Regulating Technology
ben-evans.com
ben-evans.com
1. It just doesn't work. Legal and regulatory solutions are too slow and poorly designed to be effective, see for example the EU browser consent decree applied to Internet Explorer. IE didn't fail because Microsoft was forced to offer a choice of browser; it stumbled because of other nimbler competitors (particularly Chrome) that were able to innovate despite Microsoft's historical success. Similarly, Windows' monopoly of the 2000s was nothing like as entrenched as a business like oil: the dominant player is always at risk from technological shifts (e.g. browser-based apps) that render old advantages (Win32) less profound.
2. The marketplace is global. Heavy regulation of US or EU companies is a competitive disadvantage when Chinese companies operate in a very different dynamic. The US could hypothetically force the dismantling of Facebook into its constituent products or the EU could add stricter rules on how it could monetize its services, but that just plays to the advantages of Tiktok and other companies that they have even less control over. It's unclear that this is in the interests of America or Europe.
[Disclosure: I work for Google, but it's Sunday and I don't speak for them; I'm just another muggle posting on the internet.]
This is a return to the era of robber barons. We must try to ensure that companies have incentives to do better, otherwise we have seen time and time again that they will do anything they please as long as it is profitable. Consumers will not "just choose the ethical option" because they either cannot afford to, they don't realise the consequences, or they just don't care.
There are no easy solutions here. But I agree strongly with your premise of "incentivizing companies to do better", and I suspect there are other means than regulation to achieve that goal.
Equally, the government itself is a huge purchaser of services and has undue influence in how companies behave. The desire for companies to win federal and military contracts allows governments significant leverage; perhaps not in the Facebook case, but certainly in areas like cloud.
2. I don't think it's self-evident that regulation would disadvantage US and EU companies. Regulation that encourages competition and innovation is an economic advantage - not a disadvantage. Tiktok might be less attractive if there was a vibrant marketplace of federated social media services that don't send your data to the CCP.
Chrome defeated Internet Explorer by leveraging a different monopoly. That meant it had copious funding without needing to make money itself and it got a huge amount of free marketing by being featured on google.com. But just trading one monopoly for another isn't competition. Internet Explorer was a monoculture controlled by a single player, now Chrome is, is that better? Was Microsoft going to add features that allow the platform-independent web to compete with Win32 apps? Is Google going to add features that protect privacy and allow users to keep their data on their own machines? Are they going to care about not making things so complicated that no upstart can create a third party browser ever again? Getting away from that requires actual competition.
Meanwhile the actual antitrust enforcement actions we've seen have largely been stupid garbage (pretty much as expected), but they've also been painful and expensive stupid garbage, which gives the targets an incentive to avoid attracting their attention. And, most importantly, antitrust pretty much by definition only applies to really huge companies. If all they did was show up at the doorstep of any company with more than 50% market share and beat them with clubs until they're weak enough that someone else can take market share from them, that's still doing something useful, and most importantly it isn't doing the most dangerous thing regulation can do, which is the opposite of that -- impact smaller more fragile competitors and upstarts more than huge incumbents, which destroys competition.
The marketplace being global might not very much longer be the case. For example, the EU court of justice has ruled (again) that personally-identifiable info just can't be transferred to the US under the "safe harbor" doctrine. And hasn't Google pulled out of China because they were required to give data to the government which however they weren't willing to on matters of principle?
It's clear that Google and Facebook are the problems and practically equivalent to the AOL walled garden.
I'm not sure that it would be impossible to disrupt them. What is lacking? Is it the fighting spirit?
Chinese companies have their own regulations to deal with. I’m not sure it’s necessarily a disadvantage.
* Unleaded gasoline
* Earthquake-proof building codes
* Air pollution (https://en.wikipedia.org/wiki/Clean_Air_Act_of_1963#Effects)
These are just a few that I quickly came up with off the top of my head. Obviously, not all regulation works. But it is so incredibly false to say there doesn't exist effective regulation that has made our lives much better.
Compliance goes hand in glove with regulatory reporting. Reporting to regulators should be a marginal cost thing - if the data internally is same, well managed and fully auditable in an automated fashion.
Doing this in finance is something the new challenger banks (ie monzo built about five years ago by ten coders and now has a million UK accounts) - this is something they can have one compliance person because all their systems are new and written with compliance in mind.
Doing this for most major banks is next to impossible. It would rewriting everything (#)
(#) Actuallly i would say this is a good strategic plan for most major banks. Might not be able to persuade the board but still.
If you've got lots of edge cases from a legacy business then its probably not going to work anywhere near as well even if you could rewrite everything.
As a good example, we're now at the 10th anniversary of the original Digital Economy Act in the UK, the legislation that was going to disconnect persistent pirates from the internet and send out warning letters. This legislation passed. There was much writing at the time about how this was the end of the open internet, and from politicians about how this was the end of the wild west internet.
And yet, ten years later, not a single action has ever been undertaken under those provisions. No letters were sent. No disconnections ever happened. And that's because politicians ignored the complexity, declared something must be done and passed law that didn't actually parse into any real world actions. Primarily it was just completely barmy costs wise for rights owners to send letters, so they didn't and the regulator just quietly forgot about it after several consultations.
Much of this regulation feels very similar. Laws may be passed, but the vast majority of them will never result in any changes because frankly the quality of lawmaking in most jurisdictions is extremely poor. One or two bits certainly will, but most of it will fail badly.
Evans sets out the UK's Online Harms act as an example, but the Online Harms regulation is doomed for one simple reason - everyone and their dog in politics and lobbying keeps trying to project their problems on to it as something that will be solved. It's suddenly got to do a million things, while not having any resource to do so. It will inevitably collapse under it's own weight because nobody involved is brave enough to say it's scope is already too big to work.
1. Slowing innovation 2. Creating monopolies 3. Crippling entire segments of the tech industry
The last chart is the most important: the cost of compliance affects small businesses, including startups much more than large companies.
I could steal the CSS, but that's is only 20% of the battle - getting graphs that match the snazz, getting everything just right, but with this off handed vibe.
As I get older this stuff matters.
"16px" is a very good font size. I.e. don't do anything, just let the browser use its default.
[0] https://images.squarespace-cdn.com/content/v1/50363cf324ac8e...
[1] https://onlinelibrary.wiley.com/doi/abs/10.1111/rego.12107
I'm a little concerned by the implication that regulating tech should focus on making sure that people vote "the right way".