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Mishcon Regulatory Presents: Too big to regulate?

Posted on 10 December 2021

From aggregation of customer data at scale to platform dominance, have we woken up to the threat to democracy posed by the power of a small group of tech companies or are we too late?

In our first Regulatory Thought Leadership episode, Mark Deem and Anne Rose, in conversation with Damian Tambini, discuss the steps we may need to take to achieve the balance between regulating Big Tech as 'gate keepers' to the digital world and protecting the rights of individuals, whilst ensuring that innovation is allowed to thrive for societal good.

Damian Tambini is a senior lecturer at the London School of Economics, associate fellow at the Institute for Public Policy Research and the Oxford Internet Institute, fellow of the Royal Society of Arts and serves on the advisory groups of the Oxford Media Convention and Polis, and author of Regulating Big Tech.

The Mishcon Academy Digital Sessions. 
Mark Deem, Partner
Mishcon de Reya

Hello and welcome to the Mishcon Regulatory Presents, a series of discussions, interviews and talks which aim to explore, expand and, we hope, enhance the way in which we approach the ever evolving world of regulation.  Along the way, we are going to be joined by some key thinkers and some leading practitioners in this space and today is no exception.  I am Mark Deem, I am an Innovation Partner here at Mishcon de Reya and together with my Innovation colleague, Anne Rose, we are delighted to welcome you, online and in the room, to the very first session, Too Big to Regulate, where we are going to be lifting the lid on the world of regulation in the digital space.  Over the past decade the world has been transformed, our lives have changed and our economies have been disrupted.  We have seen the convergence of our professional and our personal worlds come onto our technological devices and the way in which business has operated has leveraged technological advancements to automate scale up and achieve ever greater efficiencies in the way that business has performed.  Throughout this period, it would probably be incorrect to say that it has been the Wild West as far as regulation is concerned but it is certainly true that innovation has demanded that there has been a very light touch given to regulation.  That has effectively seen us in a world where regulation in the offline environment has merely been replicated in the online environment.  At the same time as innovation supporting this, I think it is fair to say that corporate cultures have benefited from this light touch.  The impact of that is that almost ten years on, we have seen the tide has started to turn and we have seen that the potential harms that now exist in an online environment, we’ve seen technologies developing in a way that is probably challenging traditional structures that we have in the world, where democracies and even the rule of law are now starting to be threatened.  So, is this combination of light touch regulation, with ever increasing dependencies on technology and a benign environment for corporate culture to move to the fore?  Has it really created what we call the perfect storm from the regulatory point of view or is it a storm in a teacup? 

Now, I’m delighted to say that we are joined on the stage today in the Academy with… by Dr Damian Tambini.  Dr Tambini is a distinguished policy fellow in the Department of Media and Communications at the London School of Economics here in London and is an associate fellow at the Institute of Public Policy Research and the Oxford Internet Institute.  He is an expert in media communications, regulation and policy and has acted both in the policy making arena and also academic research.  He is a former non-executive at Ofcom, a former Government adviser on the Communications Act and is currently serving on the Council of Europe Expert Group and advising the European Commission on the EU Digital Services Act and I am sure, along the way, he will also tell you about a number of the books that he has recently written.  Dr Tambini, welcome to the Mishcon Academy.  I think probably the starting point for us in today’s discussion, is to take the holistic view, to go up to 36,000 feet if we possibly can, and from your perspective, just to start to explore what technology and what regulation should really look like.  What is the purpose of regulation? 

Damian Tambini
Senior Lecturer and Author

If we think about regulatory theory, I think there are two main and largely incommensurable approaches so, economist led approaches and lawyer led approaches, I suppose.  So, in economist led regulatory theory, there is a tendency to think of the public interest in terms of the sum of consumer interests and to think that competition can sort out most problems.  Within that kind of approach, the rationale for regulation is very often based on a market failure approach and that’s the approach of the Treasury Green Book, if you like, and thinking about the justifications of the approach in terms of market failure.  On the other hand of course, there are approaches which are based on rights and Parliament setting standards of what is the public interest and when some sort of intervention, rule making, is necessary.  I think, and in my recent work, particularly in this book, which you didn’t mention which is the most recent one, ‘Media Freedom’, I am interested in the long-term development of the interplay between markets and rights.  I think of the kind of relationship between those approaches as changing over time and context specific.  As broadly a pragmatist, a kind of… who’s been open to both of those approaches, I have had to reassess my approach and I think many people are reassessing their approaches, for three reasons.  In the tech and media and communications space, we’ve had to reassess really whether pre-existing competition approaches work.  In a book which was published – this is OUP, this is from a couple of years ago – we look at, in fact Patrick Barwise from the London Business School, sets out reasons why and particularly in tech markets, the normal forces of competition don’t deal with dominance, so you have problems of network effects, consumer lock-in and a tendency for dominance, which is not dealt with by existing paradigms in approaches to competitions, so that might also be to do with the dynamics of double-side, two-sided markets and multi-sided markets as well.  So, there’s been a reassessment within the market driven, competition driven approach to antitrust and one manifestation of that is so-called hipster antitrust, a new approach saying that an approach to antitrust which his purely based on price, doesn’t deliver, so another chapter in that same book in fact is from… by Lina Khan, so Lina Khan recently appointed as Biden’s Chair for the Federal Communication… Federal Trade Commission in the US, is seen as the leading light of an approach which really undoes the Chicago School approach to antitrust and argues, and we are yet to see her play her hand really in terms of where she is taking the FTC but there it’s clear that there is a paradigm shift approach taking place and antitrust is shifting back to its roots in seeing a kind of a wider problem of dominance in terms of its implications, not only for outcomes considered in terms of consumer interests but also wider harms - harms to democracy, harms to society – and the operation of power in society.  So, there’s a big shift going on there.  Second area, national security.  War is no longer something which happens for a limited period of time in a particular space.  In these doctrines, war is continuous and it consists of multiple dimensions, including information warfare and I would argue that in democracies, in liberal democracies, we have the fur… we have to take into account the further concern which is that information warfare is asymmetrical, it is a war fought by authoritarian countries against democracies because democracies are vulnerable to those kinds of information controls because they are based ultimately on consent and/or you know, if you prefer, sovereignty of people in a way that authoritarian countries are not.  So, authoritarian countries can interfere with the operations of democracy.  People are thinking about whether media regulation is part of defence and I think there are dangers in there and the dangers are censorship, obviously, and we need to think very carefully about democracy so, the third area where I think we’re not talking about incremental change in regulation, we’re talking about paradigm shifts is in relation to democracy.  In liberal democracy, fundamentally this is based on individual choice makers being able to make decisions about collective self-government, so it’s liberal, we are all free to make choices about self-government and tech and the kind of merging of media and tech, is creating new challenges that require new solutions.  If we look back historically, as I do in the book a little bit, we had the idea of media pluralism so, the competition regime or the market structuring was designed to guarantee that no one company or individual can destroy the legitimacy of democracy.  Now, democratic legitimacy has to come to grips with a new set of challenges which are to do with that same set of problems but manifest in a very different way because of, for example, targeted messaging, creating propaganda bubbles around individual voters, for example, which is not really captured by the existing frameworks that Ofcom for example applies when they are doing a public interest test in the media merger regime.  Because of these three big changes, national security, the normal operation of competition and reassessment in competition law and this question of democracy, I think we’re looking at quite a big paradigm shift and this is manifest, for example, in the European Commission and their approach in the Digital Services Act and the Digital Markets Act which we have now in draft form and just to wrap up, I mean some of us are old enough to have been around when they were kind of designing the first regime for the internet in the ‘90s and then the discussion was about growth, innovation and competition but if you look at the Democracy Action Plan, the framework and the mood music around the Digital Services Act, for example, the package of regulations which is currently in draft, it’s all about rights, democracy and a perception that we really need to do something in this space, also in the wider AI space in my view, to think about how to make those technologies compatible with the kind of societies we want to live in, the kind of values and in order to do that competition is not enough, we’ve actually got to make bigger interventions, bigger changes, system design type changes. 

Mark Deem, Partner
Mishcon de Reya

And so it sounds to me as though what we shouldn’t be talking about is the regulation of technology so much as the regulation and looking at the way people interact with technology and the deployment of that technology.  What, in your view, would represent good regulation or perhaps bad regulation?

Damian Tambini
Senior Lecturer and Author

Well, in a way, that’s precisely what the Online Safety Bill, which parliament is currently thinking about, does.  It tries to look at the way technology is being used by individuals and how to effect that and how to reduce harm in ways which operate in a, I would describe a kind of a complex co-regulatory framework so the idea of a duty of care being imposed on platforms so that they make those decisions about design solutions which reduce harm so, they might provide certain forms of anonymity reduction, for example, so it is that kind of relationship, that way that users use technology which is being targeted by the Online Safety Bill but an argument I would make is whether that goes far enough in terms of these wider, democratic harms and that’s certainly a contrast between the UK approach and for example the EU disinformation approach. 

Anne Rose, Managing Associate
Mishcon de Reya

What do you think are some of the biggest changes that have really happened in like the past five years?

Damian Tambini
Senior Lecturer and Author

There are some things that we need to think about very carefully.  In terms of social media, it’s place in democracy, whether competition is working for consumers and this question of national security, which you know if anybody sort of says, ‘oh Damian, you’re making it up, it’s complete rubbish’.  One, look at the book I mentioned and two, look at… listen carefully to what’s coming out of the security establishment, listen carefully to what the joint chief of staff are saying about information warfare and about interference, I mean there’s a real problem but I think partly because of the political level, we haven’t seen much real change yet in the last five years, to answer your question, what we’ve seen is multiple agencies calling for changes and at the level of policy, sort of a slow game of catch-up, it’s the Online Safety Bill, as it used to be referred to as the Online Harms Bill, is the fruition of part of that, we also have a new election law going through Parliament at the moment which also doesn’t do much in my view to deal with some of the challenges and I think where the nettle has been graft slightly more firmly is in Brussels, where partly because there’s more of a consensus, there’s more political will to actually drive through some genuine legislative changes and you know for example a, the Digital Services Act in its current draft, is much stronger on disinformation, for example, than the Online Safety Bill is in the UK.  So, short answer, getting there with political will but in terms of actual legislative change, we’ve just got drafts.  I would describe the kind of regulatory problem that we have in front of us as what is sometimes referred to in public policy as a wicked problem.  So, because of the complexity of the problem, it’s very difficult to deal with it through a siloed approach so, for example, if you are concerned with – and this is another theme of the Media Freedom book – if you are concerned with private censorship, so platforms regulating speech and you can think about that in the context of say Trump de-platforming, people are profoundly uncomfortable with a platform regulating speech but if it was a market structure in which people were able to switch between platforms, they are able to port data, as they are supposed to be able to do under the GDPR, they are supposed to, they have interoperability rules applied to those platforms and you have a plurality of different platforms, so you have genuine consumer choice, then I’m less worried about the private censorship because it’s more like editorial control and it’s less likely to have a chilly effect on speech, depending on how it’s deployed.  So, when I say these are wicked problems, it’s like if the market structure problem and approach to competition is really linked to all of these other social problems that we’re trying to solve and how we address them in terms of their implication for fundamental rights, particularly speech, you know, ultimately…

Anne Rose, Managing Associate
Mishcon de Reya

That’s interesting. 

Damian Tambini
Senior Lecturer and Author

…the regulatory settlement that comes out of this will be a system for regulating speech and it will be fundamental to democracy and therefore we should be really worried about this, right, because in a world in which consumer, sorry conspiracy theories are circulating wildly and half the population seems to think that there is a conspiracy of them, who are trying to control us, through things like speech regulation or Google censoring something or Google doing the minister’s bidding, we have to be very careful that what comes out of this is trusted and is understood in terms of relatively simple principles. 

Anne Rose, Managing Associate
Mishcon de Reya

In your new book, the Regulating Big Tech and the Responses to Digital Dominance, which you are going to publish in January, is that correct?

Damian Tambini
Senior Lecturer and Author

It’s actually out and, you know, my publishers would probably tick me off but if you go to Oxford Scholarship Online…

Anne Rose, Managing Associate
Mishcon de Reya

Oh yes, I saw that, it’s available but you can’t get off Amazon yet till January. 

Damian Tambini
Senior Lecturer and Author

You can actually get it open access.  Shh, don’t tell anybody.

Anne Rose, Managing Associate
Mishcon de Reya

You know, you wrote the chapter in there I saw on reconceptualising media freedom and as part of this chapter you discussed the deep and enduring differences between the legal and policy approaches taken by democracies to new media and the internet and particularly between the United States and Europe and can you briefly talk about the contrasting regulatory approaches between the two and I found it was really interesting, if you can have a particular focus as well on the different approaches to media freedom and you talked about particularly the negative rights versus the international human rights and I found that really interesting. 

Damian Tambini
Senior Lecturer and Author

What I’m trying to grapple with in this kind of bit of my work is, is the, related to that problem of private censorship, from a point of view of freedom of speech theory and also the developing case law, the problem of the role of private actors in censorship is actually quite complex and difficult and given that we are moving towards this kind of co-regulatory framework, it sits in slight discomfort and particularly with the First Amendment because one of the things I was intrigued by is that the First Amendment says, ‘Congress shall make no law to abridge freedom of speech or of the press’.  Now there’s a whole theoretical debate about the last four words and whether there are special institutional rights, for example, for the press or for the media.  The First Amendment says no and it says that the right really is against the state, so congress shall make no law has been interpreted to mean that freedom of speech is, and I develop this a bit in the book, slightly at the risk of caricaturing the difference, is a negative rights approach, freedom from.  And if you contrast that with what I call the international human rights approach and this is under the European Convention on Human Rights, the develop… the what’s coming out of a UN special rapporteur system and the UN Human Rights Commission, they have a different approach, which is to say that yes there are special rights for the media and there are positive obligations on states to create the conditions for speech, including by regulating private actors and in relation to private censorship and co-regulation, it takes you to a different place.  So, I guess what I’m arguing is that the US First Amendment approach, which is very much the default habit of thought if you like, of Big Tech, which is to say hands off, you can’t regulate us, you can’t regulate speech, the State has to get out of the speech space.  I think we need to look at reconciling that approach with this International Human Rights approach and I think, and for various reasons, I think there is a role actually for theory here, to actually say okay, we need to look at this at the analytical level and get our ducks in a row, partly because it’s important that people understand any system of speech regulation.  In the Media Freedom book and in that chapter, I develop this, got a simple notion of what do people mean when they say media freedom?  Everybody says media freedom is a great idea, there’s a whole machinery of international kind of NGOs and IGOs developing around the motion of media freedom but they can’t agree on the most fundamental thing, for example, our social media media.  Do they deserve these positive privileges etcetera, etcetera?  What I’m trying to do is go for a reconciliation between those positive and negative approaches and by the way, that’s not original to me, that’s a well-established, theoretical difference between positive and negative approaches, there are lots of academics for many years who have been writing about that.  What I’ve done is say well actually, it’s worth acknowledging that they are manifest in the difference between the First Amendment and International Human Rights approaches. 

Mark Deem, Partner
Mishcon de Reya

Are we too late now?  Has the horse bolted and the stable door is wide open here that we have just left it too late to try to get into this space for regulating Big Tech and for tech in general?

Damian Tambini
Senior Lecturer and Author

No.  Particularly in Europe, as I said before, to a certain extent in this country the political will is there and the questions which are being dealt with is the how, not the whether something should be done but the how.  There is a negotiation that will go on here and if it comes to Facebook saying well I, or Google, in the way that they did in relation to Google News in Spain, saying we will withdraw our services from your market if we don’t get the settlement, we cannot operate in your market anymore because of the regulatory settlement.  Then it, you realise it’s a negotiation.  There will be a kind of a difficult process of negotiation but I believe it can be done because ultimately, Parliament is in charge and in a liberal democracy, and it’s a point I make at the end of the Digital Dominance book, I think liberal democracy realises that this is existential so they have to do it because otherwise liberal democracy is not safe so, that in a paradoxical way gives me a bit of optimism. 

Mark Deem, Partner
Mishcon de Reya

I’d like to thank everyone in the room and those joining online for joining us today.  We asked at the outset whether or not or we set out our task to explore, expand and enhance our view of regulation and I very much hope we’ve done that, certainly with Dr Tambini’s help.  We also asked are we too big to regulate?  Now, I think it’s fair to say that having heard everything that Dr Tambini has said, that I don’t think that we are too big to regulate or that businesses are not too big to regulate or to put it into my mum’s words, ‘You are never too old to be told off’.  And on that note, thank you ever so much for joining us and thank you, Dr Tambini. 

 

 

The Mishcon Academy Digital Sessions.  To access advice for businesses that is regularly updated, please visit mishcon.com.


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