U.S. markets closed

The splintering internet means trouble for Facebook, Twitter, and Google

In the early days of the digital era it was understood that the internet was bringing the world closer together. And it has, in a million obvious ways that companies like Facebook (FB) and Google (GOOGGOOGL) love to show us in gauzy promotional videos.

But now it’s also understood that the internet is pulling us apart, by creating personalized echo chambers where we only connect to like-minded people.

Of course both of these conclusions are accurate.

I’d like to focus on the pulling us apart point, though maybe in a way you have not thought of before. It’s not just that so many of us only nod along with those who propagate our own social and political beliefs at the expense of other perspectives. It’s that the world writ large appears to be breaking up into discrete geo-political internet zones.

What I mean is that because of distinct nationalistic views on issues like privacy and security, the internet is becoming regionalized in an under-recognized way with unknown consequences.

Governments taking control of the internet

We can observe at least three zones for now; the internet of the U.S., of China, and of Europe. Australia and New Zealand might become another zone, especially after a Facebook live stream of a mass shooting in the latter country. India could become yet another zone.

Visitors walk past the Facebook logo at an exhibitor's display at the Global Mobile Internet Conference (GMIC) in Beijing, Thursday, April 26, 2018. (AP Photo/Mark Schiefelbein)

New York Times editorial last fall cited Eric Schmidt, former CEO of Google, making this point and noted “...three spheres — Europe, America and China — are generating sets of rules, regulations and norms that are beginning to rub up against one another. The power of a handful of platforms and services combined with the dismal state of international cooperation across the world pushes us closer and closer to a splintered internet.”

That’s true as far as it goes, but there’s actually more to it.

What we’re really witnessing is another front in the war between the forces of globalism versus nationalism. The global digital La La Land put forth by Big Social Media flies directly in the face of the political mega-trend, neo-nationalism a la, China’s Xi, Russia’s Putin, India’s Modi, Brexiters, Brazil’s Bolsonaro, Turkey’s Erdogan, the Philippines’ Duterte, and so on. Do any of these folks really want an unfettered internet controlled by hoodied Silicon Valley 30-somethings? Of course not. Are they a bigger force than Facebook? I think so.

“Different governments are trying to assert their own national sovereignty over the internet as it’s experienced in their country,” says Emma Llanso, director of the Free Expression Project at the Center for Democracy and Technology. “That’s a concern that’s understandable...but [it’s] also a direct challenge to the idea of an open interconnected internet.”

Indian Prime Minister Narendra Modi answers a question during an online interaction with students of different colleges and universities of India in Srinagar, Kashmir on February 03, 2019. (Photo by Faisal Khan/NurPhoto via Getty Images)

And that can be good or bad. “Governments are taking back control over the internet,” adds Adrian Shahbaz, research Director, Technology and Democracy at Freedom House. “In some cases, though, with the intent of taking back democratic sovereignty. Making sure citizens’ rights to privacy and freedom of expression are protected. On the other hand many authoritarian governments are enforcing their own idea of digital sovereignty, which means all the ways freedom of expression, privacy, and personal security were violated in those countries are now going to happen on the internet.”

What does this mean for social media platforms and digital companies like Facebook, Google, Twitter (TWTR), Snap (SNAP), Pinterest (PINS), and even Amazon (AMZN) and Apple (AAPL)? A trickier and slower global growth trajectory at the very least.

Speaking of authoritarian governments, China of course was the first mover when it came to clamping down. Shortly after declaring 1996, “The Year of the Internet,” the Guardian reported that “Beijing had enacted its first laws criminalizing online postings it believed were designed to hurt national security or the interests of the state.”

The totalitarian model versus ‘reckless tech bros’

Paradoxically, over the past two decades China has made the internet more and more closed even as the number of users, platforms, and websites in China has exploded. U.S. internet giants like Google and Facebook either left the country or were banned. Recently under Xi Jinping controls have greatly tightened. According to a report by the Freedom House: “Internet controls within China reached new extremes in 2018 with the implementation of the sweeping Cybersecurity Law and upgrades to surveillance technology. The law centralizes all internet policy within the Cyberspace Administration of China (CAC), strengthens obligations for network operators and social media companies to register users under their real names, requires that local and foreign companies work to ‘immediately stop transmission’ of banned content, and compels them to ensure that all data about Chinese users [are] hosted within the country.”

Chinese internet companies have also started keeping detailed records of their users' personal information and online activity. And the Chinese have begun ranking citizens with a social score system, like a credit score, which reportedly includes demerits for posting fake news online.

Matt Stoller, a fellow at the Open Markets Institute, a think tank critical of the power of tech companies, says this leaves developing nations with a Hobson’s choice — that is, they have two not-so-great alternatives. Do you “use the totalitarian [Chinese] model? Or do you use the weird western model with reckless tech bros running things and not paying attention,” he asks. “[The] Chinese model is worse, [as it] places you under control of [an] aggressive government, rather than control of neglectful idiots.”

Until recently, we in the U.S. looked at these developments with a patronizing mixture of horror and outrage. How dare the Chinese government try to control the internet? Then came the 2016 election with its trolls and Russian hacks and now even Facebook CEO Mark Zuckerberg is asking the government to step in and help.

The U.S. is the wild, wild west of the internet

Europeans, long skeptical of U.S. tech giants, watched those events unfold and took matters into their own hands by enacting the General Data Protection Regulation (GDPR) last May, which limits the amount of data internet companies can collect and restricts how it can be used and monetized. “The U.S. and Europe are diverging systems,” says Matt Schruers, of the Computer and Communications Industry Association, a trade group that includes Google and Facebook. “GDPR sets Europe apart from not just the U.S. but many other countries with a highly prescriptive extensive regulatory framework that is much more focused on restricting movement of data.”

Facebook Chief Executive Officer and founder, Mark Zuckerberg, leaving the Merrion Hotel in Dublin after meeting with Irish politicians to discuss regulation of social media. (Photo by Artur Widak/NurPhoto via Getty Images)

As for the U.S., it’s safe to say we are miles away from regulating the internet. When confronted with this notion, many Americans hold up the sanctity of the First Amendment, forgetting that we’ve always had limits on speech (think yelling fire in a crowded theater). It’s similar to the conflating that occurs in the debate about guns. Anyone who talks about limits is immediately accused of seeking to ban everything.

Actually the only laws we have regulating the internet are laws that protect Internet giants, specifically Section 230 of the 1996 Communications Decency Act, which gives websites broad legal immunity. Generally speaking it means digital platforms can't be held liable for something posted by a user, even if the companies perform mediating as publishers do, by moderating content or through setting standards. Says Marc Rotenberg, executive director at the Electronic Privacy Information Center, who litigated against Section 230, “platforms have consolidated power and control. 230 has allowed them to push liability to distributors.”

Facebook CEO Mark Zuckerberg delivers the opening keynote at the Facebook F8 Conference at McEnery Convention Center in San Jose, California on April 30, 2019. - (Photo by Amy Osborne / AFP)

California will roll out GDPR-like regs in 2020, and yet those new rules notwithstanding, what increasingly distinguishes the U.S. internet sphere from the rest of the world is that we are the wild, wild west where anything goes.


“It’s really important to understand how much Europe is in the driver’s seat,” says Daphne Keller, director of Intermediary Liability at the Center for Internet and Society, as well as former associate general counsel at Google. “It kind of doesn’t matter what U.S. law says for a lot of things. Europe is extracting agreements by companies — they're going to enforce those agreements publicly.”

What that means is not only is the world is getting more divided up, but the U.S. — and the tech giants based here — are losing their leadership roles.

To a degree, the splintering of the internet is probably inevitable and maybe a good thing. But we need to stop allowing political dogma to guide policy. U.S. tech companies and governments need to work together in this process. Consensus and implementation of rules and guidelines for the internet will be extremely challenging. Letting the rest of the world take market share, never mind dictate terms of the digital future, will be even more so.

Andy Serwer is editor-in-chief of Yahoo Finance.

Read more:

Former Google CEO Eric Schmidt says tech companies can regulate themselves

Alexandria Ocasio-Cortez has a point about the ‘trifecta of inequality’

Former AOL exec Jean Case faults tech giants for trying to ‘own the world’