook and its ever-expanding stable of digital services.
Facebook is about to go through a rite of passage once faced by Google and Microsoft | Joel Saget/AFP via Getty Images
We have already seen early skirmishes in this upcoming battle. Germany’s competition authority recently charged the company for unfairly abusing its market position, and the European Commission fined Facebook €110 million last May for misleading regulators when it bought WhatsApp, the internet messenger. The company denies wrongdoing in the German case and claimed any errors in the Commission case were unintended.
Yet in 2018, this pressure will be turned up a notch. In particular, new data protection laws come into force across Europe in May (and with them, potential fines of up to 4 percent of companies’ annual revenues if they flout tough privacy standards). For those who already think Facebook plays fast and loose with people’s digital information, these upcoming changes will provide a new regulatory stick to use against the social network.
Digital misinformation here to stay
“Fake news” may have been Collins Dictionary’s word of 2017, but such digital misinformation — which also includes so-called trolling on social media, hacking of people’s email accounts and other digital mischief — will cement itself as part of countries’ electoral cycles this year.
But don’t expect such online tactics, including the spread of false reports by state-backed groups across social networks, to stand still while policymakers struggle to get their heads around the phenomenon. Already, the use of digital misinformation is morphing into something more sophisticated — a shift from outright fake news reports that are easy to spot, to more nuanced political messages aimed at sowing distrust among national voters.
With elections planned in Italy and Sweden, as well as in Russia and the United States this year, global politicians and tech companies will remain one step behind the online misinformation merchants, playing a (potentially unwinnable) game of whack-a-mole to keep nationwide polls out of the hands of digital tricksters.
Regulators and consumers diverge
For many policymakers, 2018 marks a year when Big Tech will finally get its comeuppance. From Europe’s three-pronged digital game plan to overhaul competition, privacy and tax rules, to the U.S.’s renewed zeal to tackle Silicon Valley’s perceived excesses, there’s certainly a push by regulators to clip tech companies’ wings.
This split between digital policymakers and the average consumer will grow this year.
But that tough stance runs counter to the views of most people (and investors) who actually use these services, many of whom still believe Big Tech does more to improve their lives than to harm them.
This split between digital policymakers and the average consumer will grow this year, likely leading to regulatory decisions against tech companies taken in the name of Europeans and others which, bizarrely, may not be supported by those same citizens.
That would be a backward step. No one is saying Big Tech should be able to operate beyond the rule of law. But if politicians can’t win voters’ support for their plans to rein in these companies, digital policymaking by the end of 2018 may leave the online world in worse shape than it found it at the beginning of the new year.
Mark Scott is chief technology correspondent at POLITICO.