This blog is the paragraph on “digital utilities” from the book “The Digital Challenge for Europe
Exponential growth and dominance of tech giants
There is a lot going on right now around the world’s major tech giants. Approximately 90% of the 70 largest Tech Giants operate from the US and China and dominate almost all digital markets. This situation has grown in less than twenty years. And given the high appreciation of the services provided, it looks like these types of companies will continue to grow rapidly. All these companies operate entirely in the digital space and their ideal is to provide the same advanced services to everyone, worldwide, in a digital way. Their infrastructure is the internet, their services are offered digitally through sophisticated websites, their services are by definition internation- al – which means that they are inexpensive on a national level – and their services are of high quality for the end user, often cheap and sometimes free of charge. All this leads to numerous new forms of services, but also to the erosion of many classical services, which previously took place on a national scale. The rapid growth shows that new digital services are better valued by consumers than many classical services. It is therefore undeniable that the tech giants around the world are now meeting the digital needs of billions of people.
On the other hand, these companies may be criticized on many issues. They are not very transparent, they strive for market dominance, their policy regarding the handling of private data is often dubious, there are hardly any serious rules regarding the ethical handling of social media, their al- gorithms force people into digital traps with conspiracy theories or other disinformation and they escape the classical taxation rules and therefore pay no taxes in the countries where they generate turnover.
Are tech giants digital utilities?
It is therefore now perfectly clear that new economic-fiscal-legal-ethical rules are needed for this type of company. Also that these new rules will have to be international, because national regulations do not work in the digital world.
A new point of view is perhaps that this type of platforms could be regarded as the utilities of the digital world. They could be called “digitilities”, just as there are utilities for gas, water, light, telephony, in the classical world. It is mainly because of their desire to provide the same and increasing number of services to everyone, worldwide, in an increasing number of sectors that they can play an important role as digital utilities. But it also becomes clear that in this general utility function they must be decoupled from the laws of one nation-state.
There is no objection to this role for them, provided that – just as with traditional utilities – governments ensure that they are subject to the rules that should be drawn up with regard to their social functioning. This lack of clarity in their position must be resolved, but this should be done interna- tionally and by governments. The EU could very well play an initiating role in this, based on the Digital Services Act and the Digital Marketing Act, which aim to establish the frameworks that platform companies should comply with. The next step is to discuss these Acts with other governments worldwide, for example in a OECD context.