I would like to thank the members of the committee for the opportunity to speak today.
I'm an associate professor of media economics at the University of Toronto. I appear here today in a personal capacity, so the views expressed are mine and mine alone.
I want to speak about the risks posed by the underlying incentive structure of social media platforms. In doing so, I hope to convey some sense of the changes that have transpired in our media landscape and why there are, too often, divergences between public and private interests.
Digital platforms are major features of the information economy because of their capacity to reduce market frictions and lower transaction costs. To understand what I'm talking about, imagine how a social media app like Instagram might make a particular group of users, such as amateur photographers or travel enthusiasts, accessible to advertisers who want to target them with commercial messages.
In this scenario, there are actually three market actors. There are the users, the advertisers and the platform operator, and they each have their own set of incentives. Instagram has a financial incentive to maximize the number of users and their level of engagement. This makes the platform more attractive to advertisers. Advertisers want as much information as possible about the platform's users so they can minimize uncertainty, and users just want to enjoy the functionality of the platform with as little disruption as possible.
Multisided markets like these are nothing new. They've been a feature of mass communication systems since the earliest newsletters began selling advertisements in the 1600s. However, terms like “niche marketing” and “targeted advertising” only begin to scratch the surface of what actually transpires every time you enter a search query on Google, watch a video on TikTok, like someone's post on Facebook or retweet something. Information is gathered, auctions take place and commercial messages are delivered.
My concerns are not driven primarily by escalating geopolitical tensions or foreign threat actors, though foreign interference, misinformation, disinformation and radicalization are all genuine concerns. My concern is that these platforms, even when functioning exactly as intended, have adverse impacts on the public sphere. My concern is that the economics of platforms all but guarantees the propagation of disinformation, efforts to influence behaviour and the erosion of individual privacy.
My concern is born out of the realization that, in the economics of platforms, there is no effective upper limit to the exploitation of human attention. “Attention” might refer to the ability to concentrate on something, but from the perspective of society, it speaks to our collective ability to recognize problems and opportunities, to the horizon of our imagination and creativity, and to our ability to rise to the occasion to meet the world's most pressing problems. Attention is a renewable resource, but it isn't like any other resource. You can't hoard it like a precious metal. You can only direct it at something. In fact, that's the economic function of advertising: the allocation of scarce attention among its competing uses. How we choose to allocate our attention is important, both for individuals and for society. Our attention shapes who we are, who we might be and where we might go.
Economists often speak of “the tragedy of the commons”. The origin of the concept is problematic. As a metaphor, however, it can be quite useful. It alerts us to the propensity for overuse and exploitation of finite resources when we allow unfettered access to them. Digital platforms don't merely attempt to measure attention. They seek to modify it—to make it conform to commercial imperatives. Today's attention economy looks less like AMC's Mad Men and more like the speed-of-light trading that takes place in financial markets. The fundamental economics of this system is inconsistent with robust privacy protections.
The overriding economic imperative is to maximize data collection. It's not just the PRC or Russia. It's U.S. firms like Alphabet, Meta, Amazon and a host of data brokers you have never even heard of. As a consequence, our attention is exhausted. Its quality is diminished.
We have protections to safeguard other resources, such as water, air and habitat. We must likewise manage this renewable resource in a similar manner, in a sustainable manner, as we would air, habitat and water.
We are at an inflection point in Canada. It's my hope that we can take concrete steps to empower Canadians by creating a comprehensive regulatory framework for all digital platforms.
Thank you.