A Conversation With EU Parliament Member Marietje Schaake About Digital Platforms And Regulation, Part II

Yesterday we published Part I of Danish journalist/author and Cato Institute Fellow Flemming Rose's very interesting conversation with Dutch MEP Marietje Schaake concerning questions around internet platforms and regulation. This is the second and final part of that conversation.

FR: I want to focus on the small players. People concerned about regulation saythat if you only focus on the big players like Facebook, Google or Twitter and howto regulate them, you will make it very difficult for the small players to stay in themarket because transaction costs and other costs connected to regulation will killthe small companies. Regulation becomes a way to lock in the existing regime andmarket shares because it takes so many resources and so much money to stay inthe market and compete. And new companies will never be able to enter themarket. What do say to that argument?

MS: It depends on how the regulations are made but it is a real risk. It is the risk ofGDPR (general data protection regulation), and with filtering assuggested now. The size of a company is always a way to assess whether there is aproblem, and I think we should do the same with these regulations so that therecould be a progressive liability depending on how big the company is or therecould be some kind of mechanism that would help small or medium sizecompanies to deal with these requirements. Indeed, it is true that for companiesthat have billions of euros or dollars of revenue, it's easy to deploy lots of people.A representative of Google yesterday (at a conference in the European Parliament)said they have 10,000 people working on content moderation. Those areextraordinary figures, and they are proportionate because of the big the impact ofthese companies, but if you are a small company you may not be able to do it, andthis is always an issue. It's not the first time we have been dealing with this. Withevery regulation the question is how hard it is for small and medium enterprises.

FR: The challenge or threat from misinformation is also playing a big role in thedebate about regulation and liability. We will soon have an election in Denmark.Sweden recently had an election where there was a big focus on misinformation,but it turns out that misinformation doesn't work as well in Denmark as in the USor some other countries because the public is more resilient. Why not focus moreon resilience and less on regulation so people have a choice? We are up againsthuman nature, these things are triggered by tribalism and other humancharacteristics. To counter it you need education, media pluralism, and so on.

MS: I think you need to focus on both. First, what is choice if you have a few nearmonopolies dominating the market? Second, how much can we expect fromcitizens? If you look at the terms of service for a common digital provider that youand I use, they are quite lengthy. Is that a choice for a consumer? I think it'snonsense. That's one thing. Moreover, we are lucky because we are from countrieswhere basic trust is relatively high, media pluralism exists, there are many politicalparties, and our governments will be committed to investing in education andmedia pluralism, knock on wood. How will this play out in a country like Italywhere basic trust is lower and where there is less media pluralism, how are you evergoing to overcome this with big tech, so I think there is a sufficient risk if you lookat the entire European Union, Hungary and other countries, that governments willnot commit resources to what is right and they will create the kind of resilience thatour societies already have. In the Netherlands trust in the media is among thehighest, and it's probably also because of a certain quality of life and certain kindof freedom that people have enjoyed for a long time. Even in our country you see alot of anti-system political parties rise, so it's not a given that this balance willcontinue forever because it requires public resources to be spend on media andother factors. So I think both are very important and I don't want to suggest that weshould not involve people but I don't know if we can expect of the average citizento have the time and the ability to have access to information it would take to makethem resilient enough on their own.

FR: Do you think a version of the German "Facebook law" with the delegation oflaw enforcement to the digital platforms will make it to the agenda of lawmakers inthe European Parliament?

MS: No, I think there are too many flaws in it. It's bad. Some form ofresponsibility on behalf of companies to take down information will exist, but Ihope the law will be the primary tool. The companies will take down contentmeasured against the law with the proper safeguards and proportionality. If thereare incentives like big fines to be overtly ambitious in taking down information,that's a risk. But on the other hand, the platforms as private companies alreadyhave all the freedom they want to take down any information with a reference totheir terms of use. We are assuming that they are going to take the law as guidance,but nothing indicates they will. In fact, Facebook doesn't accept breastfeedingpictures, so they are already setting new social norms. A new generation may growup thinking breastfeeding is obscene. The platforms are already regulating speech,and people who are scared about regulation should understand that it is MarkZuckerberg who is regulating speech right now.

FR: Recently the EU praised the Code of Conduct to fight hate speech online that they signed with the tech companies in 2016. A lot of speechhas been taken down according to the EU: 89 percent of flagged content within 24hours in the past year, but my question is: Do we know how much speech has beentaken down that should not have been taken down?

MS: No, we don't know.

FR: That will concern those who value free speech. You have the law and you havecommunity standards and then you have a mob mentality, i.e. the people who arecomplaining most and screaming louder will have their way and they will set thestandards. So if you organize people to complain about certain content, it will betaken down to make life easier for Facebook and Twitter and Google.

MS: Yes.

FR: So you agree that it's a concern?

MS: It's a huge concern. If you believe in freedom of expression which I knowyou do, and I think it's one of the most important rights and so many people havebeen fighting for it, why will we give it up? Just a little bit of erosion of freedom ofexpression is a huge danger and therefore to put responsibility on these companiesto take down content without a check against the law is a risk, to allow thesecompanies to set their own terms of use that can be at complete odds with the lawand also with social norms (consider the restrictions on the breastfeeding, onItalian Renaissance statues as pornographic, or on the photo of a naked girl hit bynapalm in Vietnam). Let me give you an example from my own experience.I gave a speech here in parliament, it was a very innocent and clearly politicalspeech, but it was taken down by YouTube. They said it was marked as spam,which I don't believe. I have never posted anything that was labeled spam. What Ithink happened was that my speech was about banning goods and trade that can beused for torture and the death penalty. I think that the machine flagged torturebecause torture is bad, but a political debate about torture is not bad. I took ascreenshot of the fact that YouTube took it down, posted it on twitter and said"wow!, see what happened", and they were on the phone within two hours, butthat's not the experience most people (including the people I represent) will have.That's the danger. We also know examples of Russians having flagged Ukrainianwebsites and then they were taken down. And if that happens to a politicalcandidate in the last 24 hours before an election it could be decisive, even if thecompanies say they'll restore it within 24 hours.

FR: I spoke to a representative from one of the tech companies who said that whenthey consult with German lawyers whether something is legal or not, they will getthree different answers from three different lawyers. He said that his companywould be willing to do certain things on behalf of the government, but it requiresclear rules and today the rules aren't clear.

MS: Right, so now you see incentives coming from the companies as well. It's nolonger working for them to take on all these responsibilities whether they arepushed to do so or just asked to do it. The fact that they have to do things is also aconsequence of them saying "don't regulate us, we can fix this." I think it's aslippery slope. I don't want to see privatized law enforcement. What if Facebook isbought by Alibaba tomorrow? How happy would we be?

FR: I want to ask you about monopolies, competition and regulation. If you goback to 2007 MySpace was the biggest platform, then it was outcompeted byFacebook. As you say, there are concerns about the way Facebook manages ourdata and its business model with ads and sensational news driving traffic andgetting more eyeballs. But why not let the market sort things out? If there isdissatisfaction with the way Facebook is running their business and our data, whynot set up a competing company based on a different business model that willsatisfy customers' need?

MS: States don't built companies in Europe.

FR: I was having private companies in mind. Netflix has a subscription model,wouldn't a digital platform like Facebook be able to do the same?

MS: I think it would be difficult now, because there is a lock-in effect. In Europewe are trying to provide people with the ability to take their data out again. If youuse gmail for 12 years, your pictures, your correspondence with your family andloved ones, with your boss and colleagues, it could all be in there, and you want totake all those data with you. It's your correspondence, it's private, you may need itfor your personal records. You may have filed your taxes and saved your returnsand receipts in the cloud. If you are not able to move that data to another place,then competition exist only in theory. Also, if you look at Facebook, almosteverybody is on Facebook now. For somebody else to start from scratch and reacheverybody is very difficult. It's not impossible but it's difficult. And for thosemodels to make money the question is how much are customers willing to pay asrequired by the subscription model?

Facebook and Google already have so much data about us. Even if I am not onFacebook, but all my friends are, then a sketch of my identity emerges because Iam the empty spot between everybody else. If people start posting pictures of abirthday party with the 10 people who are on Facebook and the one person that isnot, and then somebody says I can't wait to go on holiday with Marietje orwhatever, then at some point it would be clear who I am, even if I am not on theplatform, so they already know so much and they already has access to so muchdata about people's behaviour that effectively it will be very hard for anycompetitor to get close, and we have seen it in practice. Why hasn't there beenmore competition?

FR: Do you compare notes with US lawmakers on this? And do you see that yourpositions are getting closer to one another?

MS: Yes.

FR: Can you say a bit more about that?

MS: First of all the talk has changed. The Europeans were dismissed as beingjealous of US companies and therefore proposing regulations, i.e. we wereproposing regulations in order to destroy US competitors. I don't think that's true,but this stereotypical view has been widespread. Also, we were being accused ofbeing too emotional about this, so we were dismissed as being irrational which isquite insulting, but not unusual when Americans look at Europeans. I think we arein a different place now with a privacy law in California, with New York Timeseditorials about the need for tougher competition regulations, with senatorsproposing more drastic measures, with organizations like the Center for HumaneTechnology focusing om time well spent, and with Apple hiring people to focus onprivacy issues. Recall also conversations about inequality in San Francisco. Wehave a flow of topics and conversations that suggest that the excessive outcomes ofthis platform economy need boundaries. I think this has become more and moreaccepted. The election of Donald Trump was probably the tipping point. Welearned later how Facebook and others had been manipulated.

FR: You said that the problem with these companies is that they have become sopowerful and therefore we need to regulate them. Is the line between public andprivate as blurred in Europe compared to the US? You focus on power no matterwhether it's the government or a private company when it comes to protection offree speech, while in the US the First Amendment exclusively deals with thegovernment. Do you see that as a fundamental distinction between Europe and theUS?

MS: There are more articulated limitations on speech in Europe: for example,Holocaust denial, hate speech and other forms of expression may be prohibited bylaw. I think there is another context here that matters. Americans in general trustprivate companies more than they trust the government, and in Europe roughlyspeaking it's the other way round, so intuitively most people in Europe wouldprefer safeguards coming from law than trusting the market to regulate itself. Thatmight be more important than the line between private and public and the FirstAmendment compared to European free speech doctrine.