Algorithmic Disclosure Co-Regulation for Digital Platforms

With digital platforms gaining dominant intermediating role and exerting regulatory functions vis-à-vis small and medium-sized enterprises (SMEs) through algorithms , EU institutions have started considering to rely on their informational capacity to regulate the myriads of market transactions occurring within and through them (so-called platform-to-business, or P2B transactions). The kind of regulation such initiatives envisage ranges from delegation of pure self-regulatory powers in the form of codes of conduct, to co-regulation via the setting of EU principles coupled with technical standards established by the platforms themselves. As per the type of strategy, most of the times, EU institutions suggest employing transparency duties regarding contract terms and conditions, obligations to release information about data use, or reputation mechanisms (such as ratings or reviews). In other words, far from interventionist, the EU approach relies on disclosure regulation. The paper purports that both regulatory governance models might suffer some limitations and, therefore, a third one should be considered. In particular, in order to tackle the multifaceted risks associated with algorithmic decisions by digital platforms, while at the same time avoiding stifling innovation, it makes three suggestions: (1) also information disclosures should be based on algorithms; (2) pre-tested in a co-regulatory process that involves the regulator and stakeholders; and (3) enforced through legal and other empowerment tools, rather than sole fines.