Google, Facebook ‘like Big Tobacco’ academics say

Google and Facebook’s power must be reined in before it’s too late, experts say.

Academics say the tech giants have made their apps deliberately addictive. Picture: AFP

Google and Facebook’s “unprecedented” power must be reined in before it’s too late, leading ­experts at top US and European universities say, arguing their clout has snuffed out any hope of competition.

Thirty professors, in a series of reports released yesterday in Chicago, warned against the “most sophisticated psychological techniques to make consumers as addicted to the (digital) platform as possible”.

“It reminds us of the tobacco companies that were using science to design the most addictive cigarettes,” said Luigi Zingales, a business professor at University of Chicago, at the start of a two-day conference on Facebook and Google’s market power.

Read the full speech here

The reports come a few weeks before the ACCC is expected to release recommendations to curb the power of Facebook and Google, which have monopolies over internet search and social networking in Australia, setting up the next government for a battle with the digital giants.

“Two algorithms designed by a few people affect simultaneously more than two billion people, without much of an alternative,” Professor Zingales told an audience of 130 academics, policymakers and executives including essayist Francis Fukuyama, Facebook co-founder Chris Hughes and former Italian prime minister Mario Monti.

ACCC chief Rod Sims visited the US last month, where he signed an agreement with the FBI to fight cartels and prosecute anti-competitive behaviour, part of an anti-trust resurgence among regulators and calls to break up the two companies.

“The cost of inaction is dramatically increasing over time: The more these companies grow in size, importance, and complexity, the higher the cost to fix mistakes later on,” Professor Zingales said, summarising four reports outlining threats the US tech giants pose to competition, privacy, the media and politics.

The tech giants are facing a barrage of inquiries around the world for alleged tax avoidance, anti-competitive practices and perpetuating “fake news”. The European Commission fined Google €4.34 billion last year for pressuring mobile phone manufactures to automatically include its apps and search facilities.

“The first obvious harm is higher prices for advertisers,” said Yale professor Fiona Scott Morton, who oversaw one of the reports, and recommended a new US regulator focused on digital platforms and anti-trust laws. Google and Facebook make more than 90 per cent of their $US180bn-plus annual revenue from advertising.