Ebrahim on Algorithms in Business, Merchant-Consumer Interactions, & Regulation

Tabrez Ebrahim (California Western School of Law) has posted “Algorithms in Business, Merchant-Consumer Interactions, & Regulation” (West Virginia Law Review, Vol. 123, 2021) on SSRN. Here is the abstract:

The shift towards the use of algorithms in business has transformed merchant–consumer interactions. Products and services are increasingly tailored for consumers through algorithms that collect and analyze vast amounts of data from interconnected devices, digital platforms, and social networks. While traditionally merchants and marketeers have utilized market segmentation, customer demographic profiles, and statistical approaches, the exponential increase in consumer data and computing power enables them to develop and implement algorithmic techniques that change consumer markets and society as a whole. Algorithms enable targeting of consumers more effectively, in real-time, and with high predictive accuracy in pricing and profiling strategies. In so doing, algorithms raise new theoretical considerations on information asymmetry and power imbalances in merchant–consumer interactions and multiply existing biases and discrimination or create new ones in society. Against this backdrop of the concentration of algorithmic decision-making in merchants, the traditional understanding of consumer protection is overdue for change, and normative debate about fairness, accountability, and transparency and interpretive considerations for non-discrimination is necessary. The theory that notice and choice in data protection laws and consumer protection laws are sufficient in an algorithmic era is inadequate, and countervailing consumer empowerment is necessary to balance the power between merchants and consumers. While legislative activity and regulation have conceivably increased consumer-empowerment, such measures may provide a limited or unclear response in the face of the transformative nature of algorithms. Instead, policy makers should consider responsible algorithmic code and other proposals as potentially effective responses in the analysis of socio-economic dimensions of algorithms in business.

Hacker on Manipulation by Algorithms

Philipp Hacker (European University Viadrina Frankfurt (Oder) – European New School of Digital Studies; Humboldt University of Berlin) has posted “Manipulation by Algorithms. Exploring the Triangle of Unfair Commercial Practice, Data Protection, and Privacy Law” (European Law Journal (Forthcoming)) on SSRN. Here is the abstract:

The optimization of sales practices in consumer markets through machine learning not only harbours the potential to better match consumer preferences with products, but also risks to facilitate the exploitation of consumer weaknesses discovered via data analysis. More specifically, recent technological advances have brought us to the edge of mind-reading technologies, which automatically analyse mental states and adapt offers accordingly, in potentially manipulative ways. This article shows that, in market contexts, the challenges of manipulation by algorithm necessitate an integrated understanding of unfair commercial practice, data protection, and privacy law. It maps the interactions between these contiguous yet distinct fields of law, and draws on economics and computer science to develop a novel framework to deal with algorithmic influence. In doing so, it also critically discusses the Commission proposals for the Digital Services Act and the Artificial Intelligence Act, and suggests to complement them with more broadly applicable measures to mitigate algorithmic manipulation.

Schwemer & Mahler on Drafting Ideas for the Revision of Non-hosting Liability Exemptions in the EU

SEBASTIAN FELIX SCHWEMER (University of Copenhagen, Centre for Information and Innovation Law (CIIR)) and TOBIAS MAHLER, University of Oslo – Norwegian Research Center for Computers and Law) have posted “Drafting Ideas for the Revision of Non-hosting Liability Exemptions in the EU” on SSRN. Here is the abstract:

The European Union is currently discussing a reform of its intermediary liability rules with its recently proposed Digital Services Act. The existing rules in the e-Commerce Directive (Directive 2000/31/EC) offer a safe harbour from liability for certain intermediary functions that are central to the functioning of the internet. A safe harbour for intermediaries is one of the regulatory cornerstones that help protect innovation, creativity and the free flow of information. At the same time, these rules are under pressure. This paper discusses a subset of ‘non-hosting’ intermediary functions. Some of these have traditionally been less visible in content-related regulatory debates. We look at selected examples of functions related to, for instance, the domain name system (DNS), content delivery networks (CDNs), cloud processing and live-streaming. The current liability exemption regime under the e-Commerce Directive focusses on transmission in, or access to, a communication network, as well as storage. However, significant grey areas arise both in relation to what we call the ‘auxiliary network intermediary’ function (as opposed to ‘direct network intermediary functions’, corresponding to ‘mere conduit’ functions), which does not transmit or provide access, and the ‘temporal provision and processing of information’, which is different from storage.

Lefouili & Madio on The Economics of Platform Liability

Yassine Lefouili (University of Toulouse 1 – Toulouse School of Economics) and Leonardo Madio (University of Padua – Department of Economics and Management; CESifo (Center for Economic Studies and Ifo Institute)) have posted “The Economics of Platform Liability” on SSRN. Here is the abstract:

Public authorities in many jurisdictions are concerned about the proliferation of illegal content and products on online platforms. In this paper, we provide an economic appraisal of platform liability that highlights the effects of a stricter liability rule on several key variables such as prices, terms and conditions, business models, and investments. We also discuss the impact of the liability regime applying to online platforms on competition between them and the incentives of third parties relying on them. Finally, we analyze the potential costs and benefits of measures that have received much attention in recent policy discussions.

Talesh & Cunningham on The Technologization of Insurance

Shauhin A. Talesh (University of California, Irvine School of Law) and Bryan Cunningham (Cybersecurity Policy & Research Institute) have posted “The Technologization of Insurance: An Empirical Analysis of Big Data and Artificial Intelligence’s Impact on Cybersecurity and Privacy” (Utah Law Review, 2021, forthcoming) on SSRN. Here is the abstract:

This article engages one of the biggest issues debated among privacy and technology scholars by offering an empirical examination of how big data and emerging technologies influence society. Although scholars explore the ways that code, technology, and information regulate society, existing research primarily focuses on the theoretical and normative challenges of big data and emerging technologies. To our knowledge, there has been very little empirical analysis of precisely how big data and technology influence society. This is not due to a lack of interest but rather, the lack of disclosure by data providers and corporations that collect and use these technologies. Specifically, we focus on one of the biggest problems for businesses and individuals in society: cybersecurity risks and data breach events. Due to the lack of stringent legal regulations and preparation by organizations, insurance companies are stepping in and offering not only cyber insurance but also risk management services aimed at trying to improve organizations’ cybersecurity profile and reduce their risk. Drawing from sixty interviews of the cyber insurance field, a quantitative analysis of a “big data” set we obtained from a data provider, and observations at cyber insurance conferences, we explore the effects of what we refer to as the “technologization of insurance,” the process whereby technology influences and shapes the delivery of insurance. Our study makes two primary findings. First, we show how big data, artificial intelligence, and emerging technologies are transforming the manner in which insurers underwrite, price insurance, and engage in risk management. Second, we show how the impact of these technological interventions are largely symbolic. Insurtech innovations are ineffective at enhancing organizations’ cybersecurity, the role of insurers as regulators and helping insurers manage uncertainty. We conclude by offering recommendations on how society can help technology to assure algorithmic justice and greater security of consumer information as opposed to greater efficiency and profit.