Person:

Verveer, Philip

One hundred years ago the eminent British economist Arthur Pigou identified the problem of externalities, of a business not absorbing all of the costs associated with the goods or services it produced and sold. Classic examples of negative externalities are environmental pollution and health effects from tobacco. Today, in addition to the carcinogenic effects of chemical runoffs and first and secondhand tobacco smoke, we have to contend with a new problem: the poisoning of democratic systems through foreign influence campaigns, intentional dissemination of misinformation, and incitements to violence inadvertently enabled by Facebook, YouTube and other major digital platform companies.

The major digital platform companies present a large, complicated array of benefits and problems for the country and the world. The companies increasingly have the attention of both average citizens and senior-most public officials, as befits entities that have achieved great—perhaps even paramount—influence in political, social, and cultural domains. And, in recent times, the companies have become the objects of profound ambivalence, with serious proposals emanating from serious sources recommending material changes in their legal rights and obligations.

The services offered, and the business models sustaining those services, produce very important consequences—both good and bad—in both the long-term and the short-term. Political and jurisprudential realities suggest that in the United States comprehensive policy responses will be formulated and implemented only over an extended period. And that raises the question, what legal mechanisms are available to address issues that arise in the interim? Does availability of legal tools imply efficacy, or are the obstacles to the imposition of effective remedies—assuming remedies are required—so formidable as to compromise the undertaking?

The digital marketplace is wide-reaching, complicated and self-reinforcing. The systems developed to oversee an earlier time are burdened by industrial era statutes and decades of precedent that render them insufficient for the digital present.

In the absence of federal oversight, the dominant digital companies have made their own rules and imposed them on consumers and the market. Just as industrial capitalism operated—and thrived—under public interest obligations, so should internet capitalism be grounded in public interest expectations.

Those expectations—and the new rules to implement them—should be the reinstatement of responsibilities long established in common law: the duty of care and the duty to deal.

To accomplish this a new Digital Platform Agency should be created with a new, agile approach to oversight built on risk management rather than micromanagement. This would include a cooperatively developed and enforceable code of conduct for specific digital activities. As both a failsafe and an incentive, the agency would also retain its own independent right of action.

Digital platforms that enable two-sided markets—Google, Facebook, Amazon, and Twitter, among others—are, to understate the case, the object of significant and growing critical attention. Their economic, social, political, and cultural power has become a source of disquiet. A concern that is only heightened by the certainty that some of the companies’ activities have been exploited by hostile intelligence and security services.

The last quarter of 2020 produced decisions in Brussels, London, and Washington that constitute a turning point in the relationship between the major digital platform companies and democratic societies. Recognizing all the good these companies produce, the different actions share a similar conclusion: that the social costs imposed by the digital companies have become too high.

While there may be shared concerns about the unsustainable social and economic costs imposed by the dominant digital companies, the actions by the European Union and United Kingdom have reinforced how the European approaches to the problems of digital platforms are more direct and focused than have been those of the United States. This is a function of two factors. The E.U. and U.K. regulatory culture has been less in thrall to the non-interventionist orthodoxy that has dominated U.S. policy; thus, while the U.S. has effectively turned a blind eye, the Europeans have for several years been searching for effective solutions.