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Author: Jason Reed

Facebook, Australia and the pitfalls of online regulation

“Facebook has re-friended Australia.” Those were the words of Australian Treasurer Josh Frydenberg to a gaggle of reporters in Canberra this week, in an ever-so-slightly smug declaration of victory in the regulatory battle between his government and the embattled social media giant.

His statement came after Facebook, having kicked up an almighty storm – and generated a great deal of bad press for itself in the process – eventually gave in and backed down from its sudden ban of all news content for Australian users. It followed Google’s example and entered into negotiations with Rupert Murdoch’s News Corp, among others, begrudgingly agreeing to pay to host their content on its platform, as mandated by the new Australian law.

This situation is profoundly troubling. The core of the dispute is the new law spelling out how tech giants like Facebook and Google, which host external news links on their platforms, must negotiate with the providers of that content.

Anybody can see that the idea of government-mandated negotiation doesn’t make much logical sense. If two consenting parties have a mutually-beneficial agreement where one facilitates the sharing of the other’s content, where is the role of the government to step in and demand that money changes hands?

It’s not clear what problem the Australian Government believes is being solved here. It has intervened in the market arbitrarily, making one side very happy and the other very miserable. But to what end? Worryingly, this appears to be just the latest front in a troubling new trend of governments arbitrarily meddling in an industry where innovation and productivity are booming. Sadly, governments are often inclined to do this.

California, for instance, recently won the right in court to implement its harsh net neutrality rules, the first state to come close to replicating the ill-fated far-reaching Obama-era law. Meanwhile, the European Union has declared its intention to keep tabs on big tech with a raft of new policy ideas, including annual check-ins with the European Commission about what steps companies are taking to “tackle illegal and harmful content”.

There is no easy answer to the question of how we should go about regulating the online market. The UK Government is at something of a crossroads in this area. It is currently consulting on the parameters of its new Digital Markets Unit (DMU) with the existing Competition and Markets Authority (CMA).

When considering the role of the DMU, the British Government would do well to learn from the mistakes of others from around the world and seek to prioritise the interests of consumers, rather than coming down rigidly on one side of the fence and cowing to the demands of one enormous lobbying operation or another, as the Australian Government appears to have done.

The DMU, in the words of its architects and proponents, will be “a pro-competition regime”, which will mean that “consumers will be given more choice and control over how their data is used and small businesses will be able to better promote their products online”. Those stated aims – making life easier for users and paving the way for the Steve Jobs of tomorrow – seem wholly positive.

But the Government briefing also says that the DMU will implement “a new statutory code of conduct” in order to “help rebalance the relationship between publishers and online platforms”. It is too early to say whether our Government is planning to go down the same road as Australia’s, but that rhetoric sounds ominous, to say the least.

There is certainly a vacancy for the DMU to fill, but the underdog it should be propping up is not Rupert Murdoch. There is a difficult balance to be struck between maintaining an environment where the existing tech giants are able to continue innovating and elevating our standard of living, while also fostering a truly competitive environment by removing obstacles for their smaller – but growing – competitors, along with new start-ups. That is the fine line the Government must tread.

Originally published here.

Dowden’s latest task? Regulating the internet. Here’s what Australia can teach us about that challenge.

Culture secretary Oliver Dowden finds himself burdened with an almighty task: regulating the internet. His new ‘Digital Markets Unit’, set to form part of the existing Competitions and Markets Authority, will be the quango in charge of regulating the social media giants. Dowden, like the rest of us, is now trying to discern what can be learned by rummaging through the rubble left behind by the regulatory punch-up between Facebook and the Australian government over a new law forcing online platforms to pay news companies in order to host links to their content.

Google acquiesced immediately, agreeing to government-mandated negotiations with news producers. But Facebook looked ready to put up a fight, following through on its threat to axe all news content from its Australian services. It wasn’t long, though, before Mark Zuckerberg backed down, unblocked the Facebook pages of Australian newspapers and, through gritted teeth, agreed to set up a direct debit to Rupert Murdoch.

The drama down under has been met with a mixed response around the world, but it is broadly consistent with the trend of governments shifting towards more and more harmful and intrusive interference in the technology sector, directly undermining consumers’ interests and lining Murdoch’s pockets. The EU, for one, is keen to get stuck in, disregarding the status quo and unveiling its ambitious plan to keep tabs on the tech giants.

In the US, the situation is rather different. Some conspiracy theorists – the type who continue to believe that Donald Trump is the rightful president of the United States – like to allege that the infamous Section 230, the item of US legislation which effectively regulates social media there, was crafted in cahoots with big tech lobbyists as a favour to bigwigs at Facebook, Google, Twitter, and so on. In reality, Section 230 was passed as part of the Communications Decency Act in 1996, long before any of those companies existed.

Wildly overhyped by many as a grand DC-Silicon Valley conspiracy to shut down the right’s online presence, Section 230 is actually very short and very simple. It is, in fact, just 26 words long: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

Not only is this a good starting point from which to go about regulating the internet – it is the only workable starting point. If the opposite were true – if platforms were treated as publishers and held liable for the content posted by their users – competition would suffer immensely. Incumbent giants like Facebook would have no problem employing a small army of content moderators to insulate themselves, solidifying their position at the top of the food chain. Meanwhile, smaller companies – the Zuckerbergs of tomorrow – would be unable to keep up, resulting in a grinding halt to innovation and competition.

Another unintended consequence – a clear theme when it comes to undue government meddling in complex matters – would be that vibrant online spaces would quickly become unusable as companies scramble to moderate platforms to within an inch of their lives in order to inoculate themselves against legal peril.

Even with the protections currently in place, it is plain how awful platforms are at moderating content. There are thousands of examples of well-intentioned moderation gone wrong. In January, the Entrepreneurs Network’s Sam Dumitriu found himself plonked in Twitter jail for a tweet containing the words “vaccine” and “microchip” in an attempt to call out a NIMBY’s faulty logic. Abandoning the fundamental Section 230 provision would only make this problem much, much worse by forcing platforms to moderate much more aggressively than they already do.

Centralisation of policy in this area fails consistently whether it comes from governments or the private sector because it is necessarily arbitrary and prone to human error. When Facebook tried to block Australian news outlets, it also accidentally barred the UK-based output of Sky News and the Telegraph, both of which have Australian namesakes. State-sanctioned centralisation of policy, though, is all the more dangerous, especially now that governments seem content to tear up the rulebook and run riot over the norms of the industry almost at random, resulting in interventions which are both ineffectual and harmful.

The Australian intervention in the market is so arbitrary that it could easily have been the other way around: forcing News Corp to pay Facebook for the privilege of having its content shared freely by people all over the world. Perhaps the policy would even make more sense that way round. If someone was offering news outlets a promotional package with a reach comparable to Facebook’s usership, the value of that package on the ad market would be enormous.

Making people pay to have their links shared makes no sense at all. Never in the history of the internet has anybody had to pay to share a link. In fact, the way the internet works is precisely the opposite: individuals and companies regularly fork out large sums of money in order to put their links on more people’s screens.

If you’d said to a newspaper editor twenty years ago that they would soon have free access to virtual networks where worldwide promotion of their content would be powered by organic sharing, they would have leapt for joy. A regulator coming along and decreeing that the provider of that free service now owes money to the newspaper editor is patently ludicrous.

That is not to say, however, that there is no role for a regulator to play. But whether or not the Digital Markets Unit will manage to avoid the minefield of over-regulation remains to be seen. As things stand, there is a very real danger that we might slip down that road. Matt Hancock enthusiastically endorsed the Australian government’s approach, and Oliver Dowden has reportedly been chatting with his counterparts down under about this topic.

The humdrum of discourse over this policy area was already growing, but the Australia-Facebook debacle has ignited it. The stars have aligned such that 2021 is the long-awaited point when the world’s governments finally attempt to reckon with the tech behemoths. From the US to Brussels, from Australia to the Baltics, the amount of attention being paid to this issue is booming.

As UK government policy begins to take shape, expect to see fronts forming between different factions within the Conservative Party on this issue. When it comes to material consequences in Britain, it is not yet clear what all this will mean. The Digital Markets Unit could yet be a hero or a villain.

Originally published here.

Knee-jerk reactions are no way to regulate big tech

Regulation enthusiasts around the world have set their sights on big tech.

In the UK, the outlet for this newfound appetite to rein in Silicon Valley is a brand new quango called the Digital Markets Unit [DMU], set to form part of the existing Competition and Markets Authority [CMA]. Specifics about the DMU’s remit are hard to come by, but the Government says it intends to foster a ‘pro-competition regime’ as it adapts the regulatory landscape to the challenges of big tech.

Oliver Dowden, the Secretary of State for Culture, Media and Sport and the minister holding the levers of power behind the DMU, is keeping his cards close to his chest. His stance remains murky, for instance, on the recent regulatory punch-up between Facebook and the Australian government. State powers down under emerged victorious after Mark Zuckerberg agreed to fork out new fees in order to host news links on Facebook.

Dowden has reportedly been chatting to his Australian counterparts – and has sent cryptic messages to the t-shirt-wearing gurus across the Atlantic (and Nick Clegg) – but has yet to come down on either side of the fence or offer any substantial hints about whether or not Britain might follow in Australia’s footsteps.

Others in Westminster appear much keener on an agenda of active hostility towards the American tech giants. Matt Hancock has already said he wants to see the UK mimic Australia’s hamstringing of social media companies by forcing them to pay news producers, calling himself a ‘great admirer’ of countries which have done so successfully.

Meanwhile, Rishi Sunak is already planning his next move. In the manner of Sacha Baron Cohen’s Dictator in a 100-metre sprint firing a gun at runners as they pull out ahead, Sunak has set his sights on the uber-successful technology industry, and wants to slow that success down by taxing it.

Not only does Sunak want to penalise tech giants for their successful business models with a new tax, he is also planning to use this year’s G7 summit in sandy Cornwall to lobby his international counterparts to do the same, with US treasury secretary Janet Yellen first in line to hear his pitch, which has the support of the Prime Minister. Companies like Amazon are already taxed for their digital services in the UK, but the chancellor views the current system as a stopgap until a global tech tax can be implemented.

This dramatic influx of punitive policies is set to do much more harm than good. Some new regulation may well be needed in this area – but there is an urgent danger that the Government will hurriedly execute a raft of headline-hungry policies which will do immeasurable damage in the longer term.

Poorly thought-out attempts to ‘level the playing field’ between old and new forms of commerce is not the area where post-Brexit Britain should be chasing a world-leading status. Instead, let’s set an example for what a modern, free economy which regulates big tech without being hostile towards it can look like. It’s not too late to keep the Digital Markets Unit’s in-house red tape production line from getting out of hand.

Originally published here.

The impending war with big tech

The last few weeks have seen a substantial ramping up of rhetoric from Westminster towards big tech. Facebook’s dramatic show of power against – and subsequent capitulation to – the Australian government over its new law obliging it to pay news outlets to host their content made for gripping viewing, and it has since become clear that senior ministers across the British government were tuning in to the action.

Matt Hancock came bursting out of the blocks to declare himself a ‘great admirer’ of countries which have proposed laws forcing tech giants to pay for journalism. Rishi Sunak has been bigging-up this year’s G7 summit, which will be held in Cornwall. From the way he is talking, it sounds like he is preparing to lead an army of finance ministers from around the world into battle with Silicon Valley.

Meanwhile, Oliver Dowden, the cabinet minister with responsibility for media and technology, indicated that he has been chatting to his Australian counterparts to learn more about the thinking behind their policymaking process. He followed that up with a series of stark and very public warnings to the businesses themselves,promising to “keep a close eye” on Facebook and Twitter, voicing his “grave concern” over the way big tech companies are operating and threatening sanctions if they step out of line.

This one-way war of words comes against the backdrop of a menacing new regulatory body slowly looming into view. The Digital Markets Unit, a quango which is set to form part of the existing Competition and Markets Authority (CMA), will be the chief weapon in the government’s armoury. As things stand, we know very little about what it is intended to achieve.

Big tech in its current form is a young industry, still struggling with teething problems as it learns how to handle owning all the information in the world. There are plenty of areas where Facebook, Google, Amazon and countless others are arguably falling short in their practices, from users’ privacy to threats to journalists, which Dowden and others have picked up on.

But the natural instinct of state actors to step in has the potential to be cataclysmically damaging. The government is running out of patience with the free market and seems poised to intervene. Countless times, haphazard central policy has quashed innovation and sent private money tumbling out of the country. Against the backdrop of the forthcoming corporation tax rise, there is a fine balance to strike between effective regulation and excessive state interference.

The nature of government interventions is that they block innovation, and therefore progress. Superfluous regulation is like a dazed donkey milling about in the middle of the road, bringing the traffic to a halt. Of course, the donkey is then given a charity collection bucket and the power to oblige passers-by to contribute a slice of their income for the privilege of driving society forwards, generating unfathomable wealth and providing us all with access to free services which have improved our quality of life beyond measure.

As the government ponders the appropriate parameters of the new Digital Markets Unit and seeks to place arbitrary limits on what big tech companies can do for the first time in the history of their existence, it should consider users’ interests first. There is a strong case to be made for shoring up the rights of individuals and cracking down more harshly on abuse and other worrying trends. But let’s not fall into the same trap as our cousins Down Under in making online services more expensive to use and passing those costs down to consumers.

As the much-fabled ‘post-Brexit Global Britain’ begins to take shape, we have a valuable opportunity to set an example for the rest of the world on how to go about regulating the technology giants. The standards we will have to meet to do that are not terribly high. In essence, all the government needs to do is avoid the vast, swinging, ham-fisted meddling which has so often characterised attempts at regulation in the past and Britain can become something of a world leader in this field.

Originally published here.

The obesity crisis? Innovation, not nannying, will cut our calories

Britain’s obesity crisis is acute and urgent. The government’s decision to make tackling it the number one public health priority has an empirical basis. Britons are fatter than ever before, with excess body fat responsible for more deaths than smoking every year since 2014. But as sound as the public health concerns might be, when they are translated into policy, we find ourselves running into a world of problems.

A few years ago, Boris Johnson liked to talk about rolling back the “continuing creep of the nanny state”. He once promised to put an end to “sin taxes” on sugary drinks. He liked to talkabout Britain as a “land of liberty” and, for many, he represented a break with the past. Theresa May had denounced what she called the “libertarian right” upon her elevation to 10 Downing Street, opting instead for “a new centre-ground”. Boris, we were assured, would be something entirely different.

So how did we get here? We have somehow reached a point where the pillars of the Government’s anti-obesity strategy are the regressive sugar tax – which remains firmly in place – along with a draconian advertising ban on foods high in salt, sugar or fat. Plus a bizarre £100 million fund which, one way or another, will supposedly help people to drop the pounds and keep them off.

In between the old Boris and the new, the man himself slimmed down following his jarring bout of Covid-19. After he came out of hospital and recovered from coronavirus, the Prime Minister embarked on a personal slimming programme of his own, allowing him to make himself the poster boy of his Government’s anti-obesity drive.

“The reason I had such a nasty experience with the disease,” he said in October of last year, “is that although I was superficially in the pink of health when I caught it, I had a very common underlying condition. My friends, I was too fat. And I have since lost 26 pounds… And I’m going to continue that diet because you have got to search for the hero inside yourself in the hope that that individual is considerably slimmer.”

Metafictional interpretations of ‘90s song lyrics aside, Johnson’s point here is essentially correct. All the data bears out the fact that obesity has a substantial effect on the dangers posed by a coronavirus infection. But it is unclear why that should warrant an abandonment of principles of liberty in favour of gratuitous and often random state intervention in people’s lives. No nanny state told the PM how to cut his calories. So if Boris could lose weight on his own, why can’t the rest of us?

It’s not like there are no alternatives on the table, leaving costly and damaging policies like new taxes and ad bans as the only option. The menu of unintrusive and unobtrusive anti-obesity policies, free of cost to the taxpayer, is endless. Studies have shown how simple changes, like marking out a section on shopping trolleys for fruit and veg with yellow tape, or rebranding healthy foods to make them more appealing to children, can have an enormous positive effect over a short period of time.

Plus, Britain is home to some of the best scientists and research institutes in the world. Even in times of economic constraint, thanks to lockdown, innovation in the private sector is booming. It was recently discovered, for instance, that a diabetes drug called semaglutide can also function as a weight-loss “miracle cure”. Something as simple as sugar-free chewing gum can suppress appetites, cutting down on unhealthy snacking by a tenth, with very little effort. Why is the Government not enthused by this constant shower of scientific breakthroughs?

For whatever reason, ministers and officials are unwilling to explore the wealth of opportunities for cost-free nudge policies and innovative scientific investments. It is wedded to its model of centralised diet control and appears to hang on Jamie Oliver’s every word. Obesity is shaping up to be the next global health disaster and if we’re not careful – if we remain blinkered by these short-sighted policies – we might find ourselves as unprepared for the next pandemic as we were for the present one.

The Government must step up to the plate now and offer real solutions that work. That is our only hope of preventing the looming catastrophe.

Originally published here.

Sugar is the new tobacco. Here’s what we should do about it!

Whichever way you look at it, Britain is facing an obesity crisis. A study into long-term public health in England and Scotland published earlier this month reached the startling conclusion that obesity is causing more deaths than smoking, with nearly two thirds of British adults now overweight.

This past year has brought rising obesity levels into sharp focus because of the effect that being overweight seems to have on the fatality of Covid-19. According to research from the World Obesity Federation, nine out of ten deaths from coronavirus occurred in countries with high obesity levels, which might go some way towards explaining why the UK has seen a disproportionately high death toll.

This issue has not passed the Government by. Led by a man who was elected on a platform of halting ‘the continuing creep of the nanny state’, this Conservative Government has unveiled a raft of policies designed to ease the pressure on Britain’s weighing scales, including the sugar tax, a ‘junk food’ advertising ban and even a fund – with a £100m price tag – which is apparently designed to bribe people into losing weight.

The problems with these policies are too numerous to count. Sin taxes hit the poor harder than anyone else, making the weekly shopping trip more expensive for families who are already struggling. The junk food ad ban is set to remove around 1.7 calories, or half a Smartie’s worth of energy intake, from children’s diets per day – according to the Government’s analysis of its own policy. And the state-funded version of Slimming World sounds like something that comes out of a pop-up book of policies. Yes, and ho!

It is unclear why Boris Johnson, who was able to lose weight after his brush with Covid without any of these new Government-sponsored initiatives in place, is now so firmly of the belief that the Government must crack down on unhealthy eating if we are to have any hope of slowing down the increase in obesity rates – especially when the private sector is doing most of the hard work voluntarily.

Tesco, for instance, recently bowed to external pressure by committing itself to increasing its sales of healthy foods to 65% of total sales by 2025. Time and time again, when there is an issue people care about, companies go out of their way to do their bit – even at the expense of their bottom line. We saw the same thing happen when the world woke up to the reality of climate change, with businesses eagerly signing up to costly net-zero plans.

Positive moves like this from incumbent giants are complemented by the wealth of innovation taking place around obesity. Semaglutide, a diabetes drug, was recently found to be extraordinarily effective in helping people lose weight. Even something as innocuous as sugar-free chewing gum might just represent part of the solution. Datasuggests that the mere act of idle chewing suppresses the appetite, resulting in a 10% reduction in the consumption of sweet and salty snacks.

Crucially, these remarkable steps towards a less obese Britain can take place at no cost to the taxpayer, free of the grip of Whitehall bureaucracy and at an astonishing pace. We have just lived through a year in which the Government pumped billions into a near-useless ‘test and trace’ system and repeatedly failed to clarify whether or not drinking coffee on a park bench is illegal. If there is one incontrovertible lesson we can surely take from that, it is that we should not leave such important tasks to the state.

Sugar is the new tobacco, so we need to be smart in how we tackle it. Sporadic, ill-thought-out Government interventions like banning Marmite adverts are not the answer. Private-sector innovation, not centralised policy, is Britain’s best hope of slimming down.

Originally published here

Banning online ‘junk food’ ads helps no one

The health benefits are tiny, but the economic damage will be huge.

Following a six-week consultation, it looks like the British government is poised to push ahead with its policy to blanket ban online junk-food advertising. Over the weekend, a ‘government source’ welcomed a helpfully timed report from a campaign group that lifted ‘the lid on the secretive online strategies global food giants are using to manipulate British children’.

The report – or ‘exposé’, as it is being branded – is from an organisation called Bite Back 2030, and carries endorsements from celebrity chefs Jamie Oliver and Hugh Fearnley-Whittingstall and, for reasons that are unclear, a Dolce & Gabbana model.

As you might expect, the dramatic revelations of the report aren’t actually very dramatic at all. It merely points out the fact that some celebrities have many thousands of Instagram followers, before revealing, stage-magician-style, that those celebrities sometimes sign advertising deals with companies like Coca-Cola and McDonald’s.

The headline figure is that children are being ‘bombarded’ with 500 online junk-food ads per second. Presumably, that’s the total amount of ads shown per second to Britain’s 12million children, rather than to each child, which might make for an uncomfortable viewing experience.

Even if there was evidence that online advertising of unhealthy foods is a crisis that needs to be tackled urgently, the ad ban would still be a terrible idea. But it is not even a real problem, let alone a crisis needing a state-imposed solution. Indeed, the government’s analysis of its own policy concludes that it will remove an average of 1.7 calories from kids’ diets per day. For context, that is roughly the equivalent of half a Smartie.

Plus, there is the inevitable problem that comes with centralising issues like this in Whitehall – in this case, what counts as the ‘junk food’ from which children’s vulnerable eyes must be shielded? The government says it is focusing on food items ‘high in fat, sugar and salt’. Yet this means they ended up condemning famously obesity-inducing foodstuffs like Marmite, yoghurt, honey, mustard and tinned fruit.

The economic costs of a policy like this are catastrophic, especially as we move towards a period of post-lockdown recovery. Advertising-industry bodies have been concerned about this for months, trying desperately to draw attention to the ways it would hamstring the economy. But their complaints have gone unheard among the red-tape enthusiasts in Westminster.

There’s also the issue of small businesses, like the baking business my mum runs out of her kitchen. The policy, in its proposed form, seems as though it will criminalise my mum for posting pictures of her cakes to her Instagram account to advertise her services. The nameless government source in The Sunday Times says that we needn’t worry about that: ‘There will be caveats – this is not aimed at small companies advertising home-made cakes online. It is aimed at the food giants.’

Yet it is unclear if or how a policy like this can be targeted at specific businesses and not others. When people are still being fined for going to the park with friends and arrested for the crime of ‘socialising outdoors’, this anonymous briefing to a newspaper is hardly reassuring.

Once this policy is implemented, the UK will have the toughest digital-marketing restrictions in the world, by some margin. That’s not something to be proud of. There are plenty of areas where Britain can be world-leading – vaccine rollout, for instance – but leading the world in breaking new ground in the ways we regulate diet and online culture is not a record any government ought to be striving for.

Originally published here.

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