How do we protect ourselves from dependence on the technological giants?
The following contribution corresponds to the portal of The Diplomat and the author is Pedro Fernaud, who is a journalist and teacher with twenty-five years of experience in various journalistic media: radio, written and online press, and more than 10 years linked to the field of teaching.
He has a degree in Journalism from the Complutense University and in Integral Communication from the Francisco de Vitoria University and a Master’s Degree in Teacher Training, in its branch of Social Sciences, from the Rey Juan Carlos I University.
We are increasingly dependent on the big technology companies for almost everything while the EU tries to stop the phenomenon
There are several events that illustrate the type of world we are building and in which we are immersed.
With these coordinates in mind, the global technological blackout that occurred last July deserves special analysis, which affected multiple sectors, from airlines to banks and the media, which revealed our dependence on a small number of software providers.
The incident was so large that, for example, in Spain, the airport operator Aena suffered more than 400 cancelled flights and thousands of delayed flights.
It is a generally accepted fact that the latest global technological blackout has highlighted the extent to which we depend on a very small number of technological giants, known in industry jargon as Big Tech or technology titans.
This term refers to the largest IT companies in the world, especially the five big American technology companies: Alphabet (Google’s parent company), Amazon, Apple, Meta (formerly Facebook) and Microsoft.
Nvidia and Tesla can also be added to this group, forming the Magnificent Seven. In addition, in the global context, Chinese companies such as Baidu, Alibaba, Tencent and Xiaomi (BATX) are also included in this group due to their significant market power and technological influence. The term Big Tech came into use around 2013 and gained popularity following investigations into Russian interference in the 2016 US election, due to the large volume of data these companies handle and their ability to influence user opinions and decisions. This concentration of power and data has led to comparisons with other large historical industries such as oil and tobacco. Their ability to shape social and economic behaviour has led to criticism of the disproportionate power they wield.
Our great dependence on big tech
When it comes to determining which companies influence our daily lives the most with their power and influence, experts sharpen their analysis and point to these four corporations: Microsoft, Apple, Alphabet (Google) and Amazon.
In what specific ways do we depend on them on a daily basis?
Microsoft has shaped the technological and business environment of many companies with its software, such as Windows and Office, as well as its Azure cloud platform. Apple has revolutionized consumer and technology design with its focus on innovative products like the iPhone, iPad, and its digital services. Google’s parent company, Alphabet, is a tech giant that dominates online advertising and has diversified its impact with innovations in artificial intelligence and autonomous technology. While Amazon has transformed e-commerce and logistics, and its AWS cloud service leads the digital infrastructure market.
Hot on the heels of these tech titans is Meta, formerly known as Facebook
The owner of the social media platforms Facebook, Instagram, and WhatsApp, and which has entered the virtual reality market with the acquisition of Oculus.
The company generates most of its revenue through targeted advertising, taking advantage of the extraordinary amount of data it collects from its users.
One of the main strengths of these tech giants is their ability to drive technological cooperation, facilitating partnerships with traditional banking that promote innovation and efficiency in financial services.
In developing regions, these companies improve financial inclusion by providing access to previously inaccessible markets and services, which especially benefits small and medium-sized businesses.
In addition, their competence in advanced technologies allows other companies to access artificial intelligence and big data tools, fostering a more robust and competitive technological ecosystem.
Why it is essential to be alert to the concentration of power of big tech
Of course, not everything that glitters is gold. Meta, for example, has been questioned for its handling and protection of users’ personal data, with scandals such as Cambridge Analytica, which exposed how the data of millions of users was used without their consent to influence elections.
In addition, Meta’s recommendation algorithms have been criticized for promoting misinformation and divisive content, since they prioritize engagement and interaction, which often results in the amplification of fake news and conspiracy theories.
Beyond the Meta case, the reality is that the incursion of Big Tech in the financial sector can introduce financial instability, since these companies are not subject to the same regulation as traditional banks, which can increase systemic risks.
Unfair competition is another critical issue
The infrastructure and power of these big tech companies allows them to quickly dominate the market, displacing local and foreign banks and fintechs, which can lead to an excessive concentration of economic power in a few hands.
In addition, user privacy is constantly at risk, as the business model of many of the Big Tech companies is based on the collection and sale of personal data, which raises concerns about data protection and information security.
It is in this critical context with the formidable dependence that the technological giants are generating in us that Scott Galloway, marketing expert and professor at New York University, analyzes in his book ‘The Four’ how Amazon, Apple, Facebook and Google have built empires that deeply affect our lives. According to Galloway, these companies ‘evade taxes, invade our privacy and destroy jobs in their eagerness to maximize profits’.
He criticizes that these companies have created a positive illusion around them
While their excessive power and size are alarming. Amazon, for example, is described by Galloway as a “prince of darkness” that dominates retail and seeks to cut costs through robots and automated stores. Facebook, according to Galloway, benefits from our need for love and connection, but has been criticized for its role in spreading fake news.
Google is described as a “modern god” that answers our questions, and Apple, with its sacred products, appeals to our desires for luxury and exclusivity. Galloway suggests that, instead of four tech giants, there should be ten companies to foster competition and economic growth.
How do we get to the point of dependency?
“I see it as a feedback loop. “First they offer you basic and free services, such as an email or a search engine,” reflects Ekaitz Cancela, researcher at the Internet Interdisciplinary Institute (IN3) of the Universitat Oberta de Catalunya and author of Utopías digitales (Verso Libros, 2023), in the newspaper El País.
“The data these companies collect from their users is then used to shape their ad personalization models, with which they have dominated the global advertising market for years. Now, they use that data to train AI models that they use in cloud services, which they then offer to governments. So they are in a perfect position to manage countries’ security systems,” he concludes.
Along these lines, according to research published by Tech Inquiry
Microsoft has signed more than 5,000 contracts with US military agencies since 2016, Amazon more than 350 similar agreements and Google another 250.
In this context, just two years ago, in 2022, the Pentagon awarded a mega-contract to Amazon, Google, Microsoft and Oracle worth 9 billion dollars to develop a cloud computing project.
In other words, the tech giants not only control the systems we need to work, entertain ourselves, run a business or do administrative tasks: they also have a presence in the military field.
How does the EU try to curb the insatiable appetite of the tech giants?
The truth is that the European Union is aware of Europe’s technological vulnerability. Hence the Gaia-X project, which aims to encourage digital autonomy and the development of a European cloud.
But the invasive reality of the technological titans does not change overnight. “To develop Gaia-X, agreements have been signed with the big technology companies. Even the EU adopted the Oracle cloud two months ago,” Javier Sánchez Monedero, a researcher in Artificial Intelligence at the Department of Computer Science and Numerical Analysis at the University of Córdoba, explains to El País.
Sánchez Monedero highlights the possibilities of the Internet and contrasts this potential with the reality of the technological oligopoly in which we are immersed. In his own words: “The network is perfectly resilient, the Internet is designed to operate in a decentralized and federated way. What is not resilient is that we have a layer on top of it with three or four products to which everything is delegated.”
To reverse this trend, the European Union has also developed the Digital Markets Act (DMA)
Whose objective is to promote competition and innovation, as well as improve equity for companies that operate in digital markets. This legal device offers advantages by encouraging greater competition in the digital market, limiting the power of big tech and giving consumers more choice and control over their personal data.
However, it also raises problems, such as potential complexity and confusion for users when deciding on new configuration options and potential security risks, due to the opening of platforms to third parties.
In addition, tech companies have warned that it could lead to changes in services that users do not want, which could affect the consumer experience.
Of course, not everyone is aligned with the EU’s critical zeal towards the tech titans. Enrico Colombatto, director of the Turin Centre for Economic Research, criticises the European Union’s (EU) hostile stance towards big tech companies, pointing out that this attitude could harm the continent’s economic future.
Regulations imposed by the EU
According to the Italian economist, unlike the United States, which seeks to cooperate with large technology companies to encourage innovation and maintain global competitiveness, the EU imposes strict regulations that hinder growth and encourage companies to relocate to more favorable environments.
This regulatory rigidity could make Europe dependent on foreign technologies, while the US continues to attract investment and talent.
The reality of China’s technological overconcentration warns of a global phenomenon
In any case, it seems clear that in the capitalist reality in which we live, technological development tends to concentrate in very few hands, with similar developments in different parts of the world.
An example of this is the tremendous power of the Chinese technological giants: Alibaba, Tencent and Baidu dominate the domestic market and are expanding their influence globally.
Alibaba, a leader in B2B commerce with a strong presence in Europe through AliExpress, generated revenues of $109.5 billion in 2023. Tencent, founded in 1998, is known for WeChat, the most popular messaging app in China, with 1.3 billion users, and in 2023 had a brand value of $214 billion.
Baidu, the ‘Chinese Google’, dominates the search market in China and is a leader in artificial intelligence and autonomous vehicles, with revenues of $19.5 billion in 2023.
In short, Big Tech has a double impact on the economy and society. On the one hand, they bring important advances in technology and financial inclusion, facilitating cooperation and access to advanced tools.
On the other hand, their power and reach can generate financial instability, unfair competition and privacy risks, posing significant challenges that require adequate regulation and supervision to balance their benefits and mitigate their disadvantages, including harm to small and medium-sized technology companies.
In this direction, it is crucial to diversify cloud service providers and encourage open source options to mitigate the risks of centralization. Governments and organizations must implement laws to protect data and foster a safer and more competitive digital environment.
Digital Markets Act: Commission appoints six gatekeepers
The following contribution is from the European Commission’s portal on digital markets issues
The European Commission has today appointed, for the first time, six gatekeepers (Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft) under the Digital Markets Act (DMA).
In total, 22 core platform services provided by gatekeepers have been appointed. The six gatekeepers will now have six months to ensure full compliance with the DMA obligations for each of the core platform services they have appointed.
Under the DMA, the European Commission can designate digital platforms as «gatekeepers»
If they provide an important gateway between businesses and consumers in relation to core platform services. Today’s designation decisions are the result of a 45-day review process conducted by the Commission following notification by Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft and Samsung of their potential gatekeeper status.
In particular, the Commission has established gatekeeper status with respect to the following specific core platform services
In parallel, the Commission has opened four market investigations to further assess Microsoft and Apple’s claims that, despite meeting the thresholds, some of their core platform services do not qualify as gateways:
Microsoft: Bing, Edge and Microsoft Advertising
Apple: iMessage
Under the DMA, these investigations aim to determine whether a sufficiently substantiated rebuttal submitted by the undertakings demonstrates that the services in question should not be designated. The investigation should be completed within a maximum of 5 months.
In addition, the Commission has opened a market investigation to further assess whether Apple’s iPadOS should be designated as a gatekeeper, despite not meeting the thresholds. Under the DMA, this investigation should be completed within a maximum of 12 months.
Furthermore, the Commission has concluded that, although Gmail, Outlook.com and Samsung Internet Browser meet the thresholds set out in the DMA to be considered gatekeepers, Alphabet, Microsoft and Samsung have provided sufficiently substantiated arguments showing that these services do not qualify as gateways to the respective core platform services.
Therefore, the Commission has decided not to designate Gmail, Outlook.com and Samsung Internet Browser as core platform services. It follows that Samsung is not designated as a gatekeeper for any core platform service.
Next steps for designated gatekeepers
Following their designation, gatekeepers now have six months to comply with the full list of dos and don’ts under the DMA, giving more choice and freedom to end-users and business users of gatekeeper services.
However, some of the obligations will only apply upon designation, for example the obligation to inform the Commission of any intended concentrations.
It is up to designated companies to ensure and demonstrate effective compliance. To do so, they have six months to submit a detailed compliance report outlining how they comply with each of the DMA’s obligations.
The Commission will monitor the effective implementation and enforcement of these obligations
In the event that a gatekeeper fails to comply with the obligations set out in the DMA, the Commission may impose fines of up to 10% of the company’s total global turnover, which may be increased to 20% in the event of a repeated infringement.
In the event of systematic infringements, the Commi
