6 September 20126 September 2012 Trust in the digital economy: Aberdeen UniversityTrust in the digital economy: Aberdeen University 11

Trust in the Digital EconomyTrust in the Digital Economy

Regulation and trust in the digital Regulation and trust in the digital economy: an uneasy relationshipeconomy: an uneasy relationship

Ray CorriganRay Corrigan

Open UniversityOpen University

22

TheoryTheory

33

EconomicEconomic

44

BehaviouralBehavioural

55

ill-informed regulation DEA, CDBill-informed regulation DEA, CDB

66

StakeholdersStakeholders

77

StakeholdersStakeholders

Public(Citizen consumers)

Innovators/Creators Agents*

* Business, public services, government (& civil society)

88

TrustTrust

99

All 3 need to thriveAll 3 need to thrive

1010

BalanceBalance

1111

Invisible handInvisible hand

1212

Enlightened governanceEnlightened governance

1313

Complex ecologyComplex ecology

1414

Net file sharing v music, online news v Net file sharing v music, online news v newspapers, Amazon v bookshopsnewspapers, Amazon v bookshops

>50 Android patent cases globally>50 Android patent cases globally

Samsung v AppleSamsung v Apple

Government v everybodyGovernment v everybody

1515

Behavioural forces in digital economyBehavioural forces in digital economy

1616

Social normsSocial norms

MarketMarket

Built environmentBuilt environment

LawLaw

1717

1818

1919

Digital Economy Act (DEA)Digital Economy Act (DEA)

2020

S3-18: ISP copyright policeS3-18: ISP copyright policenotify subscribers of reported infringementsnotify subscribers of reported infringements

provide infringement lists to copyright ownersprovide infringement lists to copyright owners

Obligations to limit internet accessObligations to limit internet access

Website blocking provisions (govt to abolish; Ofcom said unworkable)Website blocking provisions (govt to abolish; Ofcom said unworkable)

2121

Z depends on i) term ii) scope iii) penalties iv) case law v)enforcement

Strength of copyright (Z)

Cre

ativ

e A

ctiv

ity

Zero ZC

(a) Creators

Innovators/Creators

2222

Societal welfare = (weighted) sum of consumers, creators & agentsSocietal welfare = (weighted) sum of consumers, creators & agents

Consumers

2323

Music, film, software, media companies and publishersMusic, film, software, media companies and publishers

Za > Zc

Agents of creators

2424

PossiblyZa > Zc > Zconsumers

Lined up

2525

DEA Winners – some agents & creatorsDEA Winners – some agents & creators

DEA Losers - agents & creators & public & trustDEA Losers - agents & creators & public & trust

PublicCreators

Agents

2626

Optimal strength varies for creators, agents and consumersOptimal strength varies for creators, agents and consumersPossibly ZPossibly Zaa > Z > Zcc > Z > Zconsumersconsumers

We donWe don’’t knowt knowVery little empirical evidenceVery little empirical evidence

Case study of specific firmsCase study of specific firms Surveys of creators, firms, lawyers, etcSurveys of creators, firms, lawyers, etc Data & econometricsData & econometrics National or sector trends/comparisonsNational or sector trends/comparisons Sales of CDs, films, etcSales of CDs, films, etc Collecting society dataCollecting society data Legal cases matched to firm-level dataLegal cases matched to firm-level data

Evidence

2727

Communications Data Bill (CDB)Communications Data Bill (CDB)

2828

S1 Blank cheque Secretary of StateS1 Blank cheque Secretary of StatePower to ensure or facilitate availability of data

S9 S9 Authorisations for obtaining data by police and other relevant public authorities

2929

ISPs DEA to CDB ISPs DEA to CDB copyright police to surveillance agents of statecopyright police to surveillance agents of state

3030

Mass surveillance undermines trustMass surveillance undermines trustAlso doesn’t workAlso doesn’t work

3131

CDB Winners – surveillance tech suppliersCDB Winners – surveillance tech suppliers

CDB Losers - agents & creators & public & trustCDB Losers - agents & creators & public & trust

PublicCreators

Agents

3232

Governments don’t understand technologyGovernments don’t understand technology

Computers/Net Computers/Net Magic solution orMagic solution or

Terrifying problemTerrifying problem

Net = TV on steroids / online shopping centreNet = TV on steroids / online shopping centre

3333

Government ignorance bad for:Government ignorance bad for:Innovators/creatorsInnovators/creators

AgentsAgents

Citizen consumersCitizen consumers

TrustTrust

3434

Public Public Hugely forgiving of / blind to agents’ data gatheringHugely forgiving of / blind to agents’ data gathering

(Convenience beats everything)(Convenience beats everything)

But data pollution = environmental disaster of But data pollution = environmental disaster of digital economydigital economy

3535

When regulating…When regulating…

Audience 15 millionAudience 15 million Radio 40 yearsRadio 40 years TV 15 yearsTV 15 years www 3 years (600 million+ in 7 years)www 3 years (600 million+ in 7 years)

Law can’t keep upLaw can’t keep upEmpirical work/evidence neededEmpirical work/evidence needed

On creators, agents and publicOn creators, agents and public

Reed – doctrine of creative inertiaReed – doctrine of creative inertia

3636

Trust in digital economy?Trust in digital economy?

E2E Net: global machine for springing surprisesE2E Net: global machine for springing surprises

Innovators/creators engageInnovators/creators engage

Agents Agents (care with architecture)(care with architecture)

Regulators – get educated & ReedRegulators – get educated & Reed Business – data pollutionBusiness – data pollution

Citizen consumers get educated & active Citizen consumers get educated & active

3737