Sep 22, 2017

Why regulating Google and Facebook like utilities is a long shot

Illustration: Rebecca Zisser / Axios

In 2009, a radio host asked Google's Eric Schmidt whether there might come a point when Google should be treated like a utility. The audience laughed at the idea. Fewer are laughing now — but that doesn't mean it'll actually happen.

The bottom line: Even though Congress could nibble around the edges by imposing new rules on certain search or social network operations, regulating the dominant online platforms — particularly Google and Facebook — as utilities is much more difficult than it sounds.

The back story: Influential personalities on the right and left are saying platforms like Google and Facebook have become such influential forces in the way people interact, get news, shop and work, that they should be regulated as though they are essential public utilities, like electricity or water. Former White House adviser Steve Bannon was a fan of the idea.

Why it matters: Calls to reign in tech giants get louder as the companies get bigger and more powerful. Not helping matters is the fact that they are embroiled in new controversies around fake news, their role in moderating content, their influence in elections, and the personal data they trade for ads.

What they're saying: Commentators on the right, like popular Fox News host Tucker Carlson, as well as those on the left, like University of Southern California professor Jonathan Taplin (who authored a recent book about large tech companies), have pushed the idea of regulating platforms, specifically Google, as a utility. Even Michael Bloomberg compared Facebook to telecom companies (which are more heavily regulated) in a conversation with Axios this week.

How utilities are regulated: Services like water are treated like utilities because the government believes everyone has a right to access them. Then there are services regulated as "common carriers," which allows the government to appoint a body that keeps a more watchful eye on services that have monopoly-like status, like phone service.

Harold Feld of the advocacy group Public Knowledge argues the latter is the type of regulation that Google or Facebook would be subjected to.

  • That would allow the government, for example, to implement more due process around the removal of accounts of content from Facebook, Feld said. He made the comparison to cell phone service, which is regulated by the Federal Communications Commission.
  • "Nobody is saying that T-Mobile ought to 'brick' the cellphones of Nazis," Feld said, "because we accept that that's common carriage and we don't want them to come in and weigh in on that."
  • The Justice Department could use its authority to force a company to open up its intellectual property to the public, said Taplin.
  • "Think about all the IP that Google has," he said. "All the algorithms for search, all the things that are connected with Nest, connected with self driving cars, connected with media devices."

Why it's a long shot: Utility-style regulation of online platforms isn't possible without an act of Congress designating the service as a common carrier — and lawmakers don't appear interested in going down that path. Currently no regulatory agency has jurisdiction to fully regulate online platforms the way, for example, the FCC regulates the phone industry.

  • Sen. Mark Warner, who's become critical of the companies during his investigation into possible Russian election meddling, dodged the question when I asked him recently whether Google or Facebook should be regulated like utilities. "You want me to make real news!" he said.
  • When asked by my Axios colleague Ina Fried last week, FCC Chairman Ajit Pai said: "That's a very, very difficult question, I think in part because utility is a very seductive word to those who want inflate it into 'something that is useful to me."
  • Pai stopped short of saying online platforms should be treated on par with internet service providers such as AT&T or Verizon, which have traditionally been subject to more regulation. "But I do think that companies that compete in a particular space should be regulated similarly. Whether all those companies together you just mentioned [Google, Facebook and the ISPs] do in fact compete in the same space is a difficult question."

Sound smart: The current net neutrality debate centers around whether to treat broadband providers as "common carriers," just like telecom providers are. That has led people to conflate the utility-style regulation of online platforms like Google with utility-style treatment of broadband providers like AT&T.

The other coast: The industry argues that there's adequate competition between big tech companies (and startups), so the very premise that they are monopolistic is wrong.

Cracking down: Just because it's a long shot to apply sweeping, utility-style regulations to Google or Facebook doesn't mean lawmakers can't go after other areas of their business. One proposal in Congress right now, for example, would apply the same privacy rules to the companies as are applied to internet service providers.

And Warner is working on language that would require the companies to be more transparent about the political ads they take. Those are the efforts to watch — rather than speculation over treating Google like a taxi company.

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