The Advisory Council is convinced that Germany is free to take the political lead and,
possibly together with other Member States, to call on the European Commission to act.

     II.      Potential solutions as regards regulating algorithms

1.         Requirements under the Federal Data Protection Act

The Advisory Council notes that the existing rule in section 28b of the Federal Data
Protection Act represents a useful starting point when it comes to regulating self-learning
algorithms.

2.         Requirements under the General Data Protection Regulation

The Advisory Council notes that the rudimentary approaches to regulating algorithms set out
in the General Data Protection Regulation are insufficient and fall below even the standard
applied in section 28b of the Federal Data Protection Act.

3.         Re the three possible options for a regulatory approach

The Advisory Council notes that there are theoretically three possible options for regulating
this matter:

     •     proactive (legality by design): the legislature could oblige enterprises to incorporate
           binding legal requirements into algorithm development;

     •     reactive: the legislature could restrict itself to obliging enterprises to comply with the
           law when developing algorithms (which actually goes without saying) and then focus
           on ex-post monitoring;

     •     the happy medium: the legislature could set a regulatory framework which combines
           binding governmental requirements with self-regulation.

4.         Re lack of transferability of technical regulation

The Advisory Council notes that it will not be possible to regulate algorithms using the means
and technologies available for regulating industrial products.

     1. Re the deficits and consequences of a reactive approach

The Advisory Council is convinced that sticking to “business as usual” is, politically speaking,
not a serious option. The political realm is called to drop the option of ex-post controls, the de
facto approach, and to look for a regulation which does justice to the specific features of
algorithms.

     2. Re the limited possibilities of co-regulation

The Advisory Council notes that the widely touted co-regulation in the form of government
procedural framework-setting to regulate algorithms needs to be modified.

7.         Re the need for an Algorithm Act

The Advisory Council recommends

     (1) putting in place the legal requirements to ensure that algorithms take account of the
         requirements of consumer law, data protection law, anti-discrimination law and digital
         security. In the case of algorithms which enter into direct contact with consumers, the
         underlying parameters need to be made transparent. Legal responsibility also needs
         to be assignable in the case of self-learning algorithms and applicable consumer
         protection regulations need to be complied with;

                                                                                                   6

(2) ensuring that, based on standardised disclosure requirements, algorithms are
         disclosed to a circle of experts in the digital agency who carry out spot checks to see
         whether they are legally sound. Standardised software engineering procedures need
         to be developed to that end;

     (3) that enterprises should also be called on to draw up a code of conduct on the use of
         personal data, artificial intelligence systems and big data analysis.

8.          Re the problem of competence

Subject to more in-depth investigation, the Advisory Council believes that competence for
drawing up an Algorithm Act has remained with the Member States, despite the objective of
full harmonisation set out in the General Data Protection Regulation.

     III.      Potential solutions as regards the need for a digital agency

1.          Re the need for immediate political action

The Advisory Council recommends establishing a digital agency in which previous
competencies linked to digital services are pooled and expanded.

2.          Re institutional embedding of the digital agency

The Advisory Council is in favour of assigning the Federal Cartel Office those tasks which
are being considered as part of the digital agency’s remit. This will ensure that those legal
issues which the digital economy raises and which go together are not pulled apart on
extraneous grounds.

3.          Re the tasks and competencies of the digital agency

The Advisory Council recommends assigning all the necessary tasks to the digital agency
and guaranteeing it the necessary resources so that it is in a position to proactively
investigate technical and legal issues raised in the digital economy, to draw up proposals,
discuss these in the public domain, develop codes of conduct with business and consumers,
and to develop recommendations and proposal for the legislature.

4.          Re the problem of competence

The Advisory Council recommends commissioning a legal expert opinion which addresses
the question of the merging of German authorities to the extent that these are also required
to implement tasks for which EU law sets legally binding institutional and procedural
requirements.




                                                                                              7

Part I     Purpose, structure and thread of the report

    I.    Three objectives
This report has three objectives:
First, to trace and evaluate the debate around the need to regulate digital consumer
services. The Advisory Council takes up the discussion on the role and function of digital
platforms launched in December 2015/January 2016 and broadens it to address questions
around the sharing economy and the Internet of Things: Of what value are the diverse
regulations proposed by the Association of German Jurists (DJT), the European Commission
and academics1 participating in the debate? Can they achieve the worthy aim of
safeguarding the autonomy of consumers in the digital age?
More specifically: Taking a holistic perspective, what action is urgently necessary to adapt
applicable rules to the challenges the digital world poses – from when a legal relationship is
entered into until it is terminated?
Second, to give an outlook on those pressing issues and emerging problems which go along
with ongoing developments in the field of digital technologies, for instance software agent
systems, regulation by algorithm and the possibilities inherent to big data. Given its remit, the
Advisory Council believes that its task is to point out the kinds of questions which are raised
and to come up with possible solutions so as to initiate a debate about political solutions.
This on no account means that it is siding with what are known as exceptionalists,2 but is
based on the realisation that it is necessary to consider the possibility that social, economic
and political disruption is occurring.
More specifically: Would statutory regulation of big data in the shape of a law of algorithms
be a conceivable way of getting a grip on the risks to the autonomy and sovereignty of
consumer citizens?
Third, to develop concrete proposals for improving the enforcement of rights in a digital
society. More than ever before, any future regulation must never lose sight of the matter of
feasibility. It is hard for consumers to recognise when they are being sent personalised
advertising, and yet they are supposed to enforce their own rights. How is that possible?
Collective redress is getting structurally more and more difficult. The focus here is on a
proposal put forward jointly by the Federal Ministry for Economic Affairs and Energy and the
Federal Ministry of Justice and Consumer Protection3 regarding a digital agency which
would, firstly, have to make expertise available and, secondly, improve the means of
enforcing rights.
More specifically: What should a digital agency look like, what competencies should it have
and what tasks should it take on in order to safeguard consumer rights?

    II.   Background and scope of the report
When it comes to consumer policy, Germany more or less acts in response to impetus
coming from the EU. The Federal Government’s Consumer Policy Report discusses new
business models and potential risks in regard to digital consumer policy and throws up basic

1
  The plural form is used throughout the report to refer to all genders. [Translator’s note: This is only of
relevance in the German version of the report.]
2
  The term “exceptionalist” is used in the legal debate to refer to those who affirm that disruption is a
reality, see Part II, III. 2. below.
3
  Federal Ministry for Economic Affairs and Energy (BMWi)/Federal Ministry of Justice and Consumer
Affairs (BMJV), Programme of Measures for More Security, Sovereignty and Self-determination in the
Digital Economy <
https://www.bmjv.de/SharedDocs/Downloads/DE/Artikel/Ma%C3%9Fnahmenprogramm_B
MJV_BMWi.pdf?__blob=publicationFile&v=2)
                                                                            8

questions, yet does not go into them in any great detail. The joint initiative of the Federal
Ministry for Economic Affairs and the Federal Ministry of Justice and Consumer Protection
may serve as evidence of that,4 given that it says nothing about software agents, regulation
by code or big data although these three areas specifically raise questions which urgently
need answering.
In 2015 the Advisory Council undertook basic work in regard to the digital world and trade,
the digital world and finance, and the digital world and health; the legal issues these raise
were left aside, though.5 This explains the focus of this 2016 Report. The Advisory Council
will be continuing its work in 2017 and will, among other things, deliver an opinion on the
controversial debate on the worth of data and the right to one’s own data.
The Advisory Council commissioned five external studies in 2016 in preparation for this
report:6
       1. M. Schmidt-Kessel, M. Larch, K. Erler, B. Heid, A. Grimm, University of Bayreuth:
          Exploratory study on available and missing data in consumer protection law;
       2. K. Purnhagen/St. Wahlen, University of Wageningen, the Netherlands: The term
          “consumer” in the 21st century, “consumer citizen” and “consumer producer”;
       3. Ch. Wendehorst, University of Vienna: Problems regarding ownership and property in
          regard to the Internet of Things which are directly relevant to consumers, plus a
          market study compiled by the Institute for Innovation and Technology (iit) in Berlin;
       4. G. Spindler, University of Göttingen: Regulation by technology;
       5. P. Rott, University of Kassel: Report on opening up and evaluating open questions
          raised and challenges faced by German consumer law policy in the 21st century.

Reference should also be made to preparatory work done by the Advisory Council in the
form of the following four working papers which were drawn up in 2016 and incorporated into
this report:
       1. I. Domurath/L. Kosyra, Consumer Data Protection in the Internet of Things, SVRV
          Working Paper No. 3;
       2. Ph. Schmechel, Consumer Data Protection in the EU’s General Data Protection
          Regulation, SVRV Working Paper No. 4;
       3. I. Domurath, Consumers and Warranties for Material Defects in the Platform
          Economy, SVRV Working Paper No. 5;
       4. L. Adam/H.-W. Micklitz, Information, Advice and Intermediation in the Digital World,
          Legal Issues as Regards Finance, Health and Trade, SVRV Working Paper Nr. 6.


    III.   Structure and thread of the report
Part II of this report deals with the digital world and its consumer law policy relevance. Part III
addresses digital services as reflected in contract law. Part IV looks into the future-related
issues of algorithms and big data. Part V delves into new forms of institutional embedding.
Parts III to V apply a standard analysis matrix: (1) identifying the problems, (2), illustrating the
legal status quo influenced by reform proposals being discussed in the political and
academic arena, (3) treating and discussing possible solutions.




4
  Federal Ministry for Economic Affairs and Energy/Federal Ministry of Justice and Consumer
Protection (op. cit., fn. 3).
5
  See the 2015 Reports: http://www.svr-verbraucherfragen.de/veroeffentlichungen/ )(German only).
6
  The reports and working papers are available (in German only) on the Advisory Council’s
website:http://www.svr-verbraucherfragen.de/veroeffentlichungen/.
                                                                                                   9

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.
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