In an interview given to the Sunday Times, Wallace basically reiterated what several government ministers have spoken about in the last few months- that encryption is severely restricting the government's surveillance and counter-terrorism abilities and needs to be minimised.
Wallace spoke about how the government has been forced to spend hundreds of millions to run deradicalisation campaigns to rehabilitate individuals who were influenced by vitriolic campaigns run by radical organisations on social media platforms like Facebook, WhatsApp, Twitter, and YouTube.
He said these companies should be charged tax penalties for not dealing with the threat if terrorism by removing radicle and sensitive data from their sites.
In addition, he said that encrypted messaging services like Facebook's WhatsApp are making the lives of the security services more hard, as they have no access to this data. I have to have more human surveillance.
Mr Wallace said the companies were "ruthless profiteers", despite sitting "on beanbags in T-shirts", who sold on details of its users to loan companies but would fail to give the same information to the government.
Wallace said that inaction from internet giants means the cost of tackling terror content is "heaped on law enforcement agencies" - and the state should be able to recoup that in some way. "That's costing millions", continues Wallace, "they can't get away with that and we should look at all options, including tax".
His warning comes after a parliamentary inquiry into fake news criticised Twitter and Facebook for failing to properly act against Russian attempts to influence British politics.
Google says that they do not have the resources to police the web. We've invested millions of pounds in people and technology to identify and remove terrorist content, ' said Facebook executive Simon Milner to Reuters. We are committed to being part of the solution and we are doing more every day to tackle these issues.
"Over the course of 2017 we have made significant progress through investing in machine learning technology, recruiting more reviewers, building partnerships with experts and collaboration with other companies", a YouTube spokeswoman said.
Roughly 90 percent of the 101 terrorism cases brought by USA prosecutors between March 2014 and June 2016 concerned suspects who used social media, according to a report published by Fordham Law School's Center on National Security in 2016.
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