Chicago Booth: Solutions To The Threats Of Digital Monopolies

From the University of Chicago's Stigler Center blog, ProMarket:

In Chapter 5 of the forthcoming Stigler Center ebook Digital Platforms together with Concentration, published inward anticipation of the eponymous conference at Chicago Booth on Apr nineteen together with 20, ProMarket editor Guy Rolnik together with coauthors give an overview of the challenges facing the regulators of tech giants today.

Editors’ note: See also our 2017 conference bulk foreign meddling inward the USA election via large-scale advertising campaigns on Facebook (1), or the alleged abuse of marketplace position powerfulness past times Google resulting inward one of the largest antitrust fines e'er levied past times the EU (€2.42 billion, [2]), are oft echoed inward mainstream media.

In 2017 alone, the 5 Silicon Valley giants choose added nearly a trillion dollars to their aggregate value, which is right away to a greater extent than than double the value of the largest 7 banks inward the world. In conjunction amongst the increased popularity of those platforms—the issue of users ranges from 310 meg for Amazon to 2.2 billion for Facebook together with Google—the world discourse focuses non only on the merits of these digital platforms but also on the potential threats they pose to markets, fiscal institutions, together with democratic processes (3).

Some betoken to the mere size, power, together with unregulated behave of these digital monopolies. Others focus on the unprecedented scale together with speed amongst which personal information is collected together with used inward the context of prediction algorithms, an omniscient, Wikileaks Cablegate” (10)). Importantly, a safety collapse of that nature mightiness only endure the start of a serial of follow-up breaches. H5N1 hack of Google’s Gmail, for example, could allow the perpetrators to obtain a user’s depository fiscal establishment concern human relationship password through the “forgot password” functionality, together with ultimately Pb to a collapse of businesses together with industries (e.g. banking, taxation, weapon silos, etc.). Compared to what was deemed a “too large to fail” solid soil when a handful of banks collapsed inward 2008, such a crisis could endure unparalleled. Although the digital monopolies employ talented safety teams to forestall such hacks, Earth has no guarantee that a skillfully deployed assail (e.g., past times some other nation-state, powerful hugger-mugger organization, or exactly a disgruntled employee) would non endure successful. Even amongst the best efforts of the digital monopolies—which often heavily depend on the priorities of high-ranking leaders inward the organization—societies should so operate nether the supposition that the information held past times the digital monopolies could endure leaked at whatever betoken inward time.

2. Data control. The concentration of unprecedented amounts of behavioral user information may move the most precise together with effective tool for targeted marketing. Our digital footprint reveals a lot to a greater extent than close us than outset meets the eye: it conveys information close our preferences, our habits, together with our psychological traits (4, 11). Recent research, for example, shows that targeting user segments amongst advertising messages tailored to their psychological profiles (e.g., their extroversion level) significantly increases clicks together with purchases (12). While the powerfulness to target individuals of a for certain behavioral, sociodemographic, together with psychological profile mightiness non pose an immediate threat inward the context of advertising consumer goods, in that location are many other contexts inward which overly precise targeting could wound the most vulnerable members of society. Being able to target “homosexual individuals living inward a specific cipher code,” for example, could plow out to endure lethal inward a issue of countries roughly the world. The same is truthful for targeting people amongst an addictive personality amongst gambling ads, or an unsuspecting low-income household unit of measurement amongst a subprime mortgage offering.

3. Attention equally currency. The bulk of online social networks—be it Facebook, Snapchat, or YouTube—are designed together with built to encourage individuals to pass equally much fourth dimension together with resources inside the platform equally possible. While this is no dissimilar than other media channels, similar TV, online social networks choose far advanced their capabilities to manipulate together with prey on users’ weaknesses, turning “user-oriented” services into addictive, time-wasting traps (13, 14). Recent piece of job inward neuroscience together with marketing choose shown that exposure to content at a charge per unit of measurement of equally petty equally three views is sufficient to generate a witting awareness of a construct (15), whereas ten views tin sack yield unconscious drive or preference for a production (16). Studies inward psychology (17) together with neuroscience (18) demo that 1 alter people’s behavior, both short-term together with long-term, past times influencing their preferences or altering their neural pathways. Beyond behaviour changes due to content, industrial plant inward neuroscience are suggesting that the effects of digital content on our encephalon is non express to the fourth dimension of exposure but also choose addictive attributes that resemble chemic addiction to substances (19, 20). Finally, studies inward psychology are showing that the adverse effects of the fourth dimension spent on digital platforms are translated to increases inward depression together with other negative psychological outcomes (21)....

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