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A Facelift for Facebook

Summary:
The free market has never been a free-for-all, yet tech companies have long operated with few constraints on their business models. Perhaps the latest Facebook scandal will finally provide the impetus governments need to take effective action – beginning with the implementation of digital operating permits. SAN FRANCISCO – If the testimony of whistleblower Frances Haugen, a former Facebook data scientist, before a US Senate subcommittee told us anything, it was that tech companies cannot be relied upon to regulate themselves. And why should they be? It is a basic principle of modern economics that governments mandate the terms of operation for business. The real question is how governments can best exercise this

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The free market has never been a free-for-all, yet tech companies have long operated with few constraints on their business models. Perhaps the latest Facebook scandal will finally provide the impetus governments need to take effective action – beginning with the implementation of digital operating permits.

SAN FRANCISCO – If the testimony of whistleblower Frances Haugen, a former Facebook data scientist, before a US Senate subcommittee told us anything, it was that tech companies cannot be relied upon to regulate themselves. And why should they be? It is a basic principle of modern economics that governments mandate the terms of operation for business. The real question is how governments can best exercise this authority when it comes to the tech sector.

Facebook, Google, Amazon, and other tech companies have been allowed to develop unprecedented surveillance-based business models that include relentless capture of personal data, including geographic locations, and the manipulation of users with hyper-targeted content. And yet, as Haugen testified, “Almost no one outside of Facebook knows what happens inside Facebook.” The KGB would have been envious.

But tech companies also serve a useful purpose. They have built much of the public infrastructure of the digital age, including search engines, global portals for news and social networking, GPS-based navigation apps, online commercial and job marketplaces, and movie, music, and livestreaming platforms.

To enable digital platforms to continue performing a beneficent role, while minimizing their harm, governments should require them to secure “digital operating licenses.” There is plenty of precedent for this: from grocery stores to nuclear power plants to pharmaceutical manufacturing facilities, traditional businesses must be granted various licenses and permits before they can begin operations, not least to ensure the safety of workers, customers, the environment, and the local community.

Likewise, to be granted a digital operating license, tech companies would have to meet certain conditions. The first would be to obtain users’ explicit permission before collecting any...

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