Facebook And Google Set to Gain From Looming Privacy Regulations

In the United States and Europe, the conventional wisdom is to put regulation by force on Silicon Valley’s Internet behemoths, so that they respect a person’s online privacy. Now, all that might change with new rules. As Facebook and Google, hedge their way further in consolidating their reach on the World Wide Web.

Facebook And Google Set to Gain From Looming Privacy Regulations

The Need for Privacy Regulations

Moreover, next month is a crucial month for data privacy debate in Europe. As the continent is going to enact a new rule that prioritizes users’ data privacy, the new law will require tech companies to ask for people’s consent for their information. 

This might seem like a very good move to protect users’ personal data but it, in fact, will end up strengthening Facebook’s and Google’s business model. People will more likely trust these internet giants rather than trusting a newcomer in the tech industry.

There have been other regulatory attempts at online privacy that seems to strengthen it over the years. However, they have helped these very internet giants rather than causing discomfort to them.

Avi Goldfarb, professor of marketing at the University of Toronto, said that the “regulations help incumbents”. The professor has studied the effects of privacy laws on competition. According to his studies, it is very difficult for a new startup to acquire user data through their consent. Meanwhile, it’s relatively easy for established firms to acquire data through user consent.    

Google and Facebook emerging as a winner in the privacy debate seems very unusual to many. The companies in Silicon Valley are under severe scrutiny for several months now. Facebook, in particular, is reeling with shocking data theft by Cambridge Analytica on its platform. This analytics firm reportedly accessed personal information of more than 87 million users without their consent. The result was the Mark Zuckerberg’s hearing in front of the Congress in Washington.

Google Under Scrutiny As Well

Google, meanwhile, has its own share of questions when it comes to online privacy. YouTube that is under Google has raised many eyebrows due to its practices in data collection of users.

Other countries like Argentina and Brazil are also mulling over the online data privacy laws following European-style of regulations. It will test the preparedness of companies’ business models comprised of online advertising. The United States officials and lawmakers have also shown eagerness to regulate Silicon Valley, after the testimony of Mark Zuckerberg last month.

Previous attempts at privacy laws have had little effect on controlling the power of tech companies. Europe isn’t going to amend its online privacy law for the first time. It has done so in the past, but what effect it had on companies such as Google and Facebook is in front of everyone to see.

The online privacy advocates believe that this new privacy law will help the already prominent players in the internet industry. The laws and its amendments are reflecting what these big tech companies want in its favor.

Many startup founders are finding it difficult to compete with companies such as Google, simply because they do not hold the “trust” factor when it comes to seeking consent from its users. Stricter rules will only give impetus to tech giants by limiting the resources and capabilities of new companies.

European Privacy Law

The European privacy law will likely clamp down targeted advertising by putting brakes on the flow of user data. But companies like Facebook and Google will have an advantage, as advertisers will move to them because of their reach and trust factor.

If these laws are enacted, Facebook and Google will find themselves in the hot seat, charging advertisers at their will. The stats are mind-boggling. Google’s YouTube tops in video content category with 1.5 billion monthly users and Facebook has over 2.2 billion monthly users on its platform.

The data protection supervisor of Europe, Giovanni Buttarelli, said that the regulators are determined to enact a law that will provide enhanced online data privacy rights. Buttarelli should be more interested in keeping terrorists out of their countries but that would make too much sense.

He said, that the lawmakers are up against well-funded lobbyists and lawyers. Facebook and Google will be under the lens of Irish data authority, as the European headquarters for these matters are in Ireland. A staff of 2,500 across European Council is working on data privacy rights. 

The supervisor accepted that the tech giants do have an advantage over the small and medium-sized businesses. But he also ensured that the big firms aren’t immune and will face detailed scrutiny by the European Union members.

Facebook and Google Are Already Changing Their Consent Model

Facebook recently launched a new consent document asking its users globally to accept or reject targeted advertising. This move by Facebook is to allow features such as face recognition on its platform. It has also limited its collaboration with data brokers like Acxiom, as a consolation for privacy fighters.

Meanwhile, Google, which over the years has been preparing for the new privacy laws, has halted its work of scanning Gmail email messages for targeted keywords.

Previously, it used to provide these analytics to advertisers as part of its revenue generation model. Recently, it came out with a new marketing product for content publishers that show advertisements based on descriptions of other articles or content on a website, instead of supplying personal information.