The Internet of Personalised Things. Iot-Powered Consumer Manipulation As an Unfair Commercial Practice Dr Guido Noto La Diega*†
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The Internet of Personalised Things. IoT-Powered Consumer Manipulation as an Unfair Commercial Practice Dr Guido Noto La Diega*† Faculty of Arts and Humanities, University of Stirling, United Kingdom *Author email: [email protected] Abstract Personalisation is one of the key befits of the Internet of Things (IoT). IoT traders can combine data from multiple sources and access consumers’ most private spaces. At the same time, these traders retain control over their smart devices (‘Things’) throughout their lifecycles. Thanks to this combination of deep knowledge of the consumer and control over the Thing, IoT traders can personalise products, services, prices, and even the terms of service that regulation the business- to-consumer relationship. The problem is that personalisation can lead to consumer manipulation and even discrimination – such detrimental effects can be referred to as the ‘Internet of Personalised Things’. Situational data and information about consumers’ biases and vulnerabilities allow IoT traders to influence consumers’ decision-making in surreptitious ways. This can go from instilling the desire to purchase useless or even dangerous Things, to the exclusion of BAME people from certain job ads, through to electoral manipulation. This paper critically assesses whether unfair trading laws – and in particular the Unfair Commercial Practices Directive as amended in 2020 – are fit for purpose and can provide a successful strategy to re-empower consumers, thus re-building trust in the IoT. It is suggested that, despite some shortcomings, this regime can be invoked by consumer to counter IoT-powered manipulation, especially as the Directive provides special protections for vulnerable consumers and against traders’ undue influence impairing consumer freedom of choice. The Directive does have some limitations but this should not come as a surprise. Being a neoliberal instrument aimed at pursuing a perfectly competitive single market, it cannot provide an entirely satisfactory response to an issue that capitalism itself created, namely the problem of manipulated needs as discovered by Marx. Table of contents 1. Introduction......................................................................................................................................... 2 2. The IoT today: definitions and core features ...................................................................................... 3 3. Consumer benefits in the IoT ............................................................................................................ 14 4. The risks for the ‘smart’ consumer ................................................................................................... 15 5. Can we trust the Internet of Personalised Things? ........................................................................... 17 5.1. IoT-powered consumer manipulation as an unfair commercial practice .................................. 22 5.1.1. Unfair commercial practices that are contrary to the requirements of professional diligence. Is the IoT making us vulnerable? .................................................................................................. 27 5.1.2. Misleading actions and confusing practices ....................................................................... 32 5.1.3. Misleading omissions and the limitations of the communication medium .......................... 36 5.1.4. Aggressive commercial practices. IoT traders’ undue influence over consumers’ freedom of choice. ........................................................................................................................................... 41 5.1.5. Commercial practices that are unfair in all circumstances: the black list ......................... 46 5.2. The limitations and the potential of unfair trading law to counter the Internet of Personalised Things ................................................................................................................................................ 49 6. Conclusion. Or of How Neoliberal Laws Address the Neoliberal ‘Manipulation of Needs’ ............ 53 † Associate Professor of Intellectual Property and Privacy Law (University of Stirling); Fellow (Nexa Center for Internet and Society); Visiting Professor (Università degli Studi di Macerata); Researcher (CRISP – Centre for Research into Information, Surveillance & Privacy). 1 1. Introduction ‘We seek to be Earth’s most customer-centric company.’1 In Amazon’s commitment, it is possible to find one of the key benefits of the Internet of Things (IoT): personalisation. IoT traders can combine data from multiple sources and access consumers’ most private spaces. At the same time, these traders retain control over their smart devices (‘Things’) throughout their lifecycles. Thanks to this combination of deep knowledge of the consumer and control over the Thing, IoT traders can personalise products, services, prices, and even the terms of service that regulation the business-to-consumer relationship. The problem is that personalisation can lead to consumer manipulation and even discrimination. Situational data and information about consumers’ biases and vulnerabilities allow IoT traders to influence consumers’ decision- making in surreptitious ways. This can go from instilling the desire to purchase useless or even dangerous Things, to the exclusion of BAME people from certain job ads, through to electoral manipulation.2 The negative aspects of IoT-powered consumer manipulation – the Internet of Personalised Things – is the focus of this paper. First, the key IoT-related concepts will be introduced and the main benefits and consumer issues in the IoT. The paper will then inquire whether unfair trading laws – and in particular the Unfair Commercial Practices Directive as amended in 2020 – are fit for the IoT and can provide a successful strategy to re-empower consumers and re-build trust in the IoT. This doctrinal research takes an EU law perspective and it refers to English law to the limited extent to which national implementations need to be considered. The reason for this is that, despite leaving the EU, the UK has an incentive to keep their laws consistent with EU 1 Amazon.com, Inc., ‘US Securities and Exchange Commission, Form 10-K No 000-22513 Annual Report for the Fiscal Year Ended on 31 December 2019’ 42 <https://www.sec.gov/ix?doc=/Archives/edgar/data/1018724/000101872420000004/amzn-20191231x10k.htm> accessed 9 April 2020. 2 See e.g. Scott Shane and Sheera Frenkel, ‘Russian 2016 Influence Operation Targeted African-Americans on Social Media’ (The New York Times, 17 December 2018) <https://www.nytimes.com/2018/12/17/us/politics/russia-2016-influence-campaign.html> accessed 11 May 2020. 2 standards.3 However, Brexit may be an opportunity to take a different course if the acquis does not provide a solution that maximises consumer wellbeing while fostering innovation.4 2. The IoT today: definitions and core features The idea of the ‘Internet of Things’ can be traced back to 1926, when Nikola Tesla imagined that devices simpler and more mobile than the traditional telephone would convert the Earth into a brain.5 One needs to wait until the Seventies for the first Thing to be developed; it was a coke vending machine at the Carnegie Mellon Computer Science Department that thanks to microswitches enabled users to remotely double-check whether the machine was empty or full.6 Flash forward thirty years, Kevin Ashton coined the phrase ‘Internet of Things’ in a 2009 presentation for Procter & Gamble where he linked the use of radio-frequency identification (RFID) in that company’s supply chain and the internet, as a new, more reliable, way for computers to collect data about the physical world.7 Despite a not-so-recent history, there is no single commonly accepted definition of the IoT.8 In the proliferation of definitory attempts, some approaches are becoming increasingly common.9 A first authoritative definition was presented by the European Commission that in its 2009 IoT ‘action plan’ for Europe.10 The latter considered the IoT as ‘a network of 3 European Union (Withdrawal) Act 2018, ss 2-3, respectively saving EU-derived domestic legislation and incorporating direct EU legislation. 4 See Tom Verdonk, ‘The Regulation of Unfair Trading Practices after Brexit’ (LSE Blog, 11 October 2018) <https://blogs.lse.ac.uk/brexit/2018/10/11/the-regulation-of-unfair-trading-practices-after-brexit/> accessed 11 May 2020. 5 In 1926, in an interview to Collier’s – magazine that pioneered ‘muckraking’ journalism – the Serbian-American inventor predicted that ‘(w)hen wireless is perfectly applied the whole earth will be converted into a huge brain, which in fact it is, all things being particles of a real and rhythmic whole. We shall be able to communicate with one another instantly, irrespective of distance. Not only this, but through television and telephony we shall see and hear one another as perfectly as though we were face to face, despite intervening distances of thousands of miles; and the instruments through which we shall be able to do his will be amazingly simple compared with our present telephone. A man will be able to carry one in his vest pocket’ (). 6 Jay Patel, ‘The Timeline of Things’ (2015) 22 XRDS: Crossroads, The ACM Magazine for Students 13.). Others claim that the first Thing was a 1991 camera-equipped coffee pot at the Trojan Lab at Cambridge University (Paul Ford, ‘It’s All Connected’ [2013] United Hemispheres., as cited by Keith Marzullo, in Federal