Regulatory Chill: tech giants lobby negotiators at secret Swiss talks to subvert national regulators

by | Feb 17, 2020 | Markets

Global tech giants are lobbying Australian officials in secret talks in Geneva over a deal which could allow them to continue to operate without regulation, despite regulatory calls here to address Facebook and Google’s data abuse scandals; anti-competitive practices by Facebook, Google and Amazon, Apple’s tax avoidance, Uber classifying itself as a technological platform to avoid regulation and enable its exploitation of workers; and the human rights risks of facial recognition software. Sophie Hardefeldt reports.

The Australian Competition & Consumer Commission (ACCC) recommends more, not less, regulation of big tech companies to curb their abuse of market power and to protect consumers. However, through secret negotiations held in Geneva, Australian government officials are developing a “plurilateral” agreement for e-commerce which would further entrench the power of global tech giants. There is strong evidence that the negotiators are being lobbied.

There are currently two sets of secret e-commerce trade negotiations that could determine the future regulation or deregulation of the digital domain. 

SECRET TALKS IN GENEVA 

The first is for a plurilateral agreement on e-commerce which Australia is negotiating behind closed doors in Geneva with 75 other industrialised countries where the big tech companies have their largest presence. These 76 countries are a minority among the 164 countries in the World Trade Organisation (WTO). Most governments are loath to concede too much regulatory freedom if it does not benefit their economies. As a result, e-commerce agreements such as this are mainly pushed by industrialised countries where the majority of tech investors are based.  

Civil society groups can write submissions to their own governments but are excluded from the actual negotiations in Geneva. However, big tech giants Google, Facebook and others have free reign to lobby officials directly, leading to concerns that the big tech companies are enjoying an undue influence over the trade and regulatory agenda. 

Like all trade negotiations, the details are secret, and we won’t see the text of the agreement until after it’s been signed by governments and cannot be changed. What we know is that the agreement is likely to build on the e-commerce chapter in the Trans-Pacific Partnership agreement (TPP-11) and that the Australian government is supporting this.

This will ensure free cross-border data flows and remove requirements for companies to have a local presence. This could prevent the application of national privacy laws and tax regulation. It could also include rules that prevent governments from accessing source code and algorithms, which are important tools in identifying and responding to anti-competitive practices or race, gender, class and other bias. 

These concerns have increasingly been raised in Australia and internationally, as the digital economy has developed and evidence of the bad behaviour of tech companies has grown. 

Media reports have exposed Facebook and Google data abuse scandals; anti-competitive practices by Facebook, Google and Amazon; Apple’s tax avoidance; Uber classifying itself as a technological platform to avoid regulation and enable its exploitation of workers; and the human rights risks of facial recognition software

ACCC SUPPORT MORE, NOT LESS, REGULATION

Last year, these concerns were also raised by the Australian Competition and Consumer Commission (ACCC) inquiry into digital platforms, which recommended more, not less, regulation of big tech companies to curb their abuse of market power and to protect consumers. The Australian Human Rights Commission’s ongoing project on human rights and technology has also highlighted concerns about the impact on privacy and discriminatory effects of the use of artificial intelligence in job selection processes.

The government’s response to the ACCC recommendations is ongoing, but there is a real risk that reform processes could be restricted if some of these trade rules are ratified before the development of relevant laws or regulations. The same restrictions could apply to future recommendations from the Australian Human Rights Commission.

ASEAN NEGOTIATIONS SUPPORTS REGULATION

The second set of negotiations is for the Regional Economic Partnership Agreement (RCEP), which Australia and 14 other governments have agreed to sign later this year. The final e-commerce chapter for the RCEP agreement has just been leaked and shows a much more cautious approach to e-commerce rules. 

The RCEP is a broader trade deal that includes the ten ASEAN countries plus China, Japan, South Korea Australia and New Zealand. India has now withdrawn from the negotiations. The ASEAN countries are mostly developing countries, which do not have developed digital industries and want to develop local players and retain more regulatory space in the digital domain. They have more bargaining power in a negotiation in which others want access to their expanding markets.

The RCEP text is not perfect but it is better than the situation with the Geneva talks, which include the deregulation of data flows and prevent access to source code and algorithms. Under RCEP, governments can require that companies have a local presence and that some data be held locally; they can access source code and algorithms, and can protect consumer privacy and regulate the development of controversial applications like facial recognition technology.

DISAGREEMENT BETWEEN GENEVA AND ASEAN 

So the Australian government is apparently supporting a more deregulatory framework in Geneva, but it has agreed to the possibility of more regulation in the RECP. Such inconsistency is not uncommon in trade deals, where important regulatory principles can be traded off behind closed doors, and inconsistencies are not revealed until after agreements are signed. 

The Australian Fair Trade and Investment Network of 60 community organisations has prepared a detailed submission, calling on the government to heed the ACCC’s calls for more regulation of big tech companies and to reject the deregulatory framework of the Geneva negotiations which could restrict the development of future regulation. It is asking for the government to pause the negotiations and for a full inquiry into the social, economic and human rights impacts of e-commerce trade rules, and for the release of the text of all trade deals for public and parliamentary scrutiny before they are signed. 

The rules that are agreed in the Geneva negotiations could close off opportunities for regulatory reform in Australia. There are worries that new legislation would rub up against international e-commerce rules. However, these rules could also result in “regulatory chill” by restricting the scope and ambition of Australia’s regulators reform.

ABOUT THE AUTHOR

Sophie Hardefeldt

Sophie Hardefeldt

Sophie Hardefeldt is a Trade Analyst and Campaigner at the Australian Fair Trade and Investment Network (AFTINET).

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