The last ten years or so have marked an incremental growth of social media companies around the world. According to the latest surveys, almost a third of the world’s population were active users of Facebook at the end of 2017. As a relatively new business model, regulators are still in the process of examining what to do with Facebook and other social media enterprises like YouTube, Instagram, LinkedIn and Twitter. The European Union seems to be one of the first and most progressive actors to start controlling the operation of these companies.
Things could be said to have started heating up about six years ago. At that time, The EU legislation on data protection needed a comprehensive reform. Combined with the worldwide coverage of the U.S. surveillance revelations, the public opinion in Europe supported taking some action. “Stop watching all of us” and “Respect my privacy” protests took place in a number of cities.
What did the EU do? It certainly did not just stand by. The European lawmakers actively worked on and negotiated for several years the General Data Protection Regulation (GDPR), which will finally enter into force in May this year. This piece of legislation is significant, because it makes it compulsory for companies to share information about what they do with their users’ personal information. If not respected, the regulation can impose considerable fines, which are not geographically limited to Europe. Companies in other continents can soon be sued for illegal use of the EU citizens’ data. Certainly something for international social media platforms to take note of!
At the time of preparing the GDPR, a civil lawsuit was brought against Facebook. An Austrian law student, and now lawyer, Max Schrems alleged that his rights had been infringed by transferring his personal information to the U.S. where the national authorities misused it. The highest judges of the EU heard his claims and decided to strike down the “Safe Harbor” data transfer deal between the EU and the U.S. As a consequence, a large number of American companies became under an increased scrutiny regarding what kind of information they are collecting and what they are using it for. A new agreement has later been made but the challenges never seem to stop, as it has again become challenged in the EU top court.
The European regulators have also found ways to be tough on social media through competition law. For example, last year, the European Commission found that Facebook had abused its dominant market position by providing misleading information about its Whatsapp takeover and imposed a fine of € 110 million. Complaints have also been filed on YouTube’s dominant position regarding its music subscription service.
The EU competition rules aim to ensure that companies do not create cartels and monopolies that would damage the interest of society. It captures large companies that abuse their dominant position in an industry – in this case, social media giants.
Even more lately, the big social media companies have been in the news regarding their transparency towards other companies and business partners. The European Commission is currently investigating whether the biggest global platforms’ unfair position in business relations with other companies justifies controlling them through legislation.
As these enterprises have an extensive user base and exclusive information available to them, for example, for marketing purposes, they can make it considerably harder for other market players to succeed. As the data that they collect is highly valuable, they may either refuse to provide access to it at all and/or provide it for an extortionate sum. The social media companies may also use their large size as leverage to demand pre-formulated and non-negotiable terms and conditions in any business relations with them.
And just when the international social media companies thought things couldn’t get much worse, they started receiving blame for the spread of fake news and misinformation online. The outcome of the UK referendum (Brexit) in addition to Donald Trump’s selection as the US president in 2016 have been linked with excessive personalisation of content on people’s social media news feeds (the creation of eco-chambers) and targeted advertisement on social media.
It has been proposed that social media companies should delete or flag all the inappropriate and/or fake news content, the latter meaning content that does not seem to be accurate information based on facts. Because of this, social media sites have already hired armies of thousands of people to check content that is uploaded on their servers. Communication from the European Commission outlining future actions regarding the problem of fake news is expected this spring.
With these recent actions, is the EU attempting to act as a counterforce to the growth of global social media giants? Interestingly, these companies are all American-owned. Europe does not host many successful social media companies on its own soil. Despite attempts to innovate, the most popular international sites have all fallen within the hands of U.S. companies. Even Skype, which was originally developed in Sweden and Estonia, now rests under the ownership of Microsoft on the other side of the Atlantic.
It is worth noting that the American approach to regulating businesses is different from the EU. In the U.S., companies are given a lot more freedom to grow and maintain their dominant position and business practices with minimal top-down regulation.
What distinguishes the EU from the rest of the world is the people-centric approach. The efforts to control global social media giants through legislation find support in the EU’s underpinning values and the fundamental rights of consumer protection and protection of personal data. Perhaps looking over the actions of these social media giants is the right thing to do in order to ensure that their addictive – but ultimately important – services will not violate our rights.
TEXT Sofia Karttunen
The writer holds a Master of Laws degree (LL.M.) in European Public Law and Governance and is especially interested in EU internal market law and communications. Sofia is currently working with advertising and communication agencies’ interest representation in Brussels.