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Chicago-Kent Board of Overseers Technology Committee

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Introduction to the Problem:Two-Sided Data Markets
Richard Warner
The Basic Problem
Businesses usetraditional standard form contractsin non-traditional ways,creating non-traditional problems.So we needto review traditional standard form contractscharacterize the non-traditional usesidentify and solve new problems.
How To Buy A Hair Dryer
Go to the store.Pick it out.Pay.Where is the contract?A 100 year old practice.It works well—even though almost no one reads the contracts.
Standard Form Contracting
The practice first flourished in the nineteenth century shortly after the rise of mass produced, standardized products.It has served well as a fair and efficient way to allocate the risks and benefits between buyers and sellers of hair dryers, toasters, microwaves, washing machines, home repairs, auto servicing, and a wide range of other products and services.
Features of Standard Form Contracts
[1]Businesses do not expect “customers to understand or even to read the standard terms . . .[2]Employees . . . often have only a limited understanding of its terms and limited authority to vary them.[3]Customers do not . . . ordinarily understand or even read the standard terms.[4]They trust to the good faith of the party using the form[5]and to the tacit representation that like terms are being accepted regularly by others similarly situated.[6]But they understand that they are assenting to the terms not read or not understood, subject to such limitations as the law may impose.Restatement of Contracts (second) § 211
Traditional Concerns
How do you ensure that businesses will not exploit the contracting process to impose unfair or otherwise objectionable terms?How does offer and acceptance work?Mostly a theoretical issue.
Two-Sided Data Markets
Intermediary
Advertisers
Users
Access, goods, services in exchange for data
Access to data/customers in exchange for money
Contracts
Antitrust, competition law
EU data privacy/data protection
Clauses in Standard Form Contracts
Three types of clausesInteractional:Parties, type of good or service, price, delivery, etc.Risk allocation:Who bears what riskNormal course:Privileges and obligations during the proper functioning of the product or provision of the service.
How Much Interaction?
When you buy a hair dryer, how often do you interact with the manufacturer?Most likely just once—at the time of purchase.Most purchases of non-digital consumer goods involve very little ongoing interaction with the provider of that good.There are more interactive relationships—with insurance companies and banks.
The Interaction Spectrum
Low interaction
High interaction
A wide range of non-digital goods and services
Insurance,bank accounts
Google, Facebook, etc.—also employment
Online Standard Form Contracts
High interaction in an ongoing relationship.Intensive data collection.“The past fifteen years have seen extensive investments in business infrastructure, which have improved the ability to collect data throughout the enterprise. Virtually every aspect of business is now open to data collection and often even instrumented for data collection.”Provost& Fawcett, Data Science ForBusiness.Advertisingrevenue plays akey—essential (?)– rolein supporting theInternet.
What Is Bought and Sold?
Intermediary
Advertisers
Users
Usersbuy access to goods and services by providing access to their data.Advertisersbuy access to users. Think of it as buying an opportunity to make a claim on the user’s attention. In this sense, the user—access to the user—is the product.
Current Concerns
How do you ensure that businesses will not exploit the contracting process to impose unfair or otherwise objectionable terms?Fourdoctrines:The obligation of good faith and fair dealing“[4]They trust to the good faith of the party using theform.”UnconsionabilityOffer and acceptanceConsideration

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Chicago-Kent Board of Overseers Technology Committee