Personalized commercial practices and digital market manipulation: enhancing fairness in consumer protection

Project Information

FairPersonalization

Grant agreement ID: 897310

DOI

10.3030/897310

Project closed

EC signature date 11 March 2020

Start date 1 February 2021

End date 31 July 2022

Funded under

• EXCELLENT SCIENCE - Marie Skłodowska-Curie Actions

Total cost

€ 131 679,36

EU contribution

€ 131 679,36

Coordinated by

UNIVERSITEIT VAN AMSTERDAM
Netherlands

Periodic Reporting for period 1 - FairPersonalization (Personalized commercial practices and digital market manipulation: enhancing fairness in consumer protection)

Reporting period: 2021-02-01 to 2022-07-31

Summary of the context and overall objectives of the project

It is widely acknowledged that the majority of business-to-consumer (B2C) interaction is based on consumer profiling and that individuals’ data are increasingly used as a tool to elaborate and deliver personalized products and services.
With the development of automated analysis strategies and AI-based techniques, firms are able to personalize different aspects of commercial interaction, ranging from the modes of the offer—e.g. via behavioural advertising and microtargeting—to the prices and even the specific features of products.
In general terms, it has been observed that these practices are—or at least can be—welfare-enhancing if they are properly regulated. At the same time, risks related to unregulated abuse of personalized commercial practices are present and significant: using personalizing technologies to match individual users to target audiences and even to create predictive profiles might result inter alia in violation of users’ data protection and privacy, unjust discrimination based on the analysis of protected factors, and manipulation of consumers’ decision making to the detriment of competitors.
These risks operate at the crossroads of different interests and rights related to individuals and to the market as a whole; it is no surprise, therefore, that in recent times, profiling and microtargeting have found themselves at the centre of the scholarly and regulatory debate across the USA and Europe
Building on, and expanding, existing literature, the project's goal was to the effects of tailored commercial practices on consumers behaviour, contextualizing and extending the results from the main theoretical and empirical studies on the impact of targeted and personalized offers, to pinpoint their risky consequences and ultimately improve and reinterpret the existing the regulatory framework. At the same time, the project aimed at investigating how the traditional legal notions of unfairness, deception, consent and awareness could have been developed to deal with the personalization of products.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

The goal of the project was to investigate how the use of personalized and tailored offers affects the individual propensity to consume and inspect the effect of information regarding personalization in order to eventually mitigate it (Goal 1). On the basis of these analyses, the project was then aimed at critically assessing the appropriateness of the current and forthcoming regulatory framework (Goal 2), identifying new forms of interplays between actors involved in digital markets (Goal 3) and ultimately promoting innovative regulatory strategies (Goal 4).
The work performed to achieve these goals can be illustrated by referring to the 6 Working Packages (WPs) constituting the project:
WP1 was devoted to investigating the impact of personalized practices on the propensity to consume and, more in general, on individuals’ decision-making, as well as to inspect the impact of disclosure on these aspects. This task has been carried out by analyzing relevant literature but, mostly, by conducting empirical research on such aspects.
WP2 was essentially devoted to conducting literature analysis and assessing the conditions under which tailored commercial practices could be considered manipulative or deceptive.
WP3 was focused on establishing whether consumer protection could rely on its traditional theoretical notion and appraisal dynamics when dealing with personalized commercial practices, and it involved mainly literature analysis and conceptual investigations in order to identify potential shortcomings in the current regulatory framework. The target of the research were mostly referred to the dogmatical understanding of the conceptual underpinnings of consumer protection – such as the individual decision-making theory– and the determinants of its structures (e.g. the disclosure paradigm). The result of these research activities are mainly found in the articles published in Comparative Law Review and in European Review of Contract Law, which overall aim is to lay the foundation for a revisitation of the traditional conception of consumer decision-making in the digital environment.
Building on the studies conducted in WPs 1, 2 and 3, WPs 4 and 5 aimed at embracing a de jure condendo perspective, by suggesting regulatory proposals and policy options that could tackle the various critical aspects identified in the previous WPs, according to the conceptual ground laid down in previous publications, as well as to provide an overall evaluation of the findings of the project.
WP6 essentially refers to training, dissemination and communication activities. These activities have been conducted during the overall project, by means of events organized for specific academic/professional audiences and activities for the general public of users and consumers. Dissemination and communication activities were cured on a multi-modal perspective, which considered both traditional venues of dissemination (e.g. peer-reviewed journals) and digital products (e.g. communication videos).

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

The project allowed for significant advances beyond the state of the art: experimental and empirical researches considering the impact on personalized offers on consumers significantly advanced the understanding regarding the determinants of decision-making and awareness in consumers when dealing with such techniques. Additionally, it demonstrates that prompting people to reflect on the targeted dimension for personalized services by introducing relational disclosures—instead of the current individual format—boosts their subjective understanding regarding the functioning of personalization algorithms as well as their willingness to adhere to processes based on profiling, e.g. by providing further data to the service platform.
At the same time, the project allowed for the development of a theoretical framework considering the relationality of decision-making as a structural element to be kept present when considering consumption dynamics.
The project's investigations suggest that capacity to understand the meaning of our choices as consumers – and, therefore, to exercise our will – necessarily implies the ability to locate our decisions within the social context surrounding us.
Henceforth, it promotes the idea of integrating relationality not only as a mode of disclosure to improve the parties’ awareness regarding personalized interactions, but also as an essential pre-condition for an aware exercise of private autonomy currently involves a paramount element of speculation.
While providing a first theoretical framework for this theory, the project also tested it in different settings (streaming services, privacy terms and conditions, etc.) in order to support theoretical findings with sound empirical evidence.
The societal implications and impact of the project are, indeed, significant: improving consumers' awareness regarding how personalized techniques operate (by means of publications in acadenuc journals, as well as with dissemination and sensibilization activities such as information videos and blog posts) and, at the same time, develop regulatory tools (e.g. relational disclosures) to be contextualized within an overall re-reading of the conceptual consumption framework.

Activities conducted during the Project

Publications and Dissemination/Communication Initiatives carried out during the Project