The anatomy of technology regulation

The 2020s will undoubtedly be characterized by new technology regulation. But while modern technologies are global, the rules governing their development and use are not.

As a result, the fragmentation of politics is often associated with different values ​​and political ideologies in key jurisdictions: the United States, the European Union, and China. In this narrative, the U.S. prefers digital laissez-faire; Europe chooses digital big state socialism; and China pursues a politically motivated strategy of limiting some technologies and expanding others to maintain social control.

But although there is evidence to support this narrative, such broad characteristics cannot explain the sharp regulatory differences between countries that fall into the same ideological category. For example, consider Australia, New Zealand, Canada, the United States and the United Kingdom. These English-speaking liberal democracies have a strong connection to colonial history and belong to a long-standing pact on security and intelligence sharing (Five Eyes). But each has a unique approach to technology policy.

While Australia is paving its own course on everything from encryption laws and extremist content to power imbalances between digital platforms and old news media, New Zealand is building international partnerships on many of the same issues, such as through the Christchurch initiative. At the same time, Canada is listening more than it is acting, with a recent attempt to enact online legislation that ensures that Internet-era streaming companies face the same rules as traditional broadcasters. The U.S. imposed a technology embargo against China, but they did not go for domestic regulation, even in the face of abuses by major technology firms. And the UK is transforming with its former siblings into the EU.

As these examples show, several factors, outside of ideology, shape what we see as technological “political space”. Each jurisdiction has its own limited set of options to manage the effects of how new and existing technologies are developed and deployed. And these options, in turn, are limited by at least three key barriers.

The first is the constitutional jurisdiction of the jurisdiction to make decisions, legal precedents and pre-existing agreements with other states or bodies. These factors create a “hard” boundary of legal boundaries that will be difficult, though not necessarily impossible, for politicians to circumvent. And the corresponding, slightly softer border lies in conflicting political priorities in one jurisdiction, especially with regard to the “red lines” of national security.

The second barrier is a lack of political cohesion, public support and consensus among key stakeholders or disagreements between governments. Such restrictions are particularly common in systems where the legislature and the executive can be controlled by different parties, or where different parties control each of the two legislatures. In the absence of understanding, little can be done until the group of decision-makers changes in favor of one group or another. And a milder version of this restriction may occur in democracies if the ruling group avoids decisive action because it is worried about future elections.

The third barrier is the government’s lack of capacity to implement and enforce policies effectively. The most common reasons for this are budget constraints, lack of qualified staff, inability of the target sector to bear the new burden of compliance or insufficient infrastructure.

While these potential barriers tend to eliminate (or at least render ineffective) many potential policy proposals, technology policy-making is also shaped – and made more uncertain – by merging incentives and trade-offs that operate on different levels within and between governments. Here we see five main factors that can help explain the differences in policy in similar countries.

The first stems from the influence of politics on state power and attitudes towards it. Regulatory strategies tend either to centralize government power or to transfer power to other bodies and groups. Centralization is often achieved by increasing revenues and strengthening control over the private sector and the public, while the transfer of power usually involves the legislative adoption of industry standards or the complete abolition of sector regulation. The ability to change this balance of power is in itself an incentive, because it entails a redistribution of resources between stakeholders – not least government bureaucracies, on the one hand, and the business lobby, on the other.

The second factor is the likely potential impact of the policy on national output and productivity. Technology policy is often aimed at enhancing national economic power as part of a broader government development strategy, which in itself may include protectionism or market opening policies.

Thus, policy decisions can be motivated either by a desire to increase domestic activity (help producers or workers in the country) or by a desire to promote activity at the international level (support domestic exporters). Given that technology policy typically requires systems of compliance or accountability regimes that constrain business start-ups or foreign investment, economic impact should also be considered in the calculation of decision-makers.

Next, there is national security, which can be affected by a wide range of technology policies. While laws that allow security services to redefine encryption can increase the ability of these institutions to counter foreign and domestic threats, laws or court decisions that support freedom of speech and due process can complicate their work.

The fourth factor is the likely impact of the policy on consumer rights and protection. Technology policies often aim to expand new choices, lower prices, and support competitive markets. But consumer protection policies tend to be uneven due to tensions between national and local authorities, uncertainty about what consumers actually prefer, and difficulties in assessing issues such as market concentration (especially if goods or services seem “free” for end users). For example, while some people are happy that technology platforms are tracking their behavior to improve services, others prefer more privacy.

Finally, there is the likely impact of policy on the own power of decision-makers. Politicians will naturally focus on measures that can improve their own positions, both present and future; but, in the same way, they will soon abandon a policy that proves unpopular among key stakeholders.

Taken together, these constraints and incentives make it possible to understand the differences in technology policy-making in different countries that otherwise look similar. Given these factors, we can develop a finer understanding of where technology policy is heading in the crucial decade.

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