Algorithms and Democracy

'Are Algorithms a Threat to Democracy? The Rise of Intermediaries: A Challenge for Public Discourse' from AlgorithmWatch comments

 A healthy democracy needs informed citizens. People are expected to be aware of important issues and public affairs in order to provide feedback on the political system. Therefore, a diversity of viewpoints is considered a core democratic value and one of the core public values in media law and policy. With the increasing importance of intermediaries, the question arises whether algorithmic news curation is a threat to democracy. 

Fears that algorithmic personalization leads to filter bubbles and echo chambers are likely to be overstated, but the risk of societal fragmentation and polarization remains

• The fear that large parts of the population are trapped in filter bubbles or echo chambers seems overstated. Empirical studies offer a much more nuanced view of how social media affects political polarization. Due to the fact that our information repertoires are still broadly dispersed, we adapt our worldview, allow opposing opinions, and are exposed to relevant societal issues. Several studies show that incidental exposure and network effects can even contribute to an expansion of the diversity of information. 

• Nevertheless, there is evidence for possible polarization at the ends of the political spectrum. The current state of research permits the assumption that echo chambers may arise under certain circumstances; that is, facilitated by homogeneous networks, highly emotionalized and controversial topics, and strong political predispositions. In particular, social media logics can reinforce affective polarization because the features of social media platforms can lead to very stereotypical and negative evaluations of out-groups. 

• Moreover, social media may indirectly contribute to polarization by facilitating a distorted picture of the climate of opinion. As a result, spiraling processes begin because the perception of the strength of one’s own opinion camp compared to those of other camps is overstated. The entire process leads to an overrepresentation of radical viewpoints and arguments in the political discourse. At this point during the opinion formation process, individuals are more vulnerable to being influenced by “fake news” on Facebook or Twitter. Thus, strategic disinformation cannot only influence the media’s agenda through specific agenda-setting effects but can also impact the public’s climate of opinion. 

Social media are vulnerable to facilitating a rapid dissemination of disinformation, but exposure seems to be limited

• There are orchestrated disinformation campaigns online, but data on the actual scope of and exposure to disinformation is scarce. 

• The few available scientific studies suggest that the extent of the problem is likely to be overestimated since exposure to disinformation seems to be rather limited. 

• Studies on the effects of disinformation of users show no persuasive effects but a confirmation bias: disinformation may therefore widen existing gaps between users with opposing worldviews because it is able to confirm and strengthen pre-existing attitudes and (mostly right-wing) worldviews. In this context political microtargeting poses a concern, as it can be used to disseminate content tailored to target groups particularly susceptible to disinformation. 

• More research on the scope of, interaction with and individual and societal effects of disinformation is crucial to better assess the actual extent of the problem regarding disinformation. 

Social media contribute to the dissemination of incivility and hate speech

• Incivility appears to be significantly widespread online and has real, negative effects on individual attitudes and the discourse climate. 

• A potentially serious problem is the indirect effects of incivility on recipients and journalists: the credibility of journalistic content is reduced by incivility, including hate speech, in comment sections, which can have detrimental effects on trust in journalism as an institution of social cohesion in the long term. 

• In addition, empirical evidence indicates that journalists react to incivility directed at them by shying away from controversial reporting or trying to hide controversies as a reaction to incivility. This is worrying because it hinders the free development of democratic discourse. 

• A related problem is that especially women, who have been victims of hate speech, stop participating in discussions. This again backfires on the free development of public discourse on the macro-level, if whole groups of the population are cast out.  

• Discourse moderation in comment sections that focuses on sociable replies on comments by journalists seems to be an effective tool in containing and preventing incivility including hate speech. 

• Measures inhibiting freedom of expression have to be carefully applied and can only be used to combat illegal content such as hate speech. 

Research agenda for platform governance 

It can be stated that fears of filter bubbles and echo chambers seem overstated. Echo chambers and polarization seem to emerge only at the fringes of the political spectrum. Worrisome, however, are indications that social media may indirectly contribute to polarization by facilitating a distorted picture of the climate of opinion. 

There are reasons for vigilance in the cases of disinformation and incivility. A serious assessment of the extent of the problem of disinformation is hampered by the scarcity of the available scientific data. The available studies suggest that an excessively alarmist political and societal debate is to be avoided, but the actual scope of the issues remains unclear. Incivility and hate speech are prevalent phenomena that should be tackled with evidence-based policy measures. That means that (further) regulation, bans or deletion of content, which entails legal problems, are not necessarily the best solution. From the perspective of communication science, the main goal of any intervention should be to strengthen a reasonable, fruitful and free democratic discourse. 

In this context, we emphasize that existing successful approaches (e.g., community management in the form of moderation that does not entail deleting content to contain and prevent incivility) should be extended and consistently applied. In addition, further scientific evidence is needed, in particular on disinformation, in order to investigate the extent of the phenomenon and its consequences for public discourse and society in more detail, so that evidence-based measures can be developed. From a communication science perspective, it is precisely at this point that regulation appears most useful, especially with respect to demystifying the inner workings of “black box” algorithms and providing relevant data for research purposes. Hence, without access to Google’s or Facebook’s internal data, it is hard to reach firm conclusions. Therefore, it is critical to continue monitoring the evolution of digital news markets and the ways in which users are exposed to news on social media platforms. In particular, structural changes in the news market require the attention of regulators and policy makers. Intermediaries establish economic power and create new dependencies.

The 69 page study concludes

Platform Transparency Deficits 

Information intermediaries are increasingly important actors in high-choice media environments. They change the structures and processes of how communication in digitalized societies proceeds—with potentially profound consequences for the functioning and stability of our democracies. In contrast to existing media organizations, intermediaries wield far broader power because they internalize markets: Users of intermediaries choose their sources within an environment whose logic is set by the platform itself. The open market—whether the selection of newspapers at a newsstand or the list of channels available on TV— is typically regulated to prevent anti-competitive behavior, and it guarantees some degree of transparency and a level playing field. Market participants can evaluate the behavior of competitors simply by “walking over and having a look”. Internal markets for news, however, are opaque to individual and institutional observers. Within them, users of intermediaries are presented with a personalized pre-selection of content, but neither other users nor content producers can easily identify what those are. This implies two transparency deficits:

(1) Individual users only see their own recommendations. They have no way of knowing what information was hidden from them, and 

(2) they cannot observe what information was presented to other users.

Outside actors (such as competitors, content suppliers, media authorities, and researchers) suffer from these limitations: They have no way of observing the treatment and behavior of individuals or groups of users. Information intermediaries, therefore, create new potential impacts (through personalization), along with detailed measurements thereof (creating what Webster, 2010 termed “user information regimes”)—but hide both within a proprietary product. As intermediaries’ importance to public opinion formation and political processes grows, societies will need to encourage effective transparency in order to safeguard a level playing field in information dissemination. As identified above, two elements are crucial for such transparency to work:

(1) Individual users should be empowered with regard to the recommendations presented to them—they should be able to download everything that was presented, along with a sensible description of the processes that produced this exact set. Doing so would help individuals understand whether they were the subject of a biased selection and enable them to seek legal recourse in that case. Such a model is unproblematic from the perspective of user privacy, as users could only receive information which they can view anyway, yet it would facilitate the act of “whistleblowing” in the case of perceived wrongdoing. 

(2) An arguably more difficult goal would be the creation of some form of transparency that encompasses not individual users but the overall impact of intermediaries. Such a measure is necessary for monitoring the societal influence that arises from the use of platforms, including endogenous algorithmic effects but also encompassing external factors, such as manipulation attempts from malevolent third parties (such as hackers and foreign government agencies). Transparency on this level could, for example, take the form of providing privileged parties (state offices, researchers or trusted NGOs) with accurate aggregate information on the demographic makeup of user populations, the prevalence of news usage and other key insights. It might also be worth considering making less detailed data publicly available, but such a decision would need to be weighed against the potential negative effect of facilitating targeted manipulation.

 In general, transparency should help users make informed choices. But it is clear that “digital transparency—whether it is enacted through technological solutions or more classical administrative and organizational means — will not on its own provide an easy solution to the challenges posed by the growing role of platforms in political and public life” (Gorwa and Ash, 2020, p. 20). The ongoing debates on the implementation of the transparency rules in the German Media State Treaty clearly support this statement (Dogruel, Stark, Facciorusso, and Liesem, 2020).

Key Data Needs 

The combination of novel impacts, and a lack of transparency, create three distinct classes of threat to societies. Protecting against each threat requires access to specific data—most crucially the individual personalized results presented to users, the actions taken by intermediaries to change the flow of information, and the overall impact on the whole user population—that is currently unavailable (Tucker et al., 2018). 

(1) As illustrated by existing anti-trust cases against technology companies, it is possible that (for whatever reason) intermediaries fail to adhere to internal or external guidelines, resulting in detrimental treatment of users, advertisers, content providers, or other actors. In contrast to past well-documented legal disputes (e.g., in competition regulation), affected parties will have difficulties monitoring for, detecting, and collecting evidence of unfair treatment because (due to personalization and highly individual behavior) they do not have access to the recommendations that intermediaries produce for their users. Assessing (and proving) unfair bias in intermediaries would require access to a representative set of recommendations, so that differences in consumption could be clearly attributed. Consider, for example, a hypothetical search engine that systematically alters access to political cross-cutting information—displaying only conservative results to conservatives and only liberal results to liberals. Creating a legal case against such a platform would require access to a representative set of users (anecdotal evidence could always be discounted as spurious. Or chance findings). For each of those users, researchers should identify the political leaning, and then record the search results they obtained. 

Such data collection is typically unfeasible in practice for two reasons: (a) Platforms offer no way of accurately recording the output of an intermediary for a single user. Neither third parties, nor the users themselves, have access to technical interfaces that would show a comprehensive dataset of personalized recommendations, such as the personal news feed on Facebook. Even though users can access the feed visually in their browser, considerable effort would be required to extract it in an automated fashion (i.e., through web scraping). Furthermore, there is currently no company that provides such data, and researchers’ capabilities to obtain them independently are increasingly limited by the locked nature of proprietary smartphones (Jürgens, Stark and Magin, 2019). The second factor that encumbers research is (b) the unavailability of a suitable sampling strategy. Intermediaries are, of course, cognizant of their entire population of users along with key socio-demographic data (which is required i.e., for selling personalized advertisement spaces). Researchers, on the other hand, usually have no way of creating random samples from a platform’s population. Since the available information on the socio-demographic makeup of the userbase is typically drawn from (moderately sized, i.e., N in the thousands) surveys, attempts to create samples which are representative, with regard to the intermediary’s national users, offer somewhat limited precision (Jürgens et al., 2019). 

(2) Outside actors (individual, institutional and state-sponsored) frequently attempt to manipulate intermediaries in order to gain influence over citizens—e.g., through misinformation, disinformation, and the manipulation of public opinion perception (Lazer et al., 2017; Magin et al., 2019). Although intermediaries spend commendable resources on the containment and removal of such attempts, two risks remain which are outside the reach of the companies themselves: (a) Without access to large-scale data containing purported manipulation attempts, external watchdogs cannot perform independent audits in order to identify overlooked external influences. (b) Problematic content is also routinely deleted, so that external watchdogs cannot scrutinize and understand those attacks. An exception is Twitter, which regularly publishes datasets on malevolent campaigns). Intermediaries should provide trustworthy actors with a way to perform their own, independent attempts at large-scale detection of manipulation, including data that were already removed by in-house systems. The simplest strategy that would enable such attempts is simply making the raw public flow of information accessible through a technical interface (an API), as Twitter has done: It not only offers a true random sample of tweets, but includes information about which of them are removed later on. Furthermore, the company offers a growing list of datasets containing all content produced by bot networks and state-sponsored manipulation campaigns. Platforms with more restrictive privacy contexts such as Facebook (where much of the flow of information is not visible to the broader usership or public) could still allow automated analyses, for example by offering to run researchers’ models without providing access to the data itself. 

(3) In addition to institutional actors, harmful dynamics (such as radicalizing echo chambers, Stark et al., in press) may develop within intermediaries, even in the absence of external influence. Such dynamics need not have a clearly identifiable culprit; they could equally arise from the interaction of multiple individuals that leads to a mutual reinforcement of harmful tendencies. Detecting such structural phenomena is contingent on a complete picture of users’ interaction networks. Furthermore, singular snapshots do not provide much insight; instead, the development must be traced over time in order to assess the true impact as well as causes. Researchers should, therefore, gain access to representative, longitudinal, and detailed data on those (semi-public) parts of intermediaries that pertain to public debates. This includes first and foremost the discussions surrounding media, politics, and social issues. 

New Models for Partnerships 

Some attempts have been made to increase transparency; while they attempt to address the issues outlined above, they have not yet achieved any significant success. Following an initiative from King and Persily (2019), a consortium of scientists cooperated with Facebook in order to create an institution (Social Science One) and a process that would allow scholarly usage of a limited collection of pre-defined datasets. The project received much criticism from scientists, who warned that it would decrease transparency in research practices, lead to a dependence on Facebook that would encumber critical research, and create divisions between privileged “insiders” with access to data and the rest of the field (Bruns, 2019c). So far, Facebook also failed to facilitate the agreed upon access, frustrating even the existing scientific partners (Statement from the European Advisory Committee to Social Science One). Despite its pragmatic appeal, the cooperative model underpinning Social Science One has a fatal conceptual flaw: Even though it provides some access to some data, that access is pre-defined and limits researchers to a specific approach in tackling the above-mentioned threats. Participating teams are prevented from finding problems, answers, and solutions that intermediaries themselves did not identify. A cooperation between an intermediary and scientific partners can only succeed in generating trust if researchers are given the freedom to seek and find potential negative effects. Where such inquiries are prohibited ex ante, through pre-defined datasets or topical questions, both sides suffer from a lack of credibility. 

There is also a deeper issue to the proposed cooperative model: Just as independent scholarly work from different institutes is required for long-term trustworthy, rigorous, and reliable scientific insights, independence is a defining feature of work on intermediaries. Only when external observers are free to implement an autonomous process for data collection, analysis, and interpretation can they serve as the much-needed check and balance that society requires (and demands). Researchers’ ability to do so ultimately hinges on two key ingredients, both mentioned above: The capacity to obtain or create high- quality representative samples, and the availability of tools that record digital content, recommendations and user behavior within intermediaries. While the first is certainly possible (if perhaps expensive), the second remains under strong pressure from the progressive “lock-down” of platforms and mobile devices (Jürgens et al., 2019).  

Diversity as Policy Goal 

From a normative point of view, diversity is the key term: “Media pluralism and diversity of media content are essential for the functioning of a democratic society,” as the Council of Europe (2007) put it, because functioning democracies require all members of society to be able to participate in public debate — and to be able to fully participate in this democratic debate, citizens need to encounter a diversity of high-quality information and opinions. Or, as the Council of Europe (2007) adequately phrased it, the right to freedom of expression “will be fully satisfied only if each person is given the possibility to form his or her own opinion from diverse sources of information.” The close link between media diversity and democratic participation may also explain the scope of the public debate about the rise of platforms and their growing influence in the information landscape. The advances of at least some of these platforms into the business of distributing and aggregating media content have fundamentally changed our news ecosystem. In this context, a very important aspect is the newly created economic dependencies. The better part of the advertising revenue flows to the platform providers, Google and Facebook. This raises the normative question: to what extent should diversity matter in the context of social media platforms? 

Communications researchers (e.g., Moeller, Helberger, and Makhortykh, 2019) emphasize that to ensure the preservation of the news ecosystem that has come under considerable strain, the public needs to receive the curated news supply provided by traditional mass media. The length of time that traditional mass media can still assume this function is uncertain. If, at some point, this is no longer the case, the underlying conditions of the news ecosystem and consequently opinion-formation will fundamentally change. If traditional mass media disappears, high- quality news products will no longer be available, and the impact of low-quality information on processes of opinion formation will rise. If only softened and highly personalized content will be distributed, the news ecosystem will change dramatically with potentially negative consequences for democratic societies. 

Against this background, the social dynamics of media diversity become apparent (Helberger, 2018, p. 156). Thus, “media diversity on social media platforms must be understood as a cooperative effort of the social media platform, media organizations, and users. The way users search for, engage with, like, shape their network, and so forth has important implications for the diversity of content, ideas and encounters that they are exposed to. Similarly, the way the traditional media collaborate with information intermediaries to distribute content and reach viewers impacts structural diversity” (Helberger, 2018, p. 171). Put differently, future diversity policies must therefore go beyond the traditional framework and generate a new conception of media diversity, which addresses the different actors (platforms, users, and media organizations) together. These future policies must, first and foremost, ensure that diversity reaches users. 

A potential way of increasing exposure diversity could be to employ a design that focuses on serendipity and/or on diversity as a principle (see considerations on “diversity by design”: Helberger, 2011). Such a design would, for example, focus less on search engine ranking and would encourage users to have a closer look at different teasers and click on more results. Besides, users should have the opportunity to choose between, or weight, different filtering and sorting criteria. Such changes could also create more diversity in Facebook’s news feed, e.g., Facebook could implement the ability for users to adopt a different point of view, exposing them to a feed with totally new perspectives (Ash, Gorwa, and Metaxa, 2019). 

As the debate about the impact of algorithmic news recommenders on democracy is still an ongoing process, diversity-sensitive design as part of a possible solution should be taken into account. For such solutions to work, it should be clear that different perspectives on the democratic role of news recommenders imply different design principles for recommendation systems (Helberger, 2019), i.e., an explicit normative conception of the democratic potential is critical. It may also become clear, that we need to work towards a coherent mix of appropriate government regulation, co-regulation, and platform-specific self-regulation in order to minimize the negative effects of the discussed threats.

Currencies

'After Libra, Digital Yuan and COVID-19: Central Bank Digital Currencies and the New World of Money and Payment Systems' (European Banking Institute Working Paper Series 65/2020) by Douglas W. Arner, Ross P. Buckley, Dirk A. Zetzsche and Anton Didenko comments

Technology, money and payment systems have been interlinked from the earliest days of human civilization. But of late technology has reshaped money and payment systems to an extent and speed never before seen. Milestones include the establishment of M-Pesa in Kenya in 2007 (creating mobile money systems), Bitcoin in 2009 (triggering in time the explosive growth in distributed ledger technology and blockchain), the announcement of Libra in 2019 (triggering a fundamental rethinking of the potential impact of technology on global monetary affairs), and the announcement of China’s central bank digital currency – the Digital Currency / Electronic Payment (DCEP) referred herein to as Digital Yuan (marking the first launch by a major economy of a sovereign digital currency). 

The COVID-19 pandemic and crisis of 2020 has spurred electronic payments in ways never before seen. In this paper, we ask the question: In the context of the crisis and beyond, what role can technology play in improving the effectiveness of money and payment systems around the world? 

This paper analyses the impact of distributed ledger technologies and blockchain on monetary and payment systems. It particularly considers the policy issues and choices associated with cryptocurrencies, stablecoins and sovereign (central bank) digital currencies. We examine how the catalysts reshaping monetary and payment systems around the world – Bitcoin, Libra, China’s DCEP, COVID-19 – challenge regulators and give rise to different levels of disruption. While the thousands of Bitcoin progenies were able to be ignored, safely, by regulators, Facebook’s proposed Libra, a global stablecoin, brought an immediate and potent response from regulators globally. This proposal by the private sector to move into the traditional preserve of sovereigns – the minting of currency – was always likely to provoke a roll-out of sovereign digital currencies by central banks. China has moved first, among major economies, with its Digital Yuan – the initiative that may well trigger a chain reaction of central bank digital currency issuance across the globe. 

In contrast, in the COVID-19 crisis, we argue most central banks should focus not on rolling out novel new forms of blockchain-based money but rather on transforming their payment systems: this is where the real benefits will lie both in the crisis and beyond. Looking forward, neither the extreme private nor public model is likely to prevail. Rather, we expect the reshaping of domestic money and payment systems to involve public central banks cooperating with (new and old) private entities which together will provide the potential to build better monetary and payment systems at the domestic and international level. Under this model, for the first time in history, technology will enable the merger of the monetary and payment systems.

'Cryptocurrency Is Garbage. So Is Blockchain' by David Golumbia comments 

The entire space cryptocurrency/blockchain space is dominated by false claims, conspiracy theories, muddled thinking, and outright fraud of many kinds. It is remarkable how much academic, journalistic and popular writing on blockchain accepts at face value dogma that any dispassionate investigation shows to be false, This paper consists mainly of two lists: falsehoods that nobody who is interested in the world as it really is should ever repeat, at least not without heavy qualification; the second a list of truths and rules of thumb about cryptocurrency and blockchain that have been demonstrated repeatedly (often for many years) but escape notice far too often. Each item in the list is accompanied with some, but only a small subset, of the evidence available to support it.

Datafication

'Datafication and the Welfare State' by Lina Dencik and Anne Kaun in (2020) 1(1) Global Perspectives 12912 comments

 Both vehemently protected and attacked in equal measure, the welfare state as an idea and as a policy agenda remains as relevant as ever. It refers not only to a program of social welfare and the provision of social services, but also to a model of the state and the economy. According to Offe (1984), the welfare state in advanced capitalist economies is a formula that consists of the explicit obligation of the state apparatus to provide assistance and support to those citizens who suffer from specific needs and risks characteristic of the market society, and it is based on a recognition of the formal role of labor unions in both collective bargaining and the formation of public policy. Although actively dismantled in recent decades as globalization and neoliberalism have taken hold of much of the modern world-system, its future continues to be fought over. It serves as a model for society that is seen to privilege a commitment to decommodification, universal access, and social solidarity as a way to overcome the most prominent contradictions of capitalism. A product of the twinned global crises of the Great Depression and the Second World War, the modern welfare state therefore encapsulates a moment of political and economic settlement, a mechanism of stabilization that arguably could emerge only out of such crises. 

From the outset, technology, particularly information and communication technologies, has played a key role in the development of the welfare state (Hobsbawm 1994). It has been instrumental in the creation of bureaucracies and forms of population management that have long been central to the way the welfare state is administered. Gunnar and Alva Myrdal, for example, famously argued for social engineering based on statistics and the use of technology to solve the population crisis of Sweden in the 1930s and 1940s. Their suggestions are now considered central to the ideas and cornerstones of the Nordic welfare state model (Kananen 2014). The creation of databases and the monitoring of citizens was from early on a fundamental part of assessing population needs and determining allocation of resources, a type of surveillance that has been the subject of much critique for creating categories of “deserving” and “undeserving” citizens (Offe 1984). At the same time, the advent of digitization has also been seen as a challenge to the welfare state and its ability to deliver on its promises, disrupting labor relations, undermining social security, and changing the parameters of state governance. With growing trends such as mass data collection, automation, and artificial intelligence, these tensions have only intensified, putting the welfare state into further question (Petropoulos et al. 2019). 

At the time of writing this introduction, the question of not only the future of the welfare state but also how technology intersects with it has gained new pertinence as we find ourselves in the midst of another global crisis. The global pandemic brought about by the rapid spread of COVID-19 has put social welfare questions and the role of the state at the top of the agenda once more. The crisis is seen to have prompted a return of the Leviathan state, a social contract with an absolute sovereign in which the state provides the ultimate insurance against an intolerable human condition (Mishra 2020), and it has provided renewed impetus for demands for universal health care, stable employment, and a basic income (Standing 2020). Certainly, initial responses to the pandemic and ongoing lockdowns across the world have aligned around state interventions in the economy not seen in a generation, with governments designing various packages of increased public spending, which has (re)invited a rhetoric of the importance of economic planning and strong social security. 

Technology is proving to be at the heart of this crisis and how the welfare state might emerge from it. As “social distancing” speeds up the transition to social and economic life online, often presented as a seamless process, Big Tech has quickly (in partnership with governments) established itself as our (new) infrastructure for everything from health to education to work (Bharthur 2020). At the same time, Big Tech is also presented as a solution to the crisis through extensive data collection, contact tracing, and certification. At the time of writing, the big data analytics company Palantir is in talks with a number of governments, including those of the United Kingdom, Germany, and France, to provide data infrastructure for health services during the pandemic, and Google and Apple have announced a joint venture to develop infrastructure for contact-tracing apps that determine if an individual has been in close proximity to someone COVID-19 positive (Fouquet and Torsoli 2020; Kelion 2020). Furthermore, the EU Commission has requested metadata from large mobile phone carriers, including German Telekom and Orange, to calculate mobility patterns and track the spread of the coronavirus across Europe (Scott, Cerulus, and Kayali 2020). It is claimed that only anonymized and aggregated data will be collected and that data will not be used to control or sanction lockdown measures but to use this data to be able to predict where medical supplies will be needed most. 

These initiatives introduce new questions about the nature of surveillance in governance, the place of data protection frameworks such as the EU’s General Data Protection Regulation (GDPR), and the role of private companies in the delivery of public services that all form an important part of the contemporary debate on technology and the welfare state. As Baker (2020, p. para. 13) puts it, “for governments looking to monitor their citizens even more closely, and companies looking to get rich by doing the same, it would be hard to imagine a more perfect crisis than a global pandemic.” Moreover, the turn to data and the reliance on data-driven systems in governance introduces key epistemological and ontological assumptions about what constitutes relevant social knowledge for decision-making and how individuals and populations should be understood and managed. Data, on this premise, needs to be collected in as large a quantity as possible (total information capture), processed through automation, with the view to calculate all possible outcomes—a knowing of all risks—so as to preempt them before they occur (Andrejevic 2019). While a global crisis like the one we are currently in might present itself as a state of exception in these terms, the trend of datafication across social life is one that was already firmly in place. 

What does it mean to organize the welfare state around this trend of datafication? With this special issue, we take stock of this question and explore the multiple ways in which the practices, values, and logics that underpin the advancement of datafication intersect with the practices, values, and logics that form the basis of the public services that we commonly associate with the modern welfare state. The idea for this special issue emerged out of discussions in the Nordic research network Datafication, Data Inequalities and Data Justice, of which we are both members. It is perhaps no surprise that it is a Nordic context that spurred on the engagement with the welfare state as this has long been a central feature of Nordic societies, both as an idea and in practice. However, the question of how datafication impacts public services, particularly in relation to social welfare, is a global one and one that cannot be universalized, whether in terms of data-driven developments or their implications (Milan and Treré 2019). At the same time, the history of the modern welfare state is one that has most frequently been associated with Europe in what Judt (2007) has described as the “social-democratic moment” of the postwar period. This history is reflected in our contributions that predominantly engage with European and Western settings, while doing so in the context of globalization. Many of the issues discussed in our contributions are being raised elsewhere as technology infrastructures globalize and standardize practices (cf. Booth 2019).

Data Localisation

'“Data localization”: The internet in the balance' by Richard D.Taylor in (2020) 44(8) Telecommunications Policy comments

There is a steady global trend towards “Data Localization,” laws by which data is required to be maintained and processed within the geographic boundaries of its state of origin. This development has raised concerns about its possible adverse impacts on emerging data-intensive technologies such as Cloud services/E-commerce, Big Data, Artificial Intelligence and the Internet of Things (collectively, the Embedded Infosphere). The inability to reach an international agreement on rules for cross-border data flows may have significant adverse consequences for all future users of the Internet. 

The basis of Data Localization is grounded in two distinct but inter-related policy models: Data Sovereignty and Trans-Border Data Flows. These two concepts have different origins. “Data Sovereignty” is derived from the historic power of a state of absolute and exclusive control within its geographic borders. Policies behind TBDFs arose in Europe following World War II, primarily motivated by Nazi use of early proto-computers to help round up Jews and others. As they have evolved, TBDF policies have been directed primarily at protecting personal data and privacy. 

This article first examines the issues of: 1) “Information Sovereignty” and 2) TBDFs. It then describes the arguments for and against “Data Localization,” offers some examples of strong localization policies (Russia, China), and summarizes contesting policy proposals. It then contextualizes TBDF with issues of human rights (free flow of information) and privacy. 

While the utility of an international agreement on TBDFs is clear, the differences in approaches are tenacious. For the free-market developed world (e.g, EU, OECD), the path forward seems to lead through policy convergence to compatible rules, with differentiated levels of data protection and accountability. It is far from clear whether these rules will address, in a mandatory way, issues of the “free flow” of information in the human rights sense. At the same time, there are countries (e.g., BRICS), representing a majority of the world's population, in which political and cultural resistance will produce stringent Cyber Sovereignty and Data Localization policies with few if any human rights components. 

The article concludes that the more the Internet is “localized”, the more attenuated its benefits will become. The negative consequences of Data Localization will become increasingly obvious as new, data-intensive technologies become ubiquitous, creating a condition of “Data Dependence”. It is projected that in the future the nations with the least amount of Data Localization and the most open flow of information will be the most successful in benefiting from new data-intensive embedded, networked technologies. This will most likely be characterized by values adopted as policies and practices in the EU.

Apple and Competition Policy

'The Antitrust Case Against Apple' by Bapu Kotapati, Simon Mutungi, Melissa Newham, Jeff Schroeder, Shili Shao and Melody Wang comments

This article explores several potential antitrust claims against Apple - namely tying, essential facilities, refusal to deal and monopoly leveraging. We argue that the Apple ecosystem's large revenue share in terms of app transactions, lock-in effects and consumers' behavioral bias in online markets give the iPhone maker monopoly power as a mobile platform. Apple has exploited its market power to illegally tie the distribution of digital goods to its proprietary in-app purchase system to impose a 30% tax and extract supracompetitive profits, leading to higher app prices and reduced innovation. Moreover, Apple has excluded rivals and favored its own apps by downgrading competitors' discovery and promotions, blocking certain rivals entirely from the App Store, and limiting others' access to key APIs, in some cases right after copying their apps. In conjunction with the discriminatory application of the 30% tax, Apple's conduct towards major multi-homing apps such as Spotify reduces cross-platform competition with Android. These anticompetitive practices prolong and expand Apple's monopoly at the expense of competition.

Spam

The Australian Communications and Media Authority (ACMA) has announced that dominant retailer Woolworths Group Limited has paid a $1,003,800 infringement notice and agreed to a court-enforceable undertaking in response to significant breaches of the Spam Act 2003 (Cth). The penalty is the largest issued by ACMA under that Act.

 ACMA found over five million breaches of the Act by Woolworths in marketing emails to consumers   between October 2018 and July 2019 after those people had unsubscribed from previous messages. 

ACMA states its investigation found Woolworths’ systems, processes and practices were inadequate to comply with spam rules, with ACMA executive Nerida O’Loughlin  commenting

The spam rules have been in place for seventeen years and Woolworths is a large and sophisticated organisation. The scale and prolonged nature of the non-compliance is inexcusable. Woolworths failed to act even after the ACMA had warned it of potential compliance issues after receiving consumer complaints. 

Consumers claimed that they had tried to unsubscribe on multiple occasions or for highly personal reasons, but their requests were not actioned by Woolworths because of its systems, processes, and practices.

 In its court-enforceable undertaking Woolworths has committed to appoint an independent consultant to review its systems, processes, and procedures, to implement improvements, and to report to ACMA. Woolworths has also committed to undertake training, and to report all non-compliance it identifies to ACMA for the term of the undertaking.

O'Loughlin comments

Our enforcement action, a substantial infringement notice and a comprehensive three-year court-enforceable undertaking, is commensurate to the nature of the conduct, number of consumers impacted and the lack of early and effective action by Woolworths.  CMA’s actions should serve as a reminder to others not to disregard customers’ wishes when it comes to unsubscribing from marketing material.

Competition and Digital Platforms

The Competition and Markets Authority (CMA), the UK’s primary competition and consumer authority ('an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law') has announced a Digital Markets Taskforce with the Information Commissioner's Office and OfCom.

The Taskforce was originally commissioned by the government. It will build on the conclusions of the CMA's  Platforms market study (a counterpart to ACMA's Digital Platforms inquiry), as well as looking more widely across all platforms to consider the functions, processes and powers which may be needed to promote competition. It will advise government on how a new regulatory regime for digital markets should be designed. To inform its work, the CMA is publishing a call for information, and writing to a number of platforms, seeking views and information. The Taskforce will deliver advice to government by the end of 2020.

 The CMA is calling on the UK government to 'introduce a new pro-competition regulatory regime to tackle Google and Facebook’s market power'.

Its media release states

The dynamic nature of digital advertising markets and the types of concerns identified by the Competition and Markets Authority (CMA) in its market study are such that existing laws are not suitable for effective regulation. It is therefore recommending a new pro-competition regulatory regime to govern the behaviour of major platforms funded by digital advertising, like Google and Facebook. 

This recommendation to government is the result of a year-long examination of the markets. The CMA used its statutory information gathering powers to lift the lid on how advertising revenue drives the business model of major platforms. 

The CMA’s concerns 

UK expenditure on digital advertising was around £14bn in 2019, equivalent to about £500 per household. About 80% of this is earned by just 2 companies: Google and Facebook. Google enjoys a more than 90% share of the £7.3 billion search advertising market in the UK, while Facebook has a share of over 50% of the £5.5 billion display advertising market. Google’s revenue per search has more than doubled since 2011, while Facebook’s average revenue per user has increased from less than £5 in 2011 to over £50 in 2019. 

The services provided by Facebook and Google are highly valued by consumers and help many small businesses to reach new customers. While both originally grew by offering better services than the main platforms in the market at the time, the CMA is concerned that they have developed such unassailable market positions that rivals can no longer compete on equal terms: Their large user base is a source of market power – it means that Facebook is a “must-have” network for users to remain in contact with each other, and enables Google to train its search algorithms in ways that other search engines cannot. Each has unmatchable access to user data, allowing them to target advertisements to individual consumers and tailor the services they provide. Both use default settings to nudge people into using their services and giving up their data – for example Google paid around £1.2bn in 2019 to be the default search provider on mobile devices and browsers in the UK, while Facebook requires people to accept personalised advertising as a condition for using their service. Their presence across many different markets, partially acquired through many acquisitions over the years, also makes it harder for rivals to compete. Each of these factors individually presents a potential barrier to new competition, but together they work to reinforce each other and are extremely difficult to overcome. 

These issues matter to consumers. Weak competition in search and social media leads to reduced innovation and choice, as well as to consumers giving up more data than they would like. Further, if the £14bn spend in the UK last year on digital advertising is higher than it would be in a more competitive market, this will be felt in the prices for hotels, flights, consumer electronics, books, insurance and many other products that make heavy use of digital advertising. The CMA found that Google’s prices are around 30% to 40% higher than Bing when comparing like-for-like search terms on desktop and mobile. 

Google and Facebook’s market positions also have a profound impact on newspapers and other publishers. The CMA has found that newspapers are reliant on Google and Facebook for almost 40% of all visits to their sites. This dependency potentially squeezes their share of digital advertising revenues, undermining their ability to produce valuable content. 

The need for a new regime 

The scale and nature of these issues mean that a new pro-competition regulatory regime is needed so that users can continue to benefit from innovative new services; rival businesses can compete on a level playing field and publishers do not find their revenues unduly squeezed. 

The CMA’s proposals are consistent with those made by Professor Jason Furman in his report for the government. 

The CMA has proposed that within the new regime a ‘Digital Markets Unit’ should have the ability to:

• enforce a code of conduct to ensure that platforms with a position of market power, like Google and Facebook, do not engage in exploitative or exclusionary practices, or practices likely to reduce trust and transparency, and to impose fines if necessary. 

• order Google to open up its click and query data to rival search engines to allow them to improve their algorithms so they can properly compete. This would be designed in a way that does not involve the transfer of personal data to avoid privacy concerns. 

• order Facebook to increase its interoperability with competing social media platforms. Platforms would need to secure consumer consent for the use of any of their data. 

• restrict Google’s ability to secure its place as the default search engine on mobile devices and browsers in order to introduce more choice for users. 

• order Facebook to give consumers a choice over whether to receive personalised advertising. 

• introduce a “fairness-by-design” duty on the platforms to ensure that they are making it as easy as possible for users to make meaningful choices. 

• order the separation of platforms where necessary to ensure healthy competition. 

Whilst this recommendation is UK-focused, many of the problems that the CMA has identified are international in nature. It will therefore continue to take a leading role globally in relation to these issues as part of the CMA’s wider digital strategy. .... 

Our clear recommendation to government is that a new pro-competitive regulatory regime be established to address the concerns we have identified and regulate a sector which is central to all our lives. 

Privacy 

Safeguarding people’s control over their data is paramount to privacy as well as to the healthy operation of the market, so the CMA has worked with the Information Commissioner’s Office (ICO) to examine the impact of privacy regulation on the market. 

The General Data Protection Regulation is still in its early stages and the CMA is concerned that big platforms could be interpreting it in a way which favours their business models, instead of in a way which gives users control of their data. For example, big platforms might share user data freely across their own sizeable business ecosystem, while at the same time refusing to share data with reputable third parties – which could have a detrimental impact on smaller players. 

The CMA’s market study advocates a competitive-neutral approach to implementing privacy regulation, so that the big platforms are not able to exploit privacy regulation to their advantage. It will be working with the ICO and Ofcom further to address these issues through the Digital Regulation Cooperation Forum, the details of which were also published today.

Census

'Census Technology, Politics, and Institutional Change, 1790–2020' by Steven Ruggles and Diana L Magnuson in (2020) 107(1) Journal of American History 19–51 comments

A census is a political construct that reflects the ideological orientation of its creators. Legislators, intellectuals, and the public have contested the content and purposes of the U.S. census for 230 years. In each period, the meaning and uses of the census reflected the politics and priorities of the moment. In the 1850s, census planners suppressed information about slavery at the behest of southern legislators; in the 1880s, the census director promoted nativist theories of race suicide; and in the 1940s, census officials helped plan Japanese internment. The census is inherently political: its original purpose was reapportionment of political representation, and in virtually every decade, winners and losers of the demographic contest have debated the legitimacy of the results. In one case — the census of 1920 — the results were ignored altogether and no reapportionment took place, as rural legislators feared losing power to the cities. 

Political considerations shaped not only the content and applications of the census but also the mechanics of census taking. This essay traces the history of U.S. census data capture and processing, which we define as the methods and technologies used to transform raw census responses into statistical tables. By focusing on federal responses to specific technical challenges over a very long span, our narrative illuminates the long-run effects of shifting societal preoccupations on bureaucratic decision making. More broadly, the case study of the census reveals the critical and shifting role of state and political forces in the development of technology. 

Census technology was constrained and enabled by historical actors who operated within shifting institutional structures and who responded to specific political pressures and practical bottlenecks. Before 1850, census data capture and processing was decentralized, carried out by temporary piecework employees who went door to door gathering information. This system broke down with scandalous errors in 1840, leading in 1850 to radical redesign of the census form and the methods of data processing. From 1850 to 1880, the Census Office struggled to tabulate the enumeration using paper “spreadsheets” and tally marks. With increasing population, a growing number of census questions, and rising demand for detailed tabulations, by the 1880s the Census Office was responsible for the world’s largest data-processing operation, and the tally-mark system was inadequate to the challenge. 

Two disruptive paradigm shifts transformed the technology of census data capture. The first shift occurred in 1890, when the census introduced punch cards and electromechanical tabulators. The second shift occurred seven decades later, when the Census Bureau eliminated punch cards and tabulators in favor of electronic data capture and processing. Each of these technological revolutions was triggered by census administrators responding to bottlenecks in data capture and processing. In each case the major initial innovations led to decades of incremental improvements within both the Census Bureau and the private sector. 

The history of census technology may be read as a contest between public and private actors and institutions. Census innovation spin-offs led to the development of the two largest data-processing companies of the twentieth century. For most of the twentieth century, however, Census Bureau administrators adamantly resisted private sector intrusion into data-capture and data-processing operations. Beginning in 1907, the Census Bureau maintained its own machine shop that designed and manufactured data-processing equipment, in direct competition with machinery produced by the private sector. For nine decades the Census Bureau was able to maintain bureaucratic autonomy, doing their data capture and processing in-house, mainly using purpose-built equipment engineered and manufactured by Census Bureau staff. As the political scientist Daniel Carpenter has shown, similar bureaucratic autonomy occurred across a variety of federal agencies where midlevel staff developed capabilities that enabled the agencies to resist political pressures. 

Census Bureau autonomy ended abruptly in the 1990s. Ideological shifts of the late twentieth century redefined the role of government. Under pressure from the Clinton administration, the Census Bureau privatized data capture. In 1996 the Census Bureau closed its machine shop and began to outsource census data-capture operations to private vendors. Privatization led to rapidly escalating costs, reduced productivity, and near-catastrophic failures of the 2000 and 2010 censuses. As we approach the 2020 census, the risk of a major failure in data capture and processing is palpable.

Misfeasance

In Brett Cattle Company Pty Ltd v Minister for Agriculture [2020] FCA 732 Rares J in the Federal Court of Australia (FCA) has ruled that the then-Minister of Agriculture committed misfeasance in public office by recklessly prohibiting the export of livestock from Australia to Indonesia.

The Court found that the Minister's order was invalid because it prohibited all the exports without any provision allowing for the exceptions to allow exporters to carry on the existing lawful business. The Minister committed the tort of misfeasance in public office because he acted recklessly as to both his power to make the Second Control Order and the fact that persons engaged in the live export trade to Indonesia would suffer harm from it unjustifiably, for the reasons at [364]–[395] of the judgment.

Brett was awarded $2,936,629.99, inclusive of interest, with Senator Ludwig and the Commonwealth paying Brett's costs.

 Rares J states

This representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth) arises from the public outcry following the broadcast by the Australian Broadcasting Corporation (ABC) on 30 May 2011, on its Four Corners program, of graphic video footage of inhumane slaughter of Australian cattle exported to Indonesia. On 7 June 2011 the then Minister for Agriculture, Fisheries and Forestry, Senator the Hon Joe Ludwig, decided to make the Export Control (Export of Live-stock to the Republic of Indonesia) Order 2011 (the Ban Order) that prohibited the export of livestock to Indonesia for 6 months. The Export Control Act 1982 (Cth) gave the Minister extensive powers to prohibit export of livestock absolutely or to particular places or on conditions. In 2010 Australia exported nearly 520,000 head of cattle to Indonesia worth about $400 million, out of a total of about 875,000 head exported worldwide in that year worth about $684 million.

Brett Cattle Company Pty Ltd, the applicant, operated Waterloo Station, a property of nearly 189,500 hectares located about 540 kilometres south-west of Katherine in the Northern Territory. Brett Cattle had about 17,300 head of cattle at the beginning of 2011. It was one of many live cattle exporters and others involved in the live export market to Indonesia market who were affected by the Ban Order. It claimed that it had lost the opportunity to sell about 2,776 head, principally into that market in 2011 because of the impact of the Ban Order and to have suffered losses totalling about $2.5 million.

Brett Cattle alleged that the Minister committed the tort of misfeasance in public office by making the Ban Order recklessly. In essence, Brett Cattle claimed that the Minister had abused, or misused, his power to make the Ban Order. That was because Brett Cattle asserted, first, he did not care whether it would be valid or not and he knew that there was a real risk that it might not be. He had no legal advice that he could make it. Secondly, it asserted that he knew, or did not care, that the order would cause significant economic harm to persons, such as Brett Cattle, involved in exporting live cattle to Indonesia. Thus, to prove this allegation, Brett Cattle had to establish both that the Ban Order was invalid and that if it was, the Minister had acted recklessly in making it. The Commonwealth accepted that it would meet any damages or costs for which the Minister is found liable.

In representative proceedings, the Court can resolve issues of fact and law involving the representative applicant and the respondent(s) that are common to claims that other group members also have against the same respondent(s). Here, members of the group are likely to claim that they have suffered losses as a result of the Ban Order. There were several common issues of fact and law resolved in this proceeding that also appear to be relevant to claims of other group members.

The live animal export trade had a history of instances in which graphic television footage exposed examples of inhumane treatment. One example was on 26 February 2006, when the current affairs program, 60 Minutes, broadcast footage depicting mistreatment of cattle in Egypt. That generated public debate which culminated in one of the Minister’s predecessors using his power under the Export Control Act to prohibit the export of livestock to Egypt. That led to the Australian and Egyptian Governments negotiating a solution that resulted in a new feedlot and abattoir facility being built at an Egyptian port to operate as a closed loop system. Such a system requires each animal to be tagged before export so as to ensure that it can be traced and stays within the system at all times up to its slaughter. The tags are usually machine readable. Their purpose is to guard against “leakage”: that is, the risk of cattle being diverted out of the closed loop system and thus subjected to inhumane treatment. The Egyptian market imported only about 30,000 head and had very few (approved) facilities. It was much smaller compared with the Indonesian market, which had about 80 to 90 feedlots (in which cattle are fattened for about 3 months before being sent for slaughter) and over 350 slaughtering facilities.

Both Australia and Indonesia were members of the World Organisation for Animal Health, known by the acronym OIE. The OIE had developed a code (the OIE Code) that set out guidelines of minimum standards for the humane and appropriate treatment of animals throughout their lives, including during transport, their conditions when in feedlots and up to and including the moment of slaughter.

When Senator Ludwig became the Minister in September 2010, the Minister’s Department briefed him about his new portfolio. One issue that arose early in the Minister’s term of office was about whether the live cattle export industry had taken appropriate steps in Indonesia to ensure the welfare and humane treatment of cattle, especially in the slaughtering process. Many slaughterhouses there were small, unsophisticated facilities that killed about 2 to 5 head per night.

The Australian Government and industry bodies had sponsored the use of restraining boxes in Indonesian abattoirs and slaughterhouses. The boxes were designed to hold an animal immediately before its slaughter in order to decrease its stress and avoid more primitive methods of restraint, such as severing a tendon, gouging an eye or hoisting it aloft. The most commonly used restraining box was known as a “Mark I” box. However, between 2009 and up to early June 2011 there were conflicting views about both the efficacy and the manner of use of Mark I boxes in Indonesia. Animal welfare bodies contended that they did not provide humane means for the slaughter of animals while the live cattle export industry and the Australian Government supported their use by trained workers. The Department and the various parties involved in the debate on the utility of the Mark I boxes communicated their views to the Minister in the period leading up to the Four Corners broadcast.

On 1 December 2010 the ABC broadcast footage on the 7.30 Report that depicted poor handling, transport and slaughtering of sheep in the Middle East. In response, on 17 January 2011, the Minister wrote to the Australian Livestock Exporters’ Council (ALEC) saying that the Government was very concerned about the mistreatment of animals. He invited the industry to provide advice about using closed loop systems for all livestock exports in other markets, similar to that in use in trade to Egypt.

On 30 March 2011, ALEC informed the Department that Animals Australia had footage of animals being slaughtered in 4 Indonesian cities and, although ALEC did not know what the footage depicted, it was “very nervous”. This was the footage that Four Corners came to broadcast two months later.

The Department gave the Minister “talking points” on 31 March 2011 that referred to the unreleased footage. Those

included the statement that “stopping the live trade will not improve animal welfare in any of the countries we currently export to”. On 1 April 2011, the Minister made a speech to the Northern Territory Cattleman’s Conference in which he stressed the Government’s support for the live export trade. He also said that he had asked those in the industry to “review the progress they are making on improving animal handling practices in importing countries as well as other ways to achieve higher standards of animal welfare”. The Minister had a discussion there with Troy Setter who was then Chief Operating Officer of the Australian Agricultural Company (AACo) and previously had been Darwin Manager of North Australian Cattle Co (NACC), a subsidiary of Elders Ltd and one of the world’s largest cattle exporters.

Mr Setter told the Minister that “we’ve heard that animal activists have been taking footage in Indonesia”. The Minister told Mr Setter that the trade was important to Australia and that the industry and Government had to continue to work together. He said that the Government understood the challenges. Mr Setter said that Indonesia was a difficult market because not every supply chain was the same. He told the Minister that large exporters, such as Elders, through NACC, AACo and 2 large Indonesian importers, Santori and TUM had “closed supply chains where they have full control of their cattle”, but that not every other supply chain did. The Minister stated that “we will need to work together; we will stick with you, Troy; we will stick with the industry”.

Mr Setter’s information was partially correct. As at April 2011, Elders (through its subsidiary Elders Indonesia) and Santori could operate closed loop supply chains for cattle that they processed in their own feedlots and abattoirs in Indonesia. As at April 2011, TUM and another Indonesian company known as AGP had closed loop supply chains up to when cattle left their feedlots. However, TUM only began building a large commercial abattoir after the Ban Order, that became operational by late August 2011. AGP supplied to 22 abattoirs that it caused to be upgraded between 7 June 2011 and 31 December 2011. As at April 2011 each of those four closed loop systems had standards at least compliant with the OIE Code, and both TUM’s own and AGP’s various customer abattoirs did so after their construction or upgrade.

On 4 April 2011, Brett Cattle entered into a contract to sell NACC 3,200 head for delivery on about 31 May 2011. In the event, the ship on which those cattle were to be loaded was to be delayed because of the Ban Order and they remained at Waterloo Station. NACC cancelled that contract on 13 July 2011 because it could not obtain an export permit. Brett Cattle claimed damages for the loss of this contract and other sales and its incurring about $1 million extra expenses in having to send its surplus stock to agistment.

On 29 April 2011, the Department briefed the Minister with a Departmental minute on possible responses to the foreshadowed Four Corners broadcast, particularly if it aired footage of facilities to which the Australian Government had provided funding. The Department made no suggestion about any possible prohibition of trade to Indonesia. The minute noted that “a target of 100% compliance for all shipments with the OIE Code” was “unlikely to be achieved other than through a closed loop system.”

On Monday, 30 May 2011, before the Four Corners broadcast, the Department provided the Minister with an urgent minute containing suggested responses to the program. Those included that he had powers under legislation to make orders, that had the same legal effect as a regulation made under an Act, to specify facilities to which exports could not occur. However, such orders could be disallowed. The minute noted that making an order could raise community expectations that the Government was taking a stronger role in enforcing animal welfare overseas which would be very difficult to enforce. The Department recommended that the Minister continue to work collaboratively with the industry to encourage producers and others, voluntarily to restrict supply of Australian cattle only to abattoirs that had the potential to achieve OIE standards of animal welfare in a reasonable time, and, if that provided insufficient, to revisit the situation then.

The minute also attached “high level”, namely very general, undated legal advice by Blake Dawson and advice dated 25 May 2011 from the Australian Government Solicitor. Blake Dawson advised about four options, discussed earlier on 19 May 2011, none of which involved the use of the Minister’s powers under the Export Control Act or a total prohibition on all exports. The Government Solicitor’s advice dealt with creating offences for Australian companies or individuals in respect of activities overseas that adversely affected Australian Cattle exported there.

The broadcast

At about 8.30pm on 30 May 2011, the ABC broadcast the Four Corners program titled “A Bloody Business”. Kerry O’Brien introduced it, saying with telling accuracy, that it was “a program that will shock you”. The footage in the program depicted appalling cruelty to cattle in a significant number of Indonesian slaughterhouses and several scenes showing uses of the Mark I boxes that subjected animals to very poor treatment. It included interviews with experts, persons concerned with promoting animal welfare and those in the industry, all of whom condemned the practices shown in the footage.

At the end of the program, Mr O’Brien informed viewers, that after viewing some of the broadcast footage in the preceding week, the industry had announced that it had immediately moved to suspend the supply of Australian cattle to three abattoirs. But, he said, as recently as the evening before the broadcast, Australian cattle were still being slaughtered at one of them. At the very end of the program Mr O’Brien told viewers: Although he chose not to be interviewed for the story, the Minister, Joe Ludwig, said in a statement that despite the improvement of animal welfare over the past decade due to industry and Government efforts, he accepts that more work needs to be done.

Something of an understatement.

Later on 30 May 2011, the Minister issued a media release expressing his shock at what he had viewed on the broadcast. He said that he had directed the Department that night to place a moratorium on the installation of new Mark I boxes using Commonwealth funds. He also said that he had asked the Chief Veterinary Officer to coordinate an independent scientific review of the Mark I boxes and had directed his Department to give him a thorough briefing on all available legislative and regulatory responses “including the banning of trade to specific facilities or destinations”.

During the broadcast, Blake Dawson gave updated advice to the Department on the basis that the Minister had become “open to taking more direct action in terms of a prohibition”. Blake Dawson referred to the Minister’s powers under the Export Control Act to make an order prohibiting the export of goods absolutely or to specified places on a condition or both. They said that however, such an order could be disallowed by a resolution of either the House of Representatives or the Senate, but that a resolution for disallowance might not be attractive if the order was clearly based on animal welfare concerns in the importing countries or facilities.

The aftermath

The broadcast caused an immediate public furore and presented the Government (of Prime Minister the Hon Julia Gillard MP) and, particular, the Minister with a major political crisis as to how it should respond to what had been shown on the program. The Minister gave media interviews the next day, promising that the Government “will be responding to the footage in a comprehensive and considered way”. He told the meeting of the Australian Labor Party caucus on 31 May 2011 that a decision to suspend, ban or phase out live animal exports “would have serious consequences”.

On 31 May 2011, Andrew Wilkie MP, an independent member of the House of Representatives, foreshadowed the introduction of a private members Bill to ban live cattle exports. The RSPCA provided the Minister with further video material and its scientific assessment of what all the footage depicted at 12 named Indonesian facilities. Later on 31 May 2011 the Minister announced at a press conference that he had put in place steps to suspend exports to those 12 facilities. He said that “Indonesia has substantially good abattoirs”, but he left “on the table” a total ban of live export there to ensure acceptable animal welfare outcomes.

On 2 June 2011 the Minister made a control order prohibiting the export of live animals to the 12 facilities. But he included an important exceptions power in that order. That power allowed the Minister to grant approval for export to any of the 12 facilities subject to, first, his being satisfied that slaughter and related operations were being, or would be within a reasonable time, conducted in accordance with relevant provisions of the OIE Code and, secondly, any other conditions he imposed. The exceptions power also allowed the Minister to revoke an approval if there was non-compliance. In other words, the exceptions power in the First Control Order gave the Minister flexibility to allow exports in the future to any of the 12 facilities if he were satisfied that it had taken appropriate measures to ensure the animals would be treated humanely and at least in accordance with the requirements of the OIE Code.

Also on 2 June 2011, the Department provided the Minister with a minute about his future regulatory options together with a draft letter to the Prime Minister. The minute contained recommendations to Cabinet including that, first, there be a compliance regime for live cattle exports for slaughter that allowed an export permit to be granted only if the exporter could verify that there was full control of the welfare of the animals at least consistent with the OIE code up to and including the point of slaughter and, secondly, until that compliance regime was implemented, there be a total ban of all live cattle exports for slaughter to any country except one in which there was a closed loop system in place that met that standard of animal welfare (being effectively, only Egypt). The minute advised that a broad prohibition of trade could be enforced relatively easily whereas a targeted prohibition was more difficult to enforce because of ongoing monitoring requirements and the need for full support of foreign governments.

The draft letter to the Prime Minister noted that the live animal trade was worth about $1 billion annually and supported 10,000 jobs, mostly in Northern Australia. It gave the detailed information about the size and value of the live cattle trade that I set out earlier. The draft letter stated that Indonesia and other nations were unlikely fully to support the Minister’s proposal and that, in Indonesia’s case, it may also cause friction.

The Minister had a two hour long meeting on 2 June 2011 with Don Heatley, the chairman of MLA and Jock Lawrie, the president of the National Farmers Federation. During that meeting Mr Heatley told the Minister that there already were some supply chains in Indonesia better than others, such as Elders, which had a world class abattoir there. He said that there were about 5 abattoirs that could achieve OIE standards very quickly (including Elders, if it did not already do so) and a total of about 25 facilities that could do so in about 2 weeks. He told the Minister that there could not be “a complete fix overnight” and that, based on his experience, there were sovereignty issues in Indonesia related to Australia seeking to impose its will on the Indonesian Government or industry. Mr Heatley said that he did not believe that Indonesia would accept a cessation of trade very well. The Minister said to him “your social licence is lost”.

On 3 June 2011, the public debate continued and a range of interested parties made yet more representations to the Minister. The Australian Greens announced that they would seek to introduce Bills in each House of the Parliament to ban live exports. Get Up commenced a public campaign in association with the RSPCA and Animals Australia to promote such a ban. The Australian Meat Industry Council, which represented the interests of producers who slaughtered animals in Australia and exported chilled or frozen meat, joined in support of a ban. The live export industry proposed a new plan that, however, did not provide an immediate solution. One major exporter, Wellard Rural Exports Pty Ltd, wrote to the Minister with its own plan. This required the exporter, importer and abattoir to contract to ensure every animal would be fully traceable and that the abattoir would comply with the OIE Code.

The Minister’s staff obtained information that about 25,000 head were already in transit to Indonesia and that 3 export permits for another 12,500 head had been granted, including one for 1,900 head at Port Hedland to load on Falconia which was expected to sail on 5 or 6 June 2011.

Over the weekend of 4 and 5 June 2011, officials and Ministerial staff worked on what the Minister could consider. Late on the Saturday evening, the Department sought urgent legal advice from the Government Solicitor about a possible temporary ban on the trade with Indonesia, the Minister’s powers and the most effective way to do so.

On Sunday 5 June 2011 an officer of the Department of Prime Minister and Cabinet wrote to a Deputy Secretary of the Department expressing concern about the Minister bringing the matter to Cabinet without papers or consultation including as to the likely impact on relations with Indonesia. He emphasised the need for legal advice on the Commonwealth’s potential exposure to claims for compensation from industry players affected by a ban on trade.

In the afternoon on 5 June 2011 the Minister, his staff and officers of the Department met. The Minister sought more information about, first, the estimated cost of claims for compensation for detriment caused by defective administration if there were a temporary ban, secondly, animal welfare and, thirdly, economic impacts. Thus, the Minister was conscious of the potential that any control order imposing a ban could be invalid and create possible claims for compensation.

Later in the evening on 5 June 2011, the Government Solicitor wrote back to the Department saying that they were “flying somewhat blind” in providing the advice just sought because they had no familiarity with the contracts, live export industry or possible claimants. A Deputy Secretary responded saying that the main focus was to get a legal opinion on the Government’s exposure to claims for compensation if there were a temporary or permanent ban on live cattle exports for slaughter. The Minister’s office also asked the Department for a high level minute for the Cabinet meeting the next evening that, among other matters covered, a possible suspension of live cattle only to Indonesia.

On 6 June 2011 the Department provided several minutes to the Minister. Relevantly, one minute included two versions of a draft letter to the Prime Minister, recommendations for a worldwide ban for Cabinet’s consideration that were substantially the same as the recommendations of 2 June 2011 and draft “talking points” for the Minister to use. The talking points included a statement that a ban on live cattle exports would have “dramatic” effects on the industry and communities that depended on it, as well as adverse effects on Australia’s trading partners. They anticipated that it would take 6 months to develop a compliance regime.

Another minute informed the Minister that Australia supplied 100% of Indonesia’s live export needs. It said that there had been previous suspensions of live animal trade but the only one challenged in litigation had settled at a mediation, without the minute revealing the basis of the claim or settlement. Importantly, the minute also said that Indonesia’s Ambassador and its Perth Consul-General had apologised for the mistreatment of animals shown on Four Corners. It advised the Minister that the diplomats and the Indonesian Department of Agriculture had said that those slaughtering methods were not halal and that they were “keen to work with Australia to resolve the issue”. It warned that a ban on exports in the lead up to the forthcoming Ramadan period “could trigger retaliatory actions”. Despite this, there was no evidence that, before making the Ban Order, the Minister made any contact with his Indonesian counterpart or otherwise attempted to “work with” that nation on a resolution.

Also on 6 June 2011, the Department sent the Minister a minute with draft advices from Blake Dawson and the Government Solicitor. Each draft advice was in general terms and did not refer to a possible control order prohibiting trade only to Indonesia or to the terms of any such order, let alone give any draft advice about it. The Government Solicitor’s draft advice stated that it assumed that the Minister would make a control order “in accordance with the legislative requirements”. Neither advice discussed what the Minister needed to consider in framing a control order in accordance with those legislative requirements. No legal advice discussed whether a control order should have a similar exceptions power as the First Control Order contained and if not, why.

The Secretary of the Department, Dr Conall O’Connell, gave evidence that in the afternoon of 6 June 2011, before Cabinet met, he gave oral advice to the Minister consistent with the written advice that he had given “as the Department”. He told the Minister that in order to meet the Government’s objective that all Australian animals going through foreign supply chains be treated in accordance with proper animal welfare standards, an interim suspension of trade would be necessary while the Department put in place a regulatory framework. Dr O’Connell said that this work could take six months.

The Minister gave no evidence at the hearing. There were very few documents in evidence that one can say that he must have seen. He put no written submission or other document before Cabinet at its meeting on 6 June 2011. After Cabinet met, the Minister decided to make the Ban Order to impose a complete suspension of livestock exports for slaughter to Indonesia for a maximum period of 6 months. The Minister caused the Prime Minister’s chief of staff to be informed that night that he believed he had a duty to stop all further shipments. The next ship was due to sail on Wednesday 8 June 2011. The Minister also conveyed his concern that he may have had some unspecified exposure if he did not act immediately. On 6 and 7 June 2011, Elders made enquiries of the Department, including through its chief executive, Malcolm Jackman, speaking directly to the Secretary about why Falconia was not being allowed to load its cargo of 1,900 head. The official’s response to Elders’ queries was that the Department could not comment about when, or if, permission to load would be given.

At some time on 7 June 2011, the Minister signed the Ban Order. It was registered at 9.30pm that night to come into force on 8 June 2011.

Also on 7 June 2011, after he made the decision, the Minister spoke to the Indonesian Minister for Agriculture to inform him of it. Minister Suswono subsequently expressed his displeasure publicly and delayed the announcement, due on 1 July 2011, of Indonesia’s import quotas until 6 July 2011, when he contacted the Australian Ambassador in Jakarta to say that Indonesia was ready to support the issue of import permits. He invited Australia to lift the temporary suspension of trade which, he said, Indonesia would find acceptable.

Conclusions

I have found that the Minister saw and read the various Departmental minutes. In addition, he had also received, from Mr Setter and Mr Heatley, the information about the situation in Indonesia relating to actual and potential closed loop supply chains that had, or readily could have, animal welfare standards at least consistent with the OIE Code that I have described earlier. And, he received advice from Dr O’Connell, on 6 June 2011 that was consistent with the Departments’ written advices.

A regulatory measure, such as the Ban Order, must be a proportionate response to meet the situation that it is intended to address. The law requires a decision-maker, when using a wide power, like the Minister’s powers under the Export Control Act, not to make unnecessary limitations on the common law right of persons to carry on their lawful business. One test to ascertain if a provision is unnecessary, is to consider if there is an obvious and compelling alternative.

Here, the Minister had included an exceptions power in the First Control Order that banned trade to the 12 named abattoirs. Yet, 5 days later, in the Ban Order, he imposed an absolute prohibition on all livestock export to Indonesia for slaughter without ever considering including the same or a similar exceptions power in it. He gave no reasons for omitting an exceptions power. He had no advice at all about doing so from the Department or lawyers. And, he knew that the omission would have a significant economic impact on persons who could comply, immediately or relatively quickly, with what his intended regulatory and compliance regime would require, namely a closed loop supply chain with animal welfare standards at least consistent with the OIE Code.

I have found that the Ban Order was invalid. That was because it prohibited all exports without any provision allowing him to make exceptions so as to allow exporters to carry on their lawful business where they already did, or readily could, have a closed loop supply chain in Indonesia with animal welfare standards at least equivalent to those in the OIE Code. Such a total prohibition was capricious and unreasonable and made the Ban Order invalid.

When he made the Ban Order, the Minister knew that:

• it would prohibit any exports to Indonesia without any exception in an industry that in 2010 had exported over 500,000 live cattle worth about $400 million; 

• the industry representatives had told him that there were supply chains in Indonesia that had, or readily could be, adjusted to have a closed loop system with animal welfare standards that were at least compliant with the OIE Code; 

• he had made no attempt to explore agreeing an appropriate solution with the Indonesian Government and that an order prohibiting all exports there would cause that Government concern; 

• he had no Departmental advice to make an order in a form that affected only exports to Indonesia; 

• he had no legal advice that he could make lawfully the, or any, order in such a form; and there was a real risk that, if he made the order in the form he adopted, it might be invalid.  

Yet, with that knowledge the Minister plunged ahead regardless. He made the Ban Order shutting his eyes to the risk that it might be invalid and to the damage that it was calculated to cause persons in the position of Brett Cattle. I am comfortably satisfied, based on the whole of the evidence, that the Minister was recklessly indifferent as to first, the availability of his power to make the Ban Order in its absolutely prohibitory terms without providing any power of exception and, secondly, as to the injury which the order, when effectual, was calculated to produce. Accordingly, the Minister committed misfeasance in public office when he made the Ban Order on 7 June 2011.

I have found that, had the Minister acted lawfully, he would have made a control order on about 9 or 10 June 2011 that contained an exceptions power and that Elders and Santori would have been able to obtain approvals to export to Indonesia under it without delay. I also found that AGP could have satisfied the Minister that he should grant an export permit allowing exports destined for one of its customer abattoirs within about 2 weeks and export permits in respect of 2 other abattoirs very soon after, as in fact occurred once the Minister had implemented, on 27 June 2011 a new Export Supply Chain Assurance System. That system allowed trade to resume after he repealed the Ban Order on 7 July 2011.

I concluded that it is likely that significantly more than the total of about 412,000 head exported in 2011 would have been exported to Indonesia had the Minister made, instead of the Ban Order, an order with an exceptions power. However, the parties will need to consider the calculation of the scale of the increase in exports in light of my findings.

Accordingly, Brett Cattle is entitled to substantial damages and that the Minister and the Commonwealth must pay its costs of the proceeding. The parties will need to return to Court to assist in the finalisation of orders to give effect to my reasons and to deal with what needs to be done to enable group members to be compensated.

ICAC

The New South Wales Parliamentary Committee on the Independent Commission Against Corruption (ICAC) has released a discussion paper on the reputational impact on an individual being adversely named in the ICAC’s investigations.

The Terms of Reference for the inquiry are

That the Committee on the Independent Commission Against Corruption (ICAC) inquire into and report on the reputational impact on an individual being adversely named in the ICAC's investigations, with particular reference to:

• whether the existing safeguards and remedies, and how they are being used, are adequate, and 

• whether additional safeguards and remedies are needed, and 

• whether an exoneration protocol should be developed to deal with reputational impact, and 

• relevant practices in other jurisdictions, and 

• any other related matters.

The discussion paper states -

The Committee's 2019 Review of the 2017-2018 Annual Reports of the ICAC and the Inspector of the ICAC found that:

• the reputational impact experienced by people named in investigations of the ICAC can be serious, and is not addressed fully by the available remedies, and 

• an exoneration protocol is one possible remedy available to address the reputational impact of being named in the investigations of the ICAC.

The paper comments

The Committee is aware of examples of individuals concerned about reputational impact from being adversely named in the ICAC's investigations and the lack of suitable safeguards or remedies to address these circumstances. 

In the Committee's recent report, the Committee recommended that it reviews the Independent Commission Against Corruption Act 1988 (ICAC Act) in 2021 to determine whether it continues to be effective and appropriate. The Committee anticipates that this will be a broad review into the operation of the ICAC and the Inspector of the ICAC and the efficacy of the legislation. 

However, the Committee wants to pursue a separate inquiry into the specific issue of reputational impact on individuals being adversely named in the ICAC's investigations. 

The Committee acknowledges that the issue of reputational impact and an exoneration protocol have been considered by it and others previously. However, the Committee considers that this is an important issue which calls for further review.