We Can Stop Tech Giants from Becoming New Banana Republics

A new breed diplomats are being deployed to Silicon Valley to help rein in technology heavyweights.

By Xische Editorial, July 30, 2018

 Source:  Shutterstock

Source: Shutterstock

When Facebook CEO Mark Zuckerberg testifies in front of the United States Congress, who exactly is he representing? Does he speak on behalf of a private American company? Or does Mr. Zuckerberg represent the more than two billion global users that use the social media platform, dwarfing the scope of the US Congress? As a result of their constituent size and influence, Facebook and other major technology companies have started to behave a lot more like countries than companies.

There is a rich history of companies transcending the commercial space to protect their interests by moulding the public sector to their benefit. The Dutch East India Company, for example, founded the city of Cape Town on the southernmost tip of the African continent in 1652 as a refreshment outpost for its fleet of ships carrying spices and other raw materials from the East back to Europe. As one of the world’s first multinational companies with a footprint that spanned the globe, the Dutch East India Company yielded more resources and influence than most countries at the time. It was so powerful that it could create entire cities just to serve its economic needs.

Fast forward to mid-20th century, and the United Fruit Company had a similarly large footprint in Latin America. The American company, which eventually became the world’s leading banana exporter known as Dole, owned large tracts of agricultural land across the continent and wielded incredible influence. But the company was under threat. Local political movements rallied against the United Fruit Company’s business practices, and in Guatemala, a newly-elected president nationalised all agricultural land and effectively kicked out United Fruit. In response, United Fruit executives with high-ranking connections in the US government purportedly convinced the CIA to foment a coup in 1954 and topple the democratically-elected government, reversing the nationalisation plans and securing United Fruit’s foothold in the country.

These examples suggest companies acting like countries is not new, but these precursors can help inform our understanding of how modern technology giants can wield their power and influence. Facebook’s recent trials over the use and abuse of personal data highlight the power of new tech giants and the potential peril of their largesse. Since the election of US President Donald Trump in 2016, Facebook has been under severe scrutiny over the type of content it allows on its platforms. Fake news and hackers’ efforts to influence political elections from the United States to Ukraine has led to calls for the social media platform to adopt stronger editorial control over the content it publishes.

In a recent interview with Recode’s Kara Swisher, Mark Zuckerberg addressed the issue head on saying he would not ban, for example, Holocaust denial on Facebook. His company remains committed to the free and open exchange of views as long as they do not include calls for direct violence. But this was not enough for many analysts and users.

Still reeling from the Cambridge Analytica scandal in which Facebook allowed a third party application to access millions of user accounts without the users’ knowledge, Facebook’s stock had the single largest market capital loss in US stock market history on July 25, 2018.  Growth is in question as the leadership struggles to articulate a clear strategy to address privacy and free speech concerns while not alienating valuable users.

While Facebook might be under the microscope at present, there is a much bigger question at play. How should actual countries interact with the growing power of technology companies? After all, a sovereign country is endowed with a monopoly on violence and, to a lesser extent, knowledge about its citizens. Yet, at this point, Google knows more about the lives of citizens than most governments do. When Facebook decides what content is appropriate worldwide, how should individual governments react?  How should governments ensure their national interests and protect their citizens?

 Casper Klynge is Denmark’s Ambassador for Technology

Casper Klynge is Denmark’s Ambassador for Technology

Casper Klynge is Denmark’s answer. The 44-year-old diplomat is the world’s first ambassador for technology. Unlike normal ambassadors who report to an embassy in the capital, his office is in Silicon Valley. However, Klynge’s remit is not limited to Silicon Valley technology companies. As part of Denmark’s strategy to engage technological innovation around the world, the Ministry of Foreign Affairs created an innovation centre with offices in New Delhi, Seoul, Silicon Valley, and Shanghai as well.

Companies have long sent emissaries to countries, but countries do not generally appoint emissaries to private companies. This type of diplomatic engagement may pay economic dividends given the preferential treatment countries seek in the technology sector. There are other considerations at play as well. For example, social media companies command troves of personal data; gaining access to that data can be critical to the work of law enforcement agencies in some countries.

Large multinational tech companies may have more power, influence, and capital than some countries, yet they are not responsible to constituents in the same way as governments. In fact, they do not technically have to answer to constituents at all other than their stockholders. Indeed, stockholder influence has been shown to be more effective at shifting corporate policy and behaviors than local government regulations, as demonstrated during the recent fall in Facebook's stock value.

As more tech companies take their place on the world stage, a new system of checks and balances between countries and companies may be required to ensure the safety, privacy, and protection of people. With history as a guide, countries, companies, and the international community writ large must work together to ensure that the private sector remains accountable and its influence does not undermine the foundational responsibility of countries to protect their people.