In this chapter, we analyze the economics behind the use of big data and, in particular, ratings, reviews, and recommendations that have become mainstream on digital platforms. We start in Section 2.1 by analyzing rating and review systems. These systems provide platform users with information about either products or their counterparties to a transaction. Of crucial importance is, of course, the informativeness of these systems, which depends on the users’ actions. We then turn, in Section 2.2, to recommender systems, which aim to reduce users’ search cost by pointing them towards transactions that may better match their tastes. Besides the ability of such systems to generate network effects, we also discuss their effects on the distribution of sales between “mass-market” and “niche” products. Finally, in Section 2.3, we complement the analysis of ratings and recommender systems by uncovering additional channels through which big data may generate network effects and other self-reinforcing processes on platform.

This chapter examines the ‘direct obligations’ model which accepts that fundamental rights can impose legally binding obligations upon non-state actors. After briefly outlining the contours of this model, and its justification, I consider an important challenge, namely, whether recognising the obligations of non-state actors entails they have fundamental rights. At the international level, I consider the ‘sphere of influence’ approach and the ‘due diligence’ approach (enshrined in the UNGPs). I argue that the latter has an important normative gap at its core: understanding the impacts of a business on rights does not automatically translate into a conception of its obligations. The last part of this chapter considers two jurisdictions – South Africa and Colombia - and the principles they utilize to determine the direct obligations of non-state actors. Neither jurisdiction has articulated a clear legal analytical framework but what emerges is similar to the other models analysed and can form the building blocks of the multi-factoral approach developed in the following chapters.

This chapter considers how we determine the final obligations of a corporation where its actions or policies infringe upon fundamental rights. Since there are competing factors, there is a need to balance different interests. I argue that the proportionality test can be applied successfully to balance the fundamental interests of individuals against the interests of the corporation and thus can provide a structured process of reasoning for determining the final negative obligations of corporations. In making this case, I consider the justification for and challenges to applying the proportionality test to conflicts between non-state actors and individuals with a specific focus upon the corporation. I then consider how each stage of the proportionality analysis – purpose, suitability, necessity and balancing - can apply to corporations and the complexities involved in doing so. In doing so, I will show where each factor – identified in the last chapter - fits into the overall analysis.

This chapter considers the question of whether corporations have positive obligations in relation to fundamental rights and, if so, how to determine the substantive content of those obligations. The chapter examines justifications for the ‘negative obligations model’ which asserts that non-state actors only have negative obligations – to avoid harming – fundamental rights. I show why the negative/positive obligation distinction is not adequate to distinguish the obligations of the state from those of non-state actors and also provide positive justifications for why non-state actors and, particularly, corporations should have such obligations. The multi-factoral model, suitably modified, I argue complimented by a seven-step test – instead of proportionality – provides a structured analytical process for legally determining the substantive content of the positive obligations of corporations. Lastly, I consider the legal instantiation of positive obligations through the courts in South Africa and the legislature in India. The multi-factoral model, I suggest, could be helpful in systematising and guiding these developments.

In this introductory chapter, we present the motivation behind the book and the approach that we follow. We also outline the contents of the six chapters, give a brief history of platforms, and provide a preliminary discussion of the concepts of network effects and economies of scale.

This chapter examines the ‘indirect application model’ in constitutional law whereby fundamental rights do not apply ‘directly’ to the relations between individuals but nevertheless influence the content of the private law legal rules that apply between non-state actors. The legal rules though articulate the obligations of non-state actors and, if fundamental rights affect those rules, they affect the obligations of non-state actors. I argue that the indirect application model has several drawbacks – including weakening rights and undermining their relational dimension - but ultimately collapses into a form of direct application model. I thus examine, through this lens, seminal cases in Germany and South Africa, seeking to understand what approach courts utilize to construct the substantive content of the obligations of non-state actors. The analysis highlights that courts draw on a number of factors together with an amorphous balancing process to determine those obligations – similar to the other models analysed in the book.

In this chapter, we examine how a platform, which has passed the launch phase, prices its services. In Section 5.1, we provide a general introduction to platform pricing by describing the different types of prices that a platform might choose, by going through a simple numerical example, and by discussing why the platform’s decisions may diverge from what would be optimal from a social point of view. We then address, in Section 5.2, the platform pricing problem in a general way to understand how the platform optimally chooses prices so as to manage network effects, and why this often leads to pricing structures such that different groups of users end up paying quite different prices; we also address the question whether platforms should charge users only for accessing the platform or also for the transactions they conduct on the platform. In Section 5.3, we extend the analysis by considering one-sided pricing, the presence of within-group network effects, and differential pricing. Finally, in Section 5.4, we examine the link between pricing and the way users form their expectations regarding the participation of other users.

This chapter considers the ‘expanding the state model’ which limits the obligations flowing from fundamental rights to the state and only imposes obligations on non-state actors if they are, in some sense, state-like. This model fundamentally raises the question of what constitutes part of the state and, in so doing, provides an understanding of the determinants for having obligations. I argue the model focuses on the wrong issue: which agents are part of the state rather than the factors that are relevant to determining obligations. The chapter also examines the model as it is expressed through the case law of three jurisdictions – the United States, Germany and South Africa. In doing so, I explore the factors the courts employ to determine whether an entity or function is state-like and their implications for obligations. Those factors overlap with those identified in the other models – which, in turn suggests, the artificiality of confining the application of rights only to state actors.