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New research theme on the Political Economy of Digital Regulation

Posted on    by CREATe Team
Blog

New research theme on the Political Economy of Digital Regulation

By 6 March 2024No Comments

Today’s digital technologies are transforming not only the way we produce and consume goods and services, but also the way we relate to each other. Trailblazing technologies and business models (e.g. platforms) have enabled new forms of value creation, making available innovative products we couldn’t imagine a few years ago. Digital markets have become the most advanced and dynamic part of our modern economies. Simultaneously though, digital markets have enabled new forms of power (e.g. intermediation, gatekeeping, architectural power in ecosystems) and they raise various concerns pertaining to power asymmetries, anticompetitive practices, threats to democracy,  new types of market failure, exploitation, dark patterns, privacy, as well as new ways to inhibit innovation.

decorative image of data centre

Data – Original illustration by vanesaurus

 

Around the world, legislators and regulators have been trying to tame the power of large technology firms by employing competition law, abuse of economic dependency law, data protection and privacy law, ‘online safety’ provisions, and most recently ex ante platform regulations. In the EU the Digital Markets Act (DMA), one of the EU’s flagship regulations, recently entered into force and seeks to make digital markets fairer and more contestable by containing the power of gatekeepers. In addition, other pieces of legislation such as the General Data Protection Regulation (GDPR), the Digital Services Act (DSA), and the forthcoming AI Act affect the shape of competition in digital markets, while several Member States take their own initiatives. In the US a proposal for a new antitrust bill, the American Innovation and Choice Online Act, was discussed without much success. Yet, things seem to be changing also on that side of the Atlantic, since both the Federal Trade Commission and the Department of Justice are increasingly inclined to engage in vigorous antitrust enforcement against BigTech. The UK is in the process of adopting its own form of platform regulation, the Digital Markets, Competition, and Consumers Bill, while implementing the Online Safety Act (OSA), whereas other jurisdictions seem inclined to adopt one or another of the existing regulatory models (e.g. African Union). There seems to be a global competition for regulatory influence where developing countries pick and choose from this regulatory buffet.

Regulators are constantly required to grapple with novel problems (e.g. competition-related privacy harms), understand the complex interactions between economic, societal, and political actors and technologies, apply well-understood concepts in new ways (e.g. market definition, market power), and/or apply new concepts and rules (AI Act, DMA, DMCC, OSA). Digital technologies pose new challenges to regulators, yet they can also seek to manage them with new capabilities (e.g. RegTech).

Against this setting, it would be hard to deny that we are living in the era of the regulatory state, where regulation is central to political, economic, and social spheres. Hence, understanding regulation is necessary if we are to grasp and reconfigure how states, technoeconomic structures, and societal actors interact. In our view, regulation (‘the intentional use of authority to affect behaviour of a different party according to set standards, involving instruments of information gathering and behaviour modification’) is not an external and ex-post form of intervening in digital spaces, but an organic component of complex systems co-created by individuals, markets, technologies, civil society actors, governments, and international organisations. Regulation is and can be co-creating, co-shaping or reconfiguring markets, political and social orders, and digital spaces (e.g., infrastructure regulation, regulatory oversight). It can restrict behaviour and prevent certain activities or outcomes, but also, and perhaps more importantly, it can be enabling and facilitative. Its nature, function, and performance might significantly vary (e.g. regulatory regimes might be fragmented, multi-sourced and unfocused). As a result the use of indicators of regulatory quality and ‘rational planning’ tools is necessary (e.g. regulatory impact assessments, cost-benefit analysis).

The purpose of this theme is to explore how different regulatory approaches and tools shape digital markets and play into political and societal regimes, drawing on regulatory theory, and socio-legal, economic, institutional, and comparative analysis. The theme will follow closely the various regulatory, political, and competition law developments in digital markets, as well as the implementation issues and the challenges that regulators are facing. In addition, this theme will seek to examine the global regulatory competition between jurisdictions seeking to influence others and export their models and related standards.

We adopt a political economy perspective considering that markets and technological developments are socially embedded: law and societal practices shape how markets operate and how technological developments unfold, while markets, political and administrative cultures, and technologies influence the logic and practice of legal institutions. A political economy approach is also sensitive towards questions of control and power, value creation, extraction, and distribution. Furthermore, we consider that the various regulatory tools and approaches rely on a mixture of value judgements, technical legal reasoning and expert knowledge and are shaped by the character of political regimes. A political economy approach, therefore, advocates for interdisciplinarity and epistemic openness in the study of regulation. Simultaneously, it stresses the importance of institutional, societal, and geopolitical contexts in the analysis of regulation.

We are hoping to offer fresh insights and understandings into how different forms of regulation work and interoperate (or fail to do so). An overarching purpose is to use our research to engage with various stakeholders and policy makers to make meaningful recommendations.

In this context, and with new funding  by the AHRC, we are launching CREATe’s new research theme on the Political Economy of Digital Regulation to coordinate our research, events, teaching, and networking activities in this space. CREATe’s UK and international reach will serve as a hub for our own projects, as well as for those who wish to explore the political economy of regulation with us.

Our staff and activities are already researching these new dynamics. Led by Dr Stavros Makris and Prof. Martin Kretschmer, the theme brings together a group of scholars who study the challenges that regulators face and explore how they can be effective and coordinate with each other in such complex regulatory landscapes. Prof Martin Kretschmer, Dr Ula Furgał and Prof. Philip Schlesinger have  empirically mapped the emergence of the field of platform regulation the UK (for more information visit CREATe’s Platform Regulation resource page). Stavros Makris has studied how competition law and its enforcement can be more responsive to the challenges of 21st century economies, the interplay between the DMA and EU competition law with regards to innovation diversity, and is currently exploring a complexity-minded political economy approach to competition law and platform regulation. Martin Kretschmer also has written on risk-based approaches and codes as modes of regulation. Philip Schlesinger has explored how the development of digital platforms has required us to rethink the notion of public sphere, and he has examined the institutional and political preconditions of neo-regulation and its agencies.

Prof. Konstantinos Stylianou has explored how competition authorities can define markets by identifying the boundaries of ecosystems. Dr Magali Eben has examined the tension between DMA and competition law and is currently  investigating the transformations of market definition and market power in the digital era. Furthermore, together with Stavros Makris they are exploring how the African Union attempts to regulate digital gatekeepers. Gabriele Cifrodelli studies the regulation and self-regulation of AI through the terms of service of AI services, but also the very personhood of AI through the lens of intellectual property law. Dr Stefan Luca is interested in platform governance with a particular focus on content moderation, news media, and responses to disinformation.

Any of the theme members will be happy to hear from scholars, policy makers, or stakeholders who are interested in the research. To stay tuned, make sure to subscribe to CREATe’s newsletter.