Sovereign Bureaucrats vs. Global Tech Companies: Ethical and Regulatory Challenges

Sovereign Bureaucrats vs. Global Tech Companies: Ethical and Regulatory Challenges

Alexander A. Filatov (GenezisTechCapital, Russia)
DOI: 10.4018/978-1-7998-2011-6.ch010

Abstract

We live in a changing world. Disruptive technologies and digital platforms particularly are reshaping the world, making it more open and accessible on the one hand, but more fragile and uncertain on the other, rising risks of cybersecurity, personal data security. Do markets really need any kind of regulatory interventions under these circumstances? We see many cases where “state bureaucrats” impose restrictions on global companies based on digital platforms – technology champions. Are those actions effective, do they make sense in terms of global security, or it is only political game?
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Introduction

Do we want technology to keep giving more people a voice, or will traditional gatekeepers control what ideas can be expressed?

(Mark Zuckerberg, 2019)

Mother, do you think they'll drop the bomb?

Mother, do you think they'll like the song?

Mother, do you think they'll try to break my balls?

Mother, should I build the wall?

Mother, should I run for president?

Mother, should I trust the government?

Mother, will they put me in the firing line?

Is it just a waste of time?

(Roger Waters - Pink Floyd The Wall, 1979)

...10 minutes before the strike I stopped it...I am in no hurry, our Military is rebuilt, new, and ready to go, by far the best in the world. Sanctions are biting & more added last night.

(Donald J. Trump, 2019)

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Background

Will the US government and lawmakers follow tactics similar to deterrence of Iran in confronting the launch by Facebook its cryptocurrency? Or it'll make a strike to kill it at an early stage? Facebook recently revealed the details of its cryptocurrency, Libra (libra.org), which will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger and its own app. Regulators are already bristling. Democrat Senator Sherrod Brown tweeted that “We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight” (Brown, 2019).

In July 2018 the European Commission fined Google $5 billion for favoring its own applications on Android devices over those of its competitors. While Google's fine is the largest to date, it isn't the first time the European Union has sanctioned a company for this sort of abuse. Nor is it the first time that a fine has been handed to Google — which had already set a record last year — but other companies such as Microsoft and Telefonica have also received hefty punishments. Back in 2016, the EU forced Apple to pay $16 billion in back taxes to Ireland, which the company just finished paying.

Amazon is already under pressure in the US over its market dominance. At the end of August 2018, US President Donald Trump hinted that he thought Amazon, among other tech companies, could be a “very antitrust situation,” and news emerged in September that US Attorney General Jeff Sessions was open to investigating Silicon Valley giants.

President Trump has finally succeeded in building his wall: not the one he keeps demanding on the southwestern border, but a far more complex barrier meant to block China’s national telecommunications champion, Huawei, from operating in the United States and starve it of American technology as it builds networks around the globe.

All these cases deal with state bureaucrats imposing restrictions on global companies based on digital platforms - technology champions. Officials confront them in order to demonstrate that bureaucrats fulfill their duty to regulate markets. But do markets really need this kind of regulatory interventions? Isn't it simply that bureaucrats and politicians are trying to justify their salaries and to demonstrate their own importance in the face of general public - their voters?

Let's depict what corporate digital ecosystems are, how they are reshaping the world, what arguments global bureaucrats are using to impose restrictions, and if these restrictions are effective, finally.

Key Terms in this Chapter

Facebook: An American online social media and social networking service company based in Menlo Park, California.

Pavel Durov: Is a Russian entrepreneur who is best known for being the founder of the social networking site VK, and later the Telegram Messenger.

Huawei: A Chinese multinational technology company that provides telecommunications equipment and sells consumer electronics, including smartphones and is headquartered in Shenzhen, Guangdong province.

Anti-Laundering Regulation: A set of laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income. Though anti-money-laundering (AML) laws cover a relatively limited range of transactions and criminal behaviors, their implications are far-reaching.

Silicon Valley: A region in the southern part of the San Francisco Bay Area in Northern California that serves as a global center for high technology, innovation, and social media.

Telefonica: A Spanish multinational telecommunications company headquartered in Madrid, Spain. It is one of the largest telephone operators and mobile network providers in the world. It provides fixed and mobile telephony, broadband and subscription television, operating in Europe and the Americas.

Libra: A global cryptocurrency built on blockchain to promote financial inclusion.

Pavel Durov's GRAM: Cryptocurrency based on the TON blockchain platform created by Pavel Durov.

Calibra: Wallet app is built on blockchain technology to enable people to move Libra, a borderless cryptocurrency, freely, securely and affordably.

R&D: Is the process by which a company works to obtain new knowledge that it might use to create new technology, products, services, or systems that it will either use or sell.

Microsoft: An American multinational technology company with headquarters in Redmond, Washington. It develops, manufactures, licenses, supports, and sells computer software, consumer electronics, personal computers, and related services.

Cybersecurity: Is the protection of internet-connected systems, including hardware, software and data, from cyberattacks. In a computing context, security comprises cybersecurity and physical security -- both are used by enterprises to protect against unauthorized access to data centers and other computerized systems.

Digital Risks: Cyber risks and traditional risks with a digital component.

Anti-Terrorist Regulation: Laws with the purpose of fighting terrorism. They usually, if not always, follow specific bombings or assassinations. Anti-terrorism legislation usually includes specific amendments allowing the state to bypass its own legislation when fighting terrorism-related crimes, under the grounds of necessity.

KYC Regulation: Is the process of a business verifying the identity of its clients and assessing their suitability, along with the potential risks of illegal intentions towards the business relationship. The term is also used to refer to the bank regulations and anti-money laundering regulations which govern these activities. Know your customer processes are also employed by companies of all sizes for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant. Banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information.

Digital Platform: Any web-based platform for presenting content (things like Facebook, Twitter, Blogs, Websites, and sometimes SMS).

Google: An American multinational technology company that specializes in Internet-related services and products, which include online advertising technologies, search engine, cloud computing, software, and hardware. It is considered one of the Big Four technology companies, alongside Amazon, Apple, and Facebook.

Amazon: An American multinational technology company based in Seattle, Washington, that focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. It is considered one of the Big Four technology companies along with Google, Apple, and Facebook.

E-Commerce: Is the activity of electronically buying or selling of products on online services or over the internet. electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, internet marketing, online transaction processing, electronic data interchange (edi), inventory management systems, and automated data collection systems. e-commerce is in turn driven by the technological advances of the semiconductor industry, and is the largest sector of the electronics industry.

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