Digital

Televisa-Univision dará giro a iniciativa de Monreal sobre cuota de contenido nacional

El nacimiento de Televisa-Univision como una empresa combinada daría un giro a la iniciativa del senador Ricardo Monreal, quien plantea que el catálogo de contenido de plataformas como Netflix, Amazon Prime o Disney reserven el 15% a producciones nacionales.

El giro inesperado en la propuesta de reformar la Ley de Cinematografía y Audiovisual del legislador morenista radica justamente en la anunciada fusión entre Blim, de Televisa y PrendeTV, de Univision, que daría lugar a la plataforma de contenidos en español más grande existente a la fecha.

Uno de los principales argumentos en contra, por parte de analistas del sector y algunos jugadores de la industria, es que Televisa y acaso TV Azteca serían los únicos beneficiados, al ser los principales generadores de contenido en español.

Dado que la fusión entraña a un gigante de contenidos en español, no tendría sentido mantener la iniciativa tal como está, dijo Irene Levy, abogada especializada en telecomunicaciones.

En el Foro sobre Cuotas de Contenido, organizado por Consumer Choice Center, la presidenta de Observatel recordó que el motivo del incentivo de la iniciativa es beneficiar a Televisa, particularmente a Videocine.

Si México continúa con la idea de imponer un mínimo de contenido a todas las plataformas digitales, esto motivaría a que en otros países se exigiera lo mismo, y que esto no convendría al nuevo negocio de plataforma digital que tiene Televisa

Por esa razón, Levy confía en que la iniciativa, si revive en el próximo periodo legislativo, no tendrá la misma fuerza, aunque no descarta que se presente nuevamente, pero con modificaciones.

Adriana Labardini, excomisionada del Instituto Federal de Telecomunicaciones (IFT), coincidió en que la iniciativa de Monreal favorece a Televisa principalmente, además de que bloquea las opciones que pudiera tener el consumidor, al no poder abarcar un catálogo completo.

En su opinión, en México no debería existir ninguna ley que no implique antes un análisis de implementación y de asignación presupuestal, “porque sin presupuesto, cualquier apoyo del Estado es retórica, demagogia y manipulación”, dijo.

Originally published here.

Ley de Cinematografía beneficiará a plataforma Televisa-Univision

La semana pasada, Televisa y Univision dieron a conocer una alianza para conformar a la mayor compañía creadora de contenido en habla hispana a nivel global

La propuesta para crear una nueva Ley de Cinematografía, del senador de Morena Ricardo Monreal, tendrá como su mayor beneficiaria a Televisa, particularmente tras la fusión de su área de contenidos con Univision, coincidieron especialistas.

“Esta ley va a beneficiar a los únicos que producen una cantidad masiva de contenidos, no necesariamente de calidad ni de autor, pero sí nacionales”, refirió Ariana Labardini, ex comisionada del IFT.

Durante el conversatorio Las cuotas de contenido: una amenaza para la elección del consumidor, organizado por el Consumer Choice Center (CCC), recordó que la propuesta exige que cines y plataformas digitales de streaming ofrezcan 15 por ciento de contenido nacional en su programación, y subrayó que las únicas empresas capaces de producir tal oferta son la grandes.

La semana pasada, Televisa y Univision dieron a conocer una alianza para conformar a la mayor compañía creadora de contenido en habla hispana a nivel global, lo que incluye una plataforma de streaming con un mercado potencial de 600 millones de suscriptores.

“Crearán una plataforma gigantísima de contenidos en español como para que el Estado mexicano, según nos lo dicen, tan anti neoliberal, tan anti iniciativa privada, le regale esta protección enorme justo a las dos o tres empresas que no la necesitan”, dijo Labardini.

Al respecto, Irene Levy, presidenta del Observatorio de Telecomunicaciones de México (Observatel), dijo que esta ley, de aprobarse, obligaría a plataformas como Netflix o Amazon Prime a adquirir la producción enlatada de Televisa, porque la cuota de contenido nacional es muy alta y el plazo de cumplimiento de sólo 120 días cuando entre en vigor.

“Son cuatro meses y no hay manera de incentivar un mercado de producción nacional en ese tiempo, lo que incentiva a adquirir contenido y el que más tiene es Televisa”, apuntó.

Las especialistas coincidieron en que la mayor parte de los éxitos producidos en México en los últimos cinco años, alrededor de 81 por ciento, son de Videocine, empresa filial de Televisa.

“El gran ganador de esta iniciativa tiene nombre y apellido, y es Televisa”, indicó Levy.

Manuel Molano, economista en jefe del Instituto Mexicano para la Competitividad (Imco), añadió que esta cuota es muy parecida a un arancel, lo que podría traer problemas a la larga a México con sus socios comerciales.

Subrayó que sólo en el marco del T-MEC podría traer daños con los socios comerciales por el tema de competencia además de que, dijo, esta propuesta no va a contribuir a elevar la calidad de las producciones.

“Veo un riesgo inminente en México con esta ley. Se parece a un arancel y esas cuotas no van a asegurar la diversidad (…) En materia comercial la iniciativa obliga a las plataformas a comprar cosas que no están tan demandadas”, añadió.

Finalmente, Fernando de Fuentes, presidente de la Cámara Nacional de la Industria Cinematográfica (Canacine), subrayó que si se aprueba una cuota de contenido nacional debe venir acompañada de incentivos para la producción en el país.

“Me parece que hay muchos intereses creados de los grandes agentes preponderantes de la industria (…) Tenemos que promover primero la producción nacional para después hablar de cuotas nacionales”, indicó.

Originally published here.

Are Consumers Getting the Short Stick on Data Privacy?

On a Monday, there is a data leak affecting half a billion Facebook accounts, by Tuesday a bot has scraped 500 million LinkedIn accounts. On Wednesday, Stanford University announces a hack that exposed thousands of social security numbers and financial details. Then Thursday, the world’s largest aviation IT company announces 90 percent of passenger data may have been accessed in a cyber-attack. And so on. The cycle is endless.

The sheer number of reports of data leaks, hacks, and scams on affected accounts has now grown so gargantuan that consumers and users are left numb. It might as well be the soaring national debt total —the higher the number, the less we care.

But breaches of private data matter. And consumers should be rightly ticked off.

Because for every company screw-up, hacker exploit, and insecure government database, there are thousands of firms and organizations doing it right, keeping users’ data secure, encrypted, and away from prying eyes.

And although states like California, Virginia, and Vermont have passed privacy and data laws, many of these provisions too closely resemble the European Union’s troubled General Data Protection Regulation (GDPR) in making it more difficult for legitimate businesses to secure data, not less.

When large data breaches occur, consumers who have been legitimately harmed should have their claims heard in court.

But the current patchwork of regulations across the U.S., including in the tech-centric state of California, place too much of a burden on those who are follow the law and do right by their customers, and risk creating different rules in different jurisdictions. To avoid this, a national framework on data and consumer privacy will need to take shape.

While we should always be vigilant about potentials for leaks and hacks, a chief concern of a smart and common-sense data privacy bill should be in championing innovation.

For every new health data company, logistics firm, or consumer wearable, proper data collection and retention are a core value. The more that rules are uniform, clear, and do not create barriers to entry, the more innovation we will see when it comes to data protection.

We should incentivize firms to adopt interoperability and open data standards to ensure data is portable and easy-to-access for users. Major social media networks now allow this prevision, and it has been the standard for website data for several years.

If that becomes the standard, consumers will be able to choose the brands and services that best cater to their needs and interests, rather than just companies left standing in the wake of overregulation.

At the same time, if we are to have a national privacy bill, we should enshrine the principle of technology neutrality, where government avoids decreeing winners and losers. That means that regulating or endorsing various formats of data, algorithms, or technology should be determined by firms and consumers, not government agencies without the knowledge necessary to make good decisions. The EU’s recent attempt to designate the “common phone charger” as the micro-USB connection, at a time when USB-C connections are becoming the industry standard, is an easy example.

This also extends to innovation practices such as targeted advertising, geo-targeting, or personalization, which are key to the consumer experience.

Added to that, we should be wary of all attempts to outlaw encryption for both commercial and personal use.

In recent weeks, FBI Director Christopher Wray has once again called on Congress to ban the use of encryption, an overreach that would put billions of dollars’ worth of data at risk overnight, and leave us vulnerable to foreign hackers.

He is joined in these efforts by Sens. Lindsey Graham (R-SC), Tom Cotton (R-AR), and Marsha Blackburn (R-TN), who introduced a bill that would forever ban this important cryptographic invention, warning it is used by “terrorists and other bad actors to conceal illicit behavior.”

The reason encryption remains a powerful tool in the arsenal of companies and agencies that handle our data and communications is because it works. We must defend it at any cost.

While there is plenty to be concerned about when it comes to online breaches and hacks, consumers should be able to benefit from an innovative marketplace of products and services, unencumbered by regulations that all-too-often restrict progress.

This balance is possible and necessary, both if we want to have a more secure online experience, and if we want to continue to have the best technology at our disposal to improve our lives.

Originally published here.

Quiere Congreso control de plataformas digitales

Propuestas como imponer una cuota de contenido nacional en el streaming, el Padrón Nacional de Usuarios Móviles (Panaut) y otras iniciativas presentadas en el Congreso muestran una tendencia a querer controlar el entorno digital, advirtió Adriana Labardini, ex comisionada del Instituto Federal de Telecomunicaciones (IFT).

La creación de una nueva Ley de Cinematografía que impondría una cuota de pantalla a producciones nacionales en streaming y cines no está desligada de otras presentadas por legisladores, como la de ciberseguridad, que propone consecuencias penales si se considera que hay desinformación o daño a una institución o persona, la creación del Panaut, entre otras.

“Estamos rodeados ahora de una serie de iniciativas en el ecosistema digital tendientes, no como se dice aquí, a aumentar esa diversidad y pluralismo sino a controlar el discurso y eso es grave.

“Quiero combatir el crimen y te pido tus biométricos, quiero que no haya noticias falsas, pero realmente lo que quiero es eliminar un discurso liberal. Eso es peligroso. Hay que analizar esta iniciativa (Ley de Cine) a la luz de todas las demás iniciativas”, dijo Adriana Labardini, ex comisionada del Instituto Federal de Telecomunicaciones (IFT) en el conversatorio Cuotas de contenidos en México organizado por Consumer Choice Center.

La Ley Federal de Cinematografía y el Audiovisual propuesta por el senador Ricardo Monreal contempla que plataformas como Netflix, Amazon Prime o Disney+, reserven el 15 por ciento de su catálogo para obras nacionales que no hayan sido producidas hace más de 25 años.

Los contenidos deberán ser producidos por agente nacional que no sea controlado por la plataforma digital o esté sujeto a un control común con una empresa que forme parte del grupo de interés económico de la plataforma digital.

Para la propuesta un productor es nacional una persona física mexicana por nacimiento, naturalización o residencia permanente; o una moral con mayoría del capital votante controlado de manera directa o indirecta por mexicanos por nacimiento o naturalización que ejerzan control efectivo en la empresa.

“Va beneficiar a los únicos que producen una cantidad masiva de contenidos no de calidad, no de autor, pero sí nacionales. Son los que menos protección necesitaban y tan no necesitaban protección que hace tres días se anuncia la fusión Univision-Televisa.

“Crearán una plataforma gigantísima de contenidos en español como para que el Estado mexicano, según nos lo dicen, tan anti neoliberal, tan anti iniciativa privada, le regale esta protección enorme justo a las dos o tres empresas que no la necesitan”, comentó Labardini este lunes en el encuentro de la organización enfocada a la protección del consumidor.

En todo caso, las cuotas deberían imponerse en los canales de televisión y en la TV restringida, agregó la ex comisionada.

Irene Levy, presidenta de Observatel, recordó que la iniciativa inició en septiembre de 2020 cuando se pretendía imponer un mínimo de contenido nacional del 30 por ciento en el streaming.

Originally published here.

Cuota de cine mexicano a Netflix, Amazon y HBO afectará al consumidor

La Ley Federal de Cinematografía y el Audiovisual, pretende que plataformas digitales como Netflix, Amazon, HBO o Blim tengan como obligación ofrecer el 30% de producción nacional, algo que perjudicará directamente a los consumidores mexicanos.

“La nueva ley impone una cuota desproporcionada de contenidos nacionales en todas las plataformas digitales que operan en México, similar al modelo de la Unión Europea con el fin de mejorar la producción y distribución de contenido local en las plataformas digitales, pero la mexicana está incompleta”, se señala en un documento del Consumer Choice Center con sede en Estados Unidos.

La  legislación europea encontró un equilibrio entre la promoción de sus contenidos locales y el mantenimiento de los incentivos para invertir en nuevas producciones.

“Sabían que una cuota de contenido por sí misma no tendría un impacto directo en los incentivos para producir nuevos contenidos locales, especialmente para los pequeños productores independientes que no siempre pueden alcanzar los altos montos de inversión requeridos para producirlos. Por ello, todos los países europeos que han decidido aplicar esta obligación la han combinado con incentivos fiscales para promover la producción audiovisual”, agregan.

Por esto, La Ley Federal de Cinematografía y el Audiovisual debe, también, incluir incentivos financieros para la producción nacional. Hasta ahora, los resultados han demostrado que en Europa el ingrediente esencial de esta ecuación son los incentivos financieros, no las cuotas.

La pérdida de los consumidores sería inmensa de aprobarse dicha ley, apoyada por la Academia Mexicana de Artes y Ciencias e impulsada por el senador Ricardo Monreal y la bancada de MORENA.

“Para cumplir con la cuota del 15%, Amazon Prime, al igual que otras plataformas similares, tendría que triplicar su colección de películas mexicanas en muy poco tiempo sin tener la certeza de que haya contenido disponible para incluir en su catálogo.  Reducirán la cantidad de contenido total disponible y comprando más contenido producido principalmente por Televisa. En lugar de aumentar la oferta”.

Sin cuotas y sin leyes

Las cuotas de contenido ya se está dando a través de un proceso natural en el que las plataformas internacionales buscan crecer fuera de sus países de origen.

Amazon Prime aumentó el contenido original producido en México en un 68% entre 2018 y 2019. En 2020, Netflix invirtió 200 millones de dólares para producir contenido original en México y gastará casi 300 millones de dólares para producir 51 series en 2021. México es uno de los cinco países en el mundo donde Netflix opera un estudio de producción para producir contenido regional. Disney+ también producirá 21 producciones este año en México. Y HBO Max, incluso antes de su lanzamiento, ya está creando producciones localmente. Todo ello sin cuotas impuestas por el gobierno.

“La cuota de contenido haría que la inversión de las plataformas digitales en México no se dedique a realizar nuevas producciones con nuevos talentos, y únicamente se destine a comprar programas antiguos, frenando el desarrollo del cine mexicano que recientemente ha tenido éxito de mano de los servicios de streaming”, se explica en dicho documento.

Netflix tiene más de 4,000 títulos aquí en México y Prime Video tiene más de 4,000. Blim, la plataforma mexicana con la mayor biblioteca local de contenidos, tiene casi el mismo número de películas mexicanas en su catálogo que Prime Video en 2019 (231 y 224 respectivamente). Sin embargo, las 231 películas mexicanas representan el 95% de todo el catálogo en Blim y sólo el 5% del catálogo de Prime Video. Para cumplir con la cuota del 15%, Prime Video tendría que eliminar dos terceras partes de su biblioteca.

¿Un peligro más?

La fracción de Morena en la Cámara de Diputados propuso cobrar un impuesto del 7% adicional en las tarifas que cobran las plataformas digitales extranjeras por los servicios de streaming .

La diputada Reyna Celeste Ascencio propuso modificar la Ley del Impuestos Especial Sobre Producción y Servicios (IEPS) y el  impuesto se cobrará adicionalmente a la tarifa de Apple Tv, Disney +, Hulu, Netflix, Roku, entre otros servicios.

El consumidor, volverá a perder ante un aumento en el precio de las plataformas y por la obligación de ver productos mexicanos, sin darle la oportunidad de elegir lo que quiere ver.

Originally published here.

A digital tax would hurt consumers

The EU has long considered levying a tax of between two and six percent on the local revenues of platform giants. The prospect of trade talks with the US has brought this topic back into the spotlight. However, an EU-wide digital tax would limit potential …

As it stands right now, the European Commission is considering three options for a digital services tax. One would consist in a corporate income tax top-up on all companies with digital activities in the European Union, the other a tax on revenues from certain digital activities in the EU. A last option would be a tax on business-to-business digital transactions in the EU. The reasoning in favour of a DST (digital services tax) are two-fold: on one hand, and stemming from French political pressure, the DST is considered to be socially fair. Digital companies prefer tax-optimised HQ locations, which means that those nations with larger corporate tax levies lose out on revenue from digital transactions. This would be changed through a tax that does not consider the location of the firm, but the location of the transaction. On the other hand, the EU has just created the largest budget in the history of the union, and has taken up a loan of €750 billion. It isn’t entirely clear how this money will be paid back until 2058, but a digital tax seems to be among the existing proposals.

A DST is rejectable for many reasons. We don’t know at this point how such a tax would make market actors react. When GDPR was introduced, we saw a large amount of media operators seize their activities in the EU, because they were unsure how to deal with new privacy rules. This goes beyond a rule, and will affect the balance sheets of companies. Adding to that, the thresholds are very important. Low tax thresholds would affect small European start-ups, which could then also revert to only offering their services in low-tax countries.

Innovators should be able to choose between high-taxed and low-taxed locations, not be faced with a uniform unavoidable tax. Complicated issues – such as the EU’s digital lag – require complex solutions according to officials, but that’s not the case. Less intervention means more innovation. Antitrust lawsuits — a direction the EU has been more keen to take in the past years — are a great tool for tax collecting but they don’t solve the core problem. We need a digital market that has many different options to choose from, making it less likely that one company can gain a monopoly as it will be more preoccupied with actual competition, and thus seek to come up with innovative solutions for consumers.

The central justification given by the Commission for both proposals is that digital activities are not subject to traditional taxation. The intellectual property of the companies concerned is often located outside the EU, where most of the added value is created. The income of these companies is generally not taxed in the EU, but this certainly does not mean that the firms aren’t taxed at all, especially since the US has adopted a global minimum tax. It is therefore not the virtuous ideal that “these companies must pay their taxes”, but rather that these companies must pay their taxes to the EU. The difference for an international organisation that has just lost a major contributing member (the United Kingdom) is therefore more a question of revenue than a principle of social justice.

This bargaining tactic could drive up one bill, and that is the one of the European consumer. Very often, increases in company expenditure in indirect taxes, which this would inevitably imply, would raise prices for consumers around the continent. VAT has long been recognised as the tax which hits poor people the hardest, yet many EU countries now prefer to introduce higher levels of indirect taxation. Just at a time when especially low-income earners can have simpler access to many products because of the internet, it seems cruel to restrict their purchasing power, particularly in the midst of a pandemic that sees many EU citizens compelled to use digital solutions. If we care about those with low wages, we need a more competitive marketplace in which companies are in a price race, not a race to optimise astronomical tax burdens.

The future of Europe’s market economy undeniably lies in the digital sector. The idea of attempting to massively tax online businesses is not a promising objective, neither for the states nor their consumers. It belongs in the dustbin of creative political EU integration.

Originally published here.

We don’t need content quotas

Streaming platforms and consumers should make their own decisions…

A number of countries and regions are already applying entertainment content quotas. This means that a certain percentage of audiovisual content on broadcasting channels needs to be local. This rule already exists in France, for radio broadcasters.

For private radio stations, there are rules on the broadcasting of French-language songs. It states that: “the substantial proportion of musical works in French or interpreted in a regional language used in France must reach a minimum of 40% of French songs, at least half of which must come from new talent or new productions, broadcast during significant listening hours by each of the radio broadcasting services authorised by the Conseil supérieur de l’audiovisuel, for the part of its programmes composed of variety music. ” 

Since July 2016, the law has been supplemented by new provisions:

Firstly, the addition of a third ad hoc derogatory regime for so-called “musical discovery” radio stations: at least 15% of new French-language productions or new French-language talent Secondly, the introduction of a malus aimed at excluding some of the broadcasts of the ten most scheduled French-language titles, those that account for more than 50% of total French-language broadcasts, from the calculation of compliance with the obligations to broadcast French-language songs. Lastly, the creation of a bonus allowing the overall quotas for French-language songs to be adjusted downwards by up to five points, subject to compliance with several cumulative conditions relating in particular to substantial and quantified commitments to promote diversity in music programming.

It really needs the French to make a radio station so downright bureaucratic, and its music awfully controlled. Like French music or not, I cannot for the life of me understand a system in which the government comes into your station and decides of which origin your audio-content needs to be. It isn’t just dystopian, it’s downright authoritarian.

Mexico is currently debating new rules that would require a national content quota of 15% (“content or video generated by an individual or corporation with a majority of funding of Mexican origin”). The fact that the EU also deals with an audiovisual content quota for local content is inspirational to other countries. Developed countries having a rule often allows legitimacy to nationalistic rules in other regions. The term “nationalistic” is carefully chosen here, because in essence the government is making broadcasters discriminate on purpose.

On what basis could anyone in the European Union argue that consuming European audiovisual content is in any way preferable to a movie from South Africa or a song from Malaysia? Is this the European equivalent of supporting cultural diversity, supporting audiovisual access for our expat communities, and assisting content creators in developing nations?

Yes, the United States indeed dominates the streaming markets with its films and its music. The question is whether we — or any other country for that matter — is right in believing that boosting our cultural sector happens if we force broadcasters to favour our content by law. The EU is the most significant consumer region on the planet; if anything, it should be easier for our content providers to satisfy the need for local music and films.

Celebrating our cultural diversity is not a bad thing. While it is great when local artists make it on the big screen, or land their hit in the charts, it is not a tragedy if they do not. Art is not a national possession, it is an internationally cherished part of our lives. Government ought not appropriate it.

Originally published here.

The fallacy of content quotas

I’ve become somewhat of a streaming junkie during this pandemic, following up on the criticism that my pop-culture knowledge is sub-optimal. Now subscribed to three services at once, I watch both popular movies and TV shows from the U.S. and niche local productions buried in the dark corners of Netflix. On these platforms, content curation is everything. The algorithm feeds me with matching shows and the search bar helps me identify titles most fitting for what I’m into.

Though I’m satisfied, some regulators are unhappy with the amount of local artistic content on these platforms. “In order to increase cultural diversity and promote European content, the new legislation proposes that 30% of content of TV channels and VOD platforms would have to be European,” said a European Parliament press release from 2018. But putting “Europe first” on Spotify and Netflix is problematic for a number of reasons.

On the one hand, legislators intervene with broadcasting companies’ freedom to pick their own content. At present,  they choose which content they deem most interesting and valuable for their customer base. It’s difficult to imagine that streaming services would find no value in making local content, given that they are competing with TV broadcasters who cater to this market. Added to that, calling these content quotas “supportive” of the cultural sector is a misnomer because it is unlikely actually to support local productions.

Take Netflix as a case study. American users have access to 100% of Netflix titles, which makes intuitive sense. However, through a mix of copyright rules that enable geo-blocking and content quotas, European Netflix subscribers get a rotten deal. Of all EU member states, Lithuania gets access to the largest share with 52% of titles. With only 11%, Portugal gets the worst experience for subscribers. The idea that content quotas will automatically boost local film production is utopian — it is just as likely that streaming services will reduce the overall available titles to match the quota without needing to spend additional funds.

Politically, the move is deeply un-European. These quotas – which also exist on national levels – have been introduced and reformed by mainstream political parties. Still, it’d hardly be controversial to claim that had Marine Le Pen suggested them, while having French flags in the background, we’d think very differently of this policy. It would be labelled nationalistic, and rightfully so.

For some reason, EU legislators escape this judgement because now it’s being executed on a continent-wide level. But on what basis could anyone in the European Union argue that consuming European audiovisual content is in any way preferable to a movie from South Africa or a song from Malaysia? Is this the European equivalent of supporting cultural diversity, supporting audiovisual access for our expat communities, and assisting content creators in developing nations?

Yes, the United States indeed dominates the streaming markets with its films and its music. The question is whether we — or any other country for that matter — is right in believing that boosting our cultural sector happens if we force broadcasters to favour our content by law. The EU is the most significant consumer region on the planet; if anything, it should be easier for our content providers to satisfy the need for local music and films.

Most of all, European legislation is all too often the domino that creates a chain reaction. Mexico is currently debating new rules that would require a national content quota of 15% (“content or video generated by an individual or corporation with a majority of funding of Mexican origin”). However, this initiative overlooks the fact mentioned above; that the EU is the largest consumer region in the world.

The synergies obtained from an economic bloc the size of the EU are not the same from an individual market. And even if the EU regulation allows the production from over 40 countries to be considered for the quota – the chain reaction amplifies the insidious effects of the legislation rather than promote the so-called cultural benefits. In the end, consumers will be left with less diversity of content as producers would reduce their catalogues only to comply with the regulation.

Content quotas reduce consumer streaming experience, they unfairly discriminate against foreign productions, and they do not achieve the goals they were set out to achieve. If we were empowered to rate public policies on an IMDb equivalent platform, this would get a 0.0/10.

Originally published here.

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.

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