56 Business The EconomistSeptember 5th 2020
“A
mainstream giantgoes countercultural.” That is how the
technology press described the decision in the early 2000s by
ibm, then a paragon of corporate it, to back Linux, an obscure op-
erating system written by a ragtag collection of activist coders. In
the event, the unnatural combination wound up being a match
made in computing heaven. It turned Linux into a serious rival to
Microsoft’s Windows, then the dominant operating system, and
justified the decentralised way that Linux had been developed.
This benefited ibm and fuelled the rise of cloud computing, which
is mostly powered by Linux and similar “open source” software.
The tech industry may soon witness a similarly curious pair-
ing. Microsoft and Oracle, a big software firm, are—along with oth-
er, less serious suitors—fighting over TikTok, a Chinese-owned
short-video app. Its sale is far from assured (see previous article).
But if a deal were struck it too could prove momentous, this time as
a chance to redefine how big online platforms are run. TikTok
could become the Linux of social media—and a model for others.
The current debate over platform governance centres on two
options, neither of them appealing. Governments tell firms what
to do (in part already the case in Germany). Or firms can regulate
themselves (as happens in most other places, including America).
In a recent paper Dipayan Ghosh and Josh Simons of Harvard Uni-
versity propose a third way, more fitting for what the authors call
“algorithmic infrastructure”—utilities for the digital public
square. Governments should set a broad framework and let plat-
forms experiment within it, the authors suggest.
TikTok could become just such an experiment. It is a young ser-
vice unburdened by an ingrained business model or governance
structure. ByteDance, its Chinese owner, has barely begun build-
ing these for the American market. None of TikTok’s wooers, in-
cluding Oracle and Microsoft, has much experience running a so-
cial-media platform. So each could try something new as TikTok
takes on social media’s incumbents, notably Facebook and Google.
Start with the business model. Social-media firms make almost
all their money from advertising. This pushes them to collect as
much user data as possible, the better to target ads. Critics call this
“surveillance capitalism”. It also gives them every reason to make
their services as addictive as possible, so users watch more ads.The new owner is unlikely to do away with advertising in fa-
vour of subscriptions; teenagers are notoriously unwilling to pay
for online content. But the new TikTok could offer an ad-free ver-
sion for those who prefer to pay with cash rather than attention. It
could also consider other revenue sources, for example taking a
cut from enabling seamless sales of something users see in a clip
or charging professional influencers once they have reached a cer-
tain prominence (1m followers should be worth at least $100 a
month to TikTok stars). As for ads, TikTok could target only broad
categories of users instead of individuals, much as firms once
bought ads in newspapers. Advertisers, who love microtargeting,
need not necessarily object, so long as TikTok remains popular
with its coveted young demographic group.
Respectful management of data offers another business oppor-
tunity. TikTok could give users more control, telling them how
much their data are worth and managing information on their be-
half, as a data trust of sorts. Other firms could tap your TikTok “data
account” if you agree and they pay—a model pioneered by startups
like digi.me and CitizenMe, which pocket a share of the proceeds
from the data deals.
Perhaps most important, the new owner could turn TikTok
from a social-media service to a digital commonwealth, governed
by a set of rules akin to a constitution with its own checks and bal-
ances. User councils (a legislature, if you will) could have a say in
writing guidelines for content moderation. Management (the ex-
ecutive branch) would be obliged to follow due process. And peo-
ple who felt their posts had been wrongfully taken down could ap-
peal to an independent arbiter (the judiciary). Facebook has toyed
with platform constitutionalism: it once let users vote on privacy
changes (mostly as a pr stunt) and now has an “oversight board” to
hear user appeals (a more serious effort). But the social network in-
troduced these only in response to mounting criticisms. Drafting
rules at the outset might make them more credible.Linux lessons
Why would any company limit itself this way? For one thing, it is
what some firms say they want. Microsoft in particular claims to
be a responsible tech giant. In January its chief executive, Satya Na-
della, told fellow plutocrats in Davos about the need for “data dig-
nity”—ie, granting users more control over their data and a bigger
share of the value these data create. Brad Smith, Microsoft’s presi-
dent, last year wrote a book in which he argued that technology
firms “must accept greater responsibility for the future”.
Governments increasingly concur. In its Digital Services Act, to
be unveiled later this year, the European Union is likely to demand
transparency and due process from social-media platforms. In
America, ideas for making them more accountable appear on both
sides of the partisan divide. “Citizens who are using these plat-
forms every day should have a say in what content is acceptable,”
says Johnnie Moore, an evangelical leader who has the ear of Presi-
dent Donald Trump. Andrew Yang, a former Democratic presiden-
tial candidate, has launched a campaign to get online firms to pay
users a “digital dividend”. Getting ahead of such ideas makes more
sense than re-engineering platforms later to comply.
Today’s social-media titans will resist change. But they may re-
consider, as Microsoft did with Linux. Mr Nadella’s predecessor,
Steve Ballmer, once called open-source software “a cancer”. Today,
Microsoft is one of the biggest users of and contributors to such
projects. Surreal as it sounds, 20 years from now Facebook and
Google may have reconstituted themselves for the better, too. 7Schumpeter Reconstituted
How to build a better TikTok