Having spent two years looking into how exactly Facebook works and asking over 4,000 questions about it, the Commons Select Committee on Culture, Media and Sport has come to one resounding conclusion in its report published today: “We consider that data transfer for value is Facebook’s business model and that Mark Zuckerberg’s statement that, ‘we’ve never sold anyone’s data,’ is simply untrue.”
What happens next is going to be the real test of whether the efforts of the committee have been effective or in vain. The report is clear that it does not accept the claims of Facebook (and other social networks) to be merely platforms, but equally recognises they are not yet publishers. It also calls for an independent regulator with statutory powers, a role that the ICO has pronounced itself willing to take on. Given that no other regulator anywhere in the world knows as much about Facebook and social networks as the ICO, this is not a bad call.
Yet even if the called-for reform of electoral laws takes place, this still leaves a gap around what Facebook et al really represent as businesses. Additionally, it misses the opportunity to tackle the equally pressing issue of how to get these companies to pay a fairer amount of tax.
With one step, the UK has an opportunity to sweep up not only social networks, but also the expanding world of digital platforms such as Uber, Delveroo, etc, by creating a new category of organisations that are subject to government licensing - social utilities.
Utility is already the economic model of Facebook in which individual users exchange their personal data in return for a free service, even if they are not always aware of the terms (or extent) under which this is taking place. Uber has a clear vision to be a universal utility that competes with - or even replaces - public transport. Both have an aversion to regulation that might restrict their ability to operate which needs to be tackled head on.
Existing utilities, such as gas, electricity, water and telecommunications, first have to meet a set of requirements and obligations covering their probity, governance, customer service, finances and tax affairs. They pay the UK government for the right to operate and are occasionally subject to additional raids on their profits, such as the windfall tax paid by energy companies.
Importantly, there is a level playing field for all operators in a regulated sector since the rules are clear and the same for all. That makes it easier for competition law to be applied - an issue the Select Committee report frets over given Facebook’s aggressive stance towards competitors or overly-successful app developers. It also means users and customers have a good chance of understanding their relationship with a utility and how their rights are respected and exercised.
Proposing a Code of Practice and a new regulator is a reasonable solution, but it does not go far enough. The reality is that our digital economy is based around a handful of dominant players with no desire to play along with new rules on a country-by-country basis. But establishing social utility as a regulated industry would set a new global standard that could be rapidly adopted and would change for everybody’s benefit a sector that, in the words of the report, is currently being run by “digital gangsters”.