Artificial Sovereigns: A Quasi-Constitutional Moment for Tech?

K. Sabeel Rahman –

Consider the following developments:

  • In recent weeks, the explosive revelations about Cambridge Analytica and its systemic data-mining of Facebook profiles has cast into relief the way in which our contemporary digitized public sphere is not a neutral system of communication but rather a privately built and operated system of mass surveillance and content manipulation.46038488 - law concept: circuit board with  scales icon, 3d render
  • Meanwhile, Alphabet has announced that its subsidiary, Sidewalk Labs, will take over management of a major redevelopment of part of Toronto’s waterfront, in an effort to build from the ground up a modern “smart city.”
  • These developments come amidst the longer-term development of new forms of technological transformations of our political economy, from the rise of Amazon to its position as the modern infrastructure for the retail economy, to the ways in which technology is transforming the nature of work and the social safety net.

There has been a growing sense of concern about the twin crises of twenty-first-century democracy on the one hand and of the growing problems of inequality and insecurity on the other. Technological change is at the heart of both of these transformations. Technological change alters the distribution and dynamics of political and economic power, creating new forms of “functional sovereignty”—state-like powers concentrated in entities and systems that are not subject to the institutional and moral checks and balances that we associate with the exercise of public power. Such arbitrary power represents a kind of quasi-sovereignty that, left unchecked, poses a threat of domination.

The rich scholarly debate on law and technology has surfaced a range of approaches for addressing some of these concerns, from legal standards for privacy and data use to antitrust and public utility regulation, and more. These proposals and interventions can be reframed as part of a broader challenge of defusing the threat of domination created by these technological systems. Regulating and responding to new technologies and modern forms of economic and political power thus represent a variation on familiar questions of public law and constitutional design: how to structure the exercise of potentially arbitrary, state-like power, rendering it contestable, and therefore legitimate.

Continue reading

From Territorial to Functional Sovereignty: The Case of Amazon

Frank Pasquale

Economists tend to characterize the scope of regulation as a simple matter of expanding or contracting state power. But a political economy perspective emphasizes that social relations abhor a power vacuum. When state authority contracts, private parties fill the gap. That power can feel just as oppressive, and have effects just as pervasive, as garden variety administrative agency enforcement of civil law. As Robert Lee Hale stated, “There is government whenever one person or group can tell others what they must do and when those others have to obey or suffer a penalty.”

We are familiar with that power in employer-employee relationships, or when a massive firm extracts concessions from suppliers. But what about when a firm presumes to exercise juridical power, not as a party to a conflict, but the authority deciding it? I worry that such scenarios will become all the more common as massive digital platforms exercise more power over our commercial lives.

A few weeks ago, the Friedrich Ebert Stiftung (a think tank affiliated with the Social Democratic Party in Germany) invited me to speak at their Conference on Digital Capitalism. As European authorities develop long-term plans to address the rise of powerful platforms, they want to know: What is new, or particularly challenging, in digital capitalism?

My answer focused on the identity and aspirations of major digital firms. They are no longer market participants. Rather, in their fields, they are market makers, able to exert regulatory control over the terms on which others can sell goods and services. Moreover, they aspire to displace more government roles over time, replacing the logic of territorial sovereignty with functional sovereignty. In functional arenas from room-letting to transportation to commerce, persons will be increasingly subject to corporate, rather than democratic, control. Continue reading