Google democratized information, Uber democratized car rides, and Twitter democratized publishing a single sentence.
But to the World Bank, the powerful Washington-based organisation that lends money to developing countries, Silicon Valley’s technology firms appear to be exacerbating economic inequality rather than improving it.
It’s not a new argument in California’s San Francisco Bay, where protesters have blockaded Google’s commuter buses and local activists try to curtail new development for tech company headquarters. But the 330-page report released on 14 January is perhaps the most high-profile examination of how specific American tech giants impact the global economy.
“Second, some of the perceived benefits of digital technologies are offset by emerging risks,” the report says. For instance, it says: “Many advanced economies face increasingly polarized labor markets and rising inequality – in part because technology augments higher skills while replacing routine jobs.”
“The economics of the internet favor natural monopolies, the absence of a competitive business environment can result in more concentrated markets, benefiting incumbent firms. Not surprisingly, the better educated, well connected, and more capable have received most of the benefits – circumscribing the gains from the digital revolution.”
“Regulatory puzzles are posed by firms such as Amazon, Facebook, and Google ... These firms confound conventional competition law because they do not act as traditional monopolies. The risk is that states and corporations could use digital technologies to control citizens, not to empower them,” it continued.
The report goes on to say that many of the shortcomings of American tech firms can be overcome if governments can increase public access to the web. Technology firms such as Google and Facebook are working on projects to offer free internet to parts of Africa and India.
For those projects to work, the companies need to offer internet access with no strings attached, the World Bank says. At one point, it calls out Facebook’s recent efforts to provide free internet access to consumers in some countries – but only to access Facebook.
“The recent trend to develop services in which some basic content can be accessed free of data charges (such as Facebook’s Free Basics or Internet.org), while other content is subject to data charges, would appear to be the antithesis of net neutrality and a distortion of markets,” the report says. “Nevertheless, some defend the practice as a means of extending internet use in low-income countries.”
In the US, politicians and nonprofits have often attacked Wall Street banks and oil companies as sources of corporate profits that don’t help the rest of society. The World Bank report suggests it may not be long until tech joins their ranks.
