‘Polluter Pays’: A Tax on Big Tech to Reduce Online Harms
Mihaela Popa-Wyatt and Ajinkya Deshmukh from The University of Manchester.
That platforms like X, Instagram, and Facebook operated by Big Tech companies cause harms to their users is now a well-established fact. The US Surgeon General has repeatedly warned that adolescent mental health and body image are adversely affected by social media. Large-scale studies from Canada and the UK show that this is not specific to the US. The thornier issue is: how do we mitigate these harms? A popular policy solution has been banning social media for young people. Australia, Indonesia and Malaysia have done this, while France, Finland and several other countries are considering it.
72% of children aged 8–12 are still accessing sites and apps with a minimum age of 13
– Ofcom
The problem is that bypassing age-restrictions is trivially easy for many children. Ofcom research shows that “72% of children aged 8–12 are still accessing sites and apps with a minimum age of 13”. Unless there is a concerted global effort such that even technologies like Virtual Private Networks (VPNs) cannot circumvent bans, this bypassing is unlikely to stop. We think a better solution is to tax the companies that build these products based on how their algorithms amplify harmful content. Here is why this is better than bans.
Why a Tax?
Companies profit off of content amplification algorithms while creating negative externalities that are borne by society. Ideologically extremist views harm directly (political violence) and indirectly (antisocial citizenry), and can often be traced back to online radicalisation. Beyond extremism, adverse health impacts strain public health infrastructure.
For decades, the Organisation for Economic Co-operation and Development (OECD) has operated on a Polluter-Pays Principle that provides justification for taxing entities that cause (primarily environmental) harms. We believe such a principle offers a scaffolding for modelling a Pigouvian tax on companies whose algorithms cause online harms.
Who is Harmed?
It is not only children who are harmed by algorithmic amplification of harmful content, but young adults too. Women and minority ethnic groups get exposed to greater quantities of harmful content, despite not seeking it out. In most cases, bans – bypasses notwithstanding – are lifted at age 16. But the harms persist beyond that age. These harms are a negative externality of how Big Tech companies operate.
Punitive fines, the like of which have been recently imposed on Meta, are inefficient for two reasons. One, they are retroactive instead of proactive; the harm is already done. Two, given their sporadic nature and the long process of trials and appeals, these one-off fines can be absorbed as the cost of doing business.
What is Regulated?
A lot of online content can be legal yet harmful. Part of its harm comes from its amplified reach. Think of an off-colour joke privately shared between two friends. If the same joke, say it vilified a sexual minority, is algorithmically boosted to millions of people, now its power to perpetuate a negative stereotype is proportionally magnified. This disproportionate harm is not down to the original social media poster, since individual users of these platforms cannot control what content ‘goes viral’.
What constitutes harmful content? The Online Safety Act and Ofcom frameworks already help identify harmful content such as non-consensual intimate imagery, dangerous challenges, violence or instructions for violence, etc. A levy on digital harms ensures that free speech and individual autonomy are preserved while corporate behaviour antithetical to public health is penalised. A Pigouvian tax on harmful algorithmic amplification does not impinge on user freedoms but links financial liability to promoting harmful content. Speech remains free; amplification becomes accountable.
How Should This be Done?
Incentives drive behaviour. Several economists have proposed a tax on digital advertising. A Pigouvian tax is a more targetted implementation addressing the same concerns. The idea is to calibrate the tax rate such that the companies’ incentives force a pivot to safety instead of harm in order to preserve profitability. Some structures to enable this are already in place, at least in the UK. Financial audits are conducted by accredited third-party auditors with access to companies’ financial statements. A digital levy of this kind would operate similarly: using privileged access to internal company data, auditors could calculate a platform’s harmful content exposure rate (HCER) with a corresponding tax rate.
A tax that imposes proactive, progressive and proportional financial drag on social media companies that amplify harmful content uses economic levers to align corporate conduct with social good. It does so without being reactionary post-harm and while generating revenues that can be channeled to combat online harms. It is a better solution than one-off penalties, bypassable bans, or leaving Big Tech to govern itself. It is a policy position that merits being dicussed seriously.
