'Regulating Code: Towards Prosumer Law' presented at 1st Internet Science conference, Brussels, 11 April 2013 #icis2013

1. Regulating Code:
Towards a
Prosumer Law
Chris Marsden (Sussex) &
Ian Brown (Oxford)
#icis2013
11 April 2013

2. ‘Governments of the Industrial
World, you weary giants of
flesh and steel, I come from
Cyberspace, the new home of
the Mind. On behalf of the
future, I ask you of the past to
leave us alone. You are not
welcome among us. You have
John Perry Barlow
no sovereignty where we A Declaration of the
gather.’ Independence of Cyberspace
(1996)
response to CDA 1996
(partly struck down in Reno v. ACLU 1997)

3. Regulation and governance
 Internet use now ubiquitous
◦ but governments, legislators and regulatory
agencies falling further behind rapidly
changing Internet technologies and uses
 Critical analysis of regulatory shaping of
―code‖ or technological environment
◦ ‗Code is law‘ and coders operate within
normative framework
◦ More economically efficient and socially just
regulation
◦ Critical socio-technical and socio-legal
approach

4. Test the existing ‗received truths‘
1. Self-regulation and minimal state involvement
is most efficient in dynamic innovative
industries;
◦ technology is never neutral in societal impact
◦ network and scale effects drive massive
concentration
2. Self-regulation critically lacks constitutional
checks and balances for the private citizen,
including appeal
3. Multi-stakeholder co-regulation chance to
reconcile the market failures and constitutional
legitimacy failures in self-regulation
◦ voters will not allow governments to ignore the
Internet.

5. Empirical investigation
 Five case studies and one ‗prior art‘
(encryption, anonymity, security)
◦ Multi-year empirical investigation
◦ Builds on various EC/other studies including
 ‗Self-regulation.info‘ (2001-4), ‗Co-regulation‘ (2006-8),
‗Towards a Future Internet‘ (2008-10), ‗Privacy Value
Networks‘ (2008-11), ‗Network neutrality‘ (2007-10)
‗Internet science‘ (2012-15)
 Reassesses prior art in view of ‗hard cases‘
◦ Topics with no organised regulation/self-regulation
◦ Due to lack of consensus over solutions
◦ Clash between market outcomes and human
rights

6. Literature
 Previous legal focus on elephant‘s trunk?
◦ Benkler, Wu, Lessig, Zittrain, Van Schewick
◦ General US scepticism of government action
◦ Leaves only bottom-up Wiki-panacea
 Ohm‘s Myth of the Super-User
 More empirical view:
◦ Mueller (2010), De Nardis (2009)
◦ Institutional economics and political science

7. Governance and Law
 How suitable is our current system?
◦ Is it fit for 21st century?
 Open data, open code, and human rights
 Blizzard of Internet governance principles 2011
◦ Law/economics, or human rights, do not
translate
 Urgent task: dialogue between discrete expert
fields
◦ ICT growth driver and transformative technology
◦ transformative role in communication
 ‗arms trade‘ in censorship technology;
 Twitter ‗revolution‘ (sic)

8. Prosumers not super-users
 Web 2.0 and related tools make for
active users, not passive consumers
 US administrative & academic
arguments
◦ self-regulation may work for geeks,
◦ but what about the other 99%?
 European regulatory space
◦ more fertile ground to explore prosumerism
◦ as both a market-based and
◦ citizen-oriented regulatory tool

9. Penguin and Leviathan?
 Is the West (and East) already won?
◦ A billion Facebook users
◦ A billion Weibo users
 Are we oil in the digital economy?
◦ Crushed under the elephants‘ feet?
 Or silkworms unaware of our ‗owner‘s‘
◦ mingling of our silk into
their commercial tapestry?

11. Case studies
1. Data protection in Social Networks
◦ Enforcement failures, Privacy by Design
◦ Dominance, network effects, corporate
social irresponsibility
2. Search Neutrality
◦ Net neutrality argument
◦ Code-based solution to competition
problem
◦ Prosumer focus cf. Microsoft

12. Approach embraces complexity
 No easy examples that demonstrate 'truth' of
◦ technical, political, legal or economic solutions
◦ based on self-, co- or state regulatory approaches.
◦ Cf. Mansell (2012) Imagining the Internet
 Examine the deficiencies and benefits
◦ Match market and social developments
◦ With human rights concerns
◦ E.g. In fields of privacy and freedom of expression
 Note: analysis based on Art.19 UDHR not 1st Amendment
 Most of world uses variants of Article 19

13. Government and market failure
 Industry capture of regulators & legislators
 Incumbents introduce new barriers to entry
 Continued exclusion of wider civil society
◦ tenuous chain of accountability of participants
◦ to voters, shareholders and NGO stakeholders.
◦ effectiveness, accountability and legitimacy of
these groups in representing the public interest?

14. Towards interoperability as
prosumer law
 Solution for prosumers & competition
◦ enhance competitive production of public
goods
◦ including innovation, public safety, and
fundamental democratic rights
 Key aspect: interoperability (incl.
FRAND)
◦ (Note: this is detailed software
interoperability, not the general description
offered by Gasser/Palfrey 2012)

15. What regulation teaches about
code
 Ex ante + ex post intervention
 Interoperability
◦ Procurement policy + regulation/competition
 A biased policy towards open code –
◦ Data open to mash-ups (government)
◦ Systems interoperable (procurement)
◦ Use of alternatives to market leader (e.g.
Linux)
 Via competition remedies and sponsorship

16. Information regulation precedent
 Must-carry/must-offer obligations,
◦ imposed on many market actors,
◦ including obliged to offer FRAND terms
 (common carriers, broadband access providers, cable
broadcasters, electronic program guides);
 Interconnection requirements on telcos,
◦ especially those with dominance—
◦ And AOL/Time Warner merger requirement for
instant messaging interoperability
 Application programming interfaces (API)
disclosure requirements,
◦ placed on Microsoft by EC upheld by ECJ

17. Google: competition investigation
both sides of Atlantic since 2010
 settled with US authorities 3 Jan 2013
 settlement proposal to EC 1 Feb 2013
 Experts have severely criticized both
◦ the timing and content of FTC settlement
◦ extremely favourable to Google
◦ composition of the outgoing FTC board,
◦ decision not to proceed on main issues

18. Grimmelman argued:
―If the final FTC statement had been
any more favourable to Google,
I‘d be checking the file metadata to see
whether Google wrote it.‖

19. 4 lines of complaint
Search bias: Google favours own products over competitors in results
Vertical Search Opt-Out –
◦ Google don‘t let websites opt out of particular uses of pages it indexes.
◦ complete opt-out giving up all Google traffic, a significant driver of traffic –
◦ especially Europe: Google has 90% search market in UK, Nl, France, Germany
Restricted 3rd party use of AdWords:
◦ ―API Client may not [function] copies data between Google and 3rd Party.‖
◦ Companies can advertise on Google and Bing,
◦ but cannot use a program to copy Google AdWords campaigns over to Bing.
◦ dropped by Google as token interoperability sop to FTC‘s investigation;
Injunctions against standards-essential patents,
◦ including those by Google-acquired Motorola Mobility
 see Posner‘s now–famous judgment in June 2012
◦ FTC concluded (4-1) unfair competition, Google agreed not to engage in it
◦ fires a shot not just at Google, but also at rivals –clever concession by Google!

20. Google and competitors routinely
privately regulate other‘s code
 points 3 and 4,
 Google claimed the right to regulate
others‘ use of code,
 to use the AdWords API or
 to use Motorola Mobility‘s patents..

21. ―Prosumer law‖ approach
 interoperability and content neutrality
1. Google to reinforce search neutrality
1. NOT bias results with search algorithms
2. relatively trivial (by Google
standards) amendment to its code
1. allow websites more flexibility in listing,
2. rather than complete opt-out via the
existing robots.txt convention.

22. We do not make strong
normative claim that Google
should adopt neutral perspective
◦ (nor do we adopt approach to net neutrality),
 We advocate truth-in-advertising
 Any search engine (or ISP using search)
◦ claiming verifiably neutral results
◦ produce the same

23. Or prominently advertise its product as
1. commercially driven,
2. affiliate-biased
3. selective search engine.

24. Search neutrality: Internet search
engine provide search results
that correspond to its mission
 to search the Internet for relevant products,
 with any ‗promoted‘ products advertised as such
◦ separated from search results requested by the user.
 this is exactly the solution that leading search
engines claim to provide,
 ‗sponsored links‘ separate from overall results
◦ in either a side-bar or more intrusive text box above
the main results.
◦ That would not prevent linking to an affiliated maps
provider, or shopping engine,
◦ as long as these links are not in the main results.

25. Requirement does not impose
significant regulatory burden
 reinforces the brands of search providers
of integrity.
 would not apply to selective search
providers if labelled such
 ‗a search engine which selectively
provides you with search results
according in part to its commercial
affiliations‘
◦ (or equivalent wording)
 prominently displayed above search
results in that case.

26. Code-based solutions lighter than
€1b fines or structural separation
 In book, we suggest similar approach
◦ to network neutrality violators
 could not advertise their services as
allowing end-users‘ choice
◦ in accessing the ‗Internet‘
 when in fact it is a commercial Intranet
◦ to which full access is provided.

27. Social networks: US solutions
instead of EU non-enforcement
 Facebook‘s 400m European users
 27 national regulators of personal data.
 Facebook chose regulator relocated in 2006
◦ from Dublin to Portarlington, Co. Laois, Ireland,
◦ Google is also regulated from Portarlington.
 While German state and federal regulators
and others may rattle sabres at Facebook,
 Irish regulator audited Facebook spring 2012
 insisting on remedial action on nine counts

28. Prosumer law: direct intervention
 Abusive dominant social networking sites
 prevent Facebook, Google+ any other
◦ from erecting a fence around its piece of the
information commons:
◦ ensure interoperability with open standards
 Which lowers entry barriers (in theory!)
 Enforcement of privacy law even in Portarlington

29. 50 ways to leave Facebook
 Not sufficient to permit data deletion
◦ as that only covers the user‘s tracks.
 Interconnection and interoperability,
◦ more than transparency and
◦ theoretical possibility to switch.
 Ability for prosumers to interoperate to
permit exit
◦ Lower entry barriers tend to lead to increased
consumer welfare

30. US FTC constant audit
 Class actions:
 2011 $8.5m Google Buzz.
 Jan 2013, Facebook $20m
 Nov 2012, FTC Google settled for $22.5m
◦ tracking cookies for Safari browser users
 2012, both agreed to settle privacy complaints
◦ FTC privacy audit of products for a 20-year period.
◦ That‘s until 2032!
 Sector-specific regulation of social networking
already exists de facto in the United States,
 Europeans wring their hands on the sidelines.
◦ proposed new European Regulation
◦ unlikely to be implemented before 2016.

31. Euro-Interoperability Framework
 Response to multi-€bn competition
cases:
◦ Microsoft saga (to 2009), Intel (2009), Apple
(2010), Rambus (2009)
◦ Google (2013?) perhaps Facebook....
◦ Coates (2011: Chapters 5-6)
 Announced by DG Comp (CONNECT)
Commissioner Kroes 2009-2010
 Bias in favour of interoperability in policy
 Concerns are broader than competition
◦ Include privacy, IPR, security, fundamental
rights

32. Developing study of code
regulation
 Similarities and cross-over with
◦ complexity science
◦ network science
◦ web science/graph theory
 Match Internet regulation to complexity theory
 Longstaff (2003), Cherry (2008), Schneider/Bauer (2007)
 Network science fusion of scientific/fundamental
elements from various components
 Internet Science? EC Network of Excellence

33. Kroes‘ promise post-Microsoft
 Will ―seriously explore all options to
ensure that significant market players
cannot just choose to deny
interoperability.
 ―The Commission should not need to
run an epic antitrust case every time
software lacks interoperability.‖

34. Questions?
 Book published 22
March 2013
 ‗Prosumer law‘ article
(early version now on
SSRN)
 Comments welcome