Presentation given on 17 June 2013 - note that only first half was completed during presentation

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

2. John Perry Barlow
A 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.’

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. Five case study chapters
1. 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

7. 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

8. 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.

9. 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

10. 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

11. Fact Check: Cisco VNI 2013
 Western European data growth 2012-17
 Fixed 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

12. 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

14. 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 2008-13
 In a long economic depression

15. 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&

16. Economic growth 2007-12

17. But broke UK keeps growing
faster and cheaper

18. Sam Knows?
 Consumer speed tests
 UK – Ofcom since 2009
 US – FCC since April 2010
 Europe – EC since Feb 2011
◦ But no test results from latter – yet!
 Other tests are corporate:
 Cisco, Akamai, NetFlix, BBC (internal
by SamKnows April 2009)

19. EU Mobile data costs: oligopoly
800% more than new entrants
Source: http://rewheel.fi/insights_15.php

20. 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?

21. 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!

22. Developing 2013 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

23. Legal Literature
 Previous 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 carriage
 Empirical 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)

24. 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

25. 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?

26. 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)

27. 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

28. 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

29. 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

30. 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

31. 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.‖

32.  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

33. 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.‖

34. 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!

35. 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..

36. ―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.

37. 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

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

39. 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.

40. 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.

41. 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

42. 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

44. 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

45. 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.

46. 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

47. Economics and Human Rights
 Open 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)

48. 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

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