This publication represents the inaugural edition of CPI’s TechREG Chronicle. The regulation of digital businesses is emerging as one of the signature issues of our times. Through this new publication, we seek to contribute to the debate and discussion over when, how, and when not to regulate digital businesses and the key technologies they use.
The TechREG Chronicle will be published monthly and be available to subscribers of the Antitrust Chronicle as well as standalone subscription. Technology regulation, while sometimes related to antitrust, is taking on a unique flavor, and a distinct legislative and rule-making path. The regulatory choices will have profound implications for the economy and will complement those made through changes in competition policy targeted to tech firms.
We are privileged to publish contributions from some of the some of the leading participants in this rapidly emerging field. The range of issues that we will delve into in future issues is seen in the diversity of topics in this inaugural issue.
As David S. Evans observes, the scope of tech regulation will expand over the coming decades as the digital transformation sweeps through economy, leading to disruptive innovation, much unforeseen, and causing fundamental changes in the physical economy. This will raise questions as to whether we need new laws and regulations, should modify existing ones, do nothing at all, or perhaps even ease regulation that does not make sense for digital firms. Tech Reg, as several other authors note, can build on an extensive body of economics and experience on the role and design of regulation but will face new problems.
For example, Tom Brown delves into the need for U.S. Federal lawmaking procedures to deal seriously with cryptocurrencies. To what extent can regulatory and monetary policies executed within a framework conceived in the 18th century continue to be applicable in the 21st? Karen Webster’s discussions with Jeremy Allaire and Kenneth Rogoff also delve in detail into the unique regulatory issues that the blockchain raises for traditional regulators. There is much at stake in what is, to a large extent, uncharted territory for regulators and existing institutions.
Martin Cave asks what lessons can be learned from the regulation of pre-existing network industries as legislatures and regulators seek to rein in the current generation of power players. To what extent are the lessons learned from the regulation of Alexander Graham Bell’s telephone relevant to the regulation of the likes of today’s tech powerbrokers?
Cary Coglianese raises another fundamental issue. The ability to regulate technology-based industries depends, itself, on technological knowledge and capacity. How can regulators build up and retain the necessary in-house expertise and know-how to regulate this notoriously dynamic field? And how to do so when even participants in the game disagree with each other on the parameters of competition and innovation? This is an inescapable dilemma for regulators and legislators.
The diversity of the questions raised may sometimes be startling. Issues surrounding the regulation of technology can arise in situations that would seem unusual even in recent history. Facebook’s acquisition of Giphy (a company that provides an online database and search engine that allows users to search for and share short looping videos with no sound) would traditionally have passed under the radar. But David J. Teece explains well how concerns involving dynamic competition and innovation can come from the most unusual quarters.
A key concern that will inform the regulation of technology, as it develops, is the protection of user data. In order to do so, such regulation must draw insight from existing rules to derive sensible solutions. As Juan Delgado points out, there are many lessons lawmakers or regulators seeking to establish standards for the use of user data can learn from so-called “Open Banking” initiatives in various jurisdictions. There is always a careful balance between the control of personal data, on the one hand, and the facilitation of competition, on the other hand. This is a dilemma that will rear its head time and again.
As Randal C. Picker points out, this dynamic has parallels with the early development of antitrust rules, and we must learn from the lessons of the past. This is a developing debate, but momentum is growing. One thing is clear: there is a need for rigorous legal and economic scholarship to evaluate any proposals that come to light. The pieces in this volume address current thinking towards these and other questions from the authors’ diverse perspectives.
Subsequent issues of the TechREG Chronicle will focus on regulation for range of sectors, such as large platform businesses, crypto, FinTech, and telemedicine, and for broad issues such as artificial intelligence, algorithms, and user privacy. We hope you will gain insight from the diverse array of viewpoints to be assembled in these pages.
As always, many thanks to our great panel of authors.