What if big-tech companies became non-profits?

Microsoft 2019

(Tadas Sar, Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Jonathan Wichmann, Co-founder, Wichmann/Schmidt


After years of misinformation, security breaches, abhorrent labor practices and election meddling, politicians have decided it’s finally time to regulate the major tech companies.

It’s almost impossible to think that, as recently as a decade ago, large technology companies were considered agents for democracy that would usher in an era of unprecedented transparency and civic engagement. Their devices and platforms were built (and marketed) as bastions of free expression and the unfettered exchange of goods and ideas.

Recent history has taught us that these companies’ platforms are too susceptible to bad actors, disinformation and illegal data tracking to go unchecked, however. And some of the companies that deal in physical goods have quickly developed monopolies that exploit labour, provide poor (oftentimes dangerous) working conditions and avoid billions of dollars in taxes.

Regulation of these companies seems inevitable at this point, if not downright necessary.

The inevitable question, then, is to what extent they should be regulated. Techno-utopians such as Wikipedia founder Jimmy Wales find the idea abhorrent and maintain that, despite their faults, tech companies should not be subject to government oversight, for fear of it having a chilling effect on free speech or hindering economic growth. On the other side of the debate are zealous politicians – such as US Congresswoman Elizabeth Warren, who has called for breaking up Amazon, Apple, Facebook and Google, and Margrethe Vestager, the EU’s competition commissioner, who wants to impose strict regulations on data-collection practices.

But there’s a third way, one that doesn’t involve disbanding or tightly regulating these hugely influential companies, but also ensures that these companies will fulfill their promise of benefitting society.

If tech companies are serious about serving the public good, then they should become non-profits.

On its face, this idea may seem even more radical than trying to dissolve these companies. But functioning as a non-profit will allow the tech industry to simultaneously continue its business while fulfilling its promise of serving the public good.

All the problems afflicting the tech industry stem from the industry’s focus on short-term profits. This is not the tech industry’s fault, per se, as much as it’s a function of a flawed financial system that incentivizes short-term gains, and often at the expense of long-term sustainability. These companies have operated as any would, trying to maximize revenue and shareholder value. And they’re great at it. The large tech companies mentioned above are among the largest in human history.

But all that success has come at considerable expense, namely the spread of misinformation and an increasingly large gap between the poor and wealthy. Technology has increased the wealth gap in middle- and high-income countries, according to former World Bank chief economist Kaushik Basu, and it will likely have the same stratifying effect on developing countries in the coming years.

Removing the profit motive from these companies will rid them of this pressure, however, and give them the freedom to act in accordance with their stated missions. (A non-profit is an organization whose stated goal is to promote public well-being, and typically doesn’t have to pay taxes as a result. They do, however, function similarly to business in many cases.)

“What’s really powerful in non-profits is that they don’t and do not try to create profits,” says Chris McKenna, a business historian at Oxford University’s Saïd Business School and a staunch proponent of the non-profit business model. “Instead, [non-profits] can invest for long periods of time. They can motivate highly intellectual, interesting people to work for them at reduced rates. And they can motivate people to invest in them, to literally to give them money.”

This kind of corporate structure is more common than many people realize. There are a number of highly successful, multinational corporations that are owned by “industrial foundations”, such as Carlsberg, Heineken, Ikea and Rolex. Under this arrangement, the foundation elects a board of directors that operates independently from the business. Boards members can’t be removed or replaced by anyone on the business side of the organization. And the board members’ compensation isn’t determined by the firm’s profitability. All of these features ensure the company stays focused on sustainability and long-term viability.

Opponents will criticize this idea on the grounds that it will halt progress and prevent the world economy from reaching its full potential. But those concerns are unfounded. There is no proof for-profit companies are more innovative than companies that serve the public good, and non-profits have actually grown faster than private companies in recent years.

As non-profits, tech companies will still be able to recruit top talent and create world-class devices and software. If anything, transforming into a non-profit will improve the amount of talent in tech, as people will be eager to work on projects that actively benefit society.

German automotive parts manufacturer Bosch Group, for instance, is majority-owned by the Robert Bosch Stiftung, a non-profit that makes sure the company’s business side lives up to the foundation’s philanthropic ideals. The foundation has donated more than $1 billion dollars over the past several decades to a variety of charities. And the business itself still continues to thrive.

Non-profits are so successful, in fact, that some business and marketing experts say they have an unfair advantage over companies with more traditional corporate models.

The shareholder model, on the other hand, is simply not good for the planet and its people. The Enlightened Capitalists, a new book by James O’Toole about socially responsible corporations, highlights companies that have been able to both grow and stay true to their principles. But the book also unintentionally reveals how difficult this is under a typical private company structure.

 

“The vast bulk of wealth is in shareholder-owned companies, so how meaningful are virtuous practices if they can only exist on the fringes, where the real money is not?” Bethany McLean writes in a review of the book.

Technology has always carried the promise of making the world more connected, open and equitable. If it really wants to realize that promise, its companies should ditch business as usual and embrace being a non-profit, a model that benefits us all.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

How to build a more resilient and inclusive global system

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

Stopping antimicrobial resistance would cost just USD 2 per person a year

This Dutch company makes environmentally-friendly paint

Measles cases nearly doubled in a year, UN health agency projects

After music and TV, where will the streaming revolution take us next?

Trust is at breaking point. It’s time to rebuild it

Here’s how the EU is doing on gender equality

5 ways for business leaders to win in the 2020s

Call to revitalize ‘language of the ancestors’ for survival of future generations: Indigenous chief

France-Germany: Divided in Europe, USA united in…Iran

UN must bring more women police officers into the fold to be effective – UN peacekeeping official

Is academia losing its chance to capitalize on technology?

Berlin repels proposal for cheaper euro

GSMA Announces New Speakers for Mobile 360 Series – MENA, in association with The European Sting

These countries have the most expensive childcare

Will Merkel ever steer the EU migration Titanic and restore her power in Germany?

Scientists are growing meat on blades of grass

Medical workforce migration in Europe – Is it really a problem?

Millions at risk if Syria’s war moves to last redoubt of Idlib, warns senior aid official

Youth policy in Europe not delivering for young people

General Assembly officially adopts roadmap for migrants to improve safety, ease suffering

Cities will lead the electric transport revolution. Here’s why

‘Stop and listen’ to victims of terrorism, UN chief urges in message marking international day

Is it true that the G20 wants to arrest tax evasion of multinationals?

ITU Telecom World 2017: exploring smart digital transformation

80,000 youngsters at risk in DRC after forcible expulsion from Angola: UNICEF

FROM THE FIELD: ‘Eco-warriors’ fight climate change in South Africa

Jordan flash flooding: UN chief ‘saddened’ by loss of life

UN working ‘intensively’ to stop Ebola in eastern DR Congo, following second case in major border town

More state aid to big firms, no special provisions for the SMEs

Can Greece’s devastating economy deal with the migration crisis?

The UK referendum has already damaged Europe: even a ‘remain’ result is not without cost to Britain and the EU

Third EU-Western Balkans Media Days: EU reaffirms comprehensive support to media freedom in the region

My twin from Guangzhou

Australia wants to build a giant underground ‘battery’ to help power the nation

UN health experts warn ‘dramatic resurgence’ of measles continues to threaten the European region

The German automotive industry under the Trump spell

Eating less beef and more beans would cut deaths by 5-7%

Commission criticised member states on blocking financial transaction tax

Siege of Syria’s eastern Ghouta ‘barbaric and medieval’, says UN Commission of Inquiry

A Sting Exclusive: the EU referendum is about fighting for an outward-looking Britain

How drones can manage the food supply chain and tell you if what you eat is sustainable

104 countries have laws that prevent women from working in some jobs

UN launches plan to promote peace, inclusive growth in Africa’s Sahel

The fatal consequences of troika’s blind austerity policy

We need to bin disposable items for good. Here are 5 ways to do it

FROM THE FIELD: Conversations about Conservation

Medical Doctors in Industry 4.0: pure science fiction

Alcoholic drinks: Commission tables update of rules governing alcohol excise duties

Embrace ‘people-centered multilateralism,’ UN-civil society forum urges

The European Commission and EU consumer authorities publish final assessment of dialogue with Volkswagen

Dutch voters reject EU-Ukraine partnership and open a new pandora’s box for the EU

EU and New Zealand launch trade negotiations

Canada needs to increase foreign aid flows in line with its renewed engagement

“ASEM: Global Partners for Global Challenges”, a Sting Exclusive by China’s Ambassador to the EU

Congolese expelled from Angola returning to ‘desperate situation’: UN refugee agency

The UK is on a record-breaking run of coal-free power

UK: Customs Union with EU or a longer delay of Brexit

Human trafficking cases hit a 13-year record high, new UN report shows

Syria: Guterres concerned over reported attacks in Idlib, calls for ‘full investigation’

These European countries produce the most plastic waste per person

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s