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Malte Ziewitz started from the proposition that Barlow was at least partially right: there is widespread agreement that the regulatory capacity of law is seriously constrained in cyberspace. Limits of legal regulation include costly or impossible enforcement; jurisdictional problems; fast change and outdated rules; a serious knowledge gap; value clashes; and unintended consequences or regulation.

Accordingly, for Ziewitz, we should pay more attention to non-legal regulation. Law and regulation are just one mode of governance among many. Ziewitz highlights three slightly different ways of thinking about governance:

• governance as a community effort (eg: wikipedia)
• governance as governmentality (eg: ebay)
• Governance as everyday practice (eg: second life)

Wikipedia provides an example of governance as a community effort. Ziewitz claims that “governance is what people naturally do when they edit the encyclopaedia”. People feel themselves as responsible members of a community. Crucially, there is a common goal and a shared ethos that facilitates people working together.

Interestingly, this type of consensual governance is very difficult – think of Froomkin's description of the IETF (PDF) and the laborious process of obtaining consensus.

eBay provides an example of 'governance as governmentality' – the subtle shaping of social norms. eBay has a huge incentive to refrain from comprehensive policing – both because it is expensive, and because it potentially increases liability. So, eBay frames itself as a community – with shared community values (like 'we believe people are basically good'). We are subtly drawn into this feeling of being part of the community, rather than 'just a guy who buys stuff' – we internalise what it means to be a responsible ebayer.

This form of governance seems to be a weak and subtle form of governance – but it turns out to be quite important. Nikolas Rose describes this as “to govern without governing society”. It is a Foucauldian form of governance that relies on creating and perpetuating shared values. It is a a non-obvious, rather subtle view on governance that is much stronger than we realise – primarily precisely because it is so subtle.

Ziewitz uses Second Life as an example of governance as everyday practice. In SL, governance is enforced through community norms – in the interactions of everyday people. From dress codes to child protection, governance is radically flattened: enforced by other participants within the course of participation. The focus here is not on governance as organisation and structure but on how governance is 'done', achieved, or accomplished in practice.

Ziewitz concludes that we need to remember that governance is more than one – more than just law and regulation. It is important to think about these alternative modes of governance because we may become more critical users of governance; can think about new approaches in public policy and game design; and can respond to frictions between modes of governance.

I've just given a 15 minute version of my rule of law argument at the State of Play VI conference in New York. The basic point was that we are still stuck in a false dichotomy between regulation and liberty for virtual communities. I argue that we need to take a closer look at the way in which governance takes place and the tensions that exist in virtual communities. I propose an evaluatory framework based upon the various ideals of the rule of law. It is the legitimacy that is most threatened by private governance, and it should be legitimacy that we seek to encourage and safeguard in the legal regimes that constrain governance.

You can grab the slides here in PDF or PPT.

This post provides a brief outline of the contractual chapter of my PhD thesis. Comments appreciated. See Part 1 for the introductory and theoretical outline.

The term 'digital constitutionalism' is used here to denote the essential values which underpin the development of legal principle as it applies to the new technological age. It refers to the way in which private legal doctrine will be read in an environment which clearly does not support a sharp distinction between public and private spheres. By accepting the fundamental proposition that the interpretation and application of law is never value-neutral, we are able to ask whether and how we ought to embed public values in the common law so as to achieve the balance required by justice.

The law of contract is a logical first candidate through which to examine the balance required in the regulation of virtual communities. Access to most virtual communities is generally purported to be governed by contractual terms of service documents which are overwhelmingly drafted in favour of the proprietors. These standard form contractual terms of service can rarely be said to reflect the 'intent of the parties'. They are drafted by repeat players, who are able to properly evaluate risk, and are presented in dense language on 'take it or leave it' terms, with the expected result that participants are both unable to properly evaluate the terms and, in cases where they do find the terms objectionable, are unable to negotiate alternative terms. Competition in contractual terms is negligible, and participants are unable to adequately manifest demand for fairer terms. Furthermore, participants tend to discount the risk that they will be adversely affected by unjust or onerous terms, rarely realising the gravity of their mistake unless and until those terms are enforced. Through these standard form contracts, proprietors essentially appropriate all power and discretion to themselves and, through selective enforcement, are able to exercise control over the virtual community.

The common law, however, is by no means bound to give full legal force to the literal wording of these contractual documents; instead, judges habitually read down contracts in light of the deemed intent of the parties and public policy interests. Indeed, if these documents, by setting out standards of behaviour and constraints on the exercise of power in virtual environments, are to be seriously treated as forming the basis for a type of social contract between participants and proprietors, then a formal literal reading is likely to lead to substantially unjust outcomes. By taking a critical approach to the interpretation of contractual terms of service, judges are in a position to substantially ameliorate the imbalance of power and encourage the development of contractual norms which more closely reflect societal values, rather than the self-interest of proprietors.

This instrumental approach is not alien to contract law. As Sir Anthony Mason and S J Gageler recognised in a 1987 article,

[t]he role of public policy in the formulation and application of contract rules has also tended to be understated. At root, public policy is inherent in the notion of legal adjudication. A court order for the enforcement of a contract does not simply allow the parties to pursue their own freely chosen course of conduct. It brings the full power of the state to bear against one party in the service of another. When and how this should be done are necessarily important questions of public policy.¹⁾

Considerations of public policy find their way into contractual interpretation in a variety of different doctrines. First and foremost, the plain contractual terms are read not by their subjective meaning, but in light of what the parties are deemed to have agreed to. A degree of reasonableness applies here, in that parties will be bound by what a reasonable person would have believed that each was agreeing to. In the case of standard form contracts which are rarely read and never negotiated, there is a strong argument that terms which are overly onerous or surprising would not reasonably be believed to form part of the contract. Other limitations apply to the incorporation and enforcement of contractual terms, including estoppel, waiver and acquiescence, and an implied duty of good faith, among others.

The way that terms of service are currently drafted generally imposes very little obligation on the proprietors of virtual communities. The interests of participants are essentially ignored, and participants have little hope of being able to successfully sue on the contract. If we are to continue to assume that contractual documents form the basis of governance in virtual communities, then it would seem to be desirable to ensure that participants are able to extract and enforce promises from proprietors as appropriate. Courts may be able to encourage more fully formed 'social contracts' by refusing to enforce the more egregious terms and implying certain terms that the participants are unlikely to be able to demand. In this way, courts may be able to safeguard the interests of participants in a way which negates the involuntariness associated with the power imbalance in virtual communities and simultaneously encourages the diversity which an efficient and effective contractual model provides.

This is an outline of the third part of my thesis. Comments appreciated. See Part 1 and Part 2 for more background.

Contract law may be the most prominent area of law which affects the governance of virtual communities, but it is by no means alone in this category. The way that courts interpret and apply the law of copyright, property, defamation, assault, and other innumerable laws will necessarily alter the relationships between participants and proprietors. In each case, if the common law is insensitive to the subtleties which differentiate participation in virtual communities from simple consumer transactions, then it is likely to come to decisions which are substantially unjust.

This is an exceptionalist point of view. It is premised on the assumption that there are real qualitative differences between participation in virtual communities and participation in the many different relationships which occur in real space. This assumption may not be entirely true. What appears to be true, however, is that there is a real gap between the rhetoric of the legal discourse and reality, and this gap is in the virtual domain. This gap is evidenced in the assumptions that courts make in their interpretation and application of the law – particularly, that because individuals are self-sufficient, rational actors who enter into private transactions at arms-length fully aware of any inherent risks, any limitations which apply to public actors are neither necessary not desirable in the private sphere. To the extent that this assumption has ever been correct, it is much more open to challenge in a virtual context, where access to services which have become, if not strictly necessary, then at least extremely important to all aspects of everyday life, is controlled not by public governments but by private actors.

The exceptionalist argument can be made in two different ways. The first is an internal critique, an economic argument that there are market failures which ought to be corrected. This approach recognises that individuals are particularly disadvantaged in negotiations with the large commercial proprietors of virtual communities, are unable to properly evaluate risk, and are unable to adequately manifest demand for fairer terms. It also recognises that significant network effects and high switching costs inhibit competition by disincentivising new entrants and discouraging participants from leaving established communities. In these situations, it may be desirable to introduce safeguards to ensure that there is an efficient and competitive market.

The second approach, an external critique, goes further. By stepping back from the market rhetoric, we are able to suggest that there are certain interests which should not be left to determination solely by the market. We may recognise that there are certain public values which we do not wish to be negotiated in the society we are striving to create. We may decide that these interests, like the ability to communicate with friends and family, to speak freely, to express oneself, and to form communities and associate with whom we choose, are important enough that we do not want to necessarily subject them to the vagaries of the marketplace. In these circumstances, we may decide that some of the types of limits we normally associate with restraints on the actions of public actors are appropriate to impose upon private actors.

From either point of view, current legal doctrine does not adequately recognise the realities of participation in 'private' virtual communities. In either case, if the law is to arrive at just results, judges must be able to better recognise the interests which are at stake. I believe that in most cases, the common law is flexible enough to arrive at results which are appropriate and just in the circumstances. Principles of statutory interpretation and the development of precedent provide a mechanism through which judges are able to read the law in accordance with principle and reality, rather than continuing to entrench the established interests by ignoring the ideological content of law.

Australia does not have a bill of rights. Rather, it has long been said that the interests of all Australians are appropriately safeguarded by the legislature and the development of the common law. Where the legislature is unable to adequately protect the interests of individuals or groups, Australian courts have historically been willing to read both legislation and precedent in the light of public interest principles. It is these principles which provide the greatest hope of balancing the interests of participants and proprietors in a context which is at the same time partly private and commercial and partly public and partly personal.

I am finally beginning to write up my thesis. What follows is the first half of the argument I plan to present. This will hopefully provide the structure for identifying the problem and the context of the argument.



Comments welcome – what have I missed so far?

The internet provides the medium for a wealth of virtual communities, each with its distinct set of norms and values. Individuals all around the world participate in these networks to play, to socialise, to learn and teach, to express themselves, to do business, to communicate with friends and loved ones, to engage in political discourse and political process, and for innumerable other activities. These communities provide not only a 'space' for people to interact but also the promise that each individual will be able to find a community whose norms and values align with her own. Since the internet became popular in the 1990s, this libertarian idealism has proved extremely powerful. It argues that freed from physical scarcity and spatial barriers, individuals will finally be able to choose to associate with other, like-minded, individuals, and these communities will be able to determine the rules which best fit their society, rather than the clumsy approximations that often result from national democracies.

The main problem with the governance of virtual communities is that our legal system operates in such a way as to vest overwhelming power in the hands of those who create and maintain the platforms. These people, whom we call 'proprietors', for they own the code that defines the platform and servers upon which the code runs, exercise almost complete discretion as to who may access and who may continue to access 'their' community. The law, by giving primacy to these property rights, marginalises the interests of participants in these communities. Further, by casting any disputes or tensions which arise as belonging wholly in the 'private' sphere, we deligitimise any change to the current allocation of entitlements.

The result so far has been that the technologically deterministic claims of the cyber-libertarians have not held up, at least not in the largest virtual communities. The suggestion that individuals will vote with their feet (or their wallets) and choose to leave communities that do not reflect their own values breaks down as individual communities become more important. Network effects act to restrict both entry of competitors and exit of participants. As the value of many communities is proportional to the number of participants, new communities have trouble reaching a critical, sustaining, mass. Participants are less likely to leave an established community for a fledgling community, even if that smaller community has more appropriate norms or values. This means that proprietors do not have to be very responsive to the demands of participants in order to retain their custom.

There are, no doubt, limits on the behaviour of proprietors. A proprietor who is not responsive enough to the demands of the community will, eventually, begin to lose participants. In the various commercial models, this usually means a drop in subscriber revenue or in revenue derived from advertising. The relationship between participants and proprietors is accordingly seen to be market-based, and proprietors have an incentive to be just responsive enough not to lose too many participants. This model, in practice, is far removed from the idealism of the cyber-libertarians. Governance is essentially reduced to business decisions about the most profitable way to manage the virtual community.

There is a significant problem when the interests of participants are reduced to a market rhetoric. The activities of participants in virtual communities cannot be understood as the activities of mere consumers of entertainment product, and treating them as such leads to substantial injustices. For participants, there is much more at stake than access to a service – that access underpins their ability to communicate with friends and family, to express themselves, to carry out trade and commerce, and to participate in political discourse. Thus, for example, when a participant is threatened with expulsion from the strongly heteronormative World of Warcraft for advertising for a guild that is friendly to those with alternate gender or sexual identities, she risks losing not only access to a recreational pastime, but access to her rich social networks, her personal identification with her avatar, her virtual possessions, and the rest of the benefits that attach to participation in the community.¹⁾

Similarly, when an individual is banned from a social networking site, she loses a significant ability to connect with her friends, family, and distant associates. The more effective the social networking platform is at changing the way that groups organise events and remain in contact, the more acutely she will feel this disconnection. The same disconnect occurs when an individual is denied access to cloud computing platforms and is no longer able to access her email contacts or stored documents.

In the corporeal world, these concerns are often seen as public concerns, and constitutional and administrative law principles have developed to restrain states from arbitrarily or capriciously taking away the ability of individuals to be secure in their property, their ability to communicate, and their freedom of association. In the privatised environment of the internet, however, there are very few guarantees. The limits of a proprietor's power are established by the bounds beyond which certain actions will become unprofitable. At its worst, this model approaches the worst failures of majoritarian or populist rule, where individuals and minority groups are often subject to harsh treatment and discrimination.

It follows that as the internet becomes more vital to the ways in which we communicate, do business, express ourselves, live, love, and learn, then the risk posed to individuals and groups dramatically increases. The law does not currently have the adequate vocabulary to deal with these risks. Constitutional action, particularly in Australia, provides limits on governmental action, but provides no individually assertable rights against private actors. This negative model assumes that, in the absence of governmental action, citizens will be free. To the extent that this model was ever accurate, it is certainly flawed in a context where access to crucial social networks and forums for self-expression requires access to another's 'property'.

In this context, the distinction between positive and negative restrictions becomes confusing. In the absence of particular government interference, we are left with the base rules of property and contract, which are nonetheless public constructs. A proprietor's right to exclude may come from the fact that they are in control of the software code which runs the platform, but that power is reinforced through the rules we choose to apply to protect that code and the servers upon which it runs and the interpretation we give to the contracts which condition access to the platform. At each of these stages we are embedding certain values in the legal system, and it is wrong to suggest that they form part of a natural state of affairs in which the government ought not interfere. There are clearly choices to be made.

Fundamentally, our legal system should develop to arrive at just results. This means that we must be careful to consider the interests of participants and refrain from marginalising those against the interests of the proprietors. This is a balancing exercise, however, because we must be careful not to destroy the vibrant and diverse nature of these spaces through over-regulation, and equally careful not to undermine the commercial viability of platforms which are provided through private sector investment.

This balancing process is the essence of digital constitutionalism. The rest of this thesis will consider how public values can be applied to the laws which govern virtual communities.

Photo: Andrew Feinberg, CC BY 2.0.

Last week, I had the opportunity to talk to Mozelle Thompson at an event organised by QUT IPKCE and the IIA. Mozelle was a US Federal Trade Commissioner, and is now a legal adviser to Facebook.

Mozelle had some interesting things to say about Facebook's privacy policies, including that he had recently spoken to a convention of Australian police officers and reinforced Facebook's pledge to only cooperate with law enforcement if it's demands were backed by valid legal procedure (ie., warrants and judicial oversight).

”[Facebook is] not here to provide people who want to spy the process for a fishing expedition.”

Interestingly, he also mentioned that Facebook would not comply with authorities if it believed the local laws to be too onerous:

”[…] if we think that that legal process is overbroad or inappropriate we will not enforce it.”

Mozelle also had some statistics about Facebook's adoption and growth. Without going into the details, Facebook is becoming enormous, everywhere. This raises some interesting questions. It is slowly becoming difficult to organise and participate in events if you're not a member of Facebook. Indeed, a large proportion of the people at Mozelle's talk heard about it only through Facebook. Both social and professional networking appears to be migrating to Facebook and (perhaps to a lesser extent) similar platforms. Anecdotally, it appears that it is not uncommon for a friendship group to organise themselves almost exclusively through Facebook. This means that people are becoming increasingly reliant on Facebook and other proprietary platforms for the organisation of their social life, and, to my mind, this raises the question of what responsibilities do Facebook and such other platforms have to their users?

The first thing to point to is Facebook's Terms of Use, which could charitably be described as oppressive. Significantly, they contain a clause which allows unilateral termination:

The Company may terminate your membership, delete your profile and any content or information that you have posted on the Site or through any Platform Application and/or prohibit you from using or accessing the Service or the Site or any Platform Application (or any portion, aspect or feature of the Service or the Site or any Platform Application) for any reason, or no reason, at any time in its sole discretion, with or without notice[.]

So, I asked Mozelle whether there were any applicable limits to Facebook's discretion in the way it treats its users. His answer was a very emphatic 'no'. Mozelle highlighted that it doesn't make good business sense to treat your customers poorly, and that the market provides essential safeguards for the interests of users. The problem with this argument is fairly simply stated: (a) there are few alternatives to facebook; (b) network effects inhibit exit and impose barriers to entry to new players; and © even if the market were efficient, it reduces important issues of rights and interests to a market rhetoric and provides little to no protection for the interests of minority groups.

When I pressed Mozelle about non-market limitations, he forcefully rejected the suggestion that Facebook's discretion could be limited. By differentiating Facebook from public utilities, Mozelle argued that the public (government) had no right to interfere in the way in which Facebook was run. Unlike public utilities, Facebook receives no public funding and operates in a competitive market. I asked for clarification on this point, because the market certainly doesn't seem competitive. Mozelle, who was a Federal antitrust lawyer, answered that you couldn't definte the market as narrowly as 'a market for social networking websites', and, accordingly, Facebook didn't have market power.

Competition law aside, there is a significant problem with the false dichotomy presented by Mozelle Thompson. It is simply not true that either an entity is a public utility, in which case it is regulated, or it is a private proprietary corporation, in which case it is not. We impose limits on the behaviour of private entities all the time. There is no reason that we cannot alter the boundaries of private property and the apportionment of liability and responsibility in any given case, and the proper location of these boundaries is exactly the discussion we need to be having.

I pointed Mozelle to the example of Sara Andrews, who was threatened with banning from World of Warcraft by Blizzard after she advertised for a LGBT-friendly guild. Mozelle distinguished World of Warcraft from Facebook based upon the subscription fee which WoW gamers pay. The gist of the argument was that by paying $15/mo, WoW subscribers had a right to complain to Blizzard about the way they are treated. Facebook users, on the other hand, pay nothing, and therefore have no such rights.

This is very dangerous thinking. Firstly, Facebook users, in aggregate, provide almost all of the value of the Facebook company. The technical platform represents some intiial investment, but it is the social network which provides the real driving force (and advertising revenue). If we focus only on subscription models, we are able to say that there is no consideration paid by Facebook users, and hence no contractual remedies. On the other hand, if we recognise the value that participants provide, this assumption may no longer hold.

More importantly, I believe that a valid contractual relationship is not the only source of liability that platforms like Facebook may be exposed to. There are any number of non-contractual arguments which could be raised, including, most significantly, negligence, estoppel, and unjust enrichment. It may be that Facebook owes its users a duty of care not to arbitrarily or maliciously remove them, for example. Alternatively, it may be that Facebook's oppressive Terms of Use are not adequately reflected in the internal community norms, and Facebook may be estopped from enforcing those terms as written in a particular case.

We need to stop talking in terms of clear dichotomies between private and public spaces. These private networks are providing functions which were public in nature when we drew the boundaries we know – which explains why there are constitutionally protected remedies against the State when it prevents you from associating with your social network in public. In no way does this fact preclude us from determining the appropriate level of responsibility that proprietors will owe to individuals in the future.

It may well be that we will decide not to impose liability on facebook for arbitrarily or maliciously ejecting its customers, but this result is by no means certain. By presenting these issues as a clear dichotomy between private and public, we are ignoring the malleability of legal rules and forestalling a proper debate on the rights and responsibilities of actors in our networked society. We are also ignoring the very real harms that individuals may suffer at the hands of platform owners like Facebook, and it is certainly time open up this debate. In this debate, the reification of property-based arguments will only slow us down.