Analyzing the Impact of the FCC’s Proposed Restoring Internet Freedom Order

On November 27, 2017 Recon Analytics convened a panel of esteemed legal, policy and regulatory experts to discuss the Federal Communications Commission’s (FCC) Restoring Internet Freedom Order. The discussion focused on the investment and innovation implications of the FCC treating broadband as a Title I information service; how proponents of Title II may react and the arguments they may raise on appeal; and how all of this will work to either attract or repel additional investment in the sector for years to come.

Majority of Americans concerned about internet companies tracking their personal information

At the end of October, Recon Analytics surveyed more than a thousand American consumers to assess their awareness of and attitudes towards the variety of ways internet companies and social media platforms like Facebook, LinkedIn, Snapchat and Twitter collect, track and use consumers’ personal information.  The survey, explained below, reveals that a majority of Americans are concerned about the amount of personal data these companies track and strongly favor more transparency on how personal data is collected and used as part of internet companies’ business models.

Key findings: 

  • An overwhelming majority of consumers, 73%, are concerned about how their personal data is being collected and used by internet companies.
  • Almost 77% would like more transparency on the ads being targeted to them based on the personal data the internet companies collect.
  • Among those surveyed there is a shared feeling of uncertainty and insecurity over how much internet companies and platforms know about each of us and what they’re doing with that information.
  • More than 70% of respondents are unaware of tools they can use to control or limit the usage of their personal data.
  • Nearly one third of respondents, 29%, did not know that many of the “free” online services they use are paid for via targeted advertising made possible by the tracking and collecting of their personal data.
  • Almost half of the respondents are aware that Facebook and Google track their personal data even when they are not actively using their services.
  • A vast majority of those surveyed, 77%, support regulations that would require Google, Facebook and other online platforms to be more transparent about how and what personal data they collect from consumers.
  • An even greater majority, 82%, are in favor of legally requiring internet companies to disclose what information they collect and to whom they sell it to.
  • More than half of the respondents, 55%, would use internet companies’ products and services more if they would give consumers greater control over their personal information.

The all-encompassing surveillance and storage of personal data by internet companies with limited or no regulatory or legal checks and balances worries most Americans, rightfully so, especially when the attitudes of many of these companies’ senior leaders are taken into account.

Nothing to hide

On December 3, 2009, Eric Schmidt, then-Google CEO and current Executive Chairman of Alphabet Inc., Google’s parent company, dismissed the notion of online privacy in an interview with CNBC, saying, “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”

Terrifying as that statement may be, Google’s all-seeing eye may have already made secrets a thing of the past.

At the 2010 Washington Ideas Forum Schmidt offered more insight into what Google knows.

“We don’t need you to type at all. We know where you are. We know where you’ve been. We can more or less know what you’re thinking about,” he told attendees.

Social norms

Facebook’s chief executive Mark Zuckerberg has a similarly cavalier attitude when it comes to online privacy. In 2010 he said the conventional concept of privacy is no longer a “social norm.” Later that year a Facebook employee claimed that his boss simply “doesn’t believe in it.” Perhaps unsurprising given that Zuckerberg described those who trusted him with their data as “dumb [expletive]s” shortly after launching the social media platform.

Transparency

Efforts from internet companies’ to be more transparent about how they use consumers’ personal data may be too little, too late: one third of respondents said increased transparency will not alleviate their concerns about online data collection and usage.

Regulation on the horizon?

Americans are skeptical about government interference in private businesses and for the past two decades the internet grew and evolved with little regulatory oversight. The Federal Communications Commission (FCC) took a largely “hands off” approach to regulating the internet under both Democrat and Republican administrations. As a result, the internet economy grew by leaps and bounds. The resulting bonanza has been so successful that today four of the world’s largest corporations are unregulated technology firms: Apple, Alphabet Inc., Microsoft and Amazon. Their founders have become some of the wealthiest people on the planet.

Although the “hands off” approach has long been favored by regulators, the pendulum is now heading in the opposite direction. This is quite a reversal of fortune for internet companies who – just two years ago – were successful in persuading the FCC to impose privacy regulations on network providers to thwart a competitive threat to their business models. Earlier this year internet companies deployed their lobbying muscle to fight Congressional proposals that would have extended the privacy rules beyond network providers to companies like Google and Facebook. What’s good for the goose apparently isn’t good for the gander.

Long term outlook

The silver lining for internet companies and their investors? Over half of Americans – 55% – would use their products and services more if they would give consumers greater control over their personal information. This would require a radical change in thinking by these companies in that they have to depart from the mindset that they own the consumer data they collect. They might have a license to use it, the same way that consumers have a license to use a search engine or a software product, but fundamentally it is an equal exchange.

Although Americans have cheered the free services offered by companies that previously have had “Don’t Be Evil” as their motto, a certain sobering feeling is taking over. Today, internet companies maintain the upper hand in the online economy: they own their products and services and the data and information generated by their customers. This paradigm won’t last forever so these “disruptors” must prepare for when regulators come to disrupt them.

Wireless – The Essential Engine by Recon Analytics