On Rights and Competition. Citizen’s Rights and Business’ Rights in a Progressively More Immaterial World

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QUINTARELLI S., On Rights and Competition. Citizen’s Rights and Business’ Rights in a Progressively More Immaterial World, 18.09.2014

Type Article
Abstract The Internet represents the immaterial dimension of existence, which complements and acts in continuity with the material dimension rather than being an alternative to it. Immaterial relationships are mediated by the on-line platforms that have developed rapidly and with little control largely because the European e-Commerce Direc tive of 2000 exempted them from liability. On-line platforms are now determining factors in th e use of the Internet, and become not only the principal means of interacting with the immaterial dimension, but also the most important interfaces for the material dimension. However, they are not n eutral: as a matter of fact, the ways in which on-line platforms are conceived and user experienc es are shaped are capable of orienting and modifying user behaviours. And that is not all beca use the platforms are designed to produce the effects of lock-in (which make it very difficult fo r users to abandon an adopted service) and the absence of interoperability, as the laws governing intellectual property rights are used to assure the ir closure in various ways. The widely deregulated and rapid immaterial dimensio n is often characterised by increasing returns that tend to give rise to global monopolies and oli gopolies which, in a few years, have created (and are still creating) positions of dominance in inter mediating the services of the material dimension without any of the guarantees or restrictions fores een for their predecessors. They are replacing local intermediaries operating in the material dime nsion with multinational intermediaries operating in the immaterial dimension: in other words, allowi ng the presence of gatekeepers in the immaterial dimension is leading to a loss of governance of a l arge part of the material dimension. In order to defend the market (and, with it, public rights), the present gatekeepers should be subject to specific pro-competitive regulation and the entr y of the new gatekeepers wanted by those (who would like to eliminate the neutrality the Internet ) should be prevented. It is therefore to be hoped that ex ante provisions are introduced in order to protect the r ights of consumers and economic operators who are currently only protected ex post . Europe, in its dimension as a market of consumers, should decide whether to accept the status quo or intervene in order to ensure a different future.
Link http://nexa.polito.it/nexacenterfiles/2014-on-rights-and-competition.pdf
Topics Business Model, Competition, Intellectual Property, Technology, Interoperability

Notes

Internet = the immaterial dimension of our existence It is not the only dimension of our existence, but it is not even an alternative dimension) (NB: not real world vs. virtual world, but material dimension vs. immaterial dimension)

e-Commerce Directive: exemption from responsibility for ISP (mere conduit, hosting, caching) --> ISP have evolved--> however, it has been stated that they can benefit from the exemption when they are merely a software, without a human activity--> but we forget that choices can be made also technologically, without direct human intervention (e.g. through algorithms)--> such exemptions should be reviewed

Today, platforms are the main user interfaces not only in the immaterial dimension, but also for the material one: considering that what doesn't appear on a user interface doesn't exist for the user, is it then fair that the platform provider can choose independently to ban a user from that platform?

In the immaterial dimension, monopolies and oligopolies are easier to be created, because returns tend to increase over the time. These monopolies are also enhanced by network effects and lock-in (lock-in = “lock-in” is a mechanism similar to a lobster pot, in which there’s only one lane, almost automatic, to acquire a user, and it’s impossible for such a user to leave the system).

The same threats that today emerge with online platforms, in the past emerged with telco operators: but there the legislation was smarter, and designed pro-competitive rules (e.g. telcos can't be neither marketing intermediaries neither payment intermediaries). We need rules of the same kind also for platforms: today, we have only antitrust law, but it intervenes only ex post; we need pro-competitive rules which intervene ex ante and foster the market and reduce the gatekeepers (ex post antitrust v. ex ante warranty rules).

These platforms are built following a centralized and closed model: they are walled gardens. This is due to their origin: they have been created by businesses; on the contrary, emails were created in an academic context, and so with a more collaborative attitude. Moreover,the absence of a pro-competitive legislation makes things worst: think about SMS: they were created using traditional telco services, which were interoperable by definition. Therefore, the absence of interoperability of today is not due to a technical limitation, but it is a choice (on this point, see also David Orban: Internet of Things) and the major hardware manufacturers leverage the power of platforms: as a consequence, if in the past we were used to computers, on which we could install the software we wanted, today we have devices which are - according to Zittrain's definition - "tethered": there is a proprietary app store for the device, and you can install only the apps available on that store; alternative and competing app stores are not available, because to install them you should find them available on the proprietary app store, but rules related to app stores establish that among the apps that can be published there are not alternative app stores. Moreover, if you install an alternative app store anyway, you infringe the contractual terms between you and the device provider, and also copyright law. Moreover, in the past, what you wanted to be sold on Apple Store could be sold only there; today, you can sold it also on other platforms or places, but at the same price on the app store, were the commission is higher.