On March 4, Financial Times reported that David Cicilline, the head of the House antitrust subcommittee, suggested separating social media platforms from selling information and data, or so-called “Glass-Steagall for tech”. (The Glass Steagall Act was enacted in 1933 in the wake of 1929 stock market crash to separate investment and commercial banking activities. It was repealed in 1999 due to many loopholes that were found. To this day, it still remains debatable whether the repeal contributes to the 2008 financial crisis.)
Since this report, many have challenged the validity of “Glass-Steagall for tech”, including FT’s own columnist Zabella Kaminska. She argues “social media and tech platforms are structurally different to banks… (because) data mining is intrinsic to the ability of social media platforms to generate income.” Instead of an oversimplified separation, Zabella asks regulators to pay attention to platform companies moving into financial services. “By crossing the board, growing assumptions (and concern) is that the ultimate objective of the tech companies is to compete directly with banks – while benefiting from a much lower regulatory burden than banks are currently subject to. (In other words), the bigger threat is ‘(tech platform companies’) capacity to use customer capital to misdirect the entire economy from a singular algorithmic command point,” warns Kaminska.
On a different note, James Cockayne, Director of The Centre for Policy Research at United Nations University, warns “command economies* are already becoming tech platforms. Hence China’s social credit system . Geostrategy now turns on how states & biz scale competing with platform economies,” he tweeted.