GAFA Will Not Be Dismantled
And I’m going to explain why.
The GAFA have long been praised by American or European political powers. The spectacular growth of these Silicon Valley startups has made many people fantasize about them and they have watched them with envy for many years. However, for several months now, the wind has seemed to be turning and the GAFA have raised many questions.
Not a week goes by without talking about Facebook’s privacy management problems, Google’s monopoly problems in different areas, the conditions imposed by Amazon on its marketplace’s e-merchants or the lamentable conditions in which Apple’s iPhone are assembled by children in factories in China.
As increasingly severe financial sanctions are imposed on these GAFA, many politicians are calling for an outright dismantling of Facebook or Google in particular. The pressure is even stronger on Facebook, for which Chris Hughes, one of the co-founders, himself called for dismantling in the face of Mark Zuckerberg’s company’s lack of consideration for privacy.
GAFA Have Become Too Powerful
The Cambridge Analytica scandal marked a turning point in the history of the GAFA. Until then, GAFA were seen as powerful but friendly companies. This scandal totally changed the vision of the general public and political powers on the GAFA. Although this scandal concerns Facebook alone, it has highlighted the excessive power of the GAFA over our societies.
For example, by collecting personal data from millions of Facebook users, Cambridge Analytica was able to target messages in support of Brexit in the United Kingdom and the election of Donald Trump in the United States in 2016. All this with the complicity of Mark Zuckerberg’s social network.
Facebook now has so many users that it is easy for it to influence the masses. This overly large power has clearly become problematic and that is why the G7 countries reacted so negatively when Facebook announced the launch of its cryptocurrency Libra in June 2019.
For Google, the problem is currently in terms of monopoly. Due to its monopolistic position in the online research market but also in the market for mobile operating systems with Android, the Mountain View company imposes the use of its products and kills all its competitors. By doing so, Google kills any innovation in the online advertising market for example.
On Amazon’s side, working conditions in its warehouses are criticized and pointed out. Nevertheless, the firm remains a major employer in all the countries where it operates. Worse still, politicians are ready to fight to see Amazon set up one of these famous warehouses on their territory. Under these conditions, it is difficult to punish Jeff Bezos’ firm harshly.
It is clear that the GAFA are putting political powers in a schizophrenic situation.
Simple Fines That Do Not Change Anything
The European Union has taken the situation into its own hands by imposing record fines on Google in recent years. In 2017, Google was fined more than €2.4 billion for unfair practices in the online search sector by promoting its Google Shopping price comparison service at the expense of competition.
The following year, the European Union moved up a notch in the scale of sanctions, this time requiring the payment of a fine of €4.3 billion. Here again, Google has obviously filed an appeal. In this case, Google is accused of having illegal practices in its Android ecosystem in order to strengthen its dominant position, particularly in the field of Web research.
In 2019, the European Union chose to focus on AdSense. For the European Commission, Google would impose restrictions on the ability of third party websites to display contextual ads from Mountain View’s competitors.
In concrete terms, the European Commission has the power to take up to 10% of the turnover of Alphabet, Google’s parent company. With a turnover of 136 billion dollars in 2018, Google’s fine could reach up to 13.6 billion dollars! However, we are not there yet.
Although the amount of these fines is astronomical, it does not change the omnipotence of the GAFA. Indeed, it is not a multi-billion dollar fine that will boost competition in a sector that has been crushed by a firm like Google. In addition, not all companies that have had to close down over the past 10 years will be able to be reactivated.
It is therefore clear that these sanctions are limited in scope.
This scope is all the more limited when we discover that Google now wants to set up an auction system to get money from competing search engines wishing to appear on Android devices. This is how to reverse a court decision in his favour and create ever more profits.
Sanction Race Between The United States And Europe
In the United States, too, there is increasing pressure on the GAFA. Politicians have taken over the issue and many voices are calling for a outright dismantling of Facebook in the face of the omnipotence of Mark Zuckerberg’s company.
In July 2019, the Federal Trade Commission (FTC) fined Facebook $5 billion for failing to protect its users’ data. This record sanction is also accompanied by an agreement between Facebook and the FTC requiring the leading social network to implement new protection measures and independent controls, conditions of use and access to the personal data of users of its services.
This includes Facebook but also Facebook Messenger, Instagram or WhatsApp. For many, this agreement will not solve anything because many have lost confidence in Facebook’s willingness to stop violating the law in the future.
This new willingness of the United States to sanction its GAFA is new but can be explained. Their aim is clearly to anticipate the European Union sanctions in order to recover the funds first and then to refuse potential future European Union sanctions on the grounds that the GAFA will already have been sanctioned for the same reasons on their territory.
Well aware of this race against time that the United States and the European Union will be engaged in in in the coming months, the GAFA, like Google or Amazon, are seeking to quickly reach agreements with legislators in order to put an end to prosecutions.
Google has just paid a $170 million fine under an agreement with the FTC for illegally collecting personal data about children through its video service YouTube. The amount of this fine is doubtful as it is much lower than what the collection of this data will have allowed YouTube to earn in terms of profit.
Some would even say that this type of fine is an incentive…
Europe Must Propose A New Model
Overwhelmed by the domination of American and Chinese Web giants, Europe is currently only acting in the legal field by imposing sanctions on GAFA or by defining regulations aimed at putting users’ privacy first. The GDPR (General Data Protection Regulation) was clearly born of this will.
Nevertheless, to hope to have any influence in the future, Europe must propose a new model and differentiate itself from the GAFA and Chinese Web giants who are following the same path. This new model must be innovative. A place must be taken provided that privacy management issues are placed at the heart of the priorities.
The latest announcements by the European Commission that it plans to create a sovereign wealth fund to support digital innovation in the old continent suggest some hope.
Nevertheless, there is still a long way to go.
A Dismantling That Would Benefit China
All these fines on both sides of the Atlantic and all these investigations launched against the GAFA suggest that the political powers of the United States or the European Union could push for the dismantling of a Facebook or Google that are clearly the most targeted in recent years.
In my opinion, such a dismantling will never take place. Why? Quite simply because it would benefit the United States’ new enemy, China. Indeed, a dismantling of Facebook or Google would considerably weaken these firms. All this would benefit the Chinese Web giants: the famous BATX.
The Baidu, Alibaba, Tencent and Xiaomi are waiting for this to conquer Europe in particular. Not to mention Huawei, which is already ultra powerful in the world of smartphones but also in telecom equipment where it is ahead of the 5G.
The Americans are well aware of this problem and Europeans should also be aware of it. For this reason, I therefore believe that, even if the pressure for greater regulation of the GAFA continues to intensify, we will never reach the extreme case of dismantling one of them.
Mark Zuckerberg can therefore sleep soundly.