Everybody has at least once used one of the so-called Big Five tech or the Frightful Five, expressions that stand for Alphabet (Google), Amazon, Apple, Facebook and Microsoft. Some of these firms have become so overwhelming in public perception that they have come to embody the entire digital sector they work in. The creation of neologisms such as “to google” as a synonym for “to search” symbolizes the ongoing overlapping between a firm and an action that users can perform on the internet. It is possible to get a bigger snapshot of their economic power by simply looking at the global market capitalization chart: the first 5 of the top 6 global firms are the so-called Frightful Five (the other is Berkshire Hathaway, which works in the financial sector). According to growth expectations for digital markets boosted by the development of the Internet of Things (IoT), it is foreseeable that these figures will continue to grow. For example, the size of the Global Smart Home Market was valued at US$ 76.2 Billion in 2017 and is expected to reach US$ 191 Billion by 2026.
How did these Frightful Five become so “big” in the global market? In order to answer this question, it could be useful to look into recent internet history. The advent and rise of the Big Five occurred in a very specific context in a particular historical moment. It was 2001 and the digital world was living in the aftermath of the so-called “dot-com bubble”. Plenty of e-commerce firms closed down and the digital economy seemed to be just a blunder. Those who survived had to rethink how to do business in the digital world. Google was the pioneer that invented a new system to make profits: using data for advertisement. In other words, as explained by Shoshanna Zuboff, professor emeritus at the Harvard Business School, Google’s leaders decided to boost advertisement revenue “by using their exclusive access to user data logs in combination with their already substantial analytical capabilities and computational power, to generate predictions of user click-through rates, taken as a signal of an ad’s relevance.” That was the leap required to kindle the ongoing economic revolution. Soon after other companies (Facebook was one of the earliest) followed that business model, which is nowadays at the basis of the internet data-driven economy, and the IoT will bring it to the rest of the world.
The data-driven economy is built around brand new linchpins, such as Big Data, algorithms and Artificial Intelligence. This is a turning point not only for the economic sector but also for the socio-political developments of our age. Without bringing up Marx’s theory of base and superstructure, scholars and analysts agree that the engine of this new phase of capitalism (also called “surveillance capitalism”) is driving society (a more and more quantified society) to new challenges for other social actors, including – and above – all for the political.
However, since the inception of this economic revolution, political regulators did not interfere so much with the Big Tech five. When they did, it was more for sanctioning them for violating existing rules rather than developing new legal frameworks to address this new business model and thus regulate the new digital economy. For example, the European Union (EU) has already fined Google three times for breaking the EU’s antitrust law – overall the fines reached more than €8 billion; the EU also hit Amazon with €250 million because of unpaid taxes in 2017, whereas on the other side of the Atlantic Ocean, the Federal Trade Commission fined Facebook for $5 billion for the Cambridge Analytica scandal. These are just examples of precedents that prove an ongoing activism by political regulators, who are showing more dynamism versus these tech giants. It is possible to identify at least three main clusters in which political rulers are called to work: lack of competitiveness, of transparency (including privacy and data portability) and of taxation. The first refers to the overwhelming position reached by the Frightful Five in their business sector. The data-driven economy as explained by Francesco Angelini has intrinsic problematics which create some entry barriers for other competitors. There is also the need to better understand what these companies do with their users’ data. As a matter of fact, the Federal Trade Commission set new and stricter controls over Facebook data usage. Facebook’s CEO Mark Zuckerberg himself spoke about the need for new regulations and a more active role for governments. Finally, the long-standing issue of taxation: where do these tech giants have to pay taxes for their profits made with data coming from all over the world? How to properly commensurate the value of a data? There are ongoing discussions about the creation of an international digital tax, as explained by Simonelli and Iacob in their contribution within this dossier.
We are at the outset of a new economic era. As it was for the invention of mass production in the early XX century, the new digital economy is reshaping the world we live in. Everybody is affected. Politics must understand and cope with it. As Jamie Susskind asserted in his book Future Politics, “politics in the twentieth century was dominated by a single question: how much of our collective life should be determined by the state and civil society? Now the debate is different: to what extent should our lives be directed and controlled by powerful digital systems – and on what terms?”. The questions loom, the answers struggle.