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Tech Companies Might Need To Share Their Data: That's Good & Bad

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Right now, Congress is discussing whether big tech companies should be required to share their data if requested. There was a hearing Wednesday held by senators and other high-ranking politicians titled “Platform Transparency: Understanding the Impact of Social Media”.

During the hearing, certain people brought up why they think that companies should be required to share their data when requested, but we don’t know if this will even pass. For all we know, this proposal could be tossed in the trash. Regardless, requiring companies to share their data could have both positive and negative effects on the tech world as we know it.

As with any major piece of legislature, we can’t say that there will be one outcome. Major shifts in policy, as they pertain to major tech companies, have more than one ripple effect that spreads out into the ocean that is the tech industry.

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Companies don’t really tell us much, and that’s annoying

Now, as it stands, we’re getting crumbs of data from major tech companies. Performance numbers are only exposed via certain circumstances, and that’s pretty frustrating. Companies only come clean about their numbers when they’re doing really good. T-Mobile says “We just reached 100 million households!” and Samsung says we just sold over 3 million Galaxy S22 Ultras” and so on. However, we never hear them say “Yeah, we’re doing just alright; can’t complain.” If we want to hear anything other than the major milestones, we have to wait for second-hand information from other sources.

This doesn’t only pertain to performance numbers. Large tech companies have large amounts of data about their users, and people want to know how it’s being handled. Big companies like Google, Apple, and Microsoft have tons of banking, location, and other types of data, and it bothers some people that no one can know how it’s all being used. The fact that companies can keep everything behind closed doors doesn’t sit well with anyone.

First, let’s talk about the good things to come

Right now, it’s tough to say if things will be objectively better or worse if this legislation passes. However, we can’t deny that there will be some good that comes from out if it does.

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Companies will need to be more transparent about what’s going on

It should be common knowledge that big brands are never 100% clean and by-the-book. In order to stay at the top of the pack, companies often partake in shady business practices. Meta didn’t become a trillion-dollar company by keeping its users’ data off the market. This is because companies have free rein to ignore any sort of transparency.

“YouTube, TikTok, Telegram, and Snapchat represent some of the largest and most influential platforms in the United States, and they provide almost no functional transparency into their systems. And as a result, they avoid nearly all of the scrutiny and criticism that comes with it.” This is a quote from Brandon Silverman during the hearing.

If the legislation passes, then companies will need to come clean about their inner workings; the good and the bad. They won’t be able to slather on the PR speak and pretend that they’re not doing anything wrong. If they’re doing shady practices, they’ll need to fess up.

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This includes if they’re doing any sort of anti-competitive practices or if they’re illegally selling user data. These actions are happening behind closed doors, and this legislation will give more people the key to unlock them. If tech companies are doing shady practices, then, ostensibly, they’ll be pressured to stop those actions.

People could have more access to performance numbers (and not just the good ones)

Right now, it’s hard to gain direct access to simple performance numbers from major companies. We hear about when a company is kicking butt in one particular quarter, but those aren’t the only numbers that matter. Analysts need to paint a full picture of how the tech industry is performing, and they can’t do so if companies are only giving them one color.

Performance numbers are more important now than ever because of the current chip shortage. Having access to a broader array of performance numbers will help analysts gain more insight into how it’s going and how much longer it will last. It doesn’t help only knowing when a company is doing great.

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It could help fuel competition

On the opposite end of glorifying their successes, big companies also downplay their weak spots. That’s not a bad thing or some shady business practice, however. Actually, that’s just good business sense.

However, when talking about these major companies, we’re talking about industries that are very much dominated by these big players. What upstart mobile operating system is going to dethrone Android or iOS? What new video-sharing app is going to go toe-to-toe with YouTube, Instagram, or TikTok? New companies are now competing with billion-dollar and trillion-dollar companies; they just need a break.

If the public has more access to these companies’ data, then people will be able to know what areas they’re underperforming in, which markets they’re missing, or which products aren’t resonating with customers. New companies can know where they need to strike in order to sidestep the giants. This could help those smaller businesses gain more ground and expand where the other companies aren’t.

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But, what about the bad side of this?

If companies are required to share their data, then there will be some negative effects. While the law could prevent certain anti-competitive practices, it might actually exacerbate others. Any company could pay a research firm or private entity to get information on a competitor company’s inner workings.

Using that information, Company A could bad talk Company B or exploit its shortcomings. Also, in a worse scenario, Company A gains insight into a much smaller company’s inner workings. Company A could exploit Company B and squash Company B before it could even have a chance to grow.

Another potential downside is that this law could violate the 4th Amendment. For this legislation to be passed, as stated by Daphne Keller, there will need to be some clear guidelines as to what kind of data people can access. People shouldn’t be able to ask for sensitive data about the company or company secrets that made the company what is.

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Under the 4th Amendment, any person (company, in this case) has the right to their houses, papers, and effects, against unreasonable searches and seizures. If this law violates the 4th Amendment, it could mean countless legal battles between the country and the companies. Also, even if the guidelines are laid out, we can’t rule out a malicious company finding and exploiting a loophole. Whether or not requiring tech companies to share their data is constitutional will be a major talking point going forward.

In conclusion

This hearing was just that: a hearing. It was to see if this legislature could hold any water. Basically, if the final law is a video game, then this hearing was the casual spitball session the developers have to see if they even want to make a game. There’s no telling if we’ll see this law reach the next phase or fade into oblivion.

Still, anyone can tell that, if this law is passed, there will be some notable changes. The kind of data that big tech companies have locked up is really heavy stuff. They have information like sales numbers, which entities they’re selling out data to, and so much more. So much of who we are is just a series of 1’s and 0’s on a server somewhere. No company should be able to lock that kind of data away. So, this law could have some major benefits.

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But, we can’t ignore the potential negative side effects. As time goes on and this law takes form, we’re, undoubtedly, going to see it change substantially. By the time it reaches its next phase, it could be something completely different. We’re going to need to keep an eye on it, as whether they’re good or bad, the changes will be major.