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Global Digital Governance Through the Back Door of Corporate Regulation

 |  September 13, 2022

By Orit Fischman Afori (College of Management Academic Studies Law School)

Today, societal life is increasingly conducted in the digital sphere, in which two core attributes are prominent: this sphere is entirely controlled by enormous technology companies, and these companies are increasingly deploying artificial intelligence (AI) technologies. This reality generates a severe threat to democratic principles and human rights. Therefore, regulating the conduct of the companies ruling the digital sphere is an urgent agenda worldwide. Policymakers and legislatures around the world are taking their first steps in establishing a digital governance regime, with leading proposals in the EU. Although it is understood that there is a necessity to adopt a comprehensive framework for imposing accountability standards on technology companies and on the operation of AI technologies, traditional perceptions regarding the limits of intervention in the private sector and contemporary perceptions regarding the limits of antitrust tools hinder such legal moves.

Given the obstacles inherent in the use of existing legal means for introducing a digital governance regime, this article proposes a new path of corporate governance regulations. The proposal, belonging to a “second wave” of regulatory models for the digital sphere, is based on the understanding that the current complex technological reality requires sophisticated and pragmatic legal measures for establishing an effective framework for digital governance norms. Corporate governance is a system of rules and practices by which companies are guided and controlled. Because the digital sphere is governed by private corporations, it seems reasonable to introduce the desired digital governance principles through a framework that regulates corporations. The bedrock of corporate governance is promoting principles of corporate accountability, which are translated into a wide array of obligations. In the last two decades, corporate accountability has evolved into a new domain of corporate social responsibility (CSR), promoting environmental, social, and governance (ESG) purposes not aimed at maximizing profits in the short term. The various benefits of the complex corporate governance mechanisms may be used to promote the desired digital governance regime that would be applied by the technology companies. A key advantage of the corporate governance mechanism is its potential to serve as a vehicle to promulgate norms in the era of multinational corporations. Because the digital sphere is governed by a few giant US companies, corporate governance may be leveraged to promote digital governance principles with a global reach in a uniform manner.

The proposed path for introducing global digital governance principles through the back door of US corporate regulation has not been raised and discussed yet in the literature or by policymakers. This study aims to explore this promising model for regulating the digital sphere in a globalized manner and provide a theoretical basis for it.

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