In this episode
Big tech companies are spending precious euros lobbying the European Union to resist, or weaken, regulation of digital markets. A recent report by two lobby-watching organisations has the beastly details.
- Corporate Europe Observatory and LobbyControl e.V. (2021) The Lobby Network: Big Tech’s Web of Influence in the EU.
- Statcounter, Search Engine Market Share Worldwide
- Statcounter, Social Media Stats Worldwide
- Statcounter, Desktop Operating System Market Share Worldwide
Hello, and welcome to The Papers on Vulnerable By Design, the series in which we cover some of the latest and most interesting vulnerability research. I am Chris Onrust. In today’s episode: Big tech lobbying.
When you search something online, chances are frighteningly high that you’ll be using Google. Google holds a whopping 92% of the search engine market share worldwide. If you look to social media, 70% of the social media market share is in some way or other owned by Facebook, which includes Instagram and WhatsApp. And similarly, Microsoft’s Windows still dominates the desktop operating system market at 75%.
What this tells us is that in their respective markets, these companies are big, they are powerful, and fun fact: they also have lots of money.
The Lobby Network: Big Tech’s Web of Influence in the EU
Now all of this is in the background of a recent report that we’ll be looking at today, which is called The Lobby Network: Big Tech’s Web of Influence in the EU. (So: European Union.) The report was written by two groups: Corporate Europe Observatory, which is a research and campaign group based in Brussels. And LobbyControl, which is a non-profit based in Cologne in Germany. And both of these groups are active in investigating and raising awareness of the effects and the extent of lobbying in the European Union.
They are financed either by memberships or by donations, or both. And for Corporate Europe Observatory, this includes funding from the Open Society Initiative, but specifically not from the European Union, because that’s the organization that they’re investigating.
The authors of this report are Verena Leyendecker, Margarida Silva, Felix Duffy and Dr. Max Bank, and the editor of the report is Katharine Ainger.
Now, what does the report say? Its main claim, and I’ll give you a quote for that, is the following: “As Big Tech’s market power has grown, so has its political clout. Just as the EU tries to rein in the most problematic aspects of Big Tech – from disinformation, targeted advertising to excessive market power – the digital giants are lobbying hard to shape new regulations. (…) [Big Tech] is now the EU’s biggest lobby spending industry.”
What is Big Tech?
Good. Let’s unpack that. I’ll start with the notion of Big Tech, digital giant … It sounds maybe rather cute. But personally, I’m not such a fan of this terminology, because it risks staying rather metaphorical. For what the authors of the report specifically mean here are companies in the digital industry who provide digital technology or services. For example, hardware, software, telecommunications, or information services. And these companies are called ‘big’ or ‘giants’ in terms of their market share, or market dominance, and the valuation. Some of these companies have reached a market capitalization of over $1 trillion.
Well, who might they be thinking of here? Amazon, Apple, Microsoft, Google, or actually Google’s parent company Alphabet. But they’re also thinking of companies such as Huawei, IBM, Intel, or Vodafone, they also get mentioned. So let’s just start with the observation that we’re talking about quite different companies here.
So let that stand about Big Tech. And what about the lobbying? We can start from very basic definitions here. So technically, lobbying is seeking to influence a legislator, policymaker on an issue.
Is lobbying illegal? I mean, I don’t know about all legal systems across the globe. But in the European Union, it’s not. It’s just bound by certain transparency rules.
Now, lobbying is not the same as corruption or bribery, which is illegal, also in the EU. And bribing is, if we’re going to enter definitions: trying to persuade someone to act in your favor. By giving them a gift or money. It’s more transactional. Lobbying is more roundabout. So you try to persuade someone by sweet talk, by arguments, or by sketching doom scenarios. Not by money or gifts.
And some people say, how do we get rid of corruption? You can just call it ‘lobbying’ and make it legal. I’m not issuing an opinion on that. But let’s just have this contrast stand here.
Does lobbying undermine democracy?
Okay, well, lobbying, as I said, it’s not illegal, but there’s still a risk. And this is the risk of undue influence. The risk that if certain parties, but not others, get to put their views to policymakers or legislators, then the law or the policies might end up benefiting just those parties, not others, not the whole of society. And because of this, some people have even said that lobbying undermines democracy.
Now those are strong words, that sounds really, really stark. But actually, I think if we look at it, there isn’t really anything contentious there. So let’s just consider representative democracy, rather than any form of direct democracy. That works if and when people in society, they elect their representatives, and those representatives govern on behalf of the people in society whom they represent.
Now lobbying, it slightly circumvents this. There’s basically, because what’s happening here is that people are saying: “Yeah, sure, I know about all of this stuff with voting, representation… But could I just have your attention? Could you please make sure that you law or your policy, that it benefits my company? Or that in any case, it doesn’t do anything detrimental to my company?”
Think, for example of the tobacco industry lobby, trying to stifle regulation around smoking and tobacco advertising. Think of the sugary drinks industry, who lobby to avoid any type of regulation around their product.
Think of the fossil fuel industry, who lobby to delay any serious action on the climate emergency. The result of all of this lobbying may be a law, or may be a policy, that doesn’t represent the interest of people in society at all, but just benefits those groups or companies who are doing the lobbying.
So that’s how I understand the statement of: lobbying can undermine democracy. I think, if understood in that way, just in a structural form, it shouldn’t be controversial at all. So lobbying, it’s not illegal, but it’s actually quite serious, what it can result in.
Finding 1: Big Tech largest lobby industry in EU
Good. So we understand Big Tech, we understand lobbying. Let’s turn to the report and what the people found. There are actually many different points in this report. Yeah, I invite you to read this for yourself. But I just want to flag three, which stood out for me.
And a first finding here is that at this point, companies in digital industry, they make up the largest industry lobbying in the EU. And it’s growing. So I’ll give you a quote: “Together, they” meaning companies in the digital industry, “spend over €97 million annually lobbying the EU institutions. This makes tech the biggest lobby sector in the EU by spending, ahead of pharma”, so the pharmaceutical industry, “fossil fuels, finance are chemicals.”
And this is a change. This wasn’t just the case a couple of years ago. So right now, if you’re in an EU country, your favorite search engine, your social media platform is lobbying your elected representatives for special treatment. This is new, and it’s a big shift.
Finding 2: A few big players dominate
Second finding from the report is that the lobbying energy and especially the money, it’s quite concentrated. So they found over 600 companies doing the lobbying, but just 10 of these companies were responsible for nearly a third of all of the lobbying euros spent annually. I invite you to take a guess here who make it in the top five. Or actually I’ll start with number six here.
So at number six, it’s Amazon, with more than 2.7 million spent on lobbying. Number five, it’s Huawei, with 3 million spent on lobbying. Number four, it’s Apple with three and a half million. Number three—okay, we’re making a big leap here—it’s Microsoft with 5.2 million, or more than 5.2 million, spent on lobbying. Number two, Facebook spent more than five and a half million on lobbying. And the number one, it’s Google, who spent nearly 6 million so more than 5.7 million on lobbying people in the EU. Nearly 6 million. Okay, so the lobbying efforts are quite concentrated.
Finding 3: Direct and indirect lobbying
Finding number three relates to the different forms and guises these lobbying efforts can take. The investigators detail both direct lobbying, where these companies have people in house to influence elected officials. But also more indirect forms of lobbying, where they pay others to do the influencing for them. For example, through networks of lobby groups, consultancies, law firms, think tanks, and further groups.
Shaping the narrative around tech regulation
A further, and yet more indirect, form that lobbying can take is what the researchers in this report call ‘shaping the narrative’. So this is not where anyone is paid either to directly or indirectly persuade someone, a legislator. But it takes the form of putting thoughts or opinions out there, very generally, repeating them over and over again, so that it somehow becomes natural, the standard way of thinking and talking about a topic.
What sort of narrative could we then be thinking of? The researcher say that for a long time, it was really just outright rejection that any form of regulation was needed for the digital industry. Today doesn’t really take that form anymore. But there are still efforts of either trying to distract or trying to weaken or water down the idea that any form of regulation is needed. And they actually mentioned a couple of examples of these narratives that stand out. I’ll just mention three here.
One is planting the idea that digital tech platforms and services are best placed to regulate themselves. So they don’t need policymakers or external regulators, they’ll do it themselves. If there needs to be any type of intervention, it shouldn’t be structural, but only on a case by case basis. We’ll take care of it. Now that sounds familiar, doesn’t it? From the tobacco industry, from the sugary drinks industry. This is one strategy. We’ll take care of the regulation, trust us.
A second approach is the idea that these companies are not against regulation on behalf of their own benefit or their own interest. They’re just resisting regulation of their massive monopolies, because: it would hurt small businesses, it would hurt consumers, it would hurt people in society. That’s the reason that they’re resisting the regulation of their companies. Yeah, those poor consumers. That’s really who you’re spending those 97 million euros on lobbying money for.
A third narrative that the researchers mentioned is sketching some sort of doom scenario of Europe falling behind on the world stage, whatever that means. And the particular form this takes is stoking up sinophobic fears around China.
And here’s an example of Nick Clegg, the Global Head of Corporate Communications at Facebook, who says, and here’s a quote: “[The] Chinese model presents a risk to the open Internet as we know it.” That’s Nick Clegg. And they say that, without mentioning that Facebook itself has been ruining parts of the open, free internet as we know it—or at least as we visited a couple of decades ago—for years now, slow. Yet another narrative strategy that these companies use to distract from the need of regulation.
So watch out for these, see if you can recognize them in the news. And see how effective they are.
Digital Markets Act & Digital Services Act
Now, these concerns around lobbying, they are quite urgent today. And the authors of the report mention an example of two proposals that are currently being considered by the European Council and the European Parliament, of legislation where there’s a lot of lobbying going on.
And these are the proposed Digital Markets Act, which seeks to prevent abuse of market power and to encourage competition within the European market. And the Digital Services Act, which seeks new legislation around content moderation and around what is and is not allowed in terms of advertising and recommendation algorithms.
Now what this report details is that of the 271 meetings that people in the European Commission have held around these proposed Acts, nearly 75% of those was with companies or groups or business associations from within the digital industry. Only a tiny proportion was with people or groups who speak up on behalf of civil society.
That makes you really think: who knows whether these two acts will actually make it through, and will make it through unscathed. This is really a point where you can see, or where we might expect to see, the real-world impact of these lobbying activities.
Well, yeah, so what about the way forward? The report mentions quite a number, 12 recommendations or steps that could be taken to make the situation better. They include: more transparency around lobbying, more transparency around think tanks, consultancies and organizations that lobby on behalf of others. People should disclose any conflicts of interest that they might have. Legislators and policymakers should not spend all of their time listening to businesses, but really seek out the voices of people in civil society.
Well, I would say that, yeah, it sounds super well intended, but I’m not really sure whether it can or will have any impact. Let’s just take one concrete quote of one of these recommendations, which is: “EU officials and policymakers should be sceptical of those lobbying them, question their funding sources, check their sources, denounce any type of wrongdoing/non-transparent/ unethical lobbying they face.”
What does it even mean to be sceptical? It’s not even actionable. I’m really, I am suspicious, whether any of this will have any impact.
And perhaps surprisingly, the main points in the report that I suspect would have an impact, they actually don’t have anything to do with lobbying at all. But they’re more about addressing points about market position and some of the business models of some of these companies. So here’s one recommendation where I actually do see some prospects. So the authors say: “… address the privacy exploiting business model of digital platforms and empower users by banning surveillance-based advertising and allowing users to opt out of content recommender systems/algorithms.”
Yeah. Here’s another: “Tackle the excessive market power of Big Tech firms by strengthening obligations for gatekeepers, strengthening merger controls, and develop structural instruments to break up the all too powerful digital monopolies.”
Yes, that if it were to be implemented, that might actually change something about how these businesses operate, how they’re able to operate. But those are exactly the sorts of measures that these organizations are spending nearly 100 million euros a year lobbying against. So we’ll see if that actually happens.
Well, what does all of this mean? I do apologize if you came here for a bubbly, happy, friendly, lovely story. Because I realize that this is actually quite worrying. Especially because of the way that these products and services that these companies offer, they have such a huge impact on how people live, on people’s freedoms, on people’s … even thier desires and well-being. But I think it’s precisely because of that, that it’s really good that the authors of this report put the finger on it. Especially on the outsized role that lobbying is playing in practically keeping this industry barely regulated, free for all.
On that note, I would like to thank the authors of The Lobby Network: Big Tech’s Web of Influence in the EU for this week’s report. For more vulnerability research, talks and essays, stay tuned for fresh episodes from Vulnerable By Design, our parent program. You can also sign up to our email newsletter, The Vulnerability Letter. Head to vulnerablebydesign.net for more information. I am Chris Onrust. Thanks for listening and bye for now.