Machine-Readable Legitimacy: An Ethnography of Regulatory Technology

Regulatory technology coordinates algorithmic organizing between governments and industry by facilitating the exchange of compliance data to assess appropriate business conduct. This longitudinal ethnography of US regulatory technology revealed how financial services organizations established and maintained positive compliance evaluations with algorithmic oversight. With new digital infrastructure, regulators shifted away from microprudential supervision of documents at the organization level toward macroprudential supervision of data at the system level. Institutional theory makes assumptions about legitimacy conferred by governments that may not hold in digital environments where industry, vendors, and regulators discuss norms for digital submissions in advance. This paper defines machine-readable legitimacy as the negotiation and maintenance of norms by multiple actors through socio-technical data infrastructures. The findings illustrate that algorithms are contested spaces for defining norms.