Big Tech Pay-Outs To European ISPs Would Just Concentrate Their Power

from the subsidies-for-the-rich-and-powerful dept

As the debate about how to rein in Big Tech and its anti-competitive practices continues, news publishers and telecommunications providers are increasingly calling for large pay-outs from major platforms. However, these proposals risk restricting users into ever-smaller walled gardens and cementing the dominance of a few big players.

On Valentine’s day, an open letter from the CEOs of Deutsche Telekom, Telefónica, Vodafone, and Orange surfaced. In the letter, the heads of Europe’s biggest telecommunications providers called “for large content platforms to contribute to the cost of European digital infrastructure that carries their services.” Claiming that the current situation is “not sustainable” for their companies, they argued that “Europe will fall behind” if this situation is not addressed.

The request for large platforms to pay telecom providers to carry their content is not new. In 2011, the same group (absent Deutsche Telekom) attempted to levy charges on Google and other content providers, suggesting an overhaul of how data travels across the internet. In 2013, Orange struck a deal with Google under which Google would pay an undisclosed amount to the carrier for the traffic sent across its networks.

For years, telecom operators have tried to catch up with innovation, but with little real success. In the beginning, it was their inability to identify ways to diversify their centralized business models within the internet’s more decentralized environment. Instead, they have used their political capital to keep pushing, unsuccessfully, for proposals based on the simple idea that everyone else should have to pay up. They even went as far as the ITU. And, the more the internet has grown, the more telecom providers have remained stuck in outdated business models. Part of the problem has always been that telecom providers have never fully grasped the fact that users are mainly paying to connect to the ends of the network and not the middle. In other words, the value of the internet connection comes from the fact that Google, Facebook, or TikTok—not to mention smaller and regional platforms excluded from big telecom deals—make it valuable for them. Without large and small platforms and their services, users would have no reason to use telecom providers’ networks. 

This dynamic of requiring large platforms to pay telecom providers to carry their content may bring the net neutrality debate to mind. But, this post is not about net neutrality. This post is about a different trend that is picking up speed: attempting to force big technology companies to negotiate, with very little transparency, deals that end up creating barriers to entry for smaller businesses on both sides of the equation. Make no mistake, the concern about the concentration of power in big technology companies should neither be underestimated nor ignored; more fundamentally, however, promoting secret deals as the solution to any of the current problems will only make things worse.

And it’s not just the telecom providers. Last year, Australia’s News Media Bargaining Code set the tone for the relationship between Big Tech and publishers by forcing Google and Facebook to negotiate and pay publishers—namely, Rupert Murdoch’s News Corp—to host the publisher’s content.. France followed soon after, with Google agreeing to pay the Alliance de la presse d’information generale (APIG) $36 million dollars in the first case under the new EU Copyright Directive. Canada is considering similar rules, while the UK, ArgentinaBrazil, and Germany have all enacted – or are in the process of enacting – such rules. Big Tech is paying and it is paying big time. Now, telecommunication providers want a piece of this payout, and they might get it.

The obvious question here is how sustainable this is in the long run, especially considering the fact that these deals create an even greater financial interest in maintaining Big Tech’s dominance.

In this context, the paradigm that is forming is one where power will concentrate in the hands of even fewer telecommunications and Big Tech players. While Google and Facebook may be able to afford huge payouts to host publisher content and travel on telecom provider networks, smaller companies cannot. This means more users will be limited to increasingly walled-in ecosystems and services with more concentrated threats to user privacy and expression, especially as smaller players get shut out of such deals.

The openness and freedom that define the internet at its best suffer within walled-garden spaces. These kinds of deals will exacerbate this problem as Facebook and Google become centers for more kinds of user interaction, adding new services that draw users further into their closed systems. In the case of Facebook News in France, for example, users are exposed to the news and information only from certain “partners” adhering to Facebook’s terms and conditions. Independent journalism and informal reporting will vanish or, at best, get hidden.

Now, imagine if Facebook’s and Google’s reach were to extend to infrastructure. Although it is premature to guess the level of involvement and investment Big Tech will be required to commit and what it will mean exactly, it is almost a certainty that big technology companies will get unprecedented access to infrastructure opportunities they have long desired. We are already witnessing a trend towards more privatized networks and more privatized internet infrastructure, with research suggesting that big technology companies are “gaining control over not only the content but the means of transferring the content.” If core parts of the internet’s infrastructure are co-opted by big technology firms, it would further the existing dependencies we tend to experience in the latter. As Brett Frischmann argues:

Ultimately, the outcome of this debate may very well determine whether the internet continues to operate as a mixed infrastructure that supports widespread user production of commercial, public, and social goods, or whether it evolves into a commercial infrastructure optimized for the production and delivery of commercial outputs.

And, no regulation from Europe will be able to prevent this; once Big Tech is in Europe’s infrastructure, there won’t be a way out.

Europe has repeatedly said it wants to be a leader in innovation. Of course, it means every word of it. But, no one is – nor should be – entitled to the proceeds of technical innovation, and trying to enforce that through regulation is a bad idea.

Originally posted to the EFF Deeplinks blog.

Filed Under: , , ,
Companies: deutsche telekom, facebook, google, orange, telefonica

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Comments on “Big Tech Pay-Outs To European ISPs Would Just Concentrate Their Power”

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Anonymous Coward says:

"cementing the dominance of a few big players"

Yup, this is a very common and severe Unintended-Consequence of government regulation generally.

Compliance Costs for businesses to meet the complex whims of government regulators are often unaffordable to smaller competitors in any business sector — especially so for new startups.

Result is a major, semi-monopolistic competitive advantage granted by governments to large companies that can afford to deal with it in money, manpower, lawyers, accotants, technical support, etc.

It’s a bigger problem than Regulatory-Capture (whic is already very bad and prevalent)

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