222: Tech regulation is inevitable but companies should have done more

Tim Cook of Apple now believes that greater levels of regulation are inevitable. It may be being blamed on the ‘free market not working’ but the reality is that the behaviour of some of the leading companies has been a major contributor to this political action. If they’d thought more serious about their public affairs.

Many in the tech sector apparently feel ‘under siege’ from politicians and Mark Zuckerberg believes that he is at war but the reality is that the politicians are the ones with the real levers of power and always have been, whatever the hype has been.

Politicians were enamoured by the tech companies, their services, their growth and their seeming embodiment of an entrepreneurial, creative culture. Much of what they did, and the apparent basis of their initial engagement with politicians was on what they could offer – direct channels of engagement with the electorate, ways to improve turnout etc.

This has now turned sour to the extent where politicians even feel safe enough to heckle a senior tech company’s executive at their own event!

So what seems to have gone wrong?

• Not reaching out to early enough to political audiences – political engagement seems to have happened later in the day for many tech firms. They seemed not to appreciate that whilst growth is great, politicians always want to be involved. Politicians want to benefit from the stardust but also need to be kept informed of developments. It is a two-way street. Positive words can easily be reversed when a reputation starts to slip.
• Not reacting quickly enough to change – as the political audiences started to ask more questions then the tech companies appeared ill-prepared to respond. Issues were ignored or glossed over meaning political audiences had to fight for answers. This doesn’t help relationships.
• Not playing the game – many of the firms appeared not to listen to politicians but instead simply came out fighting their corner really hard. That need not be a bad strategy but it was compounded by an unwillingness to play the political game either. In some instances companies were viewed as dismissive towards political institutions, for instance Select Committees. When executives eventually turned up they were unable to respond in the way politicians expected. Where this was arrogance, a lack of preparedness, or a lack of understanding is not clear but the outcome has been the same – very annoyed politicians. And there is only one thing that happens then….
• Getting the language wrong – instead of attempting to communicate with politicians in a way that they understand, tech executives could appear patronising. True, the level of technical understanding among many politicians is low, but instead of helping to educate the audience, the impression was left that they simply being patronised. That winds politicians up as does the apparent lack of deference to them.
• Different responses to the same issues – the lack of consistency between the companies over issues such as data and privacy, has meant that politicians haven’t had any faith in what they are being told. This has led to confusion and politicians try to reduce confusion by taking control.
• Their version of the good society – some of the larger tech companies seems to want to push their own version of a good society, rather than taking the policy lead of (democratically elected) governments. Their approach to corporate social responsibility would appear to reflect this as well. Again, this is another example of a lack of deference.
• Being pushed towards remedies – when changes have been proposed then the tech companies have taken a ‘nothing to see here’ approach and then, only reluctantly, have accepted change. As far as the politicians are concerned, it has been their role to clear up the mess as the companies haven’t put their own houses in order.
• Paying tax – the lifeblood of any government remains its ability to spend the proceeds of economic growth. The tech firms have been criticised for not paying ‘enough’ tax and / or appearing to create ways to minimise their tax liabilities. What is often missed is that this is even more objectionable to politicians in an era of low growth and austerity – they need every penny they can get.

This blog is written from the position of an outside observer. It is doubtless the case that many of the points I make were raised with the senior management. They, for whatever reasons, obviously chose to disregard the advice. That is fine and they are perfectly entitled to run their businesses in the way they see fit. However, the consequences of those decisions is growing political scrutiny and intervention. The companies are, at least in part, responsible for the actions are now being taken by politicians.

Even the hiring of Nick Clegg by Facebook will not instantly overcome the general mistrust that now seems to exist.