After extensive coverage of the news that Cambridge Analytica accessed Facebook data in order to target audiences of interest, there seems to be a brewing sense of crisis. The crisis has prompted a new public awareness of and interest in building political will for additional protection of data about ourselves.
In parallel, we are continuing to see the erosion of US financial protections that came into effect after the 2008 financial crisis. We’ve seen the takeover of the Consumer Financial Protection Bureau, weakening of certain regulations in the Dodd Frank Act, and ballooning compensation packages for executives that oversaw the near collapse of the global economy.
What do the two crises have in common? It seems that many of the advocacy and regulatory arguments made around new data protections are eerily similar to the arguments made during the call for regulation of the financial industries. Given that the discussion about what to do regarding data regulation and corporate capture of online spaces is so fluid, comparisons to other industries – like the financial industry – and their respective histories can be useful, even if incomplete.
Both are big, “complex” and powerful
To start with, both the financial and technology industries are made up of powerful companies with considerable lobbying strength and specialised knowledge. These companies dominate the creation and shaping of infrastructure that affects the everyday lives of the public. This means there are huge resource and information asymmetries between companies, government actors and citizens.
Both industries benefit from and struggle with the politics of network effects. Because of this: i) big actors end up being seen as ‘too big to fail’ and ii) causing pain to the industry by imposing regulation can quickly result in (strategically passed on) pain to the consumers. It also means that in both industries, denying access – to technology, or to financial services – can cause massive harm in certain societies. Alarmingly, this means our collective dependency is only growing.
Relatedly, companies in the financial and technology industries leverage the large size of their user populations by offering granularly different services and affordances to different segments of the population. Therefore, those in positions of power or privilege have different perspectives on what the biggest problem is because they are treated differently than those who may be most affected. Consequently, those with power suggest different solutions as well.
Alarmingly, this means our collective dependency is only growing.
At a political level in the United States, partisan politics (the ‘left’ versus the ‘right’) has drummed up attempts at regulation in both industries that have been largely ineffective. The heavy presence of lobbying dollars and public disinterest in legislative detail exacerbate this situation.
Finally, both industries use their complexity as a shield. They use specialised, technical instruments to justify their decision-making and overemphasize the complexity of these instruments when regulators attempt to limit what is permissible.
Advocacy responses have stagnated
Advocacy responses and attempts at regulation have been similarly plagued by stagnation in both industries.
First, advocacy efforts in both industries are vexed by the complexity – both perceived and real – of topics and ecosystems in these industries. In response to this complexity, arguments of the public as ‘not smart enough to make good choices’ lead to lawmakers and advocacy organisations creating solutions in a vacuum. The truth of it is not that ‘average’ people can’t understand the implications of finance (or data), it’s that they shouldn’t have to in order to protect their interests.
In both contexts, entrenched interests make the establishment and operation of an independent accountability entity very difficult. (I’m thinking of the Consumer Financial Protection Bureau in the US.) This is because of lobbying by both large and small institutions who make different cases for limited regulation to different audiences. Furthermore, a consequence of the diversity in size of companies carrying out lobbying is that the advocacy case of focusing on combating monopoly becomes invalid in the long run. (Since small companies will make cases to protect their, similar, interests too.)
Advocacy arguments also frequently come up against well-practised cases linking the micro and macro effects of legislation. Opponents to regulation say that protections (financial or technical) for individuals will impede progress at the macroeconomic level, which in turn causes harm to individuals. For example, many make the arguments that regulating banks (macro) is bad for lending which is in turn bad for the economy and hurts the average consumer or employee (micro). Technology companies argue that regulating data protection is costly for companies, which stifles innovation and negatively affects consumers. The reality is much more complex than these direct causal relationships touted by opponents of regulation, making it difficult to develop advocacy responses to them. And no advocate wants to appear to be suggesting regulation that negatively affects their very community constituents.
Finally, suggesting boycott as a tactic is ineffective in both industries and ignores inherent power dynamics, privilege and questions of technical access and fair financial instruments. Many populations do not have the ability to or knowledge of how to boycott a company, doing so could end up causing individual harm, and ultimately do no widespread good given the network effects of these industries.
What lessons can we learn?
Those interested in spurring effective regulation, shifts in public attitudes, and encouraging companies to align their business models with public benefit, can learn a thing or two from the failure of the fair finance movement in the years following the 2008 crisis.
- Don’t make the case that the public is too ignorant to look out for their own interests. That is offensive and it is beside the point. Consumers shouldn’t have to be bankers to take out a mortgage, and they shouldn’t have to be data scientists to participate in the online public sphere without being harmed.
- Improved design and user experience is not sufficient. Mandating that contracts use bigger font to show consumers the traps hidden in the fine print or terms of service isn’t enough. We have to disincentivise building traps.
- Movements need to function across partisan lines and engage grassroots. Otherwise powerful lobbying corrodes even high profile successes over time and the protections that are ultimately developed only extend to the most visible and privileged classes.
- Boycott is not a feasible strategy, and those that suggest it are often unaware of its asymmetric costs.