Tech Giants Look to WTO to Entrench Their Monopoly Powers and Profits

Deborah James, djames@cepr.net, who facilitates the campaign on the WTO for the Our World Is Not for Sale network. Originally published at Alternet

In the early 1990s, transnational corporations (TNCs) in the agriculture, services, pharmaceuticals, and manufacturing sectors each got agreements as part of the WTO to lock in rights for those companies to participate in markets under favorable conditions, while limiting the ability of governments to regulate and shape their economies. The topics corresponded to the corporate agenda at the time.

Today, the biggest corporations are also seeking to lock in rights and handcuff public interest regulation through trade agreements, including the WTO. But today, the five biggest corporations are all from one sector: technology; and are all from one country: the United States. Google, Apple, Facebook, Amazon, and Microsoft, with support from other companies and the governments of Japan, Canada, and the EU, are seeking to rewrite the rules of the digital economy of the future by obtaining within the WTO a mandate to negotiate binding rules under the guise of “e-commerce.”

However, the rules they are seeking go far beyond what most of us think of as “e-commerce.” Their top agenda is to ensure free ― for them ― access to the world’s most valuable resource ― the new oil, which is data. They want to be able to capture the billions of data points that we as digitally-connected humans produce on a daily basis, transfer the data wherever they want, and store them on servers in the United States. This would endanger privacy and data protections around the world, given the lack of legal protections on data in the US.

Then they can process data into intelligence, which can be packaged and sold to third parties for large profits, akin to monopoly rents. It is also the raw material for artificial intelligence, which is based on the massive accumulation of data in order to “train” algorithms to make decisions. In the economy of the future, whoever owns the data will dominate the market. These companies are already being widely criticized for their monopolistic and oligopolistic behaviors, which would be consolidated under these proposals.

Think about Google, which has become the largest collector of advertising revenue thanks to its ability to analyze and repackage our data. And think about Uber: it is the biggest transportation company in the world, yet it does not own cars and it does not employ drivers. Its main asset is the massive amount of data it has on how people move around cities. And with that “first mover” advantage, and with its army of lawyers and its massive scale, it can outcompete or simply buy up competitors around the world. The disruption Uber has caused in the transportation sector will shortly be seen in just about every sector you can imagine. The implications for jobs and workers are difficult to overestimate.

Another key rule these corporations are seeking would allow digital services corporations to operate and profit within a country without having to maintain any type of physical or legal presence. But if a financial services firm goes bankrupt, how can depositors seek redress? If a worker (or contractor) for the company’s rights are violated, or a consumer is defrauded, how can they get justice? And if the company does not have a domestic presence, how can it be properly taxed, so that it is on a level playing field with domestic businesses? Most countries require foreign services suppliers to maintain a commercial, physical presence in the country to operate for just these reasons; but Big Tech just sees it as a barrier to trade (and unaccountable profit). Public interest regulations would be seriously undermined.

But that’s not all. Big Tech also does not want to be required to benefit the local economies in which they profit. There are a series of policies that most countries employ to ensure that the local economy benefits from the presence of TNCs: requiring technology transfer, so they can grow their own startups; requiring local inputs, to help boost local businesses; and requiring the hiring of local people, to promote employment. But although every developed country used these strategies in order to develop, they seek to “kick the ladder away” so that developing countries cannot do the same, exacerbating inequality between countries.

The business model of many of these companies is predicated on three strategies with serious negative social impacts: deregulation; increasing precarification of work; and tax optimization, which most would consider akin to evasion of taxes. All of these downward trends would be accelerated and locked in were the proposed rules on “e-commerce” to be agreed in the WTO.

Since proponents of “e-commerce” rules in the WTO first tabled proposals last year, they have sought to convert an existing mandate to “discuss” e-commerce into a mandate to “negotiate binding rules” on e-commerce in the WTO. They have justified their proposals on the basis that e-commerce will promote development and benefit micro, small and medium enterprises (MSMEs) ― as if promoting e-commerce and having binding rules written by TNCs are the same thing. But developing countries have focused their demands on increasing infrastructure, access to finance, closing the digital divide (obtaining affordable access), increasing regulatory capacity, and other concerns that will not be addressed by new rules on e-commerce in the WTO.

Meanwhile, MSMEs are able to participate in e-commerce now; but they are less likely to reap the benefits of scale, historic subsidies, strong state-sponsored infrastructure, tax avoidance strategies, and a system of trade rules written for them and by their lawyers if e-commerce rules in the WTO were to be adopted. What MSMEs need are platforms to facilitate customs clearance and international payments, but this is not what has been proposed in the WTO.

At this point, proponents have scaled back their ambitions due to massive resistance from the African bloc and some Asian and Latin American members. Now they are proposing more seemingly technical issues, such as e-payments, e-signatures, and spam. But these issues actually belong in other fora, such as the UN Conference on International Trade Law (UNCITRAL) or the International Telecommunications Union (ITU) where legal and technical experts rather than only commercial interests were long ago able to help governments establish better rules.

Perhaps as a Plan B, proponents are claiming that “technological neutrality” already exists in the WTO. This would mean that if a country “committed” financial services in the WTO ― meaning that it agreed to have financial services subject to rules limiting regulation in that sector ― then cross-border online banking ― with all of the potential cybersecurity threats of hacking, or unstable financial flows wreaking havoc on local banking systems ― would already be committed. But this is a preposterous idea, and WTO members have not agreed to it, despite the intent of some countries that it is an accepted principle.

Proponents are also pushing to renew a waiver on tariffs on electronically delivered products, but there is no economic rationale as to why digitally traded products should not have to contribute to the national tax base while those that are traditionally traded usually do. But Big Tech may actually obtain this waiver, since it is often “traded” for a waiver that helps stabilize the generic pharmaceuticals market in developing countries, which helps guarantee access to life-saving medicines for millions of people.

The outcome in Buenos Aires will depend on strong resistance by developing country members to this new corporate Big Tech agenda. They should be aided by a strong civil society resistance to further imposition of procorporate rules that encroach on our daily lives.

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19 comments

  1. Thuto

    The old adage, “with power comes responsibility, with great power comes great responsibility” is being upended. Instead of using it great responsibility, these tech giants use their great power to traverse the world in search of the last remaining vestiges of socially responsible policies that promote the collective good instead of reckless profiteering, and spare no resources to have these dismantled. This should come as no surprise of course, with all the low hanging fruits in the market already sown up, the pressure from Wall street analysts to deliver ever steeper growth trajectories remains as unrelenting as ever. Where are these next waves of growth (and profit) hiding? Behind regulatory firewalls of course, so the demolition of these firewalls naturally becomes an apex priority for the giants.

    Reply
    1. Barry

      Despite the Spiderman franchise, I would say that with power comes less responsibility. In fact, most people seek to acquire power to increase impunity.

      You could even say that power = impunity.

      Reply
  2. Amfortas the Hippie

    once again….and in the hard light of the review of Streek’s book, elsewhere…I am struck by the blatant dishonesty and shameless cognitive dissonance of our erstwhile “captains of industry”.
    Free Market, my shiny white ass.
    Even the Tea People I find myself surrounded by are aware of the disconnect, and the horrible unfairness of all of this.
    But the “New Way of the World”(by 2 frenchmen i can for the moment recall;Verso Books) is hard for folks to get their minds around….out here, we’re stuck in the old way of the world, where one identifies a need, and endeavors to fill it. So the few Producers that are left produce cattle and a little wheat, and sell it to the respective cartels….and those producers lower down the ladder produce Methamphetamine…and everybody else sells each others’ houses and does each others’ laundry and are otherwise engaged in the “service sector”….and all is lost…
    and we watch as various sociopathic moguls make off with all the money, and observe that no one in positions of Power give a damn about us.
    People know that something has gone terribly wrong, but dare not mention it….akin to the family secret about Uncle Billy Jim and the girl in the basement…or the necessity of septic tanks…known but politely ignored, lest folks become uncomfortable.
    Every morning as I review the latest outrage and chaos, the Star Wars trope echoes:”I’ve got a bad feeling about this…”
    One day, a line will be crossed…a bridge too far….and our world will burn.
    While it is likely that the weird and the different will bear the blame, and pay the price for all the perfidy and avarice, I pray that the Real Villains…at least some of them…will not escape their appointed lamp-post.

    “The lot of man is ceaseless labour,
    Or ceaseless idleness, which is still harder,
    Or irregular labour, which is not pleasant.
    I have trodden the winepress alone, and I know
    That it is hard to be really useful, resigning
    The things that men count for happiness, seeking
    The good deeds that lead to obscurity, accepting
    With equal face those that bring ignominy,
    The applause of all or the love of none.
    All men are ready to invest their money
    But most expect dividends.
    I say to you: Make perfect your will .
    I say: take no thought of the harvest,
    But only of proper sowing.”
    (https://www.poetrynook.com/poem/choruses-%C3%B4%C3%A7%C2%A3the-rock%C3%B4%C3%A7%C3%B8)

    Good luck to all, and keep up your important work.

    Reply
    1. oh

      Most people don’t ask that question and they meekly submit to the one sided agreements that they don’t read that gives away all their rights to their own data (and those of others they communicate with). Even as I write this there’s a bot that’s recording this info and correlating with my ip address to get to know my identity and store data on me. What a country!

      Reply
    2. Carolinian

      Google would probably say that they provide their customers with free email accounts, free VOIP phone calls, a free (based on Linux) operating system in Android, free maps and a search engine that, while not what it used to be, requires large resources to maintain. Google also supplies ad services that sustain many blogs making the disfavored ones Google’s victims but also Google’s collaborators. For the old model of publishing ad selling took considerable effort.

      This is not to defend Google–particularly under the current misguided leadership–but rather to suggest it isn’t all a one way street of exploitation. We have the choice of not using Google, not using Android, keeping browsers in private browsing mode etc. It’s true that the rise of the internet to dominance has taken away potential audiences from other forms of communication but the previous barriers to entry for newspaper publishing or broadcasting were already quite large. Which is why pre internet most newspapers were monopolies and we once only had three broadcast networks.

      I’d say even now television is a far more pernicious influence than the internet. And while some of the tech giants like Facebook or Amazon have dubious business models they also, for that reason, may not last.

      Reply
      1. Synoia

        Google would probably say that they provide their customers with free email accounts, free VOIP phone calls, a free (based on Linux) operating system in Android, free maps and a search engine…

        They are not customers, they are unpaid suppliers. If they were paid for their information, the business model would collapse.

        Of if one behavior was consider one’s personal property, the property rights would apply.

        Reply
        1. Carolinian

          I’m sure there are a lot of people who have no idea Google is spying on them although the terms of service for Gmail at least have always made the “we read your mail” thing clear. And providing email service, not to mention phone service, does have monetary value since there are companies that charge for this. In other words there are lots of people who knowingly trade some of their privacy for convenience or free stuff.

          In fact we all do this every time we go on the internet. It’s not just Google. As JImmy Carter said, if you want privacy in your communications lick a stamp.

          And btw newspapers have always regarded their readers as the product and their advertisers as their true customers. None of this is new except in scale.

          Reply
          1. Felix__47

            As long the search engine is so good they can know anything about me they want. If I have something secret I am not sending an email. Somehow I think the world has a lot of more serious problems. Take a trip to Port au Prince or Nairobi or Calcutta or Kabul.

            Reply
      2. Synoia

        Google would probably say that they provide their customers with free email accounts, free VOIP phone calls, a free (based on Linux) operating system in Android, free maps and a search engine…

        Actually these are not customers, they are uncompensated suppliers. If they were paid for their information, the business model would collapse.

        Reply
  3. The Rev Kev

    Did you ever hear about the conversation that Mark Zuckerburg had with a friend back in 2004 when Facebook was just getting started? It went like this-

    Zuck: Yeah so if you ever need info about anyone at Harvard
    Zuck: Just ask
    Zuck: I have over 4,000 emails, pictures, addresses, SNS
    [Redacted Friend’s Name]: What? How’d you manage that one?
    Zuck: People just submitted it.
    Zuck: I don’t know why.
    Zuck: They “trust me”
    Zuck: Dumb ****s

    And that is how these tech billionaires regard their customers. I think that in later years that Facebook even called their customers “muppets”.

    Reply
  4. Jeremy Grimm

    The Puzzle Palace unfairly competes with our MegaCorps in confiscating our privacy. The Market demands we should shut down the CIA, NSA and friends and outsource their confiscation of our privacy to the MegaCorps. Only the Market has the wisdom and knowledge necessary to make the most efficient use of our privacy and the control over our thoughts and actions. With the help of “trade” agreements they can serve the world and attain the long sought efficiencies of a truly world scale of operations.

    Reply

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