The pandemic has delivered a valuable lesson for problem-solving: perspective is everything.
When tackling major global challenges, knowing and understanding the big picture allows us to make the crucial informed decisions that ultimately yield positive results.
Sometimes, however, it can be hard to see the wood for the trees.
Look no further than the most recent gathering of the G7 Finance Ministers for a clear-cut example.
The meeting that has seemingly ushered in a new age of regulation and policy to curb the power of Big Tech, has been lauded as a monumental achievement – a huge shift in global rules and a critical step in ensuring the big tech players pay their fair share.
We’ve seen these types of major international summit moments before – whether it’s taxation one year, or climate change policy the next – it dominates the agenda and creates a sense of significant progress being achieved.
By aggressively focusing on tax, governments have found an easy and manageable way to indicate action, without achieving very much in the long-term. The truth is, the new tech tax is a political power play and will do little to curb the immense power of tech giants.
The tax is lipstick on a pig and it will fail to address the real challenge big tech presents in the form of the powerful monopolies they hold over the global flow of information and data.
We’ve now reached a stage when the issue of tech monopolies is so vast and deeply ingrained, we’re unable to see the full picture. Governments attempt to break it down into digestible elements – digital tax, data regulation, privacy control – in the hope to make a dent and regain control, but it’s all in vain.
When we step back, it’s clear that all these issues stem from the same problem – powerful market monopolies where enforcing regulation is almost impossible.
Tax enforcement may well feel like an achievement at this point in time, but ultimately it won’t be enough.
A hefty tax fine will do little when dealing with the richest companies in the world. Without a watertight consensus across all jurisdictions, the companies will swiftly move to circumvent the rules and identify loopholes.
Efforts need to instead focus on curbing the monumental power they hold – their influence over policy, regulation and economic conditions is inherently undemocratic and will only worsen the longer they are allowed to operate in the current state.
Over the course of the pandemic, Big Tech has seen explosive growth fuelled by the digitalisation of the economy and the increasing flow of data – further solidifying their hold on the market.
A global tax solution won’t solve this issue. Our focus must be on breaking up the monopolies.
A clear example of how to tackle this comes from the late 90s, when it became clear that Microsoft’s dominance was becoming problematic. It faced antitrust charges, with regulators claiming down the on the monopoly and breaking it up into two business areas.
Even further back is the case of Standard Oil, when regulation – not taxation – forced the breakaway of the companies and stimulated a healthier industry.
When technology companies are allowed to grow to an enormous size and are able to easily eliminate competitors, we are creating a dangerous consolidation of power – ultimately stifling competition and harming wider ecosystem innovation in the long-run.
We desperately need proper legislative work to break down the tech giants into their separate specific business functions, in order to allow competition to flourish.
Big Tech firms have dominated markets without any real consequences for long enough.
It’s time for governments to step in and curb their power once and for all by addressing the real issue at hand.