New global regulations to rein in big tech firms
The biggest hurdle for big tech international firms in the future will be conforming to global data privacy regulations, according to a new report by data and analytics company GlobalData.
Companies mentioned in the report include Tencent, Alibaba, Apple, Amazon, Facebook and Microsoft as big tech firms that have largely benefitted from “light-touch regulation, strong political alliances, and near immunity from prosecution for activity that would be deemed illegal in the offline world” over the past few years.
GlobalData’s latest report: “Data privacy – Thematic research” states these companies have persistently evaded any form of accountability for data breaches, election manipulation, obstruction of justice, promotion of terrorist material, fake news, and online abuse perpetrated through their own Internet platforms.
The report cautions there is change coming, posing a challenge to companies previously thought of as consumer champions but which are now widely criticised for their data practices.
According to the report, big tech companies are arguably presenting a bigger risk to society than bankers were in 2007, and public outrage at their actions is now forcing regulators to act.
It is still yet to be seen how the new regulations will impact on South African companies, or if they will inspire a revamp of local regulations to meet international standards.
Locally, there is the Protection of Personal Information (POPI) Act, which will, once fully operational, prescribe basic conditions for the manner in which companies are required to manage personal information of individuals and juristic persons.
POPI sets out the general standard for security safeguards that must be implemented by a responsible party in relation to personal information.
The European Union has the General Data Protection Regulation, a law on data protection and privacy for all individual citizens of the European Union and European Economic Area.
The GlobalData report comes at a time in SA when the average cost of a data breach has jumped by over 12% from last year.
This is according to the IBM 2019 Cost of a Data Study, which shows data breach costs are on the rise globally.
IBM says based on four years of historical data, R43.3 million is the average total cost of a data breach, which represents an increase of 12.16% from the previous year.
The IBM study shows malicious or criminal attacks were the root cause for 52% of data breaches in SA.
GlobalData in its report says after several years of regulatory missives emanating from the European Union, US regulators are also initiating formal probes.
“On both sides of the Atlantic, data privacy regulation is gaining prominence as the very future of the ad-funded business model that supports Facebook, Google and many others is at stake. Even anti-trust regulators are shifting their focus from investigating abuse of significant market power in product markets, to investigating abuse of power when it comes to the control of customer data.”
It adds that advertising companies and Internet platforms will be the biggest losers from the increased regulation, as they rely on an advertising-funded revenue model which is inherently adverse to data privacy.
Laura Petrone, senior analyst for GlobalData, says: “Advertising-funded companies are forging pure ad business models for the collection, sale and use of personal data, with a number of non-material costs for customers, as they are designed to optimise the user’s attention to the detriment of data privacy.
“While compliance costs for big tech are almost certain to rise in the short- to medium-term, these companies will still have a rosy future in the long run, thanks to their resources and ability to adapt.”