Democratizing Tech Giants

by Drifa Atladottir and Sverrir Arnorsson

Motivation

Over the past decades, different technologies have risen and dominated new industries. Now we are witnessing the rise of Artificial Intelligence (AI) in the technology industry. Although this is somewhat similar to what we saw with machine automation, there is one crucial difference. Unlike automation, which improves with more human resources, AI improves through its usage and data collection. This difference has significant implications on how the technology affects the dynamics of aggregate economic variables and how we can democratize tech giants that gain from AI.

The macroeconomic perspective

To understand this from the macroeconomic perspective, we need to study the economic interactions between sectors; this can be done with models that simulate the labour movements between industries. These models predict mass movement between sectors at specific tipping points, such as between AI and applied research (AR). These trends are happening because of the unusual nature of AI; although it requires labour to start with, the more efficient it becomes, the less labour it will need. This new dynamic could create market inequalities because of significant spillovers from AI to the industry. To combat this imbalance, one could implement policy instruments. The most important tool is a tax on AI to rebalance AI and AR.

Democratizing tech giants

With more data, AI becomes better, and the product becomes more efficient. Although this leads to a better product for the consumer, this can also generate natural monopolies. Companies that attract more users cultivate significantly better algorithms that improve user experiences. This market position allows them to have better products simply by having more data. Furthermore, this allows them to become so much larger than their competitors that they can buy out anyone still standing. This natural creation of monopolies can be a danger to democracy as these tech giants control the platforms for communication for media, voters, political campaigns, etc. These platforms can significantly affect people's opinions and allow a handful of corporations to control what is permitted, which gives them great amounts of power. On top of that, they have accumulated such detailed data on every user that they can further target who receives what information. To diffuse the power that these companies have, Prof. Gersbach proposed five pathways:

1. Impose vigilant merger control
2. Strengthen competition laws
3. Set data protection laws
4. Set liability rules
5. Democratization

Although the first four pathways can lead to some successful outcomes, they could be problematic in practice when dealing with tech giants. Prof. Gersbach mainly emphasized the idea of democratization. Democratization would allow users of the platforms to be a part of a type of decision-making involving users. To do this, Prof. Gersbach proposed two options. Firstly, one could implement co-boarding. This would be done by randomly selecting a subgroup of users to be a part of an assessment group along with the board of directors. These users could then have voting power along with the board. Secondly, one could implement a user council with groups of expert, avid and regular users who would be elected and have the right to veto critical issues. These actions would provide better transparency into decision making. It would also strengthen the move towards non-biased algorithms and allow users to directly impact the platforms, transferring some power from tech companies to users.

We want to thank Prof. Dr Hans Gersbach for his insights on the issue of natural monopolies in the tech world and his ideas on how to combat them.