Abstract
The success of tech firms rests on their ownership of the algorithms for operating new platforms for the interactions among five groups of stakeholders in the markets of news, ads, and chats: stakeholders from the spheres of politics, journalism, the citizenry, the tech firms themselves, and other firms. Recent regulations that touch on property rights such as the German Netzwerkdurchsetzungsgesetz and the European Directive on Copyright in the Digital Market have turned ownership of algorithms into exclusive ownership. Thereby tech firms obtain also the right to censor and the exclusive right to micro-target clients for advertisers. Coase’s theorem is used to discuss alternative allocations of property rights that could improve the quality of news, ads, and chats.
Highlights
Issue This commentary is part of the Multidisciplinary Issue of Media and Communication, edited by Epp Lauk (University of Jyväskylä, Finland) and Raul Reis (Emerson College, USA)
“I’m a lawyer and I have no idea what that means” declared Republican Senator Lindsey Graham while holding up the Facebook Terms of Service in the Congressional Hearing regarding Facebook on April 10th, 2018 (C-Span, 2018). In spite of such objections, the US Congressional Hearing, the German Netzwerkdurchsetzungsgesetz (NetzDG)1 of January 2018, the General Data Protection Regulation (GDPR)2 of May 2018, and the Directive on Copyright in the Digital Market (“Copyright Directive”, approved by the European Parliament in September 2018; expected implementation in laws of the European Union (EU) member states in 2019)3, all push in the direction of giving even more rights to tech firms: first, the right to use their algorithms to censor, as well as the exclusive right to use their algorithms to microtarget their users with messages from firms and advocacy groups who pay for this
The tech firms earn the largest share of advertising revenues, algorithm owners may decide to let successful vloggers share in advertisement revenues once they attract many new clients (YouTube), or put advanced social media monitoring tools such as CrowdTangle at the disposal of media companies so as to maximize the audience for their news items on their social media pages (Facebook)
Summary
“I’m a lawyer and I have no idea what that means” declared Republican Senator Lindsey Graham while holding up the Facebook Terms of Service in the Congressional Hearing regarding Facebook on April 10th, 2018 (C-Span, 2018) In spite of such objections, the US Congressional Hearing, the German Netzwerkdurchsetzungsgesetz (NetzDG) of January 2018, the General Data Protection Regulation (GDPR) of May 2018, and the Directive on Copyright in the Digital Market (“Copyright Directive”, approved by the European Parliament in September 2018; expected implementation in laws of the European Union (EU) member states in 2019), all push in the direction of giving even more rights to tech firms: first, the right to use their algorithms to censor, as well as the exclusive right to use their algorithms to microtarget their users with messages from firms and advocacy groups who pay for this. We will take Coase’s theorem as the point of departure to answer the research question whether alternative allocations to stakeholders of property rights over algorithms would result in a lower price, or a higher quality of news, ads, and/or chats
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