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Regaining the Public from the Private Keeps the Hope Alive

With the huge expansion of digitalization into almost all areas of our public and private lives and our societies, we also witnessed an unprecedented expansion of a legal framework structure incorporating the free market logic – namely of so-called “private law” – into the very same areas: This applies, for instance, to the platform economy, social networks, the Internet of things and the provision of software and hardware to the public and private sectors, including satellites and electronic military weapon systems.

All digitalized areas of our societies have certain traits in common:

(a) The market logic and private order expanding: Those areas are based on a “private order” which is established unilaterally by the dominating provider of the digital service or technology on the basis of a private law institution called “general terms and conditions” (GTC). This is made possible by national contract law. Problem: The existing private law gives a certain structure and logic (form and content) to digitalized areas of life which seems undesirable: It brings about the commercialization of public issues and public spheres. It leads to the expansion of the domination of enterprises of the digital economy from traditional markets to all corners of citizens’ private lives (including the data about it) and to political and public life. Example: Social networks (which are enterprises) nowadays determine the outcome of public elections or support the organization of terrorist attacks. The checks and limits set by national legal systems to private enterprises of the digital economy sector intruding into the fundamental rights of citizens and into manifold public interests like democracy, free speech, privacy, self-determination, are grossly inadequate.

(b) New dimensions of superpower: Those areas are dominated by super-powerful oligopolists who have nothing in common with “ordinary” enterprises for whom we created consumer and competition law. The relationship between these power-enterprises and their customers – who are businesses and consumers – is not only characterized by an imbalance of information and financial power, but also by new additional structures of dependency and vulnerability on the side of consumers and business customers: network effects, entangled markets, digital service providers in control of all – even personal and intimate – data and the access to the public sphere). Problem: The checks and limits set by national legal systems to the new category of super-powerful private enterprises are grossly inadequate. The existing rules attempting to protect citizens against enterprises were – in most parts – shaped for a different pre-digital society.

(c) Global extension: Digital relations and markets are global, whereas the legal systems supposed to govern these relations are national, only partly European in some cases. Problem: This creates the problem of international or cross-border enforceability of legal standards and legal restrictions against the super-powerful. Traditional conflicts theories will have to be reformed to adequately address this new challenge. International law will have to contribute its share.

A good example of a privately (enterprise) created global legal order that replaces the state legal order are the rules enforced on social networks: On world-wide platforms, the “community standards” (GTC based) do not comply with national state law (private and criminal), even where the latter is mandatory, in place and applicable. The content moderation on the platform enforcing the platform’s own community standards is much faster and more effective than a court proceeding of a single user against the platform invoking state law. This is particularly tough where users are harassed, discriminated or the public opinion is influenced by disinformation or even lies. On the broad basis of contractual freedom and a loose control of unfair contract clauses, private users and enterprises on platforms are deprived of their human rights and of their data needed to protect their interests.

In traditional markets of goods and services an important transformation has taken place as well: Platform oligopolists create and control their markets themselves on which businesses and their customers depend. Additionally, platform enterprises show interconnected activities on various market levels thus creating relations of dependence for platform users, thus rendering core categories of antitrust law (market) and contract law (distinction consumer – enterprise) inoperable.

The EU has set up a line of legal instruments to tame the digital private order of the super-powerful:  P2B Regulation, GDPR, DSA, DMA, Data Act, and others. They all rest on the assumption that internet and digitalization are and remain in the realm of the private law of contracts. But is the punctual and exceptional introduction of mandatory private law loosely restricting a world of individual contracts the right way to tame the tiger?

The EU and national states clearly try to regain the control over public interests which are severely endangered by the new digital super-powers who are private enterprises.

  1. But they are, firstly, probably not aware of the transformative power of private law itself which contributes a great deal to the situation as it is, and could – by amendment of its rules – also make a considerable contribution to the desired transformation.
  2. And, secondly, the EU approach of leaving the law of bilateral contracts and their general terms and conditions as they are, does not seem to be creative and courageous enough in the face of the dimension of the described regulatory challenge.
  3. As a third and last thought: Probably the distinction between the “private” and the “public” and private and public law is little helpful in this context and should be reconsidered.

Does private law really have to stay the enabling monster of a unilateral determination and domination of all issues in digital relations by super-powerful businesses? Could a more participative and caring private law be imagined? The core idea of public as well as private law should be to tackle the concerns of all citizens affected by a certain situation.

As a starting point, GTC of contracts and “community standards” of platforms should be seen as what they are: unilateral law making by private enterprises authorized to do so by the state. On internet platforms, enterprises unilaterally determine the rules of bilateral economic relations authorized and supported by contract law. In general, this vast private law-making power has to be controlled and restricted by the state in the way appropriate to protect private and public interests affected in a certain context. In the context of digitalization, controls and restrictions have to be freshly designed and enacted, because the old law is no longer appropriate for its unique challenges.

Presently, contract law is characterized by a bilateral or relativity bias: Contracts are only seen as legal relations between two parties, platform provider A und user B, provider A and user C, etc. Impacts these bilateral contracts have in a larger network on other users, citizens or on public interests are not incorporated into the logic of contract law. However, the legal relations between super-powerful providers of digital services and their users are situated in a context of network and general interests which should be reflected and incorporated in a legal framework structure. This means that contract law has to be re-conceptualized. Its legal framework structure could be similar to that of services of general [economic] interest (SGEI) under art. 14, 106 TFEU. In my proposal, a network and community oriented basic regulation, additionally, defines spaces for providers and users to make their own (binding) choices. Whether this “basic regulation” is then seen as public law and rules for choices are seen as private law, is not really relevant.

The described basic regulation could secure rights for the relatively rightless private and business users and secure respect and protection for public concerns and general interests (like democracy, human rights, ethical standards for media, national security). This means that It should be participatory and caring for all those affected and concerned by digitalization. This legal regime could be comprehensive, instead of punctual. The rules could provide a “common standard” after which all internet and digitalization actors, providers and users, have to play. These standards would be adopted by parliaments (as state legislation), instead of being dictated by super-powerful enterprises, as is the case now. General terms and conditions of contracts could be rendered partly (wholly?) superfluous, as the basic rights and duties of all actors would be defined by the (state origin) basic rules of digitalization. Unilateral determination of the content of bilateral contractual relations and network rules could be replaced by more participatory rules of choice which give power to providers and users to make important choices within the basic framework regulation of the state themselves, instead of being forced under the dictate of the dominating provider of digital services.

The solutions described are attempts to tackle the problems explained under points (a) and (b) above. The globality/nationality problem of point (c) has not yet been addressed. Under EU law and international law, a common understanding of basic standards for respectful and socially responsible behavior of all relevant actors in a digitalized society of the greatest expansion possible should be strived for (EU legislation, Council of Europe, UN recommendations, international treaties, etc.).

Art by Tomoko Nagao
Il quarto stato with motta, campari, pirelli, armani, prada, chicco, alitalia and visa at piazza duomo
2016 Digital contents
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