Regulating CodeGood Governance and Better Regulation in the Information Age (MIT Press)Ian Brown (Oxford) Chris Marsden (Sussex)@IanBrownOII@ChrisTMarsden#RegulatingCode

John Perry BarlowA Declaration of the

Independence of Cyberspace (1996)

response to CDA 1996 (partly struck down in Reno v. ACLU

1997)

‘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 no

sovereignty where we

gather.’

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

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.

Empirical investigationFive 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

Five case study chapters1. Data protection

◦ Enforcement failures, Privacy by Design

2. Copyright◦ Capture of law by lobbyists, code solutions

outflank

3. Filtering◦ Growth of censorship, surprising degree of

freedom – disappearing?

4. Social Networks◦ Dominance, network effects, corporate social

irresponsibility

5. Smart Pipes◦ Net neutrality argument, DPI deployment

Prosumers not super-usersWeb 2.0 and related tools make for

active users, not passive consumersUS 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

Commissioner Kroes to enact EU net neutrality law 4 June’13

“The fact is, the online data explosion means networks are getting congested.

“ISPs need to invest in network capacity to meet rising demand.

“But, at peak times, traffic management will continue to play a role: ◦it can be for legitimate and objective reasons;

like separating time-critical traffic from the less urgent.

Kroes: “different users have different network needs”

“Some people want a straightforward mobile package to check the odd email or website.

“Others want to constantly watch videos on their tablet, consuming high bandwidth.

“I want to put those consumer needs right at the centre of our thinking.

“Operators need to respect different needs, “and to do that they must also be allowed to

innovate to meet those needs.”

By ‘innovate’, she means charge for limited access to a walled garden or a low data cap

European Parliament net neutrality law workshop 4/6/13

“[Marsden] suggested a fatal flaw in ISP arguments to bypass net neutrality

they say they need to place limitations on connectivity

in order to deal with the “data explosion”, but there is in reality no such thing. “Marsden noted that figures from Cisco itself

◦ remember, a company trying to sell carriers kit to cope with this supposed explosion –

indicated a manageable increase in the amount of data people are using

Fact Check: Cisco VNI 2013

Western European data growth 2012-17Fixed 17% CAGR

◦ Down from historic growth of 30-40%◦ Not exactly Bernie’s 100% every 100 days, is it?

Mobile 50% CAGR◦ Mobile 0.15% of all Internet traffic 2012 (885PB)◦ Latter figure much reduced from earlier estimates◦ Due to WiFi hand-off◦ BBC has shown that over 90% of

smartphone/tablet video streams are Wifi◦ Mobiles not overloaded

http://chrismarsden.blogspot.com/2013/05/wireless-handoff-thats-why-mobile-data.html?spref=tw

Marsden conclusion“There is no data explosion on the

European internet, so we shouldn’t be trying to make policy based on a fallacious assumption,” he said.

“If we keep talking about data explosions, the thing that’s going to explode is the heads of the technical people who know there is no data explosion.”

Correct? Evidence base incomplete http://fastnetnews.com/a-wireless-cloud/61-w/4892-

cisco-mobile-growth-going-down-down-down

US Evidence-Based Policy?“America’s broadband systems

have doubled in speed, while Europe’s have remained stagnant.”

Which Europe is this?European 300% speed growth

2008-13In a long economic depression

NY Times: 16 June 2013! “No country for slow broadband”

http://www.nytimes.com/2013/06/16/opinion/sunday/no-country-for-slow-broadband.html?_r=1&

Economic growth 2007-12

But broke UK keeps growing faster and cheaper

Sam Knows?Consumer speed testsUK – Ofcom since 2009US – FCC since April 2010Europe – EC since Feb 2011

◦But no test results from latter – yet!

Other tests are corporate:Cisco, Akamai, NetFlix, BBC

(internal by SamKnows April 2009)

EU Mobile data costs: oligopoly 800% more than new entrants

Source: http://rewheel.fi/insights_15.php

Meyer [Gigaom] concludes

“Whether or not you agree with Marsden’s interpretation of Cisco’s figures,

his point highlights an inherent logical contradiction in the carriers’ stance:

“if the “data explosion” is so severe as to necessitate the creation of fast lanes with guaranteed QoS,

“doesn’t that mean the “best efforts” slow lanes will necessarily be slower than the equal-access lane we have today?

“And if that’s not the case, then why create divided classes of internet access?

They can’t have it both ways.”Really?

Unbearable Lightness of Being Right?

◦ Listening to the truly shocking Luigi Gambardella at the European Parliament on Tuesday, and

◦ the Commissioner's evidence-avoiding claims of 'Big Data Explosions'  Reminded me of Krugman's literary-inspired cri-de-ceour: 

NYTimes.com: "it’s hard to think of any previous episode in in the history of

economic thought in which we had as thorough a showdown between opposing

views, and as thorough a collapse, practical and intellectual, of one side

of the argument. And yet nothing changes. Not only don’t the policies change; by

and large even the people don’t change... the lack of accountability, for ideas and people, is truly remarkable

in a time of massive policy failure.“

Internet policy is made by the deeply cynical, if not deeply corrupt Truly the revenge of the BellHeads!

Developing 2013 case studies1. 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

Legal LiteraturePrevious legal focus on elephant’s trunk?

◦ Zittrain, Van Schewick◦ General US scepticism of govt action◦ Belief in ability of crowd-sourced heterachical regulation◦ Ohm’s Myth of the Super-User

Information commonism: Lessig (1998), Benkler (1998)

Information communism – Moglen (2003) ‘Separations principle’ – Wu

◦ Based on reading of history of common carriageEmpirical social scientific views:

◦ Mueller (2010), De Nardis (2009)◦ Institutional economics and political science◦ Power structures explicitly modelled (legal literature is

critical, assumes capture but not radical alternatives)

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

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?

Towards interoperability as prosumer law

Solution for prosumers & competition◦ enhance competitive production of public goods◦ innovation, public safety, and fundamental rights

Key aspects:◦ Communications not competition policy◦ Ex ante not ex post intervention ◦ interoperability (incl. FRAND)◦ Fair and reasonable defined by govt procurement

Not detailed rate of return regulation Note that IT software leaders make supra-normal

returns

◦ detailed software interoperability, not the general description offered by Gasser/Palfrey

2012 Specifics in Gasser (2007)

What regulation teaches about code

Ex ante + ex post interventionInteroperability

◦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

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

EC Mandated Browser Choice

2011: MSFT refused to allow browser choice by default in Windows 7 ◦fined €561m March 2013, ◦previously fined €497m 2007 €860m

2012. Browser “error” expensive line of code

TV Public Broadcaster Example

Sky EPG carries terrestrial public service channels on 101-105 ◦“must carry” and “due prominence” ◦Sky One is Channel 106◦HD public service channels

Channels 141, 142, 178, 230!

Communications Act 2003, s.310◦Ofcom Code on EPGs

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.”

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 timing and content of FTC settlement

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.”

Google FTC and EC cases

Source: Google proposal leaked to SearchEngineLand, 25/4/13

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.”

4 lines of complaintSearch 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!

Google and competitors routinely privately regulate other’s codepoints 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..

“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.

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

Or prominently advertise its product as

1. commercially driven, 2. affiliate-biased 3. selective search engine.

Requirement does not impose significant regulatory burdenreinforces 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.

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.

Social networks: US solutions instead of EU non-enforcementFacebook’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

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

50 ways to leave FacebookNot 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

US FTC constant auditClass actions: 2011 $8.5m Google Buzz. Jan 2013, Facebook $20mNov 2012, FTC Google settled for $22.5m

◦ tracking cookies for Safari browser users2012, 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.

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 policyConcerns are broader than competition

◦ Include privacy, IPR, security, fundamental rights

Economics and Human RightsOpen data, open code, and human rights Blizzard of Internet governance principles 2011

◦ Law/economics, or human rights, do not translate◦ OECD/EC vs. UNHCR/OSCE/Council of Europe

This apparent dialogue of the deaf ◦ competition policy & corporate governance problem

Urgent task: dialogue between discrete expert fields◦ ICT growth driver and transformative technology◦ transformative role in communication and dialogue

‘arms trade’ in censorship technology; Twitter ‘revolution’ (sic)

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

Questions?

Book published 22 March 2013

‘Prosumer law’ article (early version now on SSRN)

Comments welcome