It’s Haugen, Frances Haugen – Why the Regulation of Big (and small) Tech is the Next Big Thing

 

AUTHOR: DR NAOMI SCHEMBRI

In this publication, Dr Naomi Schembri, an Associate within City Legal, considers the international efforts being made towards the regulation of social media platforms and other businesses having an online presence by delving into revelations made by Frances Haugen, the now world-famous whistleblower who has publicly exposed practices and inner workings adopted by her ex-employer, Facebook, followed by an overview of the proposed Digital Services Act Package as currently being discussed at a European level.

Published on 25th October, 2021

 

On Tuesday 5th October, Frances Haugen, Facebook’s former product manager, blew the whistle on Facebook in a four-hour long speech before the US Senate’s Commerce Committee where she accused her former employer of being ‘morally bankrupt’ for preferring its own galactic profits over the public’s general safety and wellbeing.

During said speech, Haugen came out as the whistleblower behind the reports published last month in the Wall Street Journal – ‘The Facebook Files’ – with one of the bombshells therein constituting damning proof that, notwithstanding Facebook’s knowledge as to the harm that its products – including its subsidiary, Instagram, which has further extended itself to ‘Instagram Kids’ made available to children between the ages of 10-12 – were causing to children and teenagers, and this through research that it had itself commissioned, it opted to ignore and hide such findings to instead continue programming algorithms that work to amplify its users’ insecurities.[1] Haugen went so far as to assert that Facebook’s products materially ‘harm children, stoke division and weaken our democracy’ in that these promote conflict, facilitate human trafficking, and may also be used as a platform for the sale of illicit substances.

Who is Frances Haugen?

Apart from Haugen’s credibility as whistleblower being owed to her being a qualified electrical and computer engineer, as well as to her having graduated from Harvard with a Master of Business Administration in 2011, she had also been hired by Google, Yelp and Pinterest where she specialised in designing algorithms and other tools that determine what content gets served to users, and all this before joining Facebook in 2019 as product manager. Holding such managerial position within Facebook of course meant Haugen had open access to various documentation as well as exposure to Facebook’s internal workings. If this were not enough, the content of her revelations has been backed up by various others who have similarly resigned from high-ranking positions previously occupied within Facebook – and who would be in a better position to analyse such comments and contribute to the discussion than people who have actually lived the reality described by Haugen inside Facebook’s walls?

Amongst such people was Nathaniel Persily, professor at Stanford Law School, who resigned from his post at Facebook in 2020 after his futile attempts to get Facebook to publish internal data for analysis by third-party independent researchers. He is also the person who drafted a proposed law providing for companies to give independent researchers access to their underlying data. In addition, Brian Boland, former Facebook executive in charge of Facebook’s partnership data, and who also resigned this year, upheld Haugen’s plea for greater transparency as being the first step which must be implemented in any regulatory framework. Damian Collins, UK MP, has furthermore confessed that Facebook keeps refusing independent bodies from auditing its operations and thwarts the efforts of those who actually try, this conforming to Haugen’s claim that Facebook is ‘so scared of even basic transparency, that it goes out of its way to block researchers [both internal and external] who are asking awkward questions’.[2]

“As long as Facebook is operating in the dark, it is accountable to no one

In her speech, Haugen compared Facebook’s operations to a ‘black box’ through which comparison she conveyed the idea that, unless Facebook (and other similar social media platforms) provide insight into the manner in which they operate their platforms, such as for instance how they program their algorithms to control what users see on their screens, outsiders’ lack of visibility into the workings of these platforms will continue to make it more difficult to understand how problems created by such workings can be remedied. This led her to call for greater transparency in how algorithms are programmed to function in promoting content to the public, as well as in research internally conducted or commissioned by such platforms, and this so as to ensure that users are fully conscious as to the effects particular social media platforms may have on their health – whether mental, emotional and/or physical. She also insisted that this can only be achieved through regulation as it is by now clear that such platforms have failed to effectively regulate themselves.

Haugen’s testimony has prompted lawmakers, regulators, governments and the general public worldwide to push for the regulation of Big Tech by imposing tougher rules to govern how social media platforms operate and interact with the public, and stricter competition rules to reduce dominance over the online economy whilst promoting healthy competition in this sector.

Amongst the countries strongly in support of Haugen’s testimony and the regulation of Big Tech lie the following:

  • US: Lawmakers are debating on the promulgation of a law to curtail the freedom currently enjoyed by social platforms.
  • UK: A brand-new legislation, the Online Safety Bill,[3] is being drafted providing for the creation of an internet safety regulator having the task to oversee social platforms’ compliance with the regulatory framework tackling harmful content online.
  • Australia: Deputy Prime Minister Barnaby Joyce also voiced his country’s intention as to working towards the regulation of social media and other online platforms to curtail their harmful effects on teens and children in particular.

Europe: The Digital Services Act Package

The whistleblower’s testimony also strengthened Europe’s position towards the regulation of online platforms. Such regulation is already in the pipeline – this through the Digital Services Act Package (the ‘DSAP’) – which is currently being discussed at a European level, with the possibility of being adopted and made directly applicable to the Member States as early as next year.

The DSAP comprises two legislative initiatives – the Digital Services Act (the ‘DSA’)[4] and the Digital Markets Act (the ‘DMA’)[5] – proposed by the European Commission with the objective of harmonising the rules governing online platforms, thereby creating a safer and more transparent digital space and fostering healthy competition through the establishment of a more level playing field for stakeholders concerned.

The DSAP shall apply alongside the e-Commerce Directive[6] – transposed into Maltese law by virtue of Chapter 426 of the Laws of Malta, being the foundational legal framework for the removal of obstacles to cross-border online services in the EU – which has, ever since its inception some 20 years ago, seen fast paced innovation with regard to how online users shop, browse and access services over the web. The implementation of the DSAP will therefore change the manner in which companies offer, and their business users make use of, digital services, products and content within the EU.

The below constitutes a brief overview as to what the two Acts forming the DSAP are intended to achieve:

The DSA:

  • Envisaged to cover a broad scope of service providers, with its geographical applicability reaching beyond the EU territory insofar as the provider has a ‘substantial connection’ to the EU, which is currently envisaged to cover situations where the provider has an establishment in the EU; or has a significant number of users in the EU; or targets its activities, products or services to EU citizens.
  • Adopts a layered approach providing for: (1) intermediary services (e.g. internet service providers, content distribution networks); (2) hosting services (e.g. cloud or web-hosting platforms); (3) online platforms (e.g. social networks, online marketplaces, app stores, online travel and accommodation websites); (4) very large online platforms (e.g. as per (3) but having more than 45 million average monthly active users in the EU) – with obligations imposed being of a cumulative nature for providers under (2), (3) and (4), meaning that providers of hosting services will have to abide by rules governing it as well as by rules governing providers of intermediary services. The same pattern applies for providers falling under (3) and (4).
  • Conveys supervisory and enforcement powers onto the European Commission.

The DMA:

  • Intended to create a level playing field and promote healthy competition, initiative and growth of services in the digital market by regulating so-called ‘gatekeeper platforms’, which serve as a gateway enabling service providers to reach end users and vice-versa.
  • Applies only to providers of ‘core platforms services’, such as search engines, social networks, messaging services, online intermediation services, the designation of which shall be established through the satisfaction of three cumulative criteria, i.e. (a) the platform provider is active in multiple EU countries; (b) has a strong intermediation position, meaning that it connects a large number of users to a large number of businesses; and (c) has a stable and durable market position.
  • Conveys supervisory and enforcement powers onto the European Commission.

What’s Next?

Of course, although Haugen’s speech and revelations mainly targeted her ex-employer, Facebook, and its subsidiaries, the scope of her efforts clearly emerged to be that of raising awareness as to the negative impact that certain practices implemented by online platforms and other businesses having a powerful online presence are causing to our society, and this to lobby in favour of the promulgation and adoption of robust regulation to curtail such unfettered power.

The proposed DSAP is currently being discussed at a European level, with a final position expected to be issued by the end of this year 2021. Reports on the proposed amendments will then follow. Once adopted, the DSAP, comprising of the DSA and the DMA, shall be directly applicable in all Member States, including Malta, creating a harmonised regulatory environment for the offering and obtainment of digital services and for the promotion of healthy competition in the digital market.

It has been made clear that regulation will not simply impact Big Tech and, therefore, platforms, services providers, and traders which do not fall under the ‘Big Tech’ category may still be captured under the regulatory cap, and this particularly through the need for greater transparency and accountability which have been the driving forces behind this movement. From a regulatory and business perspective, companies that offer digital services and operate within the digital market in the EU resulting in their operations possibly falling within the remit of the legal regime being created by the DSAP are advised to keep abreast with ongoing developments in connection to the DSA and DMA.

We shall likewise be closely tracking the developments taking place at a European level and reporting back once the Digital Services Act Package reaches its final stages. For more information on the Digital Services Act Package and how this may potentially affect you, please contact:

Dr Emma Grech, Partner –

emma.grech@thecitylegal.com

Dr Naomi Schembri, Associate –

naomi.schembri@thecitylegal.com

DISCLAIMER: The information contained in this document does not constitute legal advice or advice of any nature whatsoever. Although we have carried out research to ensure, as far as is possible, the accuracy and completeness of the information contained in this article, we assume no responsibility for errors or other inconsistencies herein.

References:

[1] https://www.wsj.com/articles/the-facebook-files-11631713039

[2] https://www.theguardian.com/technology/live/2021/oct/05/facebook-hearing-whistleblower-frances-haugen-testifies-us-senate-latest-news

[3] https://www.gov.uk/government/publications/draft-online-safety-bill

[4] https://eur-lex.europa.eu/legal-content/en/TXT/?uri=COM%3A2020%3A825%3AFIN

[5] https://eur-lex.europa.eu/legal-content/en/TXT/?uri=COM%3A2020%3A842%3AFIN

[6] https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32000L0031