The Regulation Accountability Framework
Hold dominant companies accountable by demanding they bear the true cost of their power
The Regulation Accountability Framework is Galloway's argument that the four dominant tech companies have become so powerful that they can conduct Jedi mind tricks on entire industries, destroy jobs at unprecedented scale, and avoid the regulatory scrutiny that every previous dominant company faced. The framework diagnoses a specific failure mode: society issues 25-cent parking tickets on meters that cost 100 dollars an hour, making lying and cheating the rational shareholder-driven strategy. Amazon has paid 1.4 billion in corporate income tax while Walmart paid 64 billion. Facebook lied to EU regulators about WhatsApp data sharing and was fined only 0.6 percent of the acquisition price. The framework argues that the solution is not to expect these companies to self-regulate, because they are for-profit entities doing exactly what they are designed to do, but to elect representatives who understand these technologies and have the backbone to enforce accountability. The core insight is that the problem is not that these companies are evil but that we have given them the mother of all hall passes because we find them fascinating.
- For-profit companies are not concerned with the condition of our souls and should not be expected to self-regulate
- When regulatory penalties are trivial relative to the economic benefit of rule-breaking, rational companies will break rules
- The smart regulatory strategy is not to make lying expensive but to make it irrational
- Technology companies that wrap themselves in progressive values while behaving monopolistically deserve the same scrutiny as any dominant firm
- We have given these companies a hall pass because we find them fascinating, and that is our fault, not theirs
- Quantify the True Cost of DominanceFor any dominant company, calculate the gap between the value they extract from society and the value they return. Galloway demonstrates this with tax payments: Amazon paid 1.4 billion versus Walmart's 64 billion in corporate income tax. The gap must include job destruction, anticompetitive effects on smaller businesses, and the societal costs of their products. If Amazon grows its business by 20 billion dollars, approximately 53,000 cashiers and clerks will lose their jobs, one Yankee Stadium of workers. When Facebook and Google grow 22 billion, approximately 150,000 creative workers are displaced.Pro tipUse specific, concrete numbers. Abstract arguments about fairness are easy to dismiss. Quantified gaps between extraction and contribution are not.
- Identify the Regulatory Failure ModeDetermine whether current regulations make compliance or violation the rational choice. If Facebook's fine for lying to EU regulators is 0.6 percent of the acquisition value, lying is not just rational but required by fiduciary duty to shareholders. If Amazon's tax burden is a fraction of its competitors, the tax system is subsidizing monopoly power. The framework demands that penalties exceed the economic benefit of violation by a significant multiple, making compliance the obviously rational choice.Pro tipGalloway frames this as: we are telling these companies that the smart, shareholder-driven thing to do is to lie and cheat. The framing shifts blame from corporate greed to regulatory failure.
- Advocate for Structural RemediesMove beyond fines to structural changes. Galloway argues for antitrust enforcement, requiring companies to be subject to the same scrutiny as every other business. When a company controls 90 percent of a market that is larger than any nation's advertising industry, traditional regulatory approaches are insufficient. Structural remedies might include breaking up dominant platforms, imposing interoperability requirements, or reclassifying companies that create and distribute content as media companies with corresponding responsibilities.Pro tipGalloway's key rhetorical move: Facebook says it is a technology company, not a media company. But it creates original content, pays sports leagues for content, and runs advertising against it. By any functional definition, it is a media company allergic to media company responsibilities.WarningThis framework is diagnostic and advocacy-oriented. Individual actors cannot implement regulatory changes alone; the framework is designed to build understanding and political will.
Facebook told EU regulators that it would be impossible to share data between its core platform and WhatsApp, convincing regulators to approve the 19 billion dollar acquisition. After the merger closed, Facebook figured out how to share the data. The EU fined Facebook 120 million dollars, which was 0.6 percent of the acquisition price. Galloway argues that if Zuckerberg could take out an insurance policy guaranteeing the acquisition would go through for 0.6 percent, he would do it every time.
When Amazon announced its acquisition of Whole Foods, a grocer one-eleventh the size of Kroger, Kroger shed a third of its value. Amazon had become so dominant that merely looking at an industry could damage competitors. They reduced salmon prices by 33 percent upon acquiring Whole Foods, demonstrating that their competitive advantage was not operational excellence but the ability to subsidize any market they entered with profits from other segments.
Galloway developed this framework through 10 years of studying the four dominant tech companies while teaching at NYU. He observed that Amazon could damage entire industries just by looking at them: when Nike announced it would distribute on Amazon, Nike stock went up while every other footwear stock went down. When Amazon stock rose, the rest of retail fell. He predicted Amazon's acquisition of Whole Foods the week before it happened based on his understanding of their strategy. The framework crystallized when he recognized that the regulatory environment had fundamentally failed: Facebook could lie to EU regulators with a fine representing 0.6 percent of the deal value, making dishonesty the rational economic choice.