Nick Clegg has stepped down from Meta. The former Deputy PM joined the company six years ago to lead its public policy unit: tasked with improving the company’s reputation amongst lawmakers and keeping it out of legislative trouble.
It’s been a jolly departure from Clegg who insists he has decided to step down: but it looks pretty obvious from the outside that he’s been shuffled out. We’re now weeks away from Trump’s inauguration and Clegg was the guy responsible for banning Donald Trump from Facebook.
Meanwhile, Zuck has been on a charm offensive with the Donald. He’s donated $1mn to the inauguration fund, dined with Trump at Mar A Lago, and now replaced Clegg with the Conservative and former Bush Chief of Staff Joel Kaplan.
Zuckerberg might be worried about his social network, but he might also be worried about himself: Trump has made threats on his own social media platform, Truth Social, that he’d send election fraudsters to prison, and called out the Facebook boss by name:
“If I’m elected President, we will pursue Election Fraudsters at levels never seen before, and they will be sent to prison for long periods of time. We already know who you are. DON’T DO IT! ZUCKERBUCKS, be careful!”
The tech titans are almost unstoppable. Meta has more than 3 billion daily active users. Amazon has 2.5 monthly billion users. Google processes 8.5 billion searches per day. These three companies have arms in just about every home in the Western world, and much of the wider world too, and probably an unprecedented capacity to influence us and understand us through data.
Only one group can thwart these giants: legislators. With one flick of the pen, a government could impose catastrophic restrictions on any one of these companies, at any time.
So why don’t they?
Heavy handed regulation
One legislative body often faces up to the tech bros: the EU. The European Union is a thorn in the side of companies like Google, Meta and Amazon.
In just the last few weeks, the EU introduced its long-awaited charging mandate, forcing hardware companies to ensure their gadgets can charge via USB-C. It was a blow to companies like Apple, who historically used their own types of charger with their own products.
The EU said the move would reduce waste, but Apple said it’d “stifle innovation”. They have a point: had the EU introduced this law a decade earlier, we’d all be stuck using USB-A - which was clunky and inefficient. The market is unmotivated to develop new charging solutions now, because any innovation would be illegal to use in the EU.
It’s not just charging ports, the EU has also led the charge on stringent data protection. Its 2018 General Data Protection Regulation (GDPR) imposed some of the strictest data regulations on companies anywhere in the world.
Much of the tech industry is built on the monetization of data - data is the oil of the digital world - and the EU’s directive sought to massively taper their ability to use it. It’s bad for businesses, undoubtedly, but surely good for consumers - right? Well, you have the EU to thank for all of those cookies notifications you have to wade through every time you use the internet.
European consumers are also missing out on the biggest developments in the fast-moving world of AI. OpenAI’s latest model, a text-to-video engine called Sora, remains blocked in the EU while OpenAI figures out how to handle the EU’s heavy-handed and confusing regulatory framework around new technologies.
They’ve learnt a lesson from Google, who have been slapped with billions of dollars of fins for falling foul of the EU’s strict laws.
But there’s a real risk that the most innovative tech companies will decide all of this regulation isn’t worth the hassle, and back out of the EU altogether. That’d be terrible news for consumers, but also the European economy: where tech is creating millions of jobs.
What if they leave?
It sounds far-fetched that a company like Google or Meta might abandon an entire market, but it really isn’t.
In 2014, the Spanish government passed new legislation requiring companies like Google to pay its local publishers for sharing their content. Google responded by simply removing its Google News search from Spain, and delisting all Spanish media outlets. It was a disastrous outcome for everyone: consumers lost access to information while publishers lost a significant source of their traffic.
The same almost happened in Australia in 2021, where only intense negotiations between Google, the Australian government and publishing companies managed to avert the entire search engine being pulled from the Australian market.
It might be a story of an overpowered tech giant, who can afford to threaten governments. But it’s also a warning parable of how overreaching regulation can stifle innovation and pare back development.
Congress v the Tech Bros
There’s a constant tussle between legislatures and tech companies. Lawmakers threaten heavy-handed regulation, while tech companies threaten to leave the market or punish consumers.
When the UK government said they would ban end-to-end encryption (the way messaging services keep your messages private), WhatsApp threatened to leave the UK. The government quickly backed down.
In the US, the threat to leave is slightly emptier. For most of these companies, the US is a core market. It is reliable and profitable.
Its legislators, though, are a much lighter touch than the EU and much of the rest of the world and tech companies have slightly more freedom to run amok.
That’s helped further by the absolute dinosaurs that are supposed to be regulating this stuff. Senators have the power to quiz tech leaders like Zuckerburg and Google’s Sundar Pichai. But, with an average age of 65 years old, most of their questions might as well be “how do I turn this thing on?”.
Most Senate hearings on tech regulation go a bit like this:
There are plenty of lawmakers of all ages that have a complete grasp of tech and a clear sense of how best to regulate it. But there are many others that are far out of their depth, and unwilling to acknowledge it, and that’s leaving tech companies with too much power and consumers with too few protections.
How’s the UK?
Like the US, the UK is a core and useful market for the tech giants. In theory, our proximity to the EU means consumers do see the benefits of the heavy-handed regulation, but Brexit enables us to cut loose from the overly-stringent rules.
It’s why the UK remains a good place for tech companies to do business. Not to mention, we have the perfect timezone and language to build a global business.
The biggest reason there’s not more tech start-ups in the UK is cultural. We have a national psyche of risk-aversion. That means money tends to flow into safer investments like real estate and long-standing companies, rather than riskier bets like start-ups. It also means that talent prefers to work in banks and consultants than small start-ups that might only have the cash to survive another six months.
To top it off, we have a media that is arguably more negative and more critical than the rest of the world’s, and certainly less business-friendly. It’s one of the things that makes the UK’s journalism the best in the world, but it also makes it a difficult operating environment for a start-up or tech company trying to drive innovation.