Google, Nobel Prize, Facebook discussed on Marketplace Tech with Molly Wood
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Google showed off lots of new privacy oriented, tools, and products and user agreements at its big developer conference Google. I o apple is marketing privacy Facebook as promising privacy. Eventually federal regulators are still trying to figure out privacy laws and regulations, but Nobel prize winning economist, Paul Romer says company promises and even regulations won't actually change anything because the ad supported business model is what's broken? He argued in the New York Times this week that the US should tax revenue from targeted advertising, we called Paul rumoured to talk more about this idea in quality assurance the segment where we take a deeper look at big tech story. He says companies need to creatively. Evolve their businesses boo ad model was very important it made possible. The emergence of Google and Facebook and supported open source software. So it was very valuable it a crucial point in time. But we've outlived the usefulness of this model we need to move. On what we're stuck in right now is a bad equilibrium. And we got us think creatively about how are we going to get back to the vision? And the optimism that many of us had when we first saw the potential of digital. Well, then tell me more about the creative solutions that they might come up with to change the business model one of the models. That works is a subscription model. People pay to have access to a music service to game supplier of this lots of workable subscription models. If you tax Adra eventually it'll be in the interest of these firms to develop subscription models. The other thing that is if you make that tax on the ad revenue. Progressive what happens is you're gonna end up with a version of the remember the marriage penalty onto p with income get married and their total tax Bill goes up with progressive taxation. We want a marriage penalty in the market because if two firms joined together, we want their total tax Bill to go up because we don't want more big firms would actually. Like to have lots more small ones. So really creative innovative firm that keeps you know, developing new products, it can just off independent firms get the value when it when it's been those off and keep the total tax Bill though by not letting any one of them get too big. There is I wonder what you there is. Also, an argument though, that subscription models are themselves kind of inherently regressive, and that increasingly actually we're finding that access to good information is almost based on your income level. And I wonder what what your responses to that? If this would put information services out of reach. I'm sorry. I just have trouble with this idea that these firms her in jeopardy tens of billion dollars for a relatively small number of people were doing this as a an effective policy for redistribution. Just I just don't think that that argument you passes the left. That's not what I'm arguing. I'm just saying that a lot of information is now stored within these platforms that people may no longer be able to access if they have to pay for it. But but look I mean who who really provided the world's information to everybody on earth Wikipedia. Right. And if you're asking what could we do to make the digital world work for people? You know, the Wikipedia model is great. It's a donation model a subscription model would work a combination of subscriptions and donations on all of those things are possible. This ad model is not helping the users and or they wouldn't be called users. And it's not helping the most vulnerable users. Either is the business model the problem here. Or is it the scale is that the size of these companies always both, but the point of progressive revenue tax is that you create incentives both for breakup, you can allies. The acquisitions and you encourage the development of models where the customers are customers. And they know what they're giving up and they can compare that with the services they get back. I'd rather live in a world where firms don't have these enormous incentives to spy on individuals. So if we had that at advertising model that didn't involve all of this, you know, deep surveillance of individuals. I'd be more comfortable with that. I still think a firm that's collecting revenue on that scale is probably not a healthy thing for a society where we want to have competition and free discourse. And you know, freedom to take unpopular stands Paul Marilyn the Nobel prize in economics in twenty eighteen the union has also been debating at three percent tax on digital ad revenue for big tech companies.