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Article Type: Guest editorial From: info, Volume 17, Issue 6
New intermediaries in the hyperconnected society
Online intermediaries and platforms have come to play a prominent role in a wide array of issues concerning (European Union) EU policy in the information economy and society. Owing to the sheer variety in business models and the effects that online intermediaries and platforms can have, they are challenging for policymakers, academics and pundits alike (OECD, 2010; Moglen, 2010). Following a well-established tradition, the 31st European Communications Policy Research (EuroCPR) Conference took up as its theme “New intermediaries in the hyperconnected society”. This special issue of Info bundles key notes and contributions that were presented in Brussels on 23 and 24 March 2015 to interrogate this theme from different angles. This short introduction seeks to promote a better understanding of the importance of the topics discussed at the conference and to identify a common line through the articles selected for this issue.
Drastic changes have occurred in the Information and Communication Technology (ICT) sector over the past decade. The blurring of boundaries between previously distinct sectors is accelerating, and even the traditional four-layer representation of the ecosystem is being challenged by the emergence of a variety of platforms and networks, which display various degrees of openness and patterns of interaction with end users (Cf. Shapiro and Varian, 1999). More specifically, the emergence of over-the-top (OTT) players, the growing importance of content delivery networks, the “platformisation” of the application layer, upcoming developments in cloud computing, the Internet of things and machine-to-machine communication – all suggest that the ICT ecosystem is expanding and transforming rapidly and will likely change again in the coming years, with hardly predictable effects in terms of end-user experience and policy-regulatory challenges.
One important effect of this evolution is an ongoing process of “dis-intermediation” and “re-intermediation” of many services and markets. The emergence of giant aggregators and new platform operators at various layers of the ecosystem leads to an ongoing process of transformation, which challenges policymakers in many areas of law. To name a few: competition policy suffers as market definition, market power, collection of evidence and the finding of abusive behaviour become much more challenging in this environment than in other, more traditional domains where market boundaries are more clear-cut. Competition authorities struggle to capture the new tensions that arise when companies attempt to leverage their points of control over customer relationships to achieve prominence in digital value chains. As a consequence, EU e-communications regulation, traditionally based on competition law concepts and focused on the infrastructure layer of the ecosystem, also appears in great need of a thorough review; privacy and data protection legislation struggle with the emergence of cloud computing and big data, which create new trade-offs between security, customisation and privacy; and copyright law divides scholars, with some favouring stronger enforcement and others invoking the end of authors’ commercial rights. Increasingly, the ongoing transformation and expansion of the ecosystem conquer new territories, challenging also social policy, education, financial services and many other fields. This leads to further pressure on the “new intermediaries” in terms of behaviour vis-à-vis unaffiliated service providers and end users.
As the evolution of the ecosystem is faster and more international than the regulatory process, the effectiveness and suitability of many legal provisions are challenged. The same can be said for enforcement. This timing problem further empowers new platform operators and aggregators (the “new intermediaries”), to the extent that they are also increasingly called upon to implement and enforce public policy through private means, as is increasingly the case for privacy and the right to be forgotten, cybersecurity and critical information infrastructure protection, net neutrality, search neutrality and so on. To what extent this tendency will be confirmed in the future and to what extent the new intermediaries should be called to take responsibility for rule enforcement is a matter for discussion.
The EuroCPR 2015 conference was organised around these ideas and aimed to reach an understanding of the consequences that these new intermediaries have for EU policy in several domains, from e-communications regulation to privacy and data protection, intellectual property, industrial policy, the digital agenda (European Commission, 2010; OECD, 2015), media pluralism and universal access. EuroCPR uniquely brings together academics, policymakers and industry representatives to facilitate systematic interaction and critical analysis of both the highest academic excellence and the maximum policy and industrial relevance. The 2015 conference theme enabled participants to engage with cutting-edge research about online intermediaries and explore present and emerging issues that intermediation and platformisation raise in EU strategies and sector-specific policies.
In particular, EuroCPR 2015 attracted state-of-the-art contributions that examine the societal impact of the emerging ICT ecosystem and investigate the impact of new technologies and platforms not only on many classical information society policy issues but also on the other sectors of economic activity that are increasingly intermediated online. There is a growing need to reflect upon new forms of intermediation to understand the respective business cases of direct access and forms of intermediation and further explore relevant business models and the changes they trigger on incumbent players. At the same time, the EuroCPR conference aimed at promoting the understanding of the role of net neutrality, interoperability and openness policies (EU and non-EU) and discussing whether and how such policies are always in the interest of the end users; to reflect upon the changing nature of competition and assess how it is evolving with the growing role of Internet intermediaries; to consider whether there is a need to expand regulation to OTT and other online services or to introduce new and more comprehensive regulation; and, finally, whether there is a need to revisit existing policies so as to reach, in some policy domains, a “better” level playing field between competing intermediaries.
Set-up of the special issue
This year’s special issue opens with a comment authored by Professor Robin Mansell on “The public’s interests in intermediaries”. Given the lively debate that Professor Mansell’s keynote speech generated during the conference, we asked her to summarise the key elements in a text that, on top of the many interesting questions it raises and the sharp analysis it presents, serves the purpose of introducing the special issue and sets the scene for subsequent contributions. In her article, Professor Mansell examines recent developments in the European policy debate on whether governments should intervene in the digital intermediary marketplace to protect the public interest. In more detail, the paper discusses the public’s interest in the evolution of the digital intermediary marketplace, considers the economics and policy literature on the case for policy intervention in the market dynamics of digital platforms and examines the extent to which policymakers in Europe are catching up with changes in the market for digital platform services. She argues that policymakers need to broaden the evidence base they use to consider whether policy intervention is needed beyond economic analysis. In her view, this would be essential to ensure that the European digital intermediary marketplace develops in line with economic, social and cultural goals. She makes the case for measures to ensure continuous and integrated monitoring of developments in the digital marketplace based on economic indicators and evidence on the diversity of media content. Suggestions are made about the need for innovation in the way that policymakers develop the required evidence base for their decisions. The paper also draws attention to the need for proactive policymaking based on a consideration of economic, social and cultural goals to ensure that digital intermediaries are held accountable. This contribution provides a multidisciplinary perspective on the dynamics of the digital intermediary ecology and assesses the extent to which the European digital market strategy provides an integrated initiative that is likely to be implemented.
In line with info’s review policy, five papers were selected for inclusion in this issue. The selected papers span various disciplines and are representative of the themes discussed during the conference. The papers feature the public interest in digital intermediaries, the regulation of search engines, social network and app stores as gatekeepers of information, the legal perspective on the distinction between commercial and editorial content in hybrid advertising formats, options and limitations on the governance of algorithms, the role of new middlemen in the case of cinema as in the digital age and the balance between copyright and fundamental rights in intermediary third-party liability. The different angles that the papers take and the variety of disciplines from which they draw, including the legal, economic, political science and communication science, underscore how much online intermediaries have become a subject of academic inquiry and public policy debate.
More precisely, several papers revolve around one of the key questions this conference set out to explore:
* The question of whether regulation is done in the interest of (European) users is covered in the paper by Eva Lievens, Liesebeth Hellemans and Peggy Valcke (“Playing hide-and-seek? A legal perspective on the complex distinction between commercial and editorial content in hybrid advertising formats”); by Michael Latzer, Florian Saurwein and Natascha Just (“Governance of Algorithms: Options and Limitations”); and by Natali Helberger, Katharina Kleinen-von Köningslöw and Rob van der Noll (“Regulating search engines, social networks and app stores as gatekeepers of information diversity”).
* The interplay among new intermediaries, changing actors and new business models is addressed by Christina Angelopoulos (“Tracing the Outline of a Ghost: The Fair Balance between Copyright and Fundamental Rights in Intermediary Third Party Liability”) and also by Pierre Jean Benghozi, Elisa Salvador and Jean Paul Simon (“The new middlemen of the digital age: the case of cinema”).
Following the structure outlined above, this special issue begins with the paper written by Eva Lievens, Liesebeth Hellemans and Peggy Valcke. This article aims to examine the challenges raised by hybrid advertising strategies for the principles of identification and separation, included in various regulatory instruments and the Audiovisual Media Services Directive in particular. The authors begin by describing two examples of hybrid (television) advertising formats, with a potential interconnection between editorial and commercial content, such as advertorials and commercial overlays. They then analyse the origins and key elements of the identification and separation principle. The implementation of these principles is then explored in the context of Belgium (Flanders region), The Netherlands and the UK by reviewing the decisions of media regulators in these countries. Such comparative analysis allows an assessment of how, and to what extent, the principles at stake are implemented in practice. Finally, the article identifies the challenges that these formats raise and frames those against the background of European policy developments. The analysis undertaken shows that the current interpretation of the identification and separation principles conflicts with the inherently integrated features of hybrid advertising formats, especially commercial overlays. To remedy this, Lievens, Hellemans and Valke propose strengthening the identification principle and framing it within a co-regulatory framework where advertisers and media service providers take up their responsibility to respect fundamental principles and protect less cognitively skilled consumers, such as children. This article contributes to the current re-thinking of the legal framework with regard to new commercial communication techniques, convergence and public interest goals. The paper also sheds light on the relevant question of how existing advertisement rules apply to new hybrid advertisement formats. This enquiry is timely and relevant in the light of new advertisement techniques being deployed in the context of the regulatory identification and separation principles.
The second paper, by Michael Latzer, Florian Saurwein and Natascha Just, entitled “Governance of Algorithms: Options and Limitations”, investigates how algorithms on the Internet increasingly shape our daily lives and realities. The authors explain that the benefits of algorithms (algorithms select information, automatically assign relevance to them and keep people from drowning in an information flood) are accompanied by risks and governance challenges. Based on empirical case analyses and a review of the literature, the paper chooses a risk-based governance approach. It identifies and categorises applications of algorithmic selection and attendant risks. It then explores the range of institutional governance options and discusses applied and proposed governance measures for algorithmic selection and the limitations of governance options. The authors conclude that there are no one-size-fits-all solutions for the governance of algorithms. Recently, attention has shifted to multidimensional solutions and combinations of governance measures that mutually enable and complement each other. However, they highlight how a limited knowledge of the developments of markets, risks and the effects of governance interventions hampers the choice of an adequate governance mix. This paper contributes to a better understanding of governance choice in the area of algorithmic selection and is original, as it tackles an issue – the governance of algorithms – that is still under-researched in the literature. It is this perspective that enables the authors to launch a reflection on the possibility that private governance might deviate from the public interest.
The paper of Latzer, Saurwein and Just helps further the understanding of governance choices in the area of algorithmic selection with a structured synopsis on rationales, options and limitations for the governance of algorithms. It provides a functional typology of applications of algorithmic selection, a comprehensive overview of the risks of algorithmic selection and a systematic discussion of governance options and its limitations. The implications of such an analysis and conclusions are manifold. The analysis can be applied, for example, to the current debate on the liability of online intermediaries, including search engines and social networks. The EU debate, in particular, is interesting in this respect, both from an antitrust perspective and in a more general, Internet policy perspective.
The third paper, by Natali Helberger, Katharina Kleinen-von Köningslöw and Rob van der Noll, “Regulating search engines, social networks and app-stores as gatekeepers of information diversity”, questions the evidence to substantiate these gatekeeper concerns and asks to what extent existing regulatory solutions to control gatekeeper control are at all suitable for addressing new diversity concerns. The article also critically reviews the existing legal/policy discourse and identifies the elements for an alternative approach. This contribution maps the different gatekeeper concerns about media diversity as evidenced in existing research; against the background of network gatekeeping theory, the authors critically analyse some of the currently discussed regulatory approaches and develop the contours of a more user-centric approach towards approaching gatekeeper control and media diversity. As such, the paper functions as a useful literature review for the new information intermediaries as information gatekeepers, as well as pointing towards new research agendas and policy implications.
The work of Helberger, Kleinen-von Köningslöw and van der Noll is a conceptual piece of research based on desk research into the relevant communications science, economic and legal academic literature and the relevant laws and public policy documents. The authors’ argument is that when looking at search engines, social networks and app stores and their influence over media diversity, the new information intermediaries on media diversity do not exert as much control over critical resources or access to information as the traditional gatekeepers. Instead, the real bottleneck is access to the user, and the way the relationship between social networks, search engines or app platforms and users is given form. Based on this observation, the article concludes that regulatory initiatives in this area should pay more attention to the dynamic relationship between gatekeepers and the “gated”. This article also makes a number of concrete suggestions on how to approach potential challenges from the new information intermediaries to media diversity. While there is currently much discussion about the possible challenges from search engines, social networks and app stores for media diversity, a comprehensive overview of the scholarly literature on the evidence that actually exists is still lacking. Furthermore, while most of the regulatory solutions still depart from a more pre-networked, static understanding of “gatekeeper”, the three authors develop their analysis on the basis of a more dynamic approach that takes into account the fluid and interactive relationship between the roles of gatekeepers and the “gated”. This approach shows the regulatory solutions discussed so far in a different light.
The fourth paper, written by Christina Angelopoulos, “Tracing the Outline of a Ghost: The Fair Balance between Copyright and Fundamental Rights in Intermediary Third Party Liability”, analyses in depth the legal concept of a balance exercise between conflicting fundamental rights in the context of intermediary liability for third-party copyright infringement. Her article presents an in-depth look at a complicated and case law-driven area of law with a significant practical effect. The author is able in her thorough analysis of the field to offer a very specific analysis that helps shed new light on the topic, illustrate relevant case law and helps clarify ambiguous concepts for the non-legal minds of a wider audience. Her contribution is particularly relevant in a period in which the national courts of the EU Member States, in an attempt to stem the flow of rampant online copyright infringement, have increasingly sought a convenient enforcement tool for the imposition of obligations on Internet intermediaries whose websites and networks are used by the primary wrongdoers. In such a context, duties to prevent or remove infringing material have also proliferated. According to the author, emerging case law governing the limits to the imposition of such an obligation has rested heavily on the notion of a “fair balance” between conflicting fundamental rights. She stresses how, while recognizing that copyright is protected as a fundamental right under Art. 17(2) of the EU’s Charter of Fundamental Rights, the Court of Justice of the European Union (CJEU) has emphasised that it is not absolute and must therefore be reconciled with the counter-balancing fundamental rights of others. This has elevated the discussion on intermediary liability to the hierarchically higher legal plane of primary law, while also providing a legal basis in EU law beyond the limited reach of the e-commerce directive.
According to Angelopoulos, it is the vagueness of the basic rules invoked that inevitably results in poor guidance as to the appropriate solutions, and, as a result, the CJEU’s rulings fail to illuminate the broader picture: where does this “fair balance” lie? The answer Angelopoulos puts forward is that currently no general standard is discernible. The end result is legal uncertainty for intermediaries and rights’ holders and chilling effects on the exercise of fundamental rights. For Angelopoulos, fair balance is the appropriate conflict resolution mechanism in cases of fundamental rights clashes and balancing, and this is, according to her, a call for rational judicial deliberation.
The final paper presented in this special issue, “The new middlemen of the digital age: the case of cinema”, by Pierre-Jean Benghozi, Elisa Salvador and Jean Paul Simon, is an enquiry into various forms of innovation and observable configurations in film and documents the specific technological fields in cinema and the innovations brought about by young information technology (IT) and digital companies. The authors tell us that, like other media industries, cinema is faced with globalisation on the one hand and the emergence of new online distribution channels on the other. Over the past three decades, digital technologies have usually been introduced in the three main streams (production, distribution and exhibition) that characterise the value chain of the cinema industry. The authors guide the reader to the argument that the relationships between technology and content creation in innovative firms highlight the emergence of a new category of actors: the middlemen. The paper goes on to argue that, well beyond the well-known information-based intermediation, these middlemen develop their position from the control and mastery of technological skills. The paper traces and characterises the changes in these streams by focusing on some selected case studies of new intermediaries in the cinema industry through a description of their role and position within the wider ecosystem of IT and media. Finally, the paper concludes by delineating some potential policy interventions and identifying the challenges ahead with a focus on the EU.
The paper is original in this respect as it points to a phenomenon, or set of phenomena, that have not been properly or thoroughly recognized before: R&D innovation in the cinema sector and the role of the new middlemen. Innovation is not as frequently dealt with in studies of the cultural sector as are the characteristics and the management of R&D in the creative industries. The paper suggests an important policy implication: support for creative projects should give way to support for technology companies. While this conclusion is questionable, as cultural support comes with different policy objectives in mind than is the case with R&D and innovation support, the paper is sure to generate debate as it did during the EuroCPR 2015 conference.
Towards EuroCPR 2016: content creation and distribution in the digital single market
Next year’s edition of EuroCPR will take place on 14 and 15 March 2016 and will be dedicated to content creation and distribution. Online content and carriers have always been interlocked. Yet today’s electronic communications, markets and policy are tested by the sheer abundance of online content and its need for distribution through multiple channels and regardless of frontiers. Access to a wide variety of relevant content is key to democracy and the exercise of fundamental rights, just as the freedom to express oneself and disseminate and access content irrespective of means of communication, is fundamental for pluralism. Moreover, content creation, distribution and consumption increasingly occupy a crucial role in the success of online business and European competitiveness on the Internet. Besides authors and media companies, Internet users also increasingly generate content, which in turn contributes to the richness of diverse information available to European citizens and beyond.
The European Commission recently acknowledged in its Digital Single Market Strategy the growing importance of creating a fertile environment for content creation and distribution (European Commission, 2010). Priority has therefore been given to content-related policy initiatives such as reforming copyright law, evaluating the “fitness” of legislation on audiovisual media services and taking action against detrimental geo-blocking practices that limit cross-border access to content. At the same time, concerns on the role of intermediaries are being tackled through antitrust investigations and sectoral inquiries (e.g. on e-commerce) and also through an online public consultation to be launched in the autumn of 2015. All these efforts are likely to usher in a new wave of policy measures aimed at ensuring that the Digital Single Market is increasingly a place in which content can be created, funded and flow seamlessly across countries, in a way that stimulates the interests of creators while giving access to diverse contents to end users.
A call of papers for EuroCPR will be published this autumn on the EuroCPR website, and we would like to invite you to submit papers tackling various angles of the conference theme: Content Creation and Distribution in the Digital Single Market.
1. EuroCPR website at: http://eurocpr.org/
2. Cf. Gawer, p. 1f; Communication from the Commission (COM) (2015) 192 Final, p. 9.
3. Cf. Spulber and Yoo (2014, p. 1); but get more vigilant, e.g. UK’s Competition & Markets Authority (2014, p. 20), available at: http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/378855/Strategic_Assessment.pdf
4. EuroCPR website at: http://eurocpr.org/
Competition & Markets Authority (2014), “CMA strategic assessment”, available at: http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/378855/Strategic_Assessment.pdf
European Commission (2010), “A digital agenda for Europe”, COM/2010/0245 Final, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions.
Moglen, E. (2010), “Freedom in the cloud: software freedom, privacy, and security for Web 2.0 and cloud computing”, Presentation at the Internet Society, New York, NY, 5 February, available at: http://www.softwarefreedom.org/events/2010/isoc-ny/FreedomInTheCloud-transcript.html
OECD (2010), The Economic and Social Role of Internet Intermediaries, OECD, Paris, available at: http://www.oecd.org/internet/ieconomy/44949023.pdf
Shapiro, C. and Varian, H.R (1999), Information Rules A Strategic Guide to the Network Economy, Harvard Business School Press, Boston, MA.
Spulber, D.F. and Yoo, C.S. (2014), “Antitrust, the internet, and the economics of networks”, in Blair, R.D. and Sokol, D.D. (Eds), Oxford Handbook of International Antitrust Economics, Oxford University Press, Oxford.
European Commission (2015), “A digital single market strategy for Europe (COM, 192 Final)”, Communication from the Commission to the European Parliament, the Council, The European Economic and Social Committee and the Committee of the Regions, available at: http://ec.europa.eu/priorities/digital-single-market/docs/dsm-communication_en.pdf (accessed 9 July 2015).
Gawer, A. (2011), Platforms, Markets and Innovation, Edward Elgar, Cheltenham.
Luciano Morganti is based at SMIT, Vrije Universiteit Brussel, Brussels, Belgium and can be contacted at: email@example.com
Andrea Renda based at the Centre for European Policy Studies, Brussels, Belgium.
Kristina Irion is based at the Institute for Information Law (IViR), University of Amsterdam, Amsterdam, The Netherlands.