Self-regulation

Author: Rolf H. Weber

‘Self-regulation’ refers to rules that are autonomously developed and implemented by the thereof concerned persons, groups, or enterprises (such as users or users’ groups, intermediaries, platform or technology providers, etc.), independently from any structured form of rulemaking (often called ‘soft law’). The legitimacy of self-regulation is based on the fact that private incentives lead to a need-driven rule-setting process. Self-regulation is responsive to changes in the environment and can establish rules without regard to the territoriality principle. It is justified (i) if its application leads to a higher efficiency than provided by governmental law and (ii) if compliance with the community rules is less likely than compliance with private rules (Weber 2014, p. 23¹; Gibbons 1997, p. 509; Black 1996, p. 32 ²). In such a case, the governance consists in a decentralized regulation by private actors.

Depending on the given circumstances, the concerned persons can belong to a single or to different market level(s). Guidelines imposing specific obligations on Internet Services Providers (ISP, for example in respect of notice and takedown) only influence this professional category. In the context of some types of speech, user groups of a technology and platform “owners” might develop different soft law regimes; user groups could agree on certain expressions to be avoided, platform “owners” on control measures regarding uploaded contents thereby replacing governmental regulation (see also the contributions in Belli and Zingales, 2017, mainly on page 41³).

A universally accepted theory as to the “legal quality” of self-regulation has not (yet) been formulated. Since self-regulation is not enforceable through public action, such rules do not have the quality of law in the traditional sense (Weber, 2002, pp. 81-83⁴; Guzman and Meyer, 2010, pp. 179-183⁵; Abbott and Snidal, 2000, p. 429⁶). The often-used terms ‘contract’ and ‘social contract’ also do not fit. Self-regulation can be understood as a social control model or as a gentlemen’s agreement (Gibbons, 1997, p. 519 et seq.⁷). But compliance with its rules is usually more than only an ethical undertaking, even in the absence of direct sanction. Self-regulatory provisions correspond to standards that reflect the commonsense behavior expected to be observed by the concerned person, i.e., – in overcoming the dichotomy to “hard law” – they represent the due diligence and good faith standards being legally enforceable (Weber, 2014, p. 25⁸; Gibbons 1997, p. 509; Black 1996, p. 32 ¹⁰ with further references): (i) The rules created by the participants of a specific community are efficient since they respond to real needs and mirror the technology. (ii) Meaningful self-regulation provides the opportunity to adapt the regulatory framework to the changing technology. (iii) Self-regulation can usually be implemented at reduced cost. (iv) Due to the private initiatives, the chances are high that the rules contain incentives for compliance. (v) Effective self-regulation induces the concerned persons to be open to a permanent consultation process related to the development and implementation of the rules (i.e., a mechanism that helps to accurately reflect real needs).

The weaknesses of self-regulation include the following aspects (Weber, 2002, pp. 84-85; Brown; Marsden, 2003, p. 2¹¹; Tambini, Leonardi, Marsden, 2008, pp. 269-282¹²): (i) Self-regulation is not generally binding in legal terms, the provision are only applicable to those persons that have accepted the regulatory regime. (ii) Self-regulation tends to be based on a case-driven approach rather than general rules. (iii) If the number of ‘outsiders’ or ‘dark sheep’ not acknowledging the self-regulation is large, the legitimacy of the respective rules becomes doubtful. In contrast, ‘outsiders’ not being involved in the preparation and implementation of the rules can benefit from them free of charge (‘free rider’). (iv) Self-regulatory mechanisms are not always stable and can depend on the concerned (market) segment; consequently, the applicable standards risk remaining on a low level. (v) The main problem of self-regulation lies in the lack of enforcement proceedings; non-compliance with private rules does not necessarily lead to sanctions.

In order to overcome the described weaknesses of self-regulation, (i.e., if the level of regulation by private actors does not seem to be adequate), new models have been developed and are available in different forms of co-operative rule-making or co-regulation (see no. 15). In reality, self-regulation already exists in many fields, traditionally in the media and the Internet environment as well as in the banking markets, however, the regulation of platforms can also be suitably done by way of private rulemaking. In this field, self-regulation is usually based on Codes of Conduct and Terms of Use (mostly phrased by the providers of the platforms). Therefore, attention must be paid to a potential disequilibrium between the rights and obligations of the contract parties. The European Law Institute (ELI) has published “ELI Model Rules on Online Platforms” (March 2020), which envisage providing a fair allocation of rights and obligations (available at: https://www.europeanlawinstitute.eu/; Busch, Dannemann, Schulte-Nölke, Wiewiorowska-Domagalska, Zoll, 2020, pp. 61-67¹³).

References

Weber Rolf H. (2002). Regulatory Models for the Online World, Zurich.

Weber Rolf H. (2012), Overcoming the Hard Law/Soft Law Dichotomy in Times of (Financial) Crisis, Journal of Governance and Regulation 1, 8-14. Available at: https://virtusinterpress.org/-Journal-of-Governance-and-Regulation-15-.html. 

Weber Rolf H. (2014). Realizing a New Global Cyberspace Framework, Zurich.

1. Weber Rolf H. (2014). Realizing a New Global Cyberspace Framework, Zurich.
2. Black, Julia. (1996). Constitutionalizing Self-Regulation, The Modern Law Review 59. 24-55. Available at: https://www.modernlawreview.co.uk. 
3. Belli, L., Zingales, N. (2017). Platform Regulations. How platforms are regulated and how they regulate us. Leeds.
4. Weber Rolf H. (2002). Regulatory Models for the Online World, Zurich.
5. Guzman, A. T., Meyer, T. L. (2010). International soft law. Journal of Legal Analysis, 2(1), 171-225. Available at: https://academic.oup.com/jla.
6. Abbott Kenneth W. and Duncan Snidal (2000). ‘Hard and Soft Law in International Governance’, in International Organization 54, 421-456.
7. Gibbons, L. J. (1996). No regulation, government regulation, or self-regulation: social enforcement or social contracting for governance in cyberspace. Cornell JL & Pub. Pol’y, 6, 475.  Available at: https://scholarship.law.cornell.edu/cjlpp. 
8. Weber Rolf H. (2014). Realizing a New Global Cyberspace Framework, Zurich.
10. ).

    The strengths of self-regulation encompass the following elements being also relevant for platforms (Weber, 2002, pp. 83-84⁹Weber Rolf H. (2002). Regulatory Models for the Online World, Zurich.

11. Brown, I., Marsden, Christopher T. (2013). Regulating Code: Good Governance and Better Regulation in the Information Age, Cambridge MA/London.
12. Tambini, D., Leonardi, D., Marsden, C. (2008). Clarifying Cyberspace: Communications self-regulation in the age of Internet convergence, London. 
13. Busch, C., Zoll, F. (2020). An introduction to the ELI model rules on online platforms. Journal of European Consumer and Market Law, 9(2).