On 10 December 2020, the Dutch Authority for Consumers & Markets ("ACM") published its position paper on the supervision of algorithmic applications (Position Paper on Supervision of Algorithms). On the same day ACM also announced the launch of a pilot investigation in which ACM will map out what types of information it needs in order to scrutinize in future investigations and supervision activities the use by companies of algorithmic applications.
The publication of the Position Paper on Supervision of Algorithms and the pilot investigation follow ACM’s earlier publications in 2020 of its ‘Consumer protection guidelines regarding the use and boundaries of online persuasion techniques’ and ACM’s ‘Rules of thumb for online platforms’ which also point to the relevance of algorithmic applications.
ACM’s Position Paper and pilot investigation into algorithms
ACM set up its pilot investigation into algorithms in collaboration with online music library ‘Muziekweb’ in order to examine the best approach in supervising and investigating algorithmic applications. ACM aims to apply the insights and experience gained during this pilot in its role as competition law, consumer law and sector-specific (e.g. post, telecom, energy) regulator.
In the Position Paper on Supervision of Algorithms, ACM sets out various forms of algorithmic applications, explores when the use by market players of these applications becomes relevant for ACM as a regulator and how algorithmic applications could be scrutinized by ACM in practice. The position paper is still of a general nature but forms a starting point on which basis the ACM will further develop its supervision activities and future investigations into algorithmic applications.
Regulators have increasingly used their investigative powers such as company visits (or ‘dawn raids’) or formal information requests to gather digital evidence in order to establish cartel, abuse of dominance or other regulatory law infringements. In its Position Paper on Supervision of Algorithms, ACM states that its experience gained and methods applied during past digital investigations are also relevant in investigating the functioning of algorithmic applications.
However, ACM also points in its position paper to various challenges it will face during investigations into algorithmic applications. Self-learning algorithms for instance continuously evolve and may function differently from one moment to the other, posing practical challenges in the execution of an investigation. Furthermore, in complex IT systems companies may also use (algorithmic) applications from third parties. This may complicate an investigation, although ACM states in this respect that the company applying third party applications remains responsible for the resulting (business or market) outcome.
Two other well-known separate issues in digital investigations for both companies (specifically in the context of internal investigations) and the regulator are complying with privacy laws and the fact that company data is often stored by an external third party abroad. ACM notes in its position paper that the applicable privacy requirements of the General Data Protection Regulation are even more relevant for investigations into algorithmic applications as they often entail processing large amounts of personal data. With respect to company data stored abroad by external parties, ACM states in its position paper that such data can be reviewed or copied if the company under investigation either (i) is the owner of the data, (ii) manages the data and/or (iii) is the user of the data.
Relevance of ACM paper: the future of AI regulation at the EU level
In February 2020 the European Commission released alongside its vision for Europe’s digital future and its strategy for data its White Paper on artificial intelligence. This White Paper explained the Commission’s proposals for regulating artificial intelligence and will ultimately culminate in a legislative proposal on artificial intelligence which is expected in the 1st quarter of 2021.
Against this background, the ACM Position Paper on Supervision of Algorithms and pilot investigation into algorithms will become increasingly relevant. It will be interesting to see which approach ACM and other regulators will take in supervising algorithmic applications in the future both in the context of the upcoming EU rules on artificial intelligence and in the context of investigations under the existing competition, consumer and sector-specific regulations.
For more information please contact Piet-Hein Eijssen.