Hedge fund legend warns open societies aren't just threatened by autocratic regimes, but social networking giants

• George Soros warns that tech giants are influencing people's behaviour and choices without even realising it.
• He believes that they should be regulated are accountable public utilities not mere distributors of information.
• Soros highlights that it's also a threat how private players are lending out their technology for state sponsored surveillance.

When the Internet was invented back in the 1960's, its purpose was simple — to share and distribute information. Now, the rise of monopolistic IT platforms like Facebook and Google are have turned ‘information' into a tool. They are using it to influence how people think and behave without them even being aware of it — at least according to George Soros, a well-known hedge fund investor and founder of Open Society Foundations.

"Facebook and Google have grown into ever-more powerful monopolies, they have become obstacles to innovation and have caused a variety of problems, of which we are only now beginning to become aware," says Soros in his new book In Defence of Open Society.

Just like mining and oil companies exploit the physical environment, social media companies are exploiting the social environment. So much so the adverse consequences reach the functioning of democracies as shown by the Cambridge Analytica scandal in 2016.

The only difference is that social media companies are networks, with every step — they see rising marginal returns.

Profitability by avoiding responsibility

Social media platforms lack accountability, according to Soros. A large part of their profits come from the fact that they avoid taking responsibility for the content on their sites — since they're merely ‘distributing information'.

The same trickles down to content providers. They have no option but to use social media platforms and accept the terms offered.

But since these platforms are near-monopoloy distributors of information, they should be treated as public utilities and subject to the same stringent regulations, in Soros' opinion.

He explains that rather than fostering innovation, these companies are coming up with new business models — aside from just advertising — that exploits that data within their control and use discriminatory pricing so that they can hone in on the bulk of the profits.

Even the addiction of users to constantly be logged in and be online is engineered into the platforms, according to Soros. Not only is this harmful, but after a point, it's irreversible.

"There is a similarity between Internet platforms and gambling companies. Casinos have developed techniques to hook gamblers to the point they gamble away all their money, even money they don't have," notes Soros in his book.

Age of surveillance capitalism

It's not just about how social media platforms are indirectly affecting people but also how they're on the cusp of allying themselves with authoritarian states in order to keep their marginal returns going.

"There could be an alliance between authoritarian states and these large, data-rich IT monopolies that would bring together nascent system of corporate surveillance with an already developed system of state-sponsored surveillance," says Soros.

This isn't a prediction for some far off future, it's already happening. Amazon already provides the US government with its facial recognition technology — Rekognition. "We believe the government should have the best available technology," said Brian Huseman, Amazon's vice president of public policy during a New York City council meeting.

Soros believes that Russia and China aren't far behind — and US based IT monopolies are already preparing themselves for the opportunity because how big and fast these markets are set to grow.

Despite China's disdain of the US, dictatorial leaders will be happy to collaborate in order to get their hands on superior technology.

"The owners of the platform giants consider themselves the masters of the universe, but in fact they are slaves to preserving their dominant position," notes Soros.

Policy makers in the US aren't strong enough to stand up these monopolies, but Soros believes there may be hope yet with the European Union (EU). EU law prohibits the abuse of monopoly power, online or offline. And the EU's data and privacy protection regulations are stronger.

It has already been able to deliver a hit against Google, even if it took years to build the case.

There will always be a new threat around the corner against open society. But each generation has to figure out how it's going to reaffirm its commitment to staying open and surviving.