The prevalence of digital technologies and their corresponding effects on society at large cannot be understated. From remote work to online shopping, technology has been a pervasive force driving innovation and economic growth in nations across the world. Of particular importance to the conversation is the emergence of ‘Big Tech,’ a group of major technology companies that have achieved significant growth, impact, and disruption in the global market.
In light of the tremendous power these companies wield and their potential implications for further digital transformation of society, governments globally have had to reconsider their role in the age of Big Tech. How can governments ensure a competitive market and protect the interests of consumers in the face of private tech firms’ ability to shape the 21st-century digital economy? Let’s explore the role of government in the age of Big Tech.
Rise of Big Tech
‘Big Tech’ is typically used to refer to the five largest American tech companies: Amazon, Apple, Facebook, Google, and Microsoft. Collectively, these five companies hold an immense amount of power in the digital economy, with innovation and growth driven mainly through their products and services. As such, they have come to dominate many aspects of the tech industry, such as online advertising, search engine optimization, and digital content.
The rise of Big Tech has occurred in tandem with the growth of global and digital markets. The combination of technological advances, the growth of e-commerce, and the expansion of digital infrastructure has enabled the rapid growth of these private tech companies. With their immense market capitalization and ability to influence economic markets, Big Tech has caused governments to reconsider their traditional roles and responsibilities.
Government Responses
Due to the immense power of Big Tech companies, many governments have engaged in various policies and initiatives geared towards ensuring competition and protecting the interests of consumers. Here are some of the primary ways that governments have responded to the rise of Big Tech.
Privacy Regulations
One of the primary concerns of government is managing standards of data collection, usage, and storage. As many of the largest tech companies operate or collect data around the world, regulating the privacy of their users is a global issue. There have been many initiatives to ensure the privacy of online users, such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in the United States.
These regulations seek to protect users’ rights to privacy, as well as limit the power of data-gathering by Big Tech companies. By imposing rules on organizations that handle personal data, these policies aim to reduce the risk of data misuse and protect the rights of their citizens.
Antitrust Actions
The unprecedented consolidation of Big Tech corporations has enabled them to control specific markets, creating a lack of competition. In response, many governments have sought to break up such companies using various antitrust tactics such as interventions, court orders, or fines.
The United States is one notable example of this. In October 2020, the U.S. Department of Justice (DOJ) filed an antitrust lawsuit against Google for allegedly creating unfair barriers for other search providers and tilting markets in its favor. Beyond this, the U.S. Congress is also currently debating additional antitrust legislation that would target Big Tech.
Taxation Policies
In addition to ensuring competition, governments around the world have sought to ensure that tech giants pay a fair share of taxes. This has taken the form of increasing corporate and capital gains taxes, imposing national taxes on digital services, and requiring tech companies to remit taxes where their users are based.
The European Union (EU) has been particularly active in this respect. For example, the EU recently introduced new digital taxation directives aimed at expanding the number of companies paying taxes in the region. These rules would more explicitly require Big Tech companies to pay taxes based on where their users are located.
Benefits to Governments
In addition to safeguarding competition and protecting the interests of consumers, governments have sought to capitalize on the opportunities offered by Big Tech. This has been done primarily through the use of tech-enabled public policies, such as digital transformation initiatives, artificial intelligence (AI), and automation.
Various countries have undertaken ambitious programs to digitize their administrative and operational processes. This can be seen in Singapore’s Smart Nation vision, which uses advanced technologies in various aspects of government, and India’s Digital India campaigns, which aim to leverage data and AI-based solutions to shift the country towards a digital infrastructure.
Governments have similarly sought to capitalize on the potential of AI technology to streamline and innovate service delivery. For example, governments like the United Kingdom are utilizing AI-led proactive health services to improve outcomes and reduce health costs, while China is utilizing robotics and AI to make healthcare services more efficient.
Technology has become an integral part of our lives and it has enabled us to conduct activities we couldn’t often initiate with traditional methods. The rise of Big Tech companies has enabled much of this digital transformation, allowing for services and products to arrive in our homes faster than ever before. However, this immense power and influence held by Big Tech has caused considerable concern from global governments.
In response, various governments have sought to use various tactics and initiatives to protect the interests of their citizens and level the playing field for other organizations. These policies have ranged from data privacy regulations to aggressive antitrust actions and taxation initiatives. Governments have also looked to capitalize on the opportunities that Big Tech presents, by leveraging digital transformation and AI technology.
This has emphasized the changing role of governments in the digital economy and their need to remain relevant in the age of Big Tech. By utilizing technology-enabled public policies and rethinking traditional approaches, governments can ensure a competitive market and ultimately serve the interests of their citizens.
