ITP Techblog

The new government faces quite a challenge. What to do about tech giants who operate here in New Zealand but don't abide by New Zealand laws, New Zealand revenue gathering requirements, New Zealand regulations or support New Zealand institutions or culture.

We've seen Google publish suppressed court details, we've seen Facebook share offensive material, we've seen tax manoeuvres that would leave a fighter pilot breathless and giddy and of course we've seen a gutting of local media outlets and capability, a thumbing of the nose at New Zealand's requirements for everything from defamation to the Fair Trading Act through to Broadcasting Standards Authority and beyond.

If every you've complained to Facebook about a post or a group you'll know the company has its own rules about what is considered acceptable content. No, you can't see them and no, you can't amend them but you must abide by them. Oh and if you break them, you can't appeal that decision.

This isn't a problem restricted just to New Zealand either. All around the world regulators and policy makers are struggling with tech and the disruptors, from Uber and AirBNB to Google to Amazon and others. They all used to say they of course would abide by New Zealand law and of course they would work with the authorities around making sure the services offered in New Zealand meet New Zealand standards, but they seem to have gone quiet on that front these days. Even venerable old Microsoft has settled with Inland Revenue and paid some tax, albeit far less than you'd consider likely for a company of its size with the amount of sales it makes in New Zealand each year.

As ever the Europeans are more than happy to write the book and then throw it at the tech giants. Google has racked up US$8 billion in fines and continues to argue through the courts about privacy and its monopoly or dominant market position on search.

But even with its impressive privacy laws and focus on user rights, the EU is constantly frustrated by tech efforts in this space. Across the pond in the United States, incoming president Joe Biden is expected to be somewhat less troublesome for tech companies than his predecessor, but if the Democrats win both Georgia senate seats in the run off in January, the majority rule will give the party the firepower it needs to go to town on the companies that don't pay tax, have helped spread false information and fake news and who continue to pretend they're not responsible for the content they carry. Currently, the tech stocks are surging high on the change of leadership, clearly expecting Biden to be hamstrung in any efforts to regulate, but that may soon change.

The EU is in the throes of introducing two new pieces of legislation - the Digital Services Act and the Digital Markets Act - that are designed to force tech companies to open their books, share information on how their algorithms work, allow regulators to see into the companies and their approach to managing content on their platforms.

Big tech is, naturally enough, horrified by this and feels it is being sorely done by. I doubt very much if those who have been on the wrong side of its decision making process would agree.

All of which puts New Zealand in a tricky spot. Do we go it alone and forge our own laws and requirements or do we wait to see how it pans out with the big boys and girls?

The argument against going it alone has often been that the tech companies will simply pull out, or stop offering those products in New Zealand. I simply do not believe they will do that. They understand the power of the network effect and shutting an entire country off rather than abiding by its requirements seems to be the last thing they'll want.

But, if the EU does introduce these new acts, and if the US does start to regulate, these companies will soon find that when you disturb the dragon in its den, even when it's sleepy and slow moving, you'd best be wearing your asbestos underpants because things will start to heat up. Eventually. Once it gets moving.

Here in Hobbiton we've already called big tech out for its failures around the Christchurch shooting. None of the companies have done more than pay public relations lip service to the idea of change - perhaps soon they will have to.