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Not fudging nudges: What Internet law can teach regulatory scholarship

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Paris GIGARTS Prosumer Law: Behavioural or ‘nudge’ regulation has become the flavour of the decade since Thaler and Sunstein’s eponymous monograph. The use of behavioural psychology insights to observe changes in regulated outcomes from the ‘bounded rational’ choices of consumers has been 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 was so familiar to Internet regulatory scholars in the late 1990s that it came to be termed the leading example of the ‘new Chicago School’ by Lessig (1998), recognising imperfect information, bounded rationality and thus less than optimal user responses to competition remedies, driven by insights from the Internet’s architecture and Microsoft’s dominance of computer platform architecture. Thus recent ‘nudge’ concerns by regulatory scholars and competition lawyers 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, that in 2016 the 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. The competition and regulatory aspect of attempts to direct user and market behaviour are a key empirical perspective for regulatory scholars. The Internet is a network and a real-time laboratory for the distribution and manipulation of information, which is why it is unsurprising that the adaption of that information to affect user behaviour has been a commonplace online throughout the history of the Internet.

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Not fudging nudges: What Internet law can teach regulatory scholarship

  1. 1. NOT FUDGING NUDGES: WHAT INTERNET LAW CAN TEACH REGULATORY SCHOLARSHIP CHRIS MARSDEN GIG-ARTS 2017 CONFERENCE 31 MARCH 2017
  2. 2. 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)
  3. 3. 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 architecture Not 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.
  4. 4. 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.
  5. 5. 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
  6. 6. WE CAN MODEL FROM EXAMPLES
  7. 7. MY AREAS ARE NET NEUTRALITY AND CO- SELF-REGULATION Luckily! Norway and UK regulator (Ofcom) leading on net neutrality If UK stay in EEA, stay in European Regulators Group/BEREC as we leave, we canstate we wrote the rules Many of those rely on co- and self-regulation Community of Practice on Co- Self-Regulation or not….
  8. 8. INTERNET PLATFORMS HAVE INTENSE INTERDEPENDENT RELATIONSHIP WITH USERS Users 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)
  9. 9. 2. PLATFORM USERS ARE ALSO PRODUCERS OF CONTENT INCLUDING PERSONAL DATA platforms as distributor and archive of that content, • imposing terms of use including privacy & intellectual property Private 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.
  10. 10. PROSUMER LAW AND POLICY FOR ONLINE INTERMEDIARIES: TOWARDS A BEHAVIOURAL SOLUTION A 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.
  11. 11. 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
  12. 12. PARTICULARLY AS INFORMATION TECHNOLOGY IS A GENERAL PURPOSE TECHNOLOGY (GPT)
  13. 13. PLATFORMS RAISE SIGNIFICANT PUBLIC INTEREST REGULATION QUESTIONS Private 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
  14. 14. 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
  15. 15. MARSDEN AND BROWN (2013) COMPREHENSIVE SOLUTION Case 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.
  16. 16. #DIESELGATE
  17. 17. INTERNET FAST-MOVING LIKE FINANCE Why are we surprised? Finance is the simultaneous global transfer of trillions of bits of data We choose value this data as ‘money’ • Options, derivatives, Credit Default Swaps • All enabled by Internet trading
  18. 18. FINANCIAL SERVICES
  19. 19. STRAIGHT SHALLOW CABLES ENABLE MICROSECOND FASTER TRANSFERS
  20. 20. SURVEILLANCE: INTERNET NOT SO INNOCENT
  21. 21. CO-REGULATION? Government has enabling legislation to put regulation in place but chooses to forbear Example: 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
  22. 22. BEREC & NET NEUTRALITY
  23. 23. IT’S OVER
  24. 24. MORNING OF 24 JUNE I 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 member I was back in Brussels 29 March for #BrexitDay
  25. 25. OLD, UNQUALIFIED, LOCAL POOR
  26. 26. INTERNET SELF- AND CO- REGULATION
  27. 27. QUESTIONS? @ChrisTMarsden

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