Part II    The digital world and its consumer law policy relevance

    I.    Legal policy context
The authoritative set of rules when it comes to private transactions between consumers and
enterprises are to be found in the German Civil Code (Bürgerliches Gesetzbuch, BGB);
consumer contract law was incorporated into that Code in 2002. Legal policy proposals
aimed at radically revising the German Civil Code are a delicate matter, given that they
would shake the very foundations of a society which is based on private law. In 2016 the
Association of German Jurists tackled the question of whether the German Civil Code needs
updating in the age of digitalisation. The expert F. Faust7 proposed making minor corrections
to the German Civil Code although he believes it is in principle possible to tackle the legal
issues which digitalisation raises8 using the range of tried and tested tools available in the
Code. That is not to say, though, that there are no critics of such an approach. The
overwhelming majority of jurists wants to leave the interplay between private actions and
judicial scrutiny well alone.9
The one-sided focus on consumer protection legislation being subject to judicial scrutiny, as
is currently the case, is problematical. The 2016 Consumer Law Conference addressed the
need for and feasibility of administrative scrutiny of consumer protection legislation.10 The
majority of speakers at the conference came out in favour of expanding administrative
enforcement of rights in regard to economic consumer protection, regardless of the
challenges which digitalisation poses. They believe that public redress should not replace the
current model in which control is in the hands of consumer and business associations
(referred to in German as the “Verbandsmodell”), but that it should supplement it. The notion
of official monitoring of terms and conditions, of unfair advertising and, further, of consumer
legislation in regulated markets is highly problematical in the context of German law, civil law
and German civil-law political theory because it shakes the very foundations of a private-law
system in which the enforcement of rights is equal to the enforcement of individual rights
before a court. As far as collective redress by way of a cease-and-desist order against terms
and condition and unfair advertising is concerned, the general thinking is that the established
model of legal redress before the courts should remain.
Of course the balance has shifted in recent years – when it comes to individual redress
towards alternative dispute resolution methods (on the instigation of the EU) and when it
comes to collective redress towards greater emphasis on collective means of redress over
and above cease-and-desist orders, from the importance of a cease-and-desist declaration
upstream of a cease-and-desist order towards the controversially discussed introduction of a
general collective right to compensation. A proposal may well be put forward in the course of
the current legislative term which, in the Federal Ministry of Justice’s view, will end up
extending associations’ right of legal standing.11 In addition to cease-and-desist orders

7
  Faust, Digitale Wirtschaft – Analoges Recht – Braucht das BGB ein Update? (report presented at the
71st Conference of the Association of German Jurists in 2016).
8
  In the same vein as Balkin, “The Path of Robotics Law”, California Law Review Circuit, Vol. 6, June
2015, p. 45: “We should try not to think about characteristics of technology as if these features were
independent of how people use technology in their lives and in their social relations with others.
Because the use of technology in social life evolves, and because people continually find new ways to
employ technology for good or for ill, it may be unhelpful to freeze certain features of use at a
particular moment and label them ‛essential’.”
9
  For a plea for continuity see Dechamps, “Digitale Wirtschaft – das Instrumentarium des BGB
genügt”, (2016), Anwaltsblatt, p. 632; Graf von Westphalen is critical of continuing on the same path,
see Graf von Westphalen, “Digitale Revolution – und das Recht bleibt wie es ist?”, (2016),
Anwaltsblatt, p. 619; Blocher, “The next big thing – Blockchain – Bitcoin – Smart Contracts”, (2016),
Anwaltsblatt, p. 612.
10
   Among others, Brönneke/Micklitz/Rott. A publication including the talks edited by H. Schulte-Nölke is
in preparation.
11
   Gesell/Meller-Hannich/Stadler, “Musterfeststellungsklage in Verbrauchersachen”, NJW-Aktuell,
Standpunkt, Vol. 5/2016, p. 14–15.
                                                                                                     10

associations are also to be given the option of filing collective claims for damages. The
proposal does not break the mould of the Verbandsmodell which is currently dominant in
Germany.12
Collective redress by a consumer authority – as a complement to the Verbandsmodell –
would lead to a key shift in terms of scrutiny. This would only make sense if it were possible
to team up the existing, tried and tested means of enforcement before the courts with the
proposed official monitoring. Even though administrative decisions can and must be
reviewed by a court, a glance at those EU Member States which have already established a
consumer protection authority with the right of legal standing shows that governmental
monitoring goes along with a certain amount of de-judicalisation, that is less judicial
scrutiny.13 The current Grand Coalition Government in Germany is more inclined to entrust
the task of monitoring terms and conditions and unfair competition to the Federal Cartel
Office (Bundeskartellamt).
In the course of implementing the EU’s Distance Selling Directive, the German legislature
introduced the term “consumer” into the German Civil Code in 2000. Key rules of substantive
consumer law were then also incorporated in 2002, namely the law of general terms and
conditions, regulations on the modalities of contract conclusion (in the case of direct sales
and distance selling) as well as rules on specific types of contract (purchase law, time-
sharing and consumer credit). Since then these parts of the German Civil Code have been a
source of constant legislative disquiet on account of the activities of the EU. Backed by the
political majority of the Member States, the EU has become the driving force when it comes
to consumer law developments since the 1990s. At the 2012 Conference of the Association
of German Jurists one expert14 proposed taking consumer law out of the German Civil Code
altogether and drawing up a separate code. More and more people, reputable German legal
scholars, are beginning to agree with him.15 It is true that since 2002 the German Civil Code
appears to be constantly under construction because EU requirements on doorstop selling,
distance selling, consumer credit, time-sharing and now travel law have been fundamentally
revised since the turn of the millennium.
This trend appears to be repeating itself when one considers the rising debate on digitalising
the German Civil Code. All the proposals – in so far as they in fact voice the need for
regulation – aim to amend the relevant rules in the German Civil Code, for example the term
“consumer”, the term “ownership”, the law of general terms and conditions, or the term “tort”.
Following structural logic, this means that the law of digital services would have to be split
up. What in fact belongs together would have to be pulled apart and incorporated into the
various categories applied in the German Civil Code. The system of classification applied in
the German Civil Code takes precedence over the rational logic of the subject matter. This
line of thinking necessarily leads to a shortening of perspective, since the German Civil Code
and its catalogue of rules determines the possibilities for dealing with legal problems.
What is being overlooked here is the fact that the EU’s General Data Protection Regulation
and the emerging implementation act overlap with the law of general terms and conditions



12
   “Verbandsmodell” refers to the fact that the monitoring of terms and conditions and of advertising is
the responsibility of consumer and business associations.
13
   Rott, Rechtsvergleichende Aspekte der behördlichen Durchsetzung von Verbraucherschutz, Report
submitted to the Federal Ministry of Justice and Consumer Protection, file no. V B1-7008-3-3-52
24/2016. A legal comparison as regards the monitoring of terms and conditions and of fair trading
shows that Germany is the exception. No other country has so many different types of court
procedures and judicial decisions. Whether more court proceedings equals more consumer protection
is another matter entirely, though.
14
   Micklitz, Brauchen Konsumenten und Unternehmen eine neue Architektur des Verbraucherrechts?,
(report submitted to the 69th Conference of the Association of German Jurists in 2012) p. 129.
15
   Wagner, “Der Verbrauchsgüterkauf in den Händen des EuGH: Überzogener Verbraucherschutz
oder ökonomische Realität”, (2016), Zeitschrift für Europäisches Privatrecht, Vol. 1, p. 87–120, p. 119.
                                                                                                     11

and with fair trading law.16 One could even hypothesise that the General Data Protection
Regulation has been superimposed on the German Civil Code and that it provides the
framework not only for data protection but also for the trade in data. A possible medium-term
alternative would be a self-contained regulation on digital services as a whole, with all the
associated questions and problems as regards contract and tort law in legislation
complementary to the General Data Protection Regulation. However, this report, which takes
a holistic perspective, first and foremost aims to investigate in what areas action urgently
needs to be taken in terms of adapting applicable rules to the challenges posed by the digital
world. The entire process will be considered, from when consumers enter into a legal
relationship until they terminate that legal relationship.

     II.   Fundamental decision as regards the scope of digitalisation
Reducing the challenges which digital society faces to the question of whether the German
Civil Code or other legislation needs reforming falls short. In fact, it is necessary to look
beyond the German Civil Code and legal relationships, to shift from a micro to a macro
perspective, to the question of whether our digital society needs another legal framework,
one which can meet the challenges before the possible problems begin to take on more
concrete shape in contractual or quasi-contractual questions. It is necessary to look beyond
the law to fundamental questions concerning the state, business and society in the age of
digitalisation. The scientific debate across all those disciplines which are linked to the issue
of digitalisation is divided into two camps: On the one hand there are those who do not
regard digitalisation phenomena as bringing about radical social, economic, political and
philosophical changes; on the other hand there are those who believe that disruption is
occurring in the development of western industrial and service economies.17

      1. Continuity
The “business as usual” approach can be found in legal opinions which largely dismiss the
changing social environment and define the term “digital content” in line with traditional
conceptual jurisprudence and then break it down into the relevant legal questions, namely
those regarding media neutrality, data as payment, the content of obligations, the law of
general terms and conditions, consumer contracts and special obligations, fulfilment of a
contract on digital content, purchase and works contracts, rental agreements and contracts
on the drawing up of digital content. Other topics include liability in the context of free
services and the protection of data. There is a profusion of literature, which is constantly
growing, on each complex of issues which exhausts itself in debating the pros and cons of
the need for regulation. The 2016 Conference of the Association of German Jurists set out to
address one big issue, the question of the century as it were (unless, given that this is the
21st century and given the scope of digitalisation, it could even be called the question of the
millennium): Are the legal rules on business transactions dating back to the 19th century –
following the industrial revolution in the second half of the 19th century and the 20th century
shift from a manufacturing to a consumption- and service-oriented society – in principle
suited to overcoming the challenges posed by 21st century digital society?
The Association of German Jurists sees itself as the mouthpiece of all German – perhaps
even of all German-speaking – jurists, practitioners, lawyers, judges and scholars. However,
the number of participants attending the civil-law section of the 2016 Conference of the
Association of German Jurists fell shockingly below its high demands in terms of content.
Depending on one’s point of view, one could either play down the relevance of the
Association of German Jurists or investigate the reasons for the low attendance figures. The

16
   See Schmechel, Verbraucherdatenschutzrecht in der EU Grundverordnung, SVRV Working Paper
No. 4.
17
   Brownsword is extremely useful, see The E-Commerce Directive, Consumer Transactions, and the
Digital Single Market: Questions of Regulatory Fitness, Regulatory Disconnection and Rule Discretion,
a talk given at the SECOLA Conference in Tartu in 2016. The manuscript was made available to the
authors.
                                                                                                  12

fact remains that the Association of German Jurists has over the many years since it was
established very successfully captured the basic attitude of, perhaps even the basic mood
among, jurists, at any rate the “prevailing” mood. That is why it is worth emphasising the
conclusion F. Faust drew in a report submitted to the 2016 Conference, especially since the
majority of those attending endorsed it:
      Hypothesis no. 13: No new types of contract should be created for contracts
      relating to digital content.
      Hypothesis no. 17: It would not be possible to incorporate a “right to one’s own
      data” into section 823 (1) of the German Civil Code. (Instead a new rule should
      be included in section 303a of the Criminal Code [Strafgesetzbuch, StGB] as
      protective legislation within the meaning of section 823 (2) of the German Civil
      Code.)18
The debate is by no means over. In 2017 scholars and teachers of civil law will be looking at
the exact same issue. It will be interesting to see what side of the debate the talks and
discussions will come down on.19 At this point, however, and in the context of taking our
“fundamental decision”, the details of any proposals worth considering are not (yet) the issue.
Rather, the question is whether the social, economic and technological circumstances have
changed or will change to such an extent that political action beyond making mere marginal
corrections is what is needed. Restraint similar to that expressed by F. Faust can be found in
the reports commissioned by the Advisory Council and rendered by K. Purnhagen/St.
Wahlen,20 Ch. Wendehorst21 and G. Spindler.22 In so far as they actually make any, their
proposals are limited to possibly supplementing the relevant passages in the German Civil
Code, to the term “consumer”, the law of general terms and conditions, and the definition of
“ownership”. That even applies where the analysis leads one to expect something completely
different. Ch. Wendehorst, for example, feels that
      “The Internet of Things will doubtless lead to a structural erosion of ownership
      and property.”
A little further on, on the same page she writes:
      “Overall, on account of this development consumers are losing the freedom
      which ownership is supposed to give them and, on account of the price they have
      to pay when purchasing Internet of Things devices, they are becoming even
      more heavily dependent than if they had only rented the product [emphasis
      in original].”23
D. Post24 described this attitude as “unexceptionalist” and its proponents as
“unexceptionalists”. Accordingly, online and offline transactions should be treated the same
as far as possible. Specific rules are not, in principle, required. One need only consider EU
Directive 2011/83/EU on consumer rights, in which direct (doorstep) and distance selling are
approximated as far as possible – and then the difficulties which such approximation brings
when it comes to dogmatic fine-tuning.

18
   That is effectively a classical case of how the German Civil Code remains formally intact, no
changes are made but the relevant questions are shifted into other legislation.
19
   These will be published in the Archiv für die civilistische Praxis.
20
   Purnhagen/Wahlen, Der Verbraucherbegriff im 21. Jahrhundert, Verbraucherbürger und
Verbraucherproduzent, Report commissioned by the Advisory Council for Consumer Affairs at the
Federal Ministry of Justice and Consumer Protection, August 2016.
21
   Wendehorst, Verbraucherrelevante Problemstellungen zu Besitz- und Eigentumsverhältnissen beim
Internet der Dinge, Report commissioned by the Advisory Council for Consumer Affairs at the Federal
Ministry of Justice and Consumer Protection, October 2016.
22
   Regulierung durch Technik, Report commissioned by the Advisory Council for Consumer Affairs at
the Federal Ministry of Justice and Consumer Protection, November 2016.
23
   Wendehorst (op. cit., fn. 21), p. 62.
24
   Post, In Search of Jefferson’s Moose, (OUP, 2015), p. 186.
                                                                                                13

The guiding principle of treating online and offline enterprises the same also runs like a red
thread through the Federal Ministry for Economic Affairs’ Green Paper on Digital Platforms.25
This might be acceptable if there were an easy answer to the following crucial question: Can
offline and online transactions be treated the same or is there a fundamental difference
between the two which not only justifies but requires that they be treated differently? All too
often the need for equal treatment is presupposed, cutting off all further discussion, not least
because it is borne by the central idea that the law is uniform, that it applies equally to all – a
maxim adopted by the French Revolution which quite rightly still has a formative influence.
The unexceptionalists are also referred to as “contractualists”. They seek to overcome the
challenges which technology poses by defining a contract as something which is concluded
consensually and autonomously between two people. The crucial maxims here are self-
responsibility and the freedom to contract, i.e. self-regulation rather than state regulation.
What applies to contract law in principle also ought to apply to all other relevant legal fields.
As a result, the focus is put on introducing sectoral rules for the Internet, telecommunications
and energy, an approach which the EU has been forcefully promoting for the last 30 years. In
the same way as the basic rules of contract law cannot be understood until rules applicable
to consumer goods purchases have been incorporated, focusing on the horizontal relevance
of anti-trust law or fair trading law obscures a multitude of special rules which are applicable
to regulated markets and/or consumers. After all, the power of the claim to general
application is specifically its rationality. Any deviation needs to be justified. It is
telecommunications law in particular which causes upheavals in the course of digitalisation,
because key digital services are excluded from the specific sectoral rules.26 The all-important
question is whether digitalisation means we need to adopt a new perspective which is
entirely oriented to the specifics of the digital world and which places the focus on the
changes made compared to the old world and old law. Put another way: What if what is
“special” becomes the “new normal” or if this special law continues expanding and leads to a
fragmentation of the law, which only leaves the new normal with having a catch-all
function?27

     2. Disruption
Is disruption happening? Will it happen? How will it manifest itself – as evolution or
revolution? Those who proclaim that a rupture with the past is occurring argue that the
phenomenon of digitalisation can best be captured by means of the formula “from atoms to
bits”.28 Prior to digitalisation, the universe comprised only two levels or layers: a physical and
a social. The physical layer comprises atoms and all material things, houses, automobiles,
people and animals. The social layer comprises all those phenomena which the law
describes as immaterial, that is rights, enterprises and status-related rules. Digitalisation
adds a third layer. In the words of A. Murray: “Much as atoms can be used in the physical
world to construct everything from the human liver to an Airbus 380, bits are the basic
building blocks of the information society.”29
M. Hildebrandt speaks of a “new animism”30 which characterises the “onlife” world:31

25
   In particular Schweitzer <https://www.bmwi.de/BMWi/Redaktion/PDF/G/gruenbuch-digitale-
plattformen,property=pdf,bereich=bmwi2012,sprache=de,rwb=true.pd> (last retrieved 24 Nov. 2016).
26
   Chapter 4 (Challenges for Telecommunications Law) is convincing
<https://www.bmwi.de/BMWi/Redaktion/PDF/G/gruenbuch-digitale-
plattformen,property=pdf,bereich=bmwi2012,sprache=de,rwb=true.pdf> (last retrieved 24 Nov. 2016).
27
   Luhmann and Teubner, following Luhmann, both repeatedly stress that the stratification of society,
as reflected in fragmented law, is irreversible. Teubner also makes it clear that new irritants keep
popping up, see “Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New
Divergences” (1998), 61 Modern Law Review, 1998, p. 11.
28
   Searle, The Construction of Social Reality, (Allan Lane, The Penguin Press, 1995).
29
   Murray, Information Technology Law: The Law and Society, 2nd ed. (OUP, 2013), p. 5.
30
   Hildebrandt, Smart Technologies and the End(s) of Law (Cheltenham: Edward Elgar, 2015) viii.
31
   Hildebrandt (op. cit., fn. 30), p. 8.
                                                                                                   14

“… our life world is increasingly populated with things that are trained to foresee
      our behaviours and pre-empt our intent. These things are no longer stand-alone
      devices; they are progressively becoming interconnected via the cloud, which
      enables them to share their ‘experience’ of us to improve their functionality. We
      are in fact surrounded by adaptive systems that display a new kind of mindless
      agency. (...) The environment is thus becoming ever more animated. At the same
      time we are learning slowly but steadily to foresee that we are being foreseen,
      accepting that things know our moods, our purchasing habits, our mobility
      patterns, our political and sexual preferences and our sweet spots. We are on the
      verge of shifting from using technologies to interacting with them, negotiating
      their defaults, pre-empting their intent while they do the same to us.”32
In this onlife (not online) world, the consumption of products is personalised, anticipatory and
automated. Of course, this new world of consumption will always need a contract or at least
a legal relationship which humans conclude/enter into via a service. From the moment a
human enters the digital world, though, smart technology takes over. In the onlife world the
boundaries between the offline and online worlds become blurred, the distinction between
consumer transactions which are negotiated by humans and those which are managed and
implemented by software agents even more so.
One can and must go very much further and ask whether, in the onlife world, consumer
protection regulations will be replaced by smart technologies. Instead of consumer protection
by law and legislation we will have consumer protection by technology and self-regulation or,
to put it more succinctly: regulation by technology. The perspective shifts again. The focus is
on technologies such as blockchain, Bitcoin and smart contracts, which have not yet become
established beyond the fringes of the business world (speed trading) and in particular have
not yet entered consumer law. Estimates as to what chances legislation has of being
replaced by technology vary greatly. G. Spindler’s assessment is cautiously sceptical,
because the law cannot be translated into the black and white logic on which software is
based.33 W. Blocher, by contrast, is quite euphoric when it comes to the prospects of
regulation by technology, not least in the sense of its inherent possibilities for (re)gaining
autonomy and for reversing legal relationships (from B2C to C2B).34
Those who get a sense that fundamental technological and social changes are close at hand
must, logically, be described as exceptionalists. They seek what is “new” and feel that the
world has changed, that the relationship between humans and technology has been entirely
redefined. They call for a Digital Code “to safeguard civil liberties in the age of Internet
capitalism”.35 Cyberbutlers,36 our constant companions who still sounded rather utopian back
in 2000, have long since become a reality. However, our contracts with service providers
often have decade-long terms. Our legal system is not set up to cope with these kinds of
temporal dimensions. You do not have to look to the future to draw this consequence. Most
of us have been using Google on a daily basis for years, the same goes for Facebook.
Google and Facebook have collated data about our lives, and these form the basis of their
business models. Digital services contracts, that is in so far as they are contracts in the


32
   Hildebrandt (op. cit., fn. 30), at viii-ix.
33
   Spindler, (op. cit., fn. 22), likewise Idelberger, Connected Contracts Reloaded – Blockchains as
Contractual Networks, talk given at the SECOLA Conference in Tartu in 2016, publication in
preparation.
34
   Blocher “The next big thing: Blockchain – Bitcoin – Smart Contracts – Wie das disruptive Potential
der Distributed Ledger Technology (nicht nur) das Recht fordern wird” (2016), 8+9 Anwaltsblatt,
p. 612.
35
   Graf von Westphalen (op.cit., fn. 9), p. 626, though very much focused on the risks which
digitalisation incurs for humans (especially making reference to Schirrmacher, Technologischer
Totalitarismus, Suhrkamp Verlag, 2014).
36
   Ford, “Save the Robots: Cyber Profiling and Your So-Called Life” (2000), 52 Stanford Law Review,
p. 1572.
                                                                                                   15

sense of a two-sided legal transaction, establish a continuing obligation which stands
alongside traditional types of contracts such as rental, credit and energy agreements.37

     III. Possible consequences of the debate around continuity v. disruption
What are the consequences for the legislature of this tension between the old and new,
between continuity and disruption? Do we need legal regulations for contracts which
consumers conclude with their cyberbutler? Do we need more and more far-reaching
interference on the part of the legislature in order to control self-regulation or self-regulation
which is becoming increasingly independent ex ante? If so, then the advocates prove to be
regulators: Instead of freedom of contract and self-regulation they want the legislature to be
responsible for ex-ante scrutiny and supervision, perhaps coupled with the need for
competent governmental agencies to rectify self-regulation ex post where necessary.
Where does the European Commission stand on this issue and how far has the German
legislature got in terms of its planning and deliberations? The European Commission is
rushing ahead, saying there is a strong need to continue developing contract law. Its
Communication dated May 2015 is very telling:38
       “Digital contracts for Europe – Unleashing the potential of e-commerce”
Further on:39
       “4. ACTING BEFORE IT IS TOO LATE
       “We need to act now on the digital dimension...
       “The pace of commercial and technological change due to digitalisation is very
       fast, not only in the EU, but worldwide. The EU needs to act now to ensure that
       business standards and consumer rights will be set according to common EU
       rules respecting a high level of consumer protection and providing for a modern
       business friendly environment. It is of utmost necessity to create the framework
       allowing the benefits of digitalisation to materialise, so that EU businesses can
       become more competitive and consumers can have trust in high-level EU
       consumer protection standards. By acting now, the EU will set the policy trend
       and the standards according to which this important part of digitalisation will
       happen.”
The Commission has gone further than merely making announcements: In December 2015 it
put forward two proposals, one on the regulation of digital content and one on online and
other distance sales of goods.40 Both Proposals aim at full harmonisation, and both are the
subject of intense legal policy and academic debate.41 That debate revolves around the
canon of questions which the Association of German Jurists already raised, namely meeting

37
   Nogler/Reifner (eds), Life Time Contracts, <http://www.eusoco.eu/wp-
content/uploads/2013/10/eusoco_book_outline.pdf> (last retrieved 24 Nov. 2016).
38
   European Commission, Communication from the Commission to the European Parliament, the
Council and the European Economic and Social Committee – Digital contracts for Europe –
Unleashing the potential of e-commerce, COM(2015) 633 final, Brussels, 9.12.2015.
39
   COM(2015) 633 final (op. cit., fn. 38).
40
   European Commission, Proposal for a Directive of the European Parliament and of the Council on
certain aspects concerning contracts for the supply of digital content, COM(2015) 634 final, Brussels,
9.12.2015; and European Commission, Proposal for a Directive of the European Parliament and of the
Council on certain aspects concerning contracts for the online and other distance sales of goods,
COM(2015) 635 final, Brussels, 9.12.2015.
41
   EuCML has addressed this subject matter in a number of publications. Three books deserve special
mention: Wendehorst/Zöching, Ein neues Vertragsrecht für den digitalen Binnenmarkt,
Wendehorst/Zöching (eds) (Manz Verlag, 2016); Franceshi, European Contract Law and the Digital
Single Market, The Implications of the Digital Revolution, (Intersentia Verlag, 2016); and
Schulze/Staudenmayer, Digital Revolution: Challenges for Contract Law in Practice, (Nomos Verlag,
2016).
                                                                                                   16

the digital challenges by means of contract law. What is behind this strong rhetoric? Is the
EU calling for a new legal order?
R. Brownsword42 looked at both Proposals with a view to the difference between
unexceptionalists and exceptionalists and came to the conclusion that the European
Commission has to be classed as an unexceptionlist. What is more relevant from a
consumer policy perspective is that the Commission is attempting, with the help of these two
Proposals, to roll back the previously guaranteed level of consumer protection in regard to
online purchase contracts in favour of trade and commerce. More specifically, there is a
certain degree of tension between the Consumer Goods Directive 1999/44/EC on the one
hand and the Consumer Rights Directive 2011/83/EU, which regulates direct and distances
sales, on the other. The two Proposals interleave the two Directives. Yet again, the much-
criticised objective of full harmonisation leads to less protection, this time, though, less
protection as already guaranteed in EU directives. In other words, online trade serves to
harmonise consumer law for the online and offline worlds, to the consumer’s detriment. The
new technology and the proclaimed need to expand online trade serve to legitimise the
Commission’s approach.
The Federal Government’s 2016 Consumer Policy Report43 does not address the
fundamental question, namely regulation of the “onlife” world. However, the report does state
the following, much in the same vein as the European Commission:
      “Digitalisation doubtless does also have its economic advantages, but it poses
      new challenges when it comes to consumer protection. It is the job of policy-
      makers to put in place the regulatory framework for binding and effective
      consumer protection standards in the digital world. Strengthening self-
      determination, guaranteeing freedom of choice and transparency, comprehensive
      and comprehensible consumer information, and security in the Internet are
      decisive. That is the key to more consumer confidence, which is necessary if new
      business models and digital innovations are to succeed. Consumer data
      protection is of particular relevance in this regard.”
The report addresses neither of the two Commission Proposals. The measures announced
by the Federal Government make no reference whatsoever to the fundamental problem, nor
to the question of whether digital legal relations require specific rules, to name just this
example from the context of possible regulatory approaches. The Federal Government
restricts itself to the correction of details, as do the vast majority of legal scholars.
The approach adopted by the Federal Ministry for Economic Affairs and Energy in its Green
Paper on Digital Platforms appears to be much more fundamental in its approach, because it
is more open in the matter itself.44 That may well be down to the nature of a green paper,
which seeks to ask questions rather than to provide answers. These are expected to be
delivered in the upcoming White Book in the spring of 2017. We will have to wait and see
whether they will be exceptionalist or unexceptionalist answers. Questions around the
Guidelines on Data Sovereignty – Input for the Creation of Private Digital Autonomy and the
call for a digital agency are particularly relevant from the point of view of consumer
protection:45
      “A digital agency in the guise of a high-performing and internationally
      interconnected federal-level centre of expertise could have these remits. It could
      support other specialist authorities (such as the Federal Cartel Office and

42
   Brownsword, The E-Commerce Directive, Consumer Transactions, and the Digital Single Market:
Questions of Regulatory Fitness, Regulatory Disconnection and Rule Redirection, talk given on 18
June 2016 at the SECOLA Conference in Tartu, Estonia, http://www.secola.org/.
43
   Bundestag Printed Paper 18/9495, 25 Aug. 2016, p. 10.
44
   As at May 2016; a white book containing concrete proposals is set to be published in spring 2017,
p. 64.
45
   Faust (op. cit., fn. 7) p. 66.
                                                                                                   17

consumer protection offices) in the digitalisation process and also identify and
         eliminate obstacles to implementing policy strategies. Like the Federal
         Environment Office and the Federal Office for Migration and Refugees, a new
         digital agency can help to meet one of the key social challenges we face.”
The impetus for the latter came in the autumn of 2015 from the Federal Ministry for
Economic Affairs and Energy/Federal Ministry of Justice and Consumer Protection’s
Programme of Measures for More Security, Sovereignty and Self-determination in the Digital
Economy – Challenges and Action for Society, Business and Consumers.46 Depending on
their interpretation and orientation, data sovereignty, digital autonomy and the digital agency
could become milestones in the development of digital consumer law.



Part III Legal relationships in regard to digital services
The micro perspective seeks to address the well-known and mounting problems as regards
consumer law, including consumer data protection law. The focus is increasingly being
placed on four topics which are oriented to social issues and not to a system of classification
of whatever shape or form which is predetermined by the legal system. This list of topics is,
however, not necessarily to be regarded as exhaustive. The Internet of Things is becoming
the ostensible phenomenon in which consumer law and data protection law are increasingly
becoming intertwined. “A new dimension has been added to the world of information and
communication technologies: from anytime, anyplace connectivity for anyone, we will now
have connectivity for anything.”47 According to a report published by the UK Government,48
more than 14 billion devices worldwide were already connected to the Internet in 2014.
This deterritorialised connectivity of things which is also devoid of any temporal context gives
rise to numerous problems. For example, ethical issues raise the fundamental question of
how we as humans should act and behave.49 The Internet of Things is of relevance to ethical
issues on account of the changes made to key terms because of how technology connects
the world of things with our everyday lives. The fact that things can communicate with each
other entails a considerable loss of control on the part of humans. This raises questions
around social justice, trust, the blurring of contexts and the lack of consumers’ and citizens’
neutrality and autonomy.
Part III of this report addresses the legal questions which arise from this deterritorialised
connectivity. They concern the conclusion of contracts, contracting parties, problems around
the legal classification of the actions of platforms, liability for defects, IT security, data
protection and problems regarding the enforcement of rights in deterritorialised contexts. The
following issues will be discussed against this backdrop:
     •    Issues around the conclusion of a contract and liability,
     •    The role and function of platforms,
     •    Data protection and IT security and
     •    The deterritorialisation of consumption. (Consumers often do not know where an
          enterprise is domiciled; if it is domiciled abroad, a complicated set of legal building

46
   Federal Ministry for Economic Affairs and Energy/Federal Ministry of Justice and Consumer
Protection, (op. cit., fn. 3).
47
   <http://www.itu.int/osg/spu/publications/internetofthings/InternetofThings_summary.pdf> (last
retrieved 17 Nov. 2016).
48
   <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/409774/14-1230-
internet-of-things-review.pdf> (last retrieved 17 Nov. 2016).
49
   This paragraph is based on Haarkötter, “Eine neue Ethik für das Internet der Dinge?”:
https://www.bpb.de/dialog/netzdebatte/198471/eine-neue-ethik-fuer-das-internet-der-dinge (last
retrieved 18 Nov. 2016).
                                                                                                   18

blocks is available which has a great deal to offer legal scholars but is of very little
          benefit to consumers.)
Part III concludes with a discussion of viable solutions. So far, enterprises have in practice
dictated the matter by way of their terms and conditions, advertising and regulation by
design. The field has now recently also come to the attention of jurists. The result is an
overwhelming array of suggestions for solving certain legal issues, or not as the case may
be. Only the EU has so far reacted to this development by making any legislative proposals
in the form of the General Data Protection Regulation and its 2015 Proposal on digital
content in consumer contracts. The Association of German Jurists has looked into the
matter. However, it has not really been in any position to make any suggestions for solving
what are as yet unanswered questions.

     I.   Conclusion of contract
This section addresses the civil-law problems which arise in connection with Internet of
Things devices. In particular, they include the packaging of services, the obligations on digital
service providers offering “as is” services50 regulated by means of terms and conditions, and
the special problem of the classification, under civil law, of declarations of intent when
automated systems are used in the Internet of Things.

      1. Information and packaging
Hardware and software
Today, when consumers purchase technical devices the software is generally pre-installed.
The practice of packaging services is not ruled out per se under fair trading law; the incentive
effect of a good offer is always a desirable consequence of performance-based
competition.51 The European Court of Justice (ECJ) recently ruled that pre-installed software
on a computer was not an unfair commercial practice. The case revolved around the
question of whether the lack of price information regarding individual programs represents a
misleading commercial practice within the meaning of Article 5(4)(a) and Article 7 of the
Unfair Commercial Practices Directive 2005/29/EC. The ECJ came to the conclusion that the
mere lack of price information did not result in any misleading of consumers, since the lack of
information regarding individual programs was neither suited to preventing consumers from
making an informed transaction decision, nor to causing them to take a transaction decision
which they would otherwise not have taken. The price of individual programs did not,
therefore, represent material information within the meaning of Article 7(4) of Directive
2005/29/EC and the omission of that information was not misleading.52 This interpretation is
contestable because it misconstrues the role and function of Article 7(4), which not least
demands transparency ahead of the conclusion of a contract in order to permit competition.
Accordingly, an informed decision is one which not only serves the consumer but also
potential competition between the suppliers of the individual price components.
Services and data
Another much-debated issue which needs to be addressed in the context of digital services,
whether they are provided by commodity dealers, app stores or other platforms, is that of
“data as payment”. This problem is, firstly, discussed in the context of the debate on
consumer sovereignty and in the debate on data protection v. data sovereignty; secondly,



50
   Consumers have no influence on the service provided. The supplier can adapt the service at any
time.
51
   Ohly, “Das neue UWG – Mehr Freiheit für den Wettbewerb?”, (2004), Gewerblicher Rechtsschutz
und Urheberrecht, Vol. 11, p. 889–900, p. 897, with further references.
52
   Case C-310/15, Vincent Deroo-Blanquart v. Sony Europe Limited, successor in law to Sony France
SA, EU:C:2016:633.
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