Big Techs Free Ride Is Coming To An End

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About the Author: Mark Penn is President and CEO of Stagwell, a technology-driven global marketing services company.

The technological age of the Wild West is coming to an end. For decades, American policy has been to set aside technology to allow it to grow and innovate. With the advent of artificial intelligence and the metaverse, consumer aversion and disagreements with social media suggest the inevitability of more aggressive regulation.

The latest round of layoffs will do little to allay consumer fears that technology could establish a surveillance state. Their concern will accelerate the spread of technology privacy, censorship, non-compete, and national security legislation in the United States and abroad by 2023.

Half of American consumers fear that technology will interfere with their personal liberties in the next decade, and 70% fear that technology will no longer empower big business. The younger generation is very wary of big tech. Elon Musk gave several journalists access to images from Twitter after buying the social company. The report they produced, known as the Twitter Files, is an expose that government officials are pulling the strings behind the scenes and that tech companies often follow through.

According to a recent Harvard-Harris poll, 70% of voters now support national legislation to prevent corporate censorship. Perhaps the saving grace for the tech industry is that many Democrats feel they have taken advantage of censorship and will oppose such a law without realizing that what is happening is happening. They will regret blocking this law if they think they are the ones censoring it. I hope this becomes a major theme of the 2024 campaign.

If Big Brother, in cahoots with Big Tech, is keeping consumers up at night, the idea that TikTok is a Trojan horse for Chinese influence and espionage is a ploy by Congress to demonstrate its power to China. Before the end of the year, the leaders introduced a series of government restrictions on the use of the platform by government officials. The Chamber prohibits its members and employees from downloading applications. There are dozens of opposing trends on TikTok: Democrats and Republicans basically agreed to curb China's influence, the Biden administration's talks with TikTok have stalled, and bad news keeps coming that TikTok employees are abusing the app, more recently to spy on journalists. . The company said it does not share data with Beijing and fired employees it said were involved in spying incidents.

Voters may care less about the diplomatic implications of a TikTok ban than their senators, but rest assured, consumers will be outraged if the government enacts an outright ban. TikTok is the fastest growing social media platform in the United States and has taken market share away from its traditional competitors. Expect compromises that allow TikTok to work, but place restrictions on the use and sharing of information.

Outside of the United States, data protection regulations will be stricter in 2023, which means that global companies will face even more stringent restrictions when doing business abroad. Since the introduction of the EU General Data Protection Regulation in 2018, countries have adopted privacy rules and, according to Forrester, there are currently more than 100 rules in place. By 2024, an estimated 75% of the world's population will be subject to modern privacy regulations.

The good news is that the company has followed the drama around Google's plans to phase out user tracking cookies long enough to find a tool replacement solution, and privacy standards have been tightened. But a more optimistic FTC, with a new focus on "policing dangerous trade and weak data security," means there's no time for complacency. The US is unlikely to receive national standards like the US Privacy Act. However, expect the FTC to ban almost all tech M&A, even if the government loses business.

Such an impulse is not typical for Americans. With the passage of the Digital Market Law, the EU is also taking anti-competitive measures against tech giants in order to limit the market power of dominant digital companies. We have yet to see the alignment with similar federal efforts in the United States, but the recent FTC meddling in Microsoft's Activision settlement suggests there is more to come. The FTC will also take action against Google in September for alleged anticompetitive actions.

Big tech remains a key driver of economic opportunity and innovation. But when it began broadcasting political news and speeches, the industry crossed a line that brought it under the guns of politicians. This undermined his traditionally pro-market Republicans, as Democrats veered further to the left and leaned more against big business. The combination of these trends could lead to the industry's first major year of regulation.

Opinions like these are written by writers outside of the Barron's and MarketWatch staff. They reflect the views and opinions of the author. Send suggested comments and other comments to idea@barrons.com.

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