Focusing on regulatory challenges in digital markets, in particular trust online, the third annual Conference and Policy Forum of the Berlin Centre for Consumer Policies (BCCP) was held in Berlin on June 8th, 2018.
Touching upon an issue at the forefront of current European and US policy debates, around 100 participants, including academics from law and economics, policy makers, professionals, BCCP Fellows, and the interested public came together at the headquarters of the Leibniz Association.
The tremendous growth of digital transactions has profoundly affected the way we interact, opening vast opportunities to improve our lives. Consumers have benefited from an unprecedented proliferation of new services and products. At the same time, consumers often must process large amounts of imperfect information regarding the products they purchase and services they use. Even more, for many services consumers need to share highly personal information. Being able to both rely on third party information as well as safely share personal data not only requires a well-designed legal framework and active enforcement. Consumers must trust (potentially dominant) platforms, providers of goods and services, as well as individuals they interact with online.
The conference panellists and participants discussed how policymakers, regulators and online platforms can foster trust and protect consumer privacy and their personal data.
In the opening policy roundtable about the Digital Single Market and consumer trust, panelists Stacy Feuer (US Federal Trade Commission), Juhan Lepassaar (European Commission), and moderator Ludwig Siegele (The Economist) engaged in a lively discussion about current and potential policy measures to protect consumer privacy and foster online trust. With the increasing relevance of online influencers, regulation of influencer marketing similar to the regulation of traditional advertising is required. In particular, disclosure of compensation of online influencers for reviews or recommendations is necessary to prevent deception of consumers. Regarding consumer privacy protection, the introduction of the General Data Protection Regulation (GDPR) started a global debate about privacy protection in the digital era that was previously dormant. In the EU, the project of the Digital Single Market aims to enable the free movement of goods and services in the digital space, providing the underlying infrastructure, and harmonizing national advances in e-government.
Watch the presentations and discussion of the policy roundtable on the Digital Single Market and consumer trust (YouTube):
In the first afternoon session, Ari Ezra Waldman (New York Law School) and Glen Weyl (Microsoft Research and Yale University) presented their research on user data sharing, trust and incentives. Nowadays many online services rely on the sharing of user-generated data. In this context, the so called privacy paradox alludes to the finding that while consumers state that they care about their privacy, they still provide substantial personal information and data to online services. However, as Ari Ezra Waldman argued, this privacy paradox exists because companies manipulate user behaviour online through deliberate platform design choices that lull consumers into a false sense of trust and make them believe that they are in control over their personal information. Glen Weyl on the other hand, argued for a shift from regarding “data as capital” to regarding “data as labor”. According to him, artificial intelligence is just a new form of production function of tech companies that uses data as input. As users provide the necessary data that is then used as an input in order to develop new sophisticated products and services, these users should consequently be paid by the companies for the provision of this data. The two talks where followed by a vivid discussion moderated by Dorothea Kübler (WZB Berlin Social Science Center and Technical University Berlin) on how data labor unions could solve the issue of design choices creating a fake sense of trust on online platforms.
Watch the presentations and discussion of the panel on User Data Sharing: Trust and Incentives (YouTube):
In the second afternoon session, Michael Luca (Harvard Business School), Steve Tadelis (UC Berkeley), and moderator Roland Strausz (HU Berlin) discussed the role of reputation and trust in online platforms. The design of reputation systems on online platforms can lead to unintended negative consequences. For example, including a photo and the name on the peer-to-peer rental platform Airbnb is supposed to decrease anonymity and foster trust but allows for racial discrimination of hosts with regards to potential guests. Research presented by Michael Luca showed that racial discrimination plays a role on Airbnb in the US. He suggested platforms should therefore try to maximize the value of reputation systems while minimizing unintended consequences. Further, online reputation systems often face three challenges: grade inflation, the public good problem, and the cold start problem. Steve Tadelis suggested several ways in which platforms could use information available to them to generate more informative reputation measures. Using data from eBay, he showed that these measures are good predictors of the likelihood of consumers to return to eBay after a transaction.
Watch the presentations and discussion of the panel on reputation and trust on online platforms (YouTube):
The conference program and further information about the speakers can be found at the conference website.