Regulating in a digital world Contents


The internet has brought huge opportunities, connecting the world as never before. The ‘digital world’—an environment composed of digital services facilitated by the internet—plays an ever-increasing role in all aspects of life. However, regulation of the digital world has not kept pace with its role in our lives. Although it is not a lawless ‘Wild West’, a large volume of activity occurs online which would not normally be tolerated offline. Misuse of personal data, abuse and hateful speech make the case for further regulation compelling. The Government is expected, through its Internet Safety Strategy, to propose legislation intended to help make the UK “the safest place in the world to be online”.

The need for regulation goes beyond online harms. The digital world has become dominated by a small number of very large companies. These companies enjoy a substantial advantage, operating with an unprecedented knowledge of users and other businesses. Without intervention the largest tech companies are likely to gain more control of technologies which disseminate media content, extract data from the home and individuals or make decisions affecting people’s lives.

Over a dozen regulators have a remit covering the digital world. But there is no overall regulator. Regulation of the digital environment is fragmented with overlaps and gaps. Notably, there is no specific content regulator for the internet. We recommend the development of a comprehensive and holistic strategy for regulation.

The digital world does not merely require more regulation but a different approach to regulation. The key ideas that shape this report are that there should be:

(1)an agreed set of 10 principles that shape and frame all regulation of the internet, and

(2)a new Digital Authority to oversee this regulation with access to the highest level of the Government to facilitate the urgent change that is needed.

In this way the services that constitute the digital world can be held accountable to an agreed and enforceable set of principles.

We recommend 10 principles to guide the development of regulation online:

Proper enforcement and resources will be necessary to implement these principles and promote their importance to all parts of the digital world.

Responses to growing public concern have been piecemeal, whereas they should be continually reviewed as part of a wider strategy. A new framework for regulatory action is needed. We recommend that a new body, which we call the Digital Authority, be established to instruct and coordinate regulators. The Digital Authority would have the remit to continually assess regulation in the digital world and make recommendations on where additional powers are necessary to fill gaps. The Digital Authority would also bring together non-statutory organisations with duties in this area.

Effective and timely policy-making and legislation relies on decision-makers being fully informed. However, the speed at which the digital world is developing poses a serious challenge. The Digital Authority should play a key role in providing the public, the Government and Parliament with the latest information. To ensure a strong role for Parliament in the regulation of the digital world, the Digital Authority should report to a joint committee of both Houses of Parliament whose remit is to consider all matters related to the digital world.

Principles should guide the development of online services at every stage. The design of online services affects what users see and how they behave. A prominent business model of the internet involves capturing users’ attention to collect their data and advertise to them. We argue that there should be greater transparency when data are collected and greater choice to allow users to control which data are taken. There should also be greater transparency around data use, including the use of algorithms.

Digital markets pose challenges to competition law, including network effects which result in ‘winner-takes-all’, the power of intermediaries, and consumer welfare in the context of ‘free of charge’ services. The largest tech companies can buy start-up companies before they can become competitive. Responses based on competition law struggle to keep pace with digital markets and often take place only once irreversible damage is done. We recommend that the consumer welfare test needs to be broadened and a public interest test should be applied to data-driven mergers.

There are other consequences of market concentration. A small number of companies have great power in society and act as gatekeepers to the internet. Greater use of data portability might help, but this will require more interoperability.

In the EU illegal content is regulated by the operation of the general law and by the e-Commerce Directive, which exempts online platforms from liability unless they have specific knowledge of illegal content. At nearly 20 years old, it was developed before platforms began to curate content for users. Although liability already depends on the role a platform plays in delivering of content, the directive is no longer adequate for dealing with online harms.

Self-regulation by online platforms which host user-generated content, including social media platforms, is failing. Their moderation processes are unacceptably opaque and slow. We recommend that online services which host user-generated content should be subject to a statutory duty of care and that Ofcom should have responsibility for enforcing this duty of care, particularly in respect of children and the vulnerable in society. The duty of care should ensure that providers take account of safety in designing their services to prevent harm. This should include providing appropriate moderation processes to handle complaints about content.

Public opinion is growing increasingly intolerant of the abuses which big tech companies have failed to eliminate. We hope that the industry will welcome our 10 principles and their potential to help restore trust in the services they provide. It is in the industry’s own long-term interest to work constructively with policy-makers. If they fail to do so, they run the risk of further action being taken.

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