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.

1. NOT FUDGING NUDGES:
WHAT INTERNET LAW
CAN TEACH
REGULATORY SCHOLARSHIP
CHRIS MARSDEN
GIG-ARTS 2017 CONFERENCE
31 MARCH 2017

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. 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. 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. 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. WE CAN MODEL FROM
EXAMPLES

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

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. 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. 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.

17. #DIESELGATE

18. 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

19. FINANCIAL SERVICES

20. STRAIGHT SHALLOW CABLES
ENABLE MICROSECOND FASTER
TRANSFERS

21. SURVEILLANCE:
INTERNET NOT SO
INNOCENT

22. 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

23. BEREC & NET
NEUTRALITY

25. IT’S OVER

26. 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

27. OLD, UNQUALIFIED,
LOCAL POOR

28. INTERNET
SELF- AND
CO-
REGULATION

29. QUESTIONS?
@ChrisTMarsden