Social media regulatory threats will loom large in 2020, with a focus on antitrust, data privacy, and tax avoidance. Facebook is likely to be hit the hardest, but will not be the only company to suffer. Any change to the ability of companies to gather and store user data will undermine their core business model of monetising this data through ads.
Listed below are the top social media regulatory trends, as identified by GlobalData.
Data security is a key issue for social media firms. In late 2018, Facebook announced that a data breach had affected 50 million users. 2020 will see regulators step-up their scrutiny of social media companies’ data security. The General Data Protection Regulation (GDPR) requires all organisations with more than 250 staff to appoint a data protection officer.
Data privacy has emerged as a key challenge for social networks and a significant area of scrutiny for regulators, governments, and watchdogs worldwide. Current regulation, including GDPR, has established clear obligations and penalties for social networks. 2020 will see a surge in both regulations on data privacy and the enforcement of such regulations. These attacks will target companies’ ability to collect, store, and sell users’ data.
The role of social media in terrorism
Terrorists find social media an extremely useful tool. Terrorists frequently publish manifestos online before committing atrocities. More recently terrorists have begun a trend of live-streaming their attacks, as seen in the Christchurch massacre in March 2019. Pressure will mount on social media sites to monitor and remove content associated with terrorism. Under European Union (EU) proposals, platforms face penalties of up to 4% of global revenue. The European Court has also set a precedent where individual countries can force Facebook to take down illegal content across the world.
As Brexit uncertainty continues, businesses worldwide are second-guessing the regulatory impacts. For social media companies with offices and business relationships in the UK, Brexit also brings new uncertainties. If the UK leaves the EU with no agreement for data protection and data transfers, there will be no immediate change to GDPR. Furthermore, the UK government has published a white paper outlining sweeping proposals on social media regulation and established a new regulatory body to penalise law-breakers.
Chinese social media regulation
China faces a propaganda crisis caused by tensions in Hong Kong and a backlash against the oppression of the Uighur minority. The government has demanded sites to remove content considered inappropriate and completely shut down certain apps. After pressure from the Chinese government, Apple removed HKMap.live from its App Store in Hong Kong and China. China’s social media platforms will continue to voluntarily sanitise their content. We also expect the Chinese government to step up direct moderation of online content.
The proliferation of fake news, terrorist propaganda, and other harmful content online has increased the pressure on social networks to proactively flag and remove inappropriate content. Instagram has recently banned all depictions of self-harm on its platform. Facebook has about 15,000 content reviewers and claims to have removed 8.7 million sexual photos of minors within three months in 2018. Despite companies like Facebook developing AI-based content moderation tools, AI will remain an assistive technology. Therefore the number of content moderators that work for social media firms must increase to combat this rise in illicit content.
Digital assets and intellectual property can easily be managed from low-tax jurisdictions. Over the last decade, average reported effective tax rates have fallen 13% for the largest technology companies, whilst they have remained broadly flat in the health, consumer staples, and materials sectors, according to a 2018 Financial Times study. Worldwide, governments will push for tax reform that will reduce tax avoidance by social media firms. In the absence of any immediate supranational regulation, many individual countries are implementing digital taxes.
The virtual monopolisation of social media by the largest firms has raised antitrust concerns. Regulators are wary of Facebook’s potential for anti-competitive practices and the risk to users of such high data centralisation. In response, the US justice department has opened up an antitrust review into major technology firms. The next few years could witness the biggest push for antitrust regulation and enforcement. In the US, Democratic presidential candidate Elizabeth Warren has pledged to break up the big social media firms. Margrethe Vestager, the EU’s competition commissioner, has warned big tech firms that she will move beyond fines to ensure an even playing field.
Regulators are concerned that the society is being torn apart by abusive, often criminal behaviour online. Many laws that apply in the physical world tend not to be enforced so rigorously on social media. Regulation over online harm in the digital world is at an early stage but is gradually taking shape. The Online Harms white paper published by the UK’s Department for Digital, Culture, Media and Sport (DCMS) in 2019 aims “to create a system of accountability and oversight for tech companies beyond self-regulation”.
This is an edited extract from the Tech, Media, & Telecom Trends 2020 – Thematic Research report produced by GlobalData Thematic Research.
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