Understanding Ownership in the Age of Tech Oligarchy

This piece is part of a series with the DSA Observatory featuring articles adapted from selected papers presented at the second DSA and Platform Regulation Conference, marking two years since the Digital Services Act came into full effect. The author delivered the keynote address at the conference; this article provides a shortened overview of those remarks.

The Current Landscape of Tech Ownership

On January 20, TikTok finally agreed to sell its U.S. operations to a consortium of American investors, a move that isn’t just about business as usual. It represents a significant geopolitical strategy orchestrated by the White House. Ownership of social media platforms has become intertwined with political power, offering avenues for influencing public discourse. This trend is mirrored by recent developments, such as Elon Musk’s takeover of X (formerly Twitter), exposing a new reality where tech oligarchy is a form of governance.

A Blind Spot in Platform Governance

In the discourse around platform governance, we often center discussions around users, civil society, and advertisers, but the role of shareholders remains largely overlooked. This oversight raises pressing questions: How does ownership shape accountability, governance, and content moderation?

To fill this knowledge gap, I propose a three-step agenda for researchers and policymakers:

1. Map Ownership Structures: Understanding the stakeholders involved is essential.
2. Study the Effects of Ownership on Social Media: A focused analysis is necessary to comprehend how ownership influences platform behavior and governance.
3. Introduce Regulatory Safeguards: We must advocate for transparency in ownership structures to ensure accountability at every level.

These steps draw inspiration from media governance where ownership has historically played a crucial role in defining public discourse.

Learning from Media Governance

As elaborated in my paper, From Murdoch to Musk, historical debates around press barons offer valuable insights into dealing with current tech oligarchs. The questions are provocative: Could Europe benefit from its own TikTok or Instagram? These could serve as experiments in promoting more democratic ownership structures while curbing oligarchic influences.

Market Concentration vs. Firm Concentration

When assessing ownership, we can examine:

• Market-Level Concentration: How many firms compete in a specific market?
• Firm-Level Concentration: How many individuals own a substantial share within a firm?

While antitrust discussions have long focused on the former, the latter is gaining traction in my research on oligarchy.

Ownership Structures Across Tech Giants

Different tech companies manifest varied ownership patterns:

Dispersed Ownership: Apple and Microsoft

Firms like Apple and Microsoft showcase dispersed ownership, primarily held by institutional investors like BlackRock and Vanguard. Here, no single entity politically dictates corporate policy, which allows executive leadership to focus on maximizing shareholder value.

Dual-Class Control: Meta and Alphabet

In stark contrast, Meta exemplifies concentrated control through a dual-class stock structure. Mark Zuckerberg’s 13.5% economic shares yield him a staggering 61% of voting rights, essentially positioning him as the company’s de facto ruler. Similarly, Alphabet has a dual-class structure, but control is somewhat shared between Larry Page and Sergey Brin, who stepped back from daily operations but remain influential.

This concentration of ownership translates into a unique kind of power, often at odds with traditional concepts of corporate accountability. Julie Cohen notes that for dominant tech platforms, this structure disrupts the traditional governance bargain, creating concentrated private power over public discourse.

Evaluating Private Platforms: TikTok and X

Private platforms present additional challenges in analyzing ownership. TikTok’s parent company, ByteDance, discloses a more dispersed ownership structure, revealing that 20% is owned by founders, 60% by institutional investors, and 20% by employees. This contrasts sharply with Meta’s concentrated ownership.

Moreover, following Elon Musk’s acquisition of X, ownership details became murky. Court battles revealed that nearly a hundred investors financed the purchase, indicating a complex web of influence. However, it’s widely perceived that Musk exercises almost unilateral control over the platform.

The Governance-Owership Nexus

Understanding how ownership shapes governance requires delving into media sociology. Research indicates that dispersed ownership typically encourages a “market logic” where institutional investors focus on profitability. Conversely, concentrated ownership enables what Rodney Benson and others term a “private logic,” often leading to politically motivated content decisions.

Case Study: Musk and Political Instrumentalism

Under Musk’s leadership, X has exemplified political instrumentalism. His acquisition was framed not as a commercial venture but as a defense of free speech. This political narrative has resulted in substantial shifts in content governance on the platform, presenting challenges to accountability. For instance, Musk’s personal interests have been prioritized in algorithm modifications, raising questions regarding the motivations behind content moderation.

The Zuckerberg Enigma: Personal Influence or Market Dynamics?

Zuckerberg’s influence on Meta showcases a more nuanced scenario. Initially, he seemed to rely on his trust and safety teams for content governance. Recently, however, his more aggressive stance has raised questions about his direct influence versus broader market dynamics. Contrary to earlier approaches, Meta has shifted its content policies, further blurring the lines between personal conviction and market pressures.

TikTok USA: A Regulatory Turn

The emergence of TikTok USA, amid national security concerns, illustrates a regulatory pivot toward ownership structures. The U.S. government views control over ownership as a mechanism to manage content and influence broader public discourse. This is not merely a data security issue; the governance of TikTok’s new joint venture underlines the importance of content curation and moderation.

Here, the motives of key stakeholders reveal a politically charged landscape. Investors like Larry Ellison and Michael Dell, with close ties to the GOP, are positioned to sway public discourse through their influence over TikTok USA. Despite controlling only a fraction of the shares, they wield significant power, raising important questions about what democratic accountability means in the digital age.

A Research Agenda for Understanding Social Media Oligarchs

Researching these ownership dynamics requires a focused effort to understand the political affiliations, beliefs, and broader networks of significant platform owners. What do their political donations signify? How do their other investments intersect with their social media interests? Scholars and journalists are beginning to unpack these intricate connections, yet much work remains.

Furthermore, we must identify how ownership structures differ across various platforms. The variance between public companies like Meta and private entities like X is a critical area for exploration, especially in the context of potential regulatory responses from Europe.

Policy Implications for Europe

The concept of social media oligarchy presents challenges to media pluralism, leading to disproportionate influence over public discourse by a select few individuals. Traditionally, media laws have focused on market concentration rather than firm-level ownership concentration, but the European framework offers applicable precedents.

Ownership Transparency

Across Europe, laws mandating ownership transparency are common, as highlighted by the European Media Freedom Act (EMFA). The central role of platforms in public discourse warrants similar transparency requirements for significant social media companies.

Safeguarding Editorial Independence

Another vital aspect is guaranteeing independence in content governance. While this task becomes complicated in the digital realm, historical attempts like Twitter’s Trust and Safety Council demonstrate the potential for separating moderation policy from day-to-day content decisions.

Foreign Ownership Restrictions

Many EU countries impose restrictions on foreign ownership in media. Given the importance of domestic influence in social media, could similar measures not be rationalized for tech platforms? Such initiatives would lend credence to Europe’s efforts to mitigate undue influence from foreign oligarchs.

Future Directions: An Experimental Mindset

Europe faces the pressing question of whether to adapt its ownership laws to create local alternatives to American platforms. Could initiating homegrown models foster more democratic structures? By looking into non-profit and public ownership models in the media sector, Europe can explore viable alternatives that limit concentration while promoting diverse representation.

In summary, understanding these dynamics is crucial as we navigate an increasingly complex landscape shaped by tech oligarchs. Engaging in these conversations will help us chart meaningful avenues for a more equitable digital future.