NOT FUDGING NUDGES: WHAT INTERNET LAW CAN TEACH REGULATORY SCHOLARSHIP

CHRIS MARSDENGIG-ARTS 2017 CONFERENCE31 MARCH 2017

BEHAVIOURAL OR ‘NUDGE’ REGULATION HAS BECOME THE FLAVOUR OF THE DECADE Thaler and Sunstein’s eponymous 2009 monograph. Use of behavioural psychology insights • to observe changes in regulated outcomes • from the ‘bounded rational’ choices of consumers • commonplace in Internet regulation since 1998, • driven by co-regulatory interactions between

governments, companies and users (or ‘prosumers’ as the European Commission terms us)

NUDGING FAMILIAR TO INTERNET REGULATORY SCHOLARS IN 1990S

Leading example of ‘new Chicago School’ Lessig 1998• recognising imperfect information, • bounded rationality and • thus less than optimal user responses • to competition remedies, • insights from Internet’s architecture & Microsoft dominance

of computer platform architectureNot just lawyers: • Zysman, J. Weber, S. (2000) Governance and Politics of the Internet

Economy—Historical Transformation or Ordinary Politics with a New Vocabulary? BRIE Working Paper 141, E-conomy Project Working Paper16 • also in N.J. Smelser and P.B. Baltes, eds. (2000) International Encyclopedia

of the Social & Behavioral Sciences, Elsevier Science.

RECENT ‘NUDGE’ CONCERNS ECHO 1990S CONCERNS by Internet regulation specialists. It is a mark of Internet regulation’s specialisation in Europe, • and mainstream regulation and competition law’s failure

to fully absorb the insights of that scholarship, 2017 debate surrounding nudges and privacy affecting competition outcomes has yet to reinvent the 1990s wheel of nudge limitations.

LEARNING THEIR INTERNET REGULATORY HISTORY Can help competition and regulation scholars • not repeat the lessons of the 1990s Microsoft case. Competition and regulatory aspect of attempts to direct user and market behaviour • key empirical perspective for regulatory scholars. Internet real-time laboratory for distribution/manipulation of information • adaption of that information to affect user behaviour • a commonplace online throughout Internet history

WE CAN MODEL FROM EXAMPLES

MY AREAS ARE NET NEUTRALITY AND CO- SELF-REGULATIONLuckily!Norway and UK regulator (Ofcom) leading on net neutralityIf UK stay in EEA, stay in European Regulators Group/BEREC

as we leave, we canstate we wrote the rulesMany of those rely on co- and self-regulationCommunity of Practice on Co- Self-Regulation or not….

INTERNET PLATFORMS HAVE INTENSE INTERDEPENDENT RELATIONSHIP WITH USERSUsers often don’t pay platforms for services 1. because they form an audience the platform

can sell to advertisers and direct marketers, 2. 3rd party vendors use platform to sell to users

1. paying the platform a commission (e.g. eBay, Amazon Marketplace)

2. PLATFORM USERS ARE ALSO PRODUCERS OF CONTENT INCLUDING PERSONAL DATAplatforms as distributor and archive of that content, • imposing terms of use including privacy & intellectual propertyPrivate platform actors regulate much activity on the Internet, including a durable and intense interaction with their users. Also often dominant in their respective service offerings • e.g. Google, Microsoft, Facebook, Amazon, Apple No other private actors (utility companies or car manufacturers) • has this intense a relationship with users/consumers.

PROSUMER LAW AND POLICY FOR ONLINE INTERMEDIARIES: TOWARDS A BEHAVIOURAL SOLUTIONA decade into the Web2.0 era • intermediaries are extraordinarily powerful gatekeepers • broadband social media advertising-dominated Internet • that is now a ubiquitous presence in wealthy lifestyles These include dominant operators in: • search (Google), operating systems (Microsoft, Android), • media (Apple iTunes, YouTube), • social networking (Facebook), • photo sharing (Instagram and Snapchat), • chat (Skype and WhatsApp), • commerce (eBay and Amazon).

These companies dominate their respective sectors.

USERS ARE ALSO PRODUCERS, HENCE TERMED PROSUMERS (TOFLER 1980)

We rely on these platforms • to process personal data fairly and securely. Regulatory responses are finally emerging driven by • both data protection & competition concerns Over-arching need: greater neutrality of intermediaries Limited to last mile monopolists & mobile oligopolists, • legacy telecoms providing Internet access

PARTICULARLY AS INFORMATION TECHNOLOGY IS A GENERAL PURPOSE TECHNOLOGY (GPT)

PLATFORMS RAISE SIGNIFICANT PUBLIC INTEREST REGULATION QUESTIONSPrivate platforms are providing what amount to mass communications services, • in other eras (e.g. broadcasting) • Platforms were tightly regulated for the public good Competition law and general data protection concerns, • while applicable, are recognised as providing • insufficient public interest regulation for platforms

WHAT WE NEED IS A COMPREHENSIVE PROSUMER LAW SOLUTION

Draws on • fundamental human rights to

• privacy and free expression, • competition, and • technology regulation • to ensure a fair and neutral

deal for prosumers

MARSDEN AND BROWN (2013) COMPREHENSIVE SOLUTIONCase studies examined: • search, social networking, Internet access, EU/US competition

and data protection The interdisciplinary mixed method used contains • primary and secondary literature analysis and case analysis

(both regulatory and judicial, where relevant), • qualitative empirical interviews with leading stakeholders and • both economic and engineering quantitative data analysis. Law, computer science and economics interdisciplinary analysis to explore a comprehensive policy solution to intermediary liability.

#DIESELGATE

INTERNET FAST-MOVING LIKE FINANCEWhy are we surprised?Finance is the simultaneous global transfer of trillions of bits of dataWe choose value this data as ‘money’• Options, derivatives, Credit Default Swaps• All enabled by Internet trading

FINANCIAL SERVICES

STRAIGHT SHALLOW CABLES ENABLE MICROSECOND FASTER TRANSFERS

SURVEILLANCE: INTERNET NOT SO INNOCENT

CO-REGULATION?Government has enabling legislation to put regulation in place but chooses to forbearExample: Nominet (UK Digital Economy Act 2010 amending Communications Act 2003)But: Authority for Television on Demand

• Set up as self-regulatory Association 2003• Authority in 2010 DEA implementing 2007 AVMS

(2010/13/EU)• Abolished in 2016 – functions integrated into Ofcom

BEREC & NET NEUTRALITY

IT’S OVER

MORNING OF 24 JUNEI was in Brussels at the European Union Economic and Social Committee (ECOSOC)Talking soft / co-regulation UK a leading deregulatory partner in the European Union:https://ec.europa.eu/digital-single-market/content/cop-agora I am (still) a steering committee memberI was back in Brussels 29 March for #BrexitDay

OLD, UNQUALIFIED, LOCAL POOR

INTERNET SELF- AND CO-REGULATION

QUESTIONS?@ChrisTMarsden