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January 4, 2019
Regulation of Big Tech Is 2019 the year that Facebook, Google and Amazon face the regulatory music? Big Tech is poised to continue playing defense this year in the face of mounting public and political scrutiny over the generally unchecked collection and use of user data. Just watching a few minutes of the many, many government hearings in the U.S. and Europe that executives from the likes of Facebook, Google and Twitter participated in over the last 18 months or so (Amazon has been spared hearings for a few years but a new probe is likely to change that), it’s obvious that emotions around use of people’s data — everything from shopping habits to near constant location tracking — are running high. In Europe, government regulators are much more active in trying to keep the likes of Facebook, Google and Amazon from overwhelming its single-market economy by leveraging their utter dominance over social media, searchable content and online commerce to edge out any possibility of competition. And the region, which leans toward much stricter antitrust rules, is already handing out fines for violations of its new General Data Protection Regulation law and seems to be working more directly to stymie the seemingly unstoppable growth of these major tech-driven companies. The focus on Facebook seems likely to carry on as the social media company, which also owns and operates Instagram and WhatsApp (collectively with about four billion users, or roughly 52 percent of the global population), dealt with scandal after scandal in 2018 — and not very well. “Delay, Deny and Deflect” was the headline of a New York Times exposé of how Facebook leaders Mark Zuckerberg and Sheryl Sandberg tried to dodge political and public fallout last year. Then
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Facebook coo Sheryl Sandberg and Twitter ceo Jack Dorsey in September before the Senate Intelligence Committee to discuss their companies’ roles in allowing foreign influence in U.S. elections.
U.K. Parliament at the end of November had yet another hearing on the company’s use of consumer data, inviting lawmakers from nine countries to participate. Canadian politician Charlie Angus during the hearing said simply that “the problem we have with Facebook is there’s never any accountability.” He was responding to Richard Allen, Facebook’s director of policy who was sent in (again) to take a tongue-lashing in place of Zuckerberg, who attempted to explain (again) how the company is working to address an apparently lax outlook on collecting, leveraging and sometimes selling user information.
Gen Z Changing the Face of New Media in China As China’s Gen Zers are getting online, they are shunning the social media platforms of their parents’ generation. Sandberg photograph by Jose Luis Magana/AP/REX/Shutterstock; Gen Z by Dave Tacon
by Nyima Pratten
SHANGHAI — It is projected that 40 percent of Chinese consumers will be Centennials by 2020, according to a white paper released last month by data intelligence company Kantar, and Tencent. It is therefore no surprise that brands are eager to appeal to, and resonate with, this new consumer group. This young demographic, otherwise called Gen Z, is beginning to turn its back on the more traditional forms of social media in the country, such as WeChat and Weibo, which they see their parents using. Instead, they are using alternative social media platforms targeted at a younger audience, often with a greater focus on short video sharing as a way of selfexpression. Last year, two popular platforms with China’s under-30-year-olds were Douyin, a video platform utilizing artificial intelligence, as well as the lifestyle platform Xiaohongshu, both of which are increasingly blending the boundaries of
by Kali Hays
A look from the streets of Shanghai during the city’s colorful fashion week last October.
“Perhaps the simplest answer would be to break up Facebook and treat it as a public utility,” Angus suggested as Allen looked away and reshuffled some papers. Even in the European Union, Facebook becoming a public utility is unlikely, but the company’s freewheeling days under the protective umbrella of operating as a mere user “platform” are looking to be numbered. Already its collection and sharing abilities have been limited under the GDPR, and that goes for Google and Amazon as well. All are under additional scrutiny as government officials and the public they represent wise up to the fact that advertisers are not paying the corporations hundreds of billions of
dollars a year simply for lists of names and e-mail addresses, but rather insights into how people live their private lives. Numerous U.S. magazine and newspaper publishers, too, have had to change some of their online operations around collection of reader data to comply with GDPR and are prepping for similar changes to take effect at home, at some point. Richard Gingras, vice president of news at Google, recently told WWD that it would be “…foolish to say regulation does not have its place, but it becomes a question of what? What are we regulating? How are we regulating it?” We might find out this year.
social media and e-commerce. Last year, video sharing app Douyin, developed by Beijing ByteDance Technology, moved into social e-commerce, initially starting at the beginning of the year by linking video content to Taobao stores before launching a Douyin in-platform shop, allowing any user with an account to open their own store. According to figures released by the company last year, the number of active users seen on the platform daily was 150 million. Xiaohongshu, known as “Red” in English, allows users to share photos, product reviews, fashion, beauty and lifestyle content as well as shop, all within one platform, and is described as a social-plusbusiness model. As of last year, the platform had over 100 million users and targets urban women ages 19 to 35. Cosmetic brands have found particular success on the platform by using homegrown KOLs, aka influencers, to affect buying decisions. The merging of social media and e-commerce in China is not uncommon. “It is the nature of China digital start-ups that successful platforms also need to build a whole digital ecosystem,” said Chenyin Pan, China manager at Fireworks, a digital technology company working on social e-commerce in the country. “The key difference between Western platforms and Chinese counterparts, in my opinion, is that the Chinese digital environment sees less value of a platform being unique and original. Any good idea can be ‘borrowed’ relatively fast in today's environment. So what Chinese platforms are doing instead to grow and retain users is building their own ecosystems
so they will have more consumer data, and more data will feed the initiatives to make it easier to create the next quality products,” said Pan. Douyin has launched under the name TikTok in the U.S., which was downloaded on Apple’s App store more than 104 million times during the first half of 2018, becoming the world’s most downloaded app in that time period. However, the U.S. version currently has a limited range of features compared to the Chinese app, meaning that the Chinese Douyin could be a roadmap for the future of blended social media and e-commerce in the West. “China and the U.S.’ digital environments are different in the sense that in the U.S., Facebook, Amazon and Google have been regarded to function with distinct roles. Whereas in China, platforms are more willing to invade in others' territories. So, I think TikTok will face some obstacles to roll out e-commerce in the U.S., especially when Facebook and Instagram are still in the early phase of social commerce integration. Having said that, IoT can develop at a speed exceeding anyone's imagination,” said Pan. At the end of last year, it was reported in Chinese media that ByteDance, operator of Douyin and TikTok, is set to launch a messaging platform, called FlipChat, to challenge the dominance of popular Chinese messaging platform WeChat, which is owned by Tencent. Competition between ByteDance and Tencent has been escalating, with the latter launching multiple short video-sharing apps in an effort regain market share in the allimportant Gen Z segment.