Beyond Innovation and Competition: The Need for Qualified Transparency in Internet Intermediaries

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Citation: Frank Pasquale (2010/10/01) Beyond Innovation and Competition: The Need for Qualified Transparency in Internet Intermediaries.





  • network carriers, search engines, and other intermediaries deeply affect society, including in ways not easily priced
  • competition and innovation dominant objectives in degregulatory, reguatory (eg net neutrality), and late-regulatory (antitrust) discourse, but inadequate given externalities of competition and non-economic concerns
  • privacy and reputation examples; consumers cannot organize to demand credence (hard to evaluate even after consumption) goods and competition will not deliver
  • calls for "qualified transparency" regime in which dedicated regulators have access to development of intermediary platforms


A collective commitment to privacy is far more valuable than a private, transactional approach that all but guarantees a race to the bottom. Network neutrality regulations can include rules that will protect the privacy that market competition, left on its own, will inevitably erode. One expert even predicts that privacy concerns will ―reinvigorate [the] stagnant debate [over network neutrality] by introducing privacy and personal autonomy in-to a discussion that has only ever been about economics and innovation. Reputational concerns should also be a larger part of public policy for search engine intermediaries, as discussed in Part IV below.
Innovation and competition are only two of many tools we can use to encourage responsible and useful intermediaries. We should rely on them to the extent that (a) the intermediary in question is purely an economic (as opposed to cultural or political) force; (b) the ―voice of the intermediary‘s user community is strong; and (c) competition is likely to be genuine and not contrived. For search engines and carriers, each of these factors strongly militates in favor of regulatory intervention. The FTC and FCC will need to recognize dominant carriers‘ and search engines‘ status as essential infrastructure for communication and connection.
Carriers and dominant general-purpose search engines are just as important to culture and politics as they are to economic life. As credence goods, they are not subject to many of the usual market pressures for transparency and accountability. They do not presently face many strong competitors, and are unlikely to do so in the immediate future. Their clear cultural power should lead scholars away from merely considering economies of scale and scope and network effects in evaluating these intermediaries‘ obligations. We need to consider all dimensions of network power here—the full range of cultural, political, and social obstacles to accountability that dominance can generate. Moreover, policymakers must acknowledge that competition itself can drive practices with many negative externalities.
In response to actual and potential abuses of that power, rules that would limit carriers‘ and intermediaries‘ ability to discriminate against certain applications providers or to unduly favor business partners are becoming increasingly necessary. Revelation of such discrimination when it occurs is a first step toward accountability; however, such transparency should be qualified in order to protect important intellectual property interests of intermediaries.
The growing importance of trade secrets in technologies of discipline and reward requires judges and policymakers to create nuanced regimes of qualified transparency. When ranking systems are highly complex and innovation is necessary (as in search engine algorithms and spam detection), a dedicated governmental entity should be privy to their development and should serve as an arbiter capable of providing guidance to courts that would otherwise be unable to assess complaints about the results the algorithm generates.

Theoretical and practical relevance:

43-45 discusses Google Books, barrier of licensing to competition and equal access to knowledge