Philipp Hacker

UberPop, UberBlack, and the Regulation of Digital Platforms after the Asociación Profesional Elite Taxi Judgment of the CJEU

The Uber case, decided by the Grand Chamber of the CJEU on 20 December 2017, has the potential to reshape the regulation of contracting in the digital economy. More precisely, it specifies the rules applicable to online platforms serving as intermediaries between parties demanding and offering services. The criteria the CJEU uses to reach its conclusion are likely to have repercussions far beyond the area of transportation applications. This Case Note starts by presenting the facts of the case and the legal background of those EU law provisions potentially governing digital intermediaries. It then explores the criteria the Court uses to distinguish Uber from simple intermediation services, followed by a discussion and critique of these criteria. In the last two sections, it maps out the implications of the judgment for the platform economy, and suggests that one decisive impetus of the judgment should be a thorough review of regulations governing the provision of services in the EU.

Reining in the Big Promise of Big Data: Transparency, Inequality, and New Regulatory Frontiers

The growing differentiation of services based on Big Data harbors the potential for both greater societal inequality and for greater equality. Anti-discrimination law and transparency alone, however, cannot do the job of curbing Big Data’s negative externalities while fostering its positive effects.To rein in Big Data’s potential, we adapt regulatory strategies from behavioral economics, contracts and criminal law theory. Four instruments stand out: First, active choice may be mandated between data collecting services (paid by data) and data free services (paid by money). Our suggestion provides concrete estimates for the price range of a data free option, sheds new light on the monetization of data collecting services, and proposes an “inverse predatory pricing” instrument to limit excessive pricing of the data free option. Second, we propose using the doctrine of unconscionability to prevent contracts that unreasonably favor data collecting companies. Third, we suggest democratizing data collection by regular user surveys and data compliance officers partially elected by users. Finally, we trace back new Big Data personalization techniques to the old Hartian precept of treating like cases alike and different cases – differently. If it is true that a speeding ticket over

Crypto-Securities Regulation: ICOs, Token Sales and Cryptocurrencies under EU Financial Law

50 is less of a disutility for a millionaire than for a welfare recipient, the income and wealth-responsive fines powered by Big Data that we suggest offer a glimpse into the future of the mitigation of economic and legal inequality by personalized law. Throughout these different strategies, we show how salience of data collection can be coupled with attempts to prevent discrimination against and exploitation of users. Finally, we discuss all four proposals in the context of different test cases: social media, student education software and credit and cell phone markets. Many more examples could and should be discussed. In the face of increasing unease about the asymmetry of power between Big Data collectors and dispersed users, about differential legal treatment, and about the unprecedented dimensions of economic inequality, this paper proposes a new regulatory framework and research agenda to put the powerful engine of Big Data to the benefit of both the individual and societies adhering to basic notions of equality and non-discrimination.

Behavioural Law & Economics and Sustainable Regulation

Cryptocurrencies, such as bitcoin and ethereum, have not only risen to public attention as novel means of payments, but also as facilitators of initial coin offerings (ICOs, also called token sales). In these entirely online-mediated offerings, entrepreneurs sell tokens registered on a blockchain in exchange for cryptocoins. Buyers receive tokens that can be understood as cryptographically-secured coupons which embody a bundle of rights and obligations. In July 2017, the SEC released an investigative report that highlighted that such tokens can be subject to the full scope of US securities regulation. It is unclear, however, to what extent EU securities regulation is applicable to ICOs and, particularly, whether issuers have to publish and register a prospectus in order to avoid criminal and civil prospectus liability in the EU. In conceptual terms, this depends on whether tokens are considered “securities” under the EU prospectus regulation regime. Against this background, this paper develops a nuanced approach that distinguishes between three archetypes of tokens: currency, investment, and utility tokens. It analyzes the differential implications of each of these types, and their hybrid forms, for EU securities regulation, and develops policy proposals for their regulation.

Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Organizations

Non-legal disciplines increasingly are discovering the power of learning. Neither should the law, both in scholarship and regulatory practice, hesitate to tap this precious resource as well. Such an undertaking would seem particularly fruitful in environmental law. This chapter aims to contribute to this process by making six distinctive claims.

Digital Technology as a Challenge to European Contract Law

Cryptocurrencies such as bitcoin or ethereum are gaining ground not only as alternative modes of payment, but also as platforms for financial innovation, particularly through token sales (ICOs). All of these ventures are based on decentralized, permissionless blockchain technology whose distinguishing characteristics are their openness to, and the formal equality of, participants. However, recent cryptocurrency crises have shown that these architectures lack robust governance frameworks and are therefore prone to patterns of re-centralization: they are informally dominated by coalitions of powerful players within the cryptocurrency ecosystem who may violate basic rules of the blockchain community without accountability or sanction. Against this background, this paper makes two novel contributions. First, it suggests that cryptocurrency and token-based ecosystems can be fruitfully analyzed as complex systems that have been studied for decades in complexity theory and that have recently gained prominence in financial regulation, too. It applies these insights to three key case studies: the Bitcoin Hard Fork of 2013; the Ethereum hard fork of 2016, following the DAO hack; and the ongoing Bitcoin scaling debate. Second, the paper argues that complexity-induced uncertainty can be reduced, and elements of stability and order strengthened, by adapting a corporate governance framework to blockchain-based organizations: cryptocurrencies, and decentralized applications built on top of them via token sales. Most importantly, the resulting “comply or explain” approach combines transparency and accountability with the necessary flexibility that allows cryptocurrency developers to continue to experiment for the sake of innovation. Eventually, however, the coordination of these activities may necessitate the establishment of an “ICANN for blockchains”.

One Size Fits All? Heterogeneity and the Enforcement of Consumer Rights in the EU after Faber

Abstract Offering an overview of the interactions between digital technologies and contract law, we identify three pillars in this architecture: the regulatory framework; digital interventions over the life cycle of the contract; and digital objects of contracting. The regulatory framework, which itself may draw on digital technology to effectively pursue its ends, shapes, and is shaped by, the other two pillars. More specifically, on the one hand, we show how four key technologies – digital platforms, Big Data analytics, artificial intelligence, and blockchain – are being used at different stages of the contractual process (from the screening for contractual partners to formation, enforcement and interpretation) and engender novel market dynamics that, in many instances, necessitate regulatory responses. On the other hand, digitally facilitated contracting increasingly relates to digital content as the object of the contract; however, while this area has notably been the subject of the proposed Directive on Contracts for the Supply of Digital Content and thus has received some first ‘European structure’, we argue that a number of important blind spots remain that fail to be addressed by the directive. All in all, the use of digital technology in contracting will likely reinforce an adaptive, relational view and practice of contracting. This increased fluidity engenders a vast potential for preference-conforming, time-sensitive contracts; however, to the extent that it also mirrors novel asymmetries of information and power, the ordering mechanisms of the law may simultaneously be more needed than ever.

More Behavioral vs. More Economic Approach: Explaining the Behavioral Divide between the US and the EU

On those grounds, the Court (First Chamber) hereby rules: 1. Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees must be interpreted as meaning that a national court before which an action relating to a contract which may be covered by that directive has been brought, is required to determine whether the purchaser may be classified as a consumer within the meaning of that directive, even if the purchaser has not relied on that status, as soon as that court has at its disposal the matters of law and of fact that are necessary for that purpose or may have them at its disposal simply by making a request for clarification. 2. Article 5(3) of Directive 1999/44 must be interpreted as meaning that it must be regarded as a provision of equal standing to a national rule which ranks, within the domestic legal system, as a rule of public policy and that the national court must of its own motion apply any provision which transposes it into domestic law. 3. Article 5(2) of Directive 1999/44 must be interpreted as not precluding a national rule which provides that the consumer, in order to benefit from the rights which he derives from that directive, must inform the seller of the lack of conformity in good time, provided that that consumer has a period of not less than two months from the date on which he detected that lack of conformity to give that notification, that the notification to be given relates only to the existence of that lack of conformity and that it is not subject to rules of evidence which

Overcoming the Knowledge Problem in Behavioral Law and Economics: Uncertainty, Decision Theory, and Autonomy

While US courts and regulatory agencies have set sail towards what may be dubbed a “more behavioral approach”, their European counterparts still mostly navigate the charted waters of a neoclassical “more economic approach”, as first advocated in EU competition law. This paper claims that this “behavioral divide” can be explained by a theory of social norms and expectations. Two decisive factors are uncovered that drive the behavioral divide: first, the trust a society places in the self-ordering forces of individual and market behavior (ts); and second, the degree to which each individual is supposed to contribute to a cognitively demanding collective social project (cs), such as the construction of an internal market in the EU. A high score on either variable in this model leads to the adoption of a more rational concept of human agency. Historical changes in the social norms and expectations expressed by these variables can be credited for the inverse tendencies in the US and the EU. Arguably, the more individualistic social conception of the US leads to a greater sensitivity to empirical, i.e., behavioral findings. By contrast, the European political project has long been driven by the construction of an ever closer union on the basis of a single market. This overriding goal could significantly inhibit the long-term prospects of behavioral law and economics in the practice of European law. Other factors play a lesser role in the explanation of the behavioral divide: diverging mandatory risk regulation, differences in legal education, and the distinct political economy of nudging. The latter refers to the potential of bridging otherwise insurmountable political differences in times of political institutional gridlock by behaviorally informed legal strategies. However, this may well prove a potent force in the future if the EU continues on its deplorable path to an ever greater political and ideological divide. This political dimension may thus create a tendency cutting against the current move toward more rational models of human agency in EU law.

Rules on Competition after the Crisis

Science evolves in the long run. Law rules in the present. This potential temporal disconnect leads to a Hayekian “knowledge problem”, a challenge increasingly raised against behavioral law and economics: Empirical findings are deemed too uncertain to provide a solid basis for legal reasoning. This paper claims that in such cases, rules for decision making under risk and uncertainty have to enter the game. They can serve as analytic tools and generate positive solutions to the knowledge problem, thereby ensuring a rational treatment of the question of bounded rationality. The paper thus essentially applies a meta-decision theory to the question of what kind of decision theory (rational choice or behavioral decision theory) should govern legal reasoning. Generally, two routes may be pursued: First, in some situations it is possible to reduce uncertainty with the help of advanced empirical techniques. This prepares the ground for decision making under risk in an expected utility analysis. Second, in the majority of cases, reliable empirical data are indeed so far unavailable, necessitating decision making under uncertainty. In a decision theoretic maximin analysis, this paper demonstrates that in these cases of empirically unresolved uncertainty legal rules should presumptively assume the significant presence of bounded rationality among the relevant actors. The result can be successfully defended against the common objection that behaviorally informed interventions, such as debiasing or nudging, constitute an infringement of autonomy. Finally, implications of this methodologically novel justification of behaviorally informed legislation and adjudication for specific legal concepts in consumer law and product liability are discussed.