DL Seminar | Beyond the Consumer Sovereignty Model: A New Paradigm for Regulating AsymmetricMarket Power

Individual reflection by Carlos Suberviola (scroll below).

By Carlos Suberviola

Cornell Tech

In the realm of technology law and regulation, the rapid evolution of digital markets

and artificial intelligence (AI) presents unprecedented challenges. At a recent seminar led

by Olivier Sylvain, a distinguished professor of Law at Fordham University, a compelling

case was made for reevaluating our regulatory approaches to address these challenges

effectively. Titled Beyond the Consumer Sovereignty Model: Regulating for Asymmetric

Market Power, the seminar shared insight on the inadequacies of existing frameworks

and proposed a shift towards more equitable regulatory strategies. This essay endeavors

to dive into Sylvain's insights into a coherent narrative, advocating for a paradigm shift in

how we regulate the digital economy.

The foundational premise of Sylvain's argument is the critique of the consumer

sovereignty model, which has long underpinned regulatory approaches in digital markets.

This model posits that consumers, equipped with the necessary information, can make

rational decisions that reflect their best interests. However, as Sylvain articulately points

out, this framework is profoundly inadequate in the context of contemporary digital

markets characterized by asymmetric power dynamics between consumers and tech

giants.

A key issue identified is the reliance on consumer consent without ensuring a

genuine understanding of the terms agreed upon. This practice has led to a widespread

phenomenon of forced consent and information asymmetry, where consumers are

presumably in control but in reality are far from it. Sylvain's critique extends to the

mechanisms of commercial surveillance and data collection practices, exemplified by

cases against companies like Snapchat and Vizio, which have misled consumers or

collected data without full consent.

The seminar underscored the necessity of moving beyond consent-based models

to tackle the structural power imbalances inherent in digital markets. Sylvain advocates

for regulatory frameworks that mandate transparency from companies about service

changes and establish protections that do not solely rely on individual consent. This

approach aligns with the European Data Protection's stance, suggesting a regulatory

model that ensures certain protections regardless of consent, thereby addressing the root

causes of information asymmetry and forced consent.

Sylvain's analysis extends to international regulatory perspectives, contrasting the

European Union's approach with other models, such as China's emphasis on technology

education. The discussion of the EU's AI Act, which introduces a risk-based liability

regime, highlights the shift towards addressing data processing risks through structural

regulation rather than placing the liability on consumers. This perspective is crucial in

moving away from the consent fatigue that plagues European consumers and towards a

model that prioritizes structural solutions over individual decision-making.

The seminar culminates in a call for a new paradigm that refrains from the outdated

consumer sovereignty model in favor of structural regulation. Sylvain's vision for the future

of technology regulation is one where the inference economy (our current state,

characterized by extensive data collection and processing) is governed by frameworks

that protect individuals through systemic means rather than relying on flawed

assumptions about consumer capability.

This approach necessitates a reevaluation of how privacy, data protection, and AI

are regulated, ensuring that these technologies serve the public interest within a

framework that guarantees accountability, transparency, and individual protection against

the excesses of market power. By advocating for a comprehensive regulatory strategy

that addresses both macro-level structural issues and micro-level consumer interactions

with technology, Sylvain presents a compelling roadmap for creating a digital environment

where innovation and free speech flourish within a context of equitable and effective

protection for all.

In conclusion, the seminar "Beyond the Consumer Sovereignty Model: Regulating

for Asymmetric Market Power" offers a critical and insightful reflection on the need for

regulatory reform in the digital age. Olivier Sylvain's thoughts provide a foundation for a

new regulatory paradigm: one that is better equipped to address the complex challenges

of asymmetric market power in the digital economy, ensuring a more equitable and just

digital future for consumers and society at large.