ICT corporations through accountability and global governance

Abstract

Liquidity. This is one of the most appropriate word to describe our society. Even more targeted when we think about the development of Information and Communication Technology (ICT) colossus. The “classical” structure of multinational corporations poses the problem of which jurisdiction should we refer to when an abuse occurs throughout its supply chain. This issue arises because of the dislocated but still physical production: subsidiaries are usually displaced in third world countries where governance is lower and thus, generally, we are rethinking the liability of multinational enterprises. But what about those enormous corporates that have no dislocations but can potentially invade every house through internet and through hand devices such as smartphones and tablets? The new age firms which operate in the ICT sector are some of the biggest on the market, they represent a new lobby and their capital (bigger than some countries’ GDP) is so enormous that it grants them unlimited and uncontrolled power. Who regulates them? Is it an International Law issue? Is there an international potential framework for Internet global governance? What is being done, or pursued; which strategies have been thought of? This paper intend to research answers to those questions by identifying the global framework, the main issues at stake and what has been accomplished or is in process of being accomplished. The research will be brought out through compilation and comparison of the main legal documents and proposals issued internationally regarding ICT.

I. Information and Communication Technology Corporations

Information Communications Technology is hard to define precisely as the concepts, methods and applications involved in ICT are constantly evolving on an almost daily basis. ICT is broadly consistent with all uses of digital technology that exist to help individuals, businesses and organisations to use information; thus, ICT covers any product that will store, retrieve, manipulate, transmit or receive information electronically in a digital form (personal computers, digital television, email, robots)[1]. Usually ICT business can be categorized in two groups: (a) traditional computer-based technologies (personal/work computers) and (b) digital communication technologies (which allow people and organisations to communicate and share information digitally). Therefore, ICT companies are all those firms which produce a service (internet connection, transfer of data and so on) or a good (hardware, software, apps and so on) in this sector. For the purpose of this research we will consider corporations which provide services or non-physical goods through the internet: Google, Apple (mainly for internet media and iCloud), Facebook, Amazon and so on.

Let’s start with the concept of corporation. Corporate firms are usually big in terms of numbers (stakeholders, unity produced and revenue) and dislocated around the world (multinational enterprises); moreover they can have an intent number of shareholders if publicly traded. Under the legal point of view, the five core structural characteristics of the business corporation are: (1) legal personality, (2) limited liability, (3) transferable shares, (4) centralized management under a board structure, and (5) shared ownership by contributors of capital.

For the purpose of this analysis, we will quickly explain only the first and the second characteristic. Legal personality implies that the corporation, often considered as a “nexus of contracts”[2], has a “separate patrimony” that demarcate a pool of assets that are distinct from other assets owned by the firms’ owners (the shareholders). In other words, the corporate firm is constituted through an ensemble of contracts, has a separate patrimony and acts through its designated managers; thus corporations act as a unique entity and this entity has legal personality. In order to balance arising conflict of interest in case of economical distress, shareholders are generally the residual claimants and this strategy is called “entity shielding”.[3]

The second feature is strictly linked to the first: limited liability is a (strong) form of “owner shielding” that is effectively the converse of the “entity shielding”. Entity shielding protects the asset of the firm from the creditors (broadly, all persons who have a contractual claim on the firm including employees, suppliers and customers). In other words firms’ owners (shareholders) liability is restricted to the amount of the investment in the company, even if it subsequently goes bankrupt and has remaining debt obligations.

Classically, corporations’ features rose different legal problems: who is liable for corporations’ actions? Which jurisdiction would a claimant refer to in case of abuses from a multinational firm? Is the access to remedies granted? Those questions are just the tip of the iceberg. First of all, corporate law in our core jurisdictions[4] is in continuous evolution, not only in common law system, but also in civil law system, to better suit the necessity of our time. This evolution is the result of many attempts to answer those crucial questions. Second, many international and national scandals have arisen in the past decades that suggested the necessity to rethink our systems. Starting from one of the first big scandals concerning Nike’s accusations of encouraging and using child labour in their factory in Pakistan until reaching nowadays accusations against Apple’s slavery in China (Pegatron Case), tax evasion in Ireland or Shell in Nigeria; we can fill a greatportfolio of abuses of human rights and breaches of environmental law perpetrated by corporations’ subsidiaries. Though, the problems on how to conduct such litigations remains. We see more and more cases of extraterritorial jurisdiction[5] but it is always very complex and can undermine State’s sovereignty.

One feature is though intrinsic to the classical corporation: territoriality. Those problems arise because it is generally cheaper to dislocate the supply chain in areas where labour and environmental standards and lower. Nevertheless, the supply chain is physically dislocated on another State’s territory. In the last decade we have seen a great increment of ICT corporations that are less (or not at all) linked to the territory but can reach every corner of the globe through internet and hand devices. Nowadays those corporations are replacing the oil companies of the 80’: they are the new gold. Anything linked to the virtual world or to apps is a fertile terrain for growth.

Info-graphics: http://money.visualcapitalist.com/the-worlds-top-50-wealthiest-billionaires/

As it is deducible from those info-graphics, not only the technology sector is extremely profitable and has grown rapidly (12 billionaires, nearly a quarter of the list, come from the technology sector), but the tech-wealth is concentrated in the U.S.A. (more precisely in the famous Silicon Valley), thus ICT companies are mainly regulated by U.S.A. laws. We can find very similar results in the annual analysis of the Financial Times called “global 500”[6]; a rank that analyzes the world’s largest companies to show how corporate fortunes have changed in the past year, highlighting relative performance of countries and sectors. To understand better the power of ICT corporations it is enlightening to compare the some companies of this sector with the leader company in Oil and Gas production (Exxon Mobile) and the first five companies of another driving sector: the banks.

Comparing Wells Fargo, Apple and Google’s market value can give a clear idea of the trend: Apple is quoted more than double than then world leader bank. This denotes how this sector is expected to be prosperous in the next future. Thus, investors are more prone to invest in this appealing sector. Even comparing the revenue, Apple[7] is leading, though it’s the only one, as all the other ones have generally lower revenues than the major banks. Comparing the average net income of the main ICT companies[8] with annual countries’ GDP is a clear example of the economic power of this relatively new sector: the average net income of the six biggest ICT companies is higher than the GDP of around 80 countries. [9]

II. Controversies and Issues at Stake
The previous rudimentary framework is sufficient to understand what could be the controversies linked to this industry.
First, there are the classical conflicts of interests between shareholders and the other stakeholders and the liability problem. This is a very hot topic that involves majorly multinational enterprises’ subsidiaries not respecting human rights nor environmental standards. An example can be the scandals around Apple’s factories’ in China, but this is still concerning production of goods. ICT companies can engender other kind of violations: misuse of personal data, tax evasion, or, in the more recent cases of Foodora and Uber, not respecting the workers’ rights[10]. It is complicated to balance the interests but also to identify who can be possibly accountable for those breaches.
This first controversy is amplified by the second one. ICT world is boundaryless: every corporation operating through internet that can easily be reached by a hand device and have no territorial constraint; they literally come to bed with you. Having less territorial attachment, it becomes increasingly hard to understand which legal system they are navigating in. Thus, in case of breach of the law, it is first complicated to identify the law itself and then, the relevant jurisdiction.
Third, not only their actual and prospered economic power is great, but they are also the holders of the main communication and media network. This power can allow them to impose their view on States’ governance and on public institutions, overall if taken into consideration the poorest countries. Corporations influencing governance is a known fact and has happened in many developing countries, some examples are Kiobel vs. Shell, H&M influence over Cambodia’s labor law; but also in highly developed areas as for example the discrepancies arising between the different EU levels of governance and the Member States on the implementation of smart grids (in contrast with the big energy monopoles).
In the case of ICT corporations a conflict can arise when they can choose to select or not some informations. For example, social media have discretional power over the informations circulating on their networks and they can both appeal to the freedom of speech and leave any kind (even false or heinous) kind of message, or, on the other hand, appeal to their “community ethics”. Glaring examples can be the mendacious 100 pro-Trump websites being run from a single town in the former Yugoslav Republic of Macedonia[11] (they made a living out of this as acquiring likes on Facebook pays off), or the censorship exercised by Instagram on menstruation-themed photos by the artist Rupi Kaur[12].
Another peculiar aspect of ICT Corporations is that they manage the world’s data, thus handling informations that before were usually handled by public entities. The Datagate is a perfect example of conflicting legal norms over data protection and how Google, Apple and all the California based ICT firms (nearly all of them), were obliged by the U.S.A. government to supply their data not only of the american citizens but of all the world’s population.
All those controversies give birth to highly difficult exercises of balance that haven’t been solved yet: data protection vs public security, freedom of speech vs correct informations vs censorship, democratization of labour market vs labour rights protection and, of course, which jurisdiction should be used in each case. The core problem is that Internet’s main soul is “freedom” and it constitutes a very powerful democratic tool; governing the internet in order to make it safer also makes it less free. Therefore, the question is: how far does the internet has to be regulated, and by who? On the other side, it is important to bear in mind that many despotic regimes relegate internet to a censored propaganda tool. Also in those cases the problem remains as those population are not granted any positive obligations: they have no rights. In both cases, ICT Corporations scandals and Despotic Regimes, Internet is simply being polarized, censored and misused; it has lost its soul.
Therefore, it is necessary to start by establishing universal norms, mainly, rights for internet users. In other words it is necessary to first grant positive obligations to the internautes. In the next chapter the analysis will focus on the generation, mainly at international level, of those rights and obligations.

What is being done
Facing those major challenges require a common effort because, as underlined before, the boundaryless feature of the ICT corporations pushes them to another level. This is why we are increasingly encountering the concept of “Internet Global Governance” and, more generally there is a trend to legally frame those behaviors.
There are domestic legal frameworks and policies, regional initiatives, international policies and also independent initiatives. Domestic legal frameworks, being extremely fragmented and diversified according to the different needs, are not taken into account in this research. On the other hand, some regional initiatives are worth a look. The most interesting regional apparatus is the European Union.

The EU has a complete set of rules concerning data protection that after the Datagate, has been reinforced. Protection of personal data is a fundamental right under EU jurisdiction. Although, for what concerns the monetary aspects, Europe has strong laws on competition and taxes that are generally applicable to all corporations[13], there is not yet harmonization for regulation of e-commerce and all those new apps that create businesses worldwide (Uber, Airbnb, carsharing, just eat and so on). A recent phenomenon is the so-called “Europe-only Cloud”: after the Datagate, concerns came to the forefront with calls for a Europe-only cloud, also referred to as the ‘Schengen cloud’ or ‘Schengen Internet’, apparently involving constraints on the routing of data. Any Europe-only cloud could impact severely on data exchanges between Europe and other regions, such as the USA.[14] The council of Europe also drafted the Convention on Cybercrime, also known as the Budapest Convention. It is the first international treaty seeking to address Internet and computer crime by harmonizing national laws, improving investigative techniques, and increasing cooperation among nations. The Convention opened for signature in Budapest, on 23 November 2001 and it entered into force on 1 July 2004. By the end of 2016, 50 states have ratified it.
At the international level, the United Nations have recognized the growing problem of the lack of a platform for international debate on the scope of the above mentioned issue. In fact, it is with the World Summit of Information Society (WSIS) Declaration in Tunis in 2005, that the Internet Governance Forum (IGF) was created. The joint work of WSIS and the UN Working Group on Internet Governance (WGIG), assisted by an independent group of researchers whose joint efforts was published under the name Internet Governance Project (IGP), are considered cornerstones for the IGF. According to pt. 72 of the Agenda, the IGF is a unique, “new forum for multi- stakeholder policy dialogue”[15]. It is in this context that the need and the concept of Internet Governance was born and developed.
The World Summit on the Information Society (WSIS) proposed the following definition of Internet governance as part of its June 2005 report:

“Internet governance is the development and application by Governments, the private sector and civil society, in their respective roles, of shared principles, norms, rules, decision-making procedures, and programmes that shape the evolution and use of the Internet.” [16]

Through the last decade there has been growing concerns over internet governance and the necessity for cooperation. In fact, in the in 2013, the Montevideo Statement on the Future of Internet Cooperation (2013) was released by the leaders of a number of organizations involved in coordinating the Internet’s global technical infrastructure. Here is an extract:

“They called for accelerating the globalization of ICANN (Internet Corporation for Assigned Names and Numbers) and IANA (Internet Assigned Numbers Authority) functions, towards an environment in which all stakeholders, including all governments, participate on an equal footing.”

The statement was signed by the heads of the Internet Corporation for Assigned Names and Numbers (ICANN), the Internet Engineering Task Force, the Internet Architecture Board, the World Wide Web Consortium, the Internet Society, and the five regional Internet address registries (African Network Information Center, American Registry for Internet Numbers, Asia-Pacific Network Information Centre, Latin America and Caribbean Internet Addresses Registry, and Réseaux IP Européens Network Coordination Centre).
Still in 2013, UNESCO was mandated to conduct a comprehensive and consultative study on Internet-related issues. Therein, UNESCO has been involved in the development of Internet Governance principles mainly through its «Internet Universality» concept, encompassing four key pillars, namely Rights, Openness, Accessibility, and Multistakeholder Participation (called R.O.A.M.).[17] This draft concept has relevance to the Organization’s work in many areas – including online freedom of expression and privacy; efforts to advance universality in education, social inclusion and gender equality; multilingualism in cyberspace; access to information and knowledge; and ethical dimensions of information society.
Another important concept emerged is “Constitutionalism” of the internet. “Digital constitutionalism” can be considered as a common term to connect a constellation of initiatives that have sought to articulate a set of political rights, governance norms, and limitations on the exercise of power on the Internet.[18] It is interesting to underline the definition of constitution: “Constitutions define the fundamental rules and processes of a political community, and classically, the term refers to those mechanisms which delimit the boundaries of a state’s power over its citizens.”[19] In this sense, Constitutions represent that need to control, limit, and restrain state power, but they also serve as fundamental empowering of citizens. Moreover, It could not only restrain States’ power, but also ICT Corporations power by granting global citizens universal internet rights.
In this sense it has been lately released the “Draft Declaration of Internet Rights” by the italian study commission established in July 2014 and led by professor Rodotà. This is a very interesting piece of soft law as it outlines clearly the main rights that should be granted to every citizen worldwide: it could be the cyber version of the “Universal Declaration on Human Rights” of 1948. It is clear, short, and easily understandable; here are the Rights:

1. RECOGNITION AND SAFEGUARDING OF RIGHTS
2. RIGHT TO INTERNET ACCESS
3. NET NEUTRALITY
4. PROTECTION OF PERSONAL DATA
5. THE RIGHT TO INFORMATIONAL SELF-DETERMINATION)
6. INVIOLABILITY OF COMPUTER SYSTEMS AND COMPUTER DOMICILES
7. AUTOMATED PROCESSING
8. RIGHT TO ONE’S IDENTITY
9. ANONIMITY
10. RIGHT TO BE FORGOTTEN
11. RIGHTS AND SAFEGUARDS OF PEOPLE ON PLATFORMS
12. NETWORK SECURITY
13. RIGHT TO EDUCATION
14. CRITERIA FOR INTERNET GOVERNANCE

Although, for the moment it is only a draft, this potential set of rights would shelter citizens not only from Governments’ abuses, but also from corporations’ abuses. This declaration could possibly joint the ranks of well-recognized international soft law documents and become the first international Declaration for Internet Rights. The problem that remains, as for all piece of international law, is its implementation and the recognition not only of multinational corporations as international subjects but also of Corporate liability for egregious conduct as a general principle of international law.
Even though something is being done or started at different levels of governance in order to protect global citizens, the way is still very long and relying on domestic implementation. Thus, as a conclusion of this research, it is important to quote the last comparative analysis carried out by UNESCO in order to understand which are the domestic enforcement (according to the key concepts adopted by UNESCO under the acronym of R.O.A.M.). This study encompasses 52 declarations, guidelines, and frameworks from various international actors. Thus, not all available Internet Governance documents are assessed but mainly documents having a relation to the “Internet Universality” concept of UNESCO. Out of the 52 documents the geographic origins can be summarized as follows:

• 28 documents stem from global institutions (or from several jointly acting regional institutions).

• 11 documents are based on regional initiatives.

• 13 documents have been developed by different bodies of civil society.[20]

In particular, the section on accountability interests us the most. “Accountability is the acknowledgment and assumption of responsibility for policies, actions, decisions, and products within the scope of a designated role.”[21] The basic feature of accountability is the obligation of a person (the accountable) to another (the accountee), through which the former must give account of, explain and justify actions or decisions against criteria of some kind. Furthermore, the assumption of responsibility for any non-compliant behavior, fault or damage is also implied in the term accountability.[22]
“Different levels can be addressed for the implementation of accountability mechanisms, namely the organizations, the projects, and the policies:

• Organization-level aspects: Important elements here are the “democratic” structuring of the decision-making processes, giving concerned stakeholders the possibility to exercise appropriate influence on corporate governance. Typically, accountability should be bolstered through measures of institutional checks and balances.
• Project-level aspects: If working groups are mandated to execute certain projects, it must be ensured that through information disclosure or other safeguard policies, the concerned stakeholders can take part in the relevant developments.
• Policy-level aspects: Feedback mechanisms should be designed in a way that the concerned stakeholders are able to have their needs and wishes reflected in the decision-making processes. Possible means are the distribution of interactive drafts of policy provisions prior to release, or the publication of a matrix which compiles all comments, and explains how each input was addressed within the policy review, or why it was discarded.” [23]

In the definition, the accent is put on the importance of stakeholdersim. It is important to bear in mind that UNESCO is the main UN advisor in the field and is in charge of outlining general policies, principles and strategies (addressed mainly to States and international actors) so it is natural that this approach is completely different from the one above of the Declaration of Internet Rights.
In the comparative analysis they sound the normative character, the implementation, the effectiveness, the sanction mechanisms and if “accountability” is mentioned at all in the reviewed documents. These are the conclusions:

• The normative character is generally weak in most of the existing declarations, guidelines, and frameworks.
• The accountability mechanisms have remained underdeveloped.
• Accountability as a term or notion is often mentioned, however, its content is only rarely discussed.
• The hardest consequence of accountability, namely a mechanism of sanctions, is nowhere proposed in the existing documents. Although, some documents (for example the Recommendation on a Guide to Human Rights for Internet Users of the Council of Europe and the IRPC Charter) do refer to a right to redress.
• 28 of the 52 reviewed documents refer to the term “accountability” and the first appearance is registered in the Geneva Plan of Action (2003). Though, most documents only refer to accountability without discussing its contents in detail.

One of the most important result is that accountability is not necessarily strengthened by proposals to implement some kind of intergovernmental supervision.
UNESCO’s conclusions are the folowing:

1. The proponents of the examined declarations, guidelines, and frameworks seem to have underestimated the value of internal accountability; this concept encompasses ex ante control, ongoing control and ex poste control.
2. Furthermore, for informal cooperation to be effective in the long term, accountability is needed. Conversely, a core goal of accountability is the increase of effectiveness by learning from mistakes and feedback from stakeholders.
3. One positive accountability aspect of the last few years can be seen in the fact that an extended consultation of civil society as an actor in the preparation and development of documents as well as a (partly) improved inclusion of civil society in the decisionmaking processes have taken place.[24]

Conclusions
As analyzed, ICT world is extremely recent, is a growing sector and its evolution is shaping our societies. Recalling the Declaration of Internet Rights,

The Internet has played a decisive role in redefining public and private space, structuring relationships between people and between people and institutions. It has erased borders and has created new ways of generating and utilising knowledge. It has expanded the scope for people to participate directly in public life. It has changed how people work. It has fostered the development of a more open and free society. The Internet must be treated as a global resource and must sat!isfy the criterion of universality.

It also is necessary that our institutions evolve, in order to encompass those new challenges. Some pathways have been taken but there is an urge to foster global cooperation around internet. Our institutions are not prepared to such a sudden change in the balance of the powers (sovereign vs. global, and the recognition of corporations as international subjects of law), but neither was France the moment after the abolishment of monarchy; though, they proclaimed one of the most emulated civil code, the napoleonic code, and led the path towards the Universal declaration on human rights through the adoption of The Declaration of the Rights of Man and of the Citizen in 1789.

Our era also has its martyrs but much more must to be done; improving the international mechanism of accountability through effective international system of enforcement is probably the most important (and difficult) step to take.