Economic Implications of Inadequate Data Protection by Big Tech Companies
A critical look at the article by David Watt, in the online not-for-profit media publications by researchers “The Conversation,” reveals how big tech companies become unethical when handling of private consumer information. Most notably, is the fact that privacy laws imposed by governments are lenient on big tech companies like Facebook or Google, which prefer to self- regulate themselves. Laisser-Faire’s Game Theory of economics illustrates the need for self-regulation to determine the final market outcome, and it is the model currently applicable. As established, for instance, in Australia, the government imposes light-touch regulation on companies that use or ask for consumer information. Activists for data ethics have continued to demand that the Australian Competition Consumer Commission (ACCC) develop new data regulatory guidelines. Such regulations will help monitor and regulate the ever-changing market dynamics in the technological industry that is highly innovative. Also, big tech companies like Facebook got identified to use their financial muscle and market power to limit competition. Ethics demands fairness and integrity that some of these firms are not willing to uphold due to their selfish drive for market dominance.
The article addresses the fact that “The Shine Has Gone” in the data industry emanating from the unauthorized use and sale of customer information to unknown recipients. One example is the Cambridge Analytica Scandal, where Facebook was investigated and found to profile American voters. The voters got profiled according to age and race then data sold to Donald Trump’s campaign team. Such a breach of consumer data privacy exposed big tech companies to what they indeed are when it comes to withholding customer information. At their level, big tech companies have built a bad reputation on their operations, which has negatively impacted on the firm’s stock. After the revelation about Cambridge Analytica disclosure, Facebook recorded to have lost about 6 percent of its customer base in America alone, which resulted in reduced revenues between 2017 and 2018. It shows at great length how unethical insider behavior of companies can have on their profits when they breach their terms of the contract.
Concerning the ethical concept of respect for customers, Facebook undermined that contract to keep users’ information private from the reach of advertisers. High ethics dictates that a client must get contacted before their data gets handed over to a new entity. Such laws to curb such behaviors have been suggested by most countries to keep their citizens protected away from getting exploited by big tech firms. It is a course that resulted in the desire to addressing high data ethics about the insider operations of these firms. Most notably, Europe has done great to develop and pass rigid guidelines punishable by law regarding breach of customer data aided by host companies. Huge civil fines were established to caution offenders to discontinue the unethical practice that negatively impacts the customer-company relationship. Back in Australia, the ACCC spearheads that war against unscrupulous businesses undertaking unfair business competition in the market. Big tech firms, due to their thirst for market dominance, use the loss aversion theory to pursue ways to increase profits rather than losses. Therefore, selling American voter’s data to Donald Trump’s Cambridge Analytica at a price shows that firms, in this respect, Facebook, will go at great lengths to make profits, not losses.
Loyalty is another significant ethical concept that is not adhered to by big tech companies. As Watt writes in the article, “big data means money,” indicating that companies will always get ready to sell customer information for their benefit. When this happens, the company involved will have breached loyalty between two parties (digital media company and customers) that entered into a contractual agreement. Surprisingly, the Asymmetric Theory of economics argues that information between two parties going into a deal might not be well distributed; thus, one party might have more information than the other. In this case, Facebook has more data about a user and willing to distribute it for other interested parties without the knowledge of the users. Therefore, as this disparity remains, the Asymmetric Theory in this article promotes the unethical conduct of such big tech firms. If a customer had all the information needed for them to understand before signing up for any social media company, then some data leakages would have been avoided. That is why regulatory authorities are championing new and stringent laws to curb such unethical tendencies.
Accountability is another ethical concept that is getting spearheaded by believers of data privacy and protection policies. When an entity gets challenged to become accountable, it implies that they should understand that their actions should cause no harm, personality assassination, or financial loss to another. Therefore, when big tech data companies undertake such fictitious activities, they should get ready to take responsibility for their actions and face the law. Also, part of being accountable is the management taking responsibility by informing all the shareholders, including the customers of its intended plans, with the data in their hands. Part of the charges for not acting per the laws and regulation passed for data protection is hefty fines and, in extreme cases, deregistration of their license. It is the most common way highly practiced in the digital world to caution the big tech firms to adhere to the laid down rules to ensure that they uphold high levels of data protection. Stringent measures like this contribute to sanity in the market as all stakeholders try their best to get accountable for their actions while in the job place an out interacting with the community. Also, accountability dictates that all new technologies and innovations must get communicated to all the parties that do business with the tech company.
Additionally, corporate social responsibility is a way of promoting ethical practices in the digital space. It is the mandate of tech firms to ensure that all their undertaking positively impacts people and society. Henceforth, all the services that a company launches out in the digital sector must present benefits to the community and must not divide them. It is a case phenomenon with the social media platforms where insufficient censorship for hate speech, bullying, or incitement to violence is on the rise. Regulations must address the loopholes that these companies have to ensure that content censorship is conducted on a larger scale to avoid the negativity that may arise fueled by users against others. For example, past cases of incitement to violence through social media platforms in some Middle East countries have caused more harm to the communities as the vulnerable women and children fall victim to injuries or deaths. Inadequate action was taken by social media companies on their social responsibilities impacts negatively on their ratings and profits as many will choose to avoid such sites.
Adam Smith’s economic theory of free economy cannot withstand the high interference of the digital economy sector characterized by the cooperation of more prominent players to crowd out smaller companies. One such example is the buyout of some social media companies by Facebook. Instagram and WhatsApp were both bought-out of the market by Facebook, which is trying to dominate the social media industry. Such dominance cannot promote and support a free market economy that Smith prescribed in his theory of a free-market economy where, in this case, a vast market gets dictated by one player. Also, when the market dynamics appear to get controlled by one player, observing ethical and social responsibilities becomes an uphill task as it is minimal or no competition. Thus, a free-market economy is healthy for both businesses and consumers since it promotes the best ethical behaviors for all entities to incorporate at the watchful eyes of regulatory bodies. It is an economy that could operate in an oligopolistic nature where a few companies merge to crowd out the rest creating a unique arrangement of monopoly for their monetary gains.
Besides, bigger players have the financial capability to silence lawmakers or political parties with campaign monies such that when they get into power, draft laws that are lenient for them. For instance, the ACCC body in Australia, with its self-regulating policies for data companies, does not do much to protect these companies from exposing personal information to other recipients. Henceforth, more regulations should get passed to safeguard consumer interests regarding data protection and privacy. It should not appear to a one-country affair but a global concern whereby same stringent laws can get incorporated and implemented to minimize exploitation of customer’s right to data protection. Another industry concern that should get addressed is the consumer education of the data they give to data companies. Knowledge of customers will enable them to know to what extent their data can get used with or without their consent. Safe products must get promoted without fear or favor; that is why independent government commissions must get set up to autonomously draft regulations that will foresee the industry ethics. Such commissions should adopt power in their capacity to avoid over interference by “hired lawmakers” to disrupt their independence. The future outcome of ethical sanity in the data sector will highly depend on the goodwill of both lawmakers and the Big Tech firms to promote the highest levels of data protection and privacy.
eferences
Watts, D., 2019. How Big Tech Designs Its Own Rules Of Ethics To Avoid Scrutiny And Accountability. [online] The Conversation. Available at: <https://theconversation.com/how-big-tech-designs-its-own-rules-of-ethics-to-avoid-scrutiny-and-accountability-113457> [Accessed 20 April 2020].