We Need New Rules for the Internet Economy

There are still people out there who think that Amazon is nothing more than an online version of a department store. But it's much more than that: It is a rapidly growing, global internet giant that is changing the way we shop, conquering more and more markets, using Alexa to suck up our personal data straight out of our living rooms and currently seeking access to our front door keys so it can deliver packages even when nobody's home.

Facebook has also long since become much more than a social network for chatting with friends. It is a media company that earns billions in advertising by disseminating content without checking it first.

The list could go on - with Google, or Alphabet, as the company now calls itself, and others. What they all have in common are growth rates that would be impossible in the analog economy. And that they have amassed a dangerous amount of power - which is why they are increasingly facing political pushback.

Shifting Mood

It wasn't that long ago that EU efforts to limit the power of Google and Amazon on the European market were decried in the U.S. as protectionism, as an attempt by the Europeans to protect their own inferior digital economy. Now, though, politicians and economists in the U.S. have even begun discussing the prospect of breaking up the internet giants. The mood has shifted.

Republicans have always been skeptical of the giants of Silicon Valley, which generally haven't been shy about their support for the Democrats. Now, though, even the Democrats have begun looking askance at the companies, particularly since an election campaign which showed that the business model pursued by Facebook, Google and Twitter proved particularly advantageous to Donald Trump. Their platforms distributed millions of items of right-wing propaganda, with which Russia sought to influence the American vote. The exact role played by the internet companies is currently the subject of an investigation in the U.S. Congress.

As diverse as the appraisals of the critics might be, they are right. There are, of course, plenty of advantages associated with digitalization, but digital capitalism badly needs new rules - because the old laws are no longer effective. They were made for an economy that traded in real goods and for which price was an important factor. That could all be taxed, controlled and, if need be, adjusted.