Big Tech companies should not be regulated like banks

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Introduction

This piece is part 2 of a 2 part series on the regulation of big tech companies. This piece will be focusing on the negative connotations of regulating the tech industry like banks.*

Big tech companies should not be regulated like big banks, since this would hurt the industry more than help users. Tech companies operate in completely different profit margins and theories. When it comes to big tech companies, they are operating to serve new products that often need to move quickly when it comes to deploying and shipping new products (Constable, 2018). However, for banks, they are dealing with more fiscal and economic factors that is based on safer and more niche fields. To push regulation on tech companies, they should be regulated differently, and ensured that they are still able to create innovation and competition (Constable, 2018).

This ultimately would stifle innovation and history has shown that governments failed to regulate these companies properly (Denning, 2020). While the monopoly that is currently forming in big tech companies is concerning, we still have innovative features that are released every day through other companies that disrupt the market (Denning, 2020). If we start implementing restrictive regulation, then everyone would follow suit and it would cement these large corporations as the primary heads of technology.

Big tech companies should regulate themselves

Throughout the past decade, many of the groundbreaking problems that had risen in the field has been regulated based on other private companies competing to make their products better (Denning, 2020). This is evident in the cybersecurity space, where we have seen massive improvements in system hardening with cryptography and bot prevention (Huddleston, 2020). This was implemented to protect individuals’ privacy and the security of their product, which became the new standard (Zingales, 2018).

When it comes to understanding security and the field of engineering, the fast-paced nature of everything often trickles down into the norm (Waters, 2021). Even if the company that created a useful tool, all the other companies will adopt those better practices, thus regulating everything for the better. The tech industry will always be ahead of the government, and if we allow them to regulate like they have for banks, they would ultimately leave the field in disarray (Quest & Charrie, 2019).

Regulation would bring out negative side affects when it comes to a free market

Steve Jobs is a prime example of developing new tools that would often get criticised for being weird, however, they were way ahead of their times (Huddleston, 2020). If the US government set the regulation standard of a specific floppy disk port back in 1984, there would be an adverse affect on how quickly our transfer speeds were (Huddleston, 2020).

This would ultimately had a negative point of view when it came to innovating internal and external buses, as they would have had to adhere to a worse form of port (Josaphine, 2022). For this reason, not only would our future be slower to adopt new and innovative technologies, but if we regulate tech companies like banks, we are missing out on years of growth and knowledge (Huddleston, 2020).

Government regulators are often incompetent

Not only does the tech industry encompass hundreds of roles and moving parts, but it also is naturally faster and more flexible than banking (Constable, 2018). Most “expert” regulators get hired by the regulated (Constable, 2018). These “regulators” are often hired by the largest organizations that can afford to pay off their regulators, and have them target smaller competitors (Constable, 2018).

This ultimately shows the incompetence of the United States government, and this allows the power vaccum to increase.

Conclusion

This is not to say that the current state of the tech industry does not need regulation, nor does it say that tech companies are currently regulating themselves right now. However, adding restrictive regulations that are crafted by only the top tech companies in the industry would hurt everyone.

Regulation is good when they are created by informed individuals, and not by the companies that are being regulated. This is why we need to have a more informed and educated government, that is able to understand the tech industry and the problems that are currently facing it.

References

Chaudhry, V. (2021, December 30). Home. YouTube. Retrieved November 22, 2022, from https://www.thesentinel.com/communities/the-big-dilemma-over-big-tech-to-regulate-or-not-to-regulate/article_25e9a298-69f4-11ec-a525-13a26e2f543a.htm

Chaudhry, V., & Mirala, N. (2021, December 31). The Big Dilemma over Big Tech: To Regulate or Not to Regulate. Montgomery County Sentinel. Retrieved November 22, 2022, from https://www.thesentinel.com/communities/the-big-dilemma-over-big-tech-to-regulate-or-not-to-regulate/article_25e9a298-69f4-11ec-a525-13a26e2f543a.html

Constable, S. (2018, March 26). Home. YouTube. Retrieved November 22, 2022, from https://www.forbes.com/sites/simonconstable/2018/03/26/no-we-really-dont-need-government-regulation-of-the-tech-industry/?sh=35c32d14eb8d

Explore, T. (2022, March 25). Big Tech now regulated like banks, says EU antitrust chief. Tech Xplore. Retrieved November 22, 2022, from https://techxplore.com/news/2022-03-big-tech-banks-eu-antitrust.html

Josaphine. (2022, September 26). The Big Debate Over Whether Fintech Companies Should Be ... SpentApp. Retrieved November 22, 2022, from https://spentapp.com/the-big-debate-over-whether-fintech-companies-should-be-regulated-like-traditional-financial-institutions/

McNamee, R. (2020, July 29). Big Tech Needs To Be Regulated. Here's How. TIME. Retrieved November 22, 2022, from https://time.com/5872868/big-tech-regulated-here-is-4-ways/

Padilla, J. (2019, April 10). Home. YouTube. Retrieved November 22, 2022, from https://sites.duke.edu/thefinregblog/2019/04/10/the-pros-and-cons-of-big-tech-banking/

Pediatrics. (2021, December 3). Effects of Social Media on Children – Cleveland Clinic. Cleveland Clinic. Retrieved November 22, 2022, from https://health.clevelandclinic.org/dangers-of-social-media-for-youth/

Quest, L., & Charrie, A. (2019, September 19). The Right Way to Regulate the Tech Industry. MIT Sloan Management Review. Retrieved November 22, 2022, from https://sloanreview.mit.edu/article/the-right-way-to-regulate-the-tech-industry/

Radu, S. (2020, January 15). The World Wants Big Tech Companies to Be Regulated. USNews.com. Retrieved November 22, 2022, from https://www.usnews.com/news/best-countries/articles/2020-01-15/the-world-wants-big-tech-companies-to-be-regulated

Scott, E., & Stewart, M. (2020, December 16). The value and challenges of regulating Big Tech. Harvard Kennedy School. Retrieved November 22, 2022, from https://www.hks.harvard.edu/faculty-research/policy-topics/business-regulation/value-and-challenges-regulating-big-tech

Waters, C. (2021, February 13). Should big tech be regulated like big banks? Sydney Morning Herald. Retrieved November 22, 2022, from https://www.smh.com.au/technology/should-big-tech-be-regulated-like-big-banks-20210212-p571y6.html