Like banks during the 2008 financial crisis, Facebook and other tech giants are “too big to fail,” according to a University of Oxford study that calls for new regulations to protect users and the company in the event of a possible collapse.
In their article, published in the Internet Policy Review on Tuesday, Carl Öhmana and Nikita Aggarwal argue that the world’s biggest tech companies shouldn’t suddenly go out of business – but the world isn’t prepared for what would happen if they did. did.
“The disappearance of a global online communication platform such as Facebook could have catastrophic social and economic consequences for the countless communities that depend on the platform on a daily basis ”, write Öhmana and Aggarwal,“ as well as for the users whose personal data Facebook collects and stores ”.
For users, the Facebook collapse could have far-reaching ramifications. Most immediately, lose use of the site itself. This, Aggarwal notes, is a particularly acute problem in many developing countries, “where Facebook can be the primary means of communication for people. Here in the UK we have a variety of options. The sudden loss of Facebook could separate people from friends, family, specific sources of information or a critical driver of commerce.
It would also pose serious data protection concerns for active users, who might find their records split up and sold in bankruptcy proceedings, or simply deleted without their consent.
In the longer term, the collapse of such a site would also result in the loss of a large amount of historical material, which future generations would appreciate in ways that society cannot yet predict.
Much like the collapse of Lehman Brothers or Bear Stearns, the failure of a business the size of Facebook can seem nearly impossible. But the lessons of the financial crisis show that companies must plan for the impossible, argues Aggarwal.
“We make an explicit analogy to the concept of ‘systemically important financial institutions’, which was a response to the ‘too big to fail’ problem,” she told The Guardian. “There are many interesting parallels when it comes to institutions that need to be maintained, but which we cannot simply keep alive at all costs.
The couple are proposing a new concept, “systemically important technological institutions” (Siti), to coerce and regulate companies like Facebook to minimize damage from a potential collapse.
“Sometimes I have a feeling that the phrase ‘too big to fail’ is interpreted as’ so important that it has to be there forever ‘,” says Öhmana, “but in fact we say’ too big to fall. in a tumultuous and disorganized manner. “
The comparison to the banking industry also extends to how big tech power opponents should think about the proposals, he said. “There are a lot of people who don’t like the number of food banks, but few would be happy to see them fail overnight, taking with them all the savings and financial assets of their customers to the bank. autumn.
At one end of the spectrum, regulating Facebook as Siti could involve, for example, “constraints on the use of our data; on advertising; on freedom of expression; on hate speech, ”Aggarwal says. But at the other end, both argue, bigger comparisons are needed: Facebook’s archives could be declared a “digital world heritage site”, similar to the World Heritage status Unesco grants physical sites around the world. .