1) Regulation and trust have an uneasy relationship in the digital economy. 2) Both the Digital Economy Act and the Communications Data Bill undermine trust by granting overbroad surveillance powers while failing to protect innovators, creators, and the public. 3) Governments do not fully understand technology and how their ignorance can discourage innovation and harm citizen consumers' trust in the digital economy.

1. Trust in the Digital Economy
Regulation and trust in the digital
economy: an uneasy relationship
Ray Corrigan
Open University
6 September 2012 Trust in the digital economy: Aberdeen University 1

2. Theory
2

3. Economic
3

4. Behavioural
4

5. ill-informed regulation DEA, CDB
5

6. Stakeholders
6

7. Stakeholders
Innovators/
Creators Agents*
Public
(Citizen consumers)
* Business, public services, government (& civil society) 7

8. Trust
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9. All 3 need to thrive
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10. Balance
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11. Invisible hand
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12. Enlightened governance
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13. Complex ecology
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14. Net file sharing v music, online news v
newspapers, Amazon v bookshops
>50 Android patent cases globally
Samsung v Apple
Government v everybody
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15. Behavioural forces in digital economy
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16. Social norms
Market
Built environment
Law
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17. 17

18. 18

19. Digital Economy Act (DEA)
19

20. S3-18: ISP copyright police
notify subscribers of reported infringements
provide infringement lists to copyright owners
Obligations to limit internet access
Website blocking provisions (govt to abolish; Ofcom said unworkable)
20

21. Innovators/Creators
(a) Creators
Cr eative Activit y
Zero ZC Strength of copyright (Z)
Z depends on i) term ii) scope iii) penalties iv) case law v)enforcement
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22. Consumers
(b) Consumers
Total consumer welfare
Zero Zconsumer Strength of copyright (Z)
Societal welfare = (weighted) sum of consumers, creators & agents
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23. Agents of creators
Music, film, software, media companies and publishers
Za > Zc
(c) Agents
Agent profitability
Zero ZA Strength of copyright (Z)
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24. Lined up
(a) Creators
Creative Activity
Possibly
Za > Zc > Zconsumers
Zero ZC Strength of copyright (Z)
(b) Society as a whole
Total societal welfare
Zero ZS Strength of copyright (Z)
(c) Agents
Agent profitability
Zero ZA Strength of copyright (Z)
24

25. DEA Winners – some agents & creators
DEA Losers - agents & creators & public & trust
Agents
Creators
Public
25

26. Communications Data Bill (CDB)
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27. S1 Blank cheque Secretary of State
Power to ensure or facilitate availability of data
S9
Authorisations for obtaining data by police and other relevant public authorities
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28. ISPs DEA to CDB
copyright police to surveillance agents of state
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29. Mass surveillance undermines trust
Also doesn’t work
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30. CDB Winners – surveillance tech suppliers
CDB Losers - agents & creators & public & trust
Agents
Creators
Public
31

31. Governments don’t understand technology
Computers/Net
Magic solution or
Terrifying problem
Net = TV on steroids / online shopping centre
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32. Government ignorance bad for:
Innovators/creators
Agents
Citizen consumers
Trust
33

33. Public
Hugely forgiving of / blind to agents’ data gathering
(Convenience beats everything)
But data pollution = environmental disaster of
digital economy
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34. Trust in digital economy?
E2E Net: global machine for springing surprises
Innovators/creators engage
Agents (care with architecture)
 Regulators – get educated & Reed
 Business – data pollution
Citizen consumers get educated & active
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