Monday, 18 February 2019

CSP online-games industry overview

In time I'll cut this down to shorter bullet points, and keep more detail on my mediareg blog, with annual hub posts, starting with 2019 (I'll sum up key changes/events, especially on regulation, which along with the linked topic of monetisation is the key factor for this area of the course.


Will there be statutory regulation?
Yes, its already happening: GDPR; Germany will enforce $20m fines if hate speech isn't removed within 24 hours, and it + France are leading the way on taxing the tax-dodging giants. Apple has already been forced by the EU to pay the Irish government €13bn in back-tax.

Will the FAANGS conglomerates be forced to break-up into smaller companies?
Probably, but the timescale is uncertain. EU pressure will be a factor, but it will be US regulators/politicians who ultimately decide if, like the film industry back in 1948 (Hollywood giants were forced to sell off their cinema holdings), they legally form monopolies and therefore competition + consumer protection law insists they must become smaller. The FAANGS are spending $millions to persuade US lawmakers that the EU are trying to undermine USA dominance, and that any attack on them is bad for the USA.

However, with deregulation being the long-term trend ever since Reagan back in 1980 (same for the UK from 1979 when Thatcher was elected, two very right-wing, 'free market' politicians), the film industry may actually see its anti-trust laws scrapped in 2019! Right-wing governments (eg Trump/Republicans, May/Tories) are reluctant to regulate the 'free market'.

The right-wing press may also be very free market, but they do frequently campaign for tighter regulation of other media (just not the press), which will add pressure to right-wing politicians to act.

Are children (+ how they are monetised) a factor?
Protection of children, arguably even more than protection of democracy, is a (the?) key driver behind media regulation. The age rating system (film, games), TV watershed, multiple clauses in the press industry's Editors' Code, much of the ASA's policymaking, all are dominated or even defined by protection of children. The ASA's ruling that apps must not contain gambling if they're accessible to kids is just the start of what promises to be a tough EU-led fightback against the non-regulated, wild west approach of the 'digital gangsters' of new media.

Phone hacking was a scandal to Guardian readers until the Milly Dowler case broke, and within weeks the highest-selling Sunday paper was closed and a multi-year formal commission (Leveson) was set up to investigate newspaper malpractice, while the self-regulator, PCC, scrapped itself and announced IPSO would replace it.

Expect Facebook and Google/YouTube's lax age controls to become a major issue.

The non-regulated monetising of freemium apps (Lara Croft Go, Kim Kardashian's Hollywood) and vlogging social influencers like Zoella is already facing restrictions.

Read more on the Feb 2019 'digital gangsters' statement + call for statutory regulation, which was quickly backed by the Labour party (but the Tories are unlikely to agree).
A 'digital gangster'? UK MPs are furious with Zuckerberg

Facebook (and Google/YouTube) are facing ever growing scrutiny over their (mis)use of user data and facilitation of anti-democratic forces (in US presidential election, Brexit vote, spreading of anti-vaccine ideas, etc). They have grown into vast global conglomerates with little or no formal regulation.

GDPR, laws passed within the EU to insist on minimal standards of privacy and registration of user data, was an early sign of this wild west era ending, though the lobbyists (PR, campaigners) employed by the FAANGS have successfully argued to US politicians that this is the EU trying to damage American business.

There remains the distinct possibility, though, that US regulators will get tough on them. Facebook is facing multi-billion fines for misuse of user data, which could lead to a re-think on regulation there.

Several EU states have already passed laws to tax and/or regulate the FAANGS giants above and beyond the limited GDPR regulations (which Facebook is widely seen as failing anyway, and attempting to get round it by seeking to merge Facebook/WhatsApp).

The DCMS (UK government ministry that oversees culture, media, sport) Select Committee (backbench MPs from all parties, NOT government ministers) wants swift action; its report:
  • Calls on the British government to establish an independent investigation into “foreign influence, disinformation, funding, voter manipulation and the sharing of data” in the 2014 Scottish independence referendum, the 2016 EU referendum and the 2017 general election.
    Labour moved quickly to endorse the committee’s findings, with the party’s deputy leader, Tom Watson, announcing: “Labour agrees with the committee’s ultimate conclusion – the era of self-regulation for tech companies must end immediately.“We need new independent regulation with a tough powers and sanctions regime to curb the worst excesses of surveillance capitalism and the forces trying to use technology to subvert our democracy.” [source]
Mark Zuckerberg, and/or top Facebook executives, could face prosecution for misleading parliament (lying to MPs) or contempt of parliament (Zuckerberg has refused demands to meet MPs).
Watson agreed. “Few individuals have shown contempt for our parliamentary democracy in the way Mark Zuckerberg has,” he said. “If one thing is uniting politicians of all colours during this difficult time for our country, it is our determination to bring him and his company into line.”The report warns Facebook is using its market dominance to crush rivals, shutting them out of its systems to prevent them from competing with Facebook or its subsidiaries.
The report also revealed how Facebook used 'gangster' tactics to force apps that wanted to continue accessing Facebook data to spend a minimum $250k on Facebook ads each year.
The DCMS report calls for sites such as Facebook to be brought under regulatory control, arguing “social media companies cannot hide behind the claim of being merely a ‘platform’ and maintain that they have no responsibility themselves in regulating the content of their sites”.It proposes comprehensive new regulations, including a mandatory code of ethics and an independent regulator empowered to bring legal proceedings against social media companies and force them to hand over user data.It cites the example of Germany, which passed a law in January 2018 forcing tech companies to remove hate speech within 24 hours or face a €20m (£17.5m) fine. As a result, it claims, one in six of Facebook’s moderators work in Germany.It also warns electoral law is out of date and vulnerable to manipulation by hostile forces, with urgent need of updating. “We need reform so that the same principles of transparency of political communications apply online, just as they do in the real world,” Collins [DCMS committee chairman] said.

This story isn't going away; pressure is going to keep building on Facebook especially, but also Google, which will include calls for anti-trust legislation to force the break-up of 'monopoly' companies like Google, YouTube, Facebook (the FAANGS will fiercely resist any such labelling), just as the film industry was once forced to sell off its cinema wings to end horizontal integration.


ASA force I'm A Celebrity app maker to remove gambling ads for breaking rules on children.


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