Author(s)
Source
Florida Law Review, Vol. 69, pp. 887-957 (2017)
Summary
Regulation is not truly incompatible with innovation. Over time, businesses that once resisted regulation will welcome the involvement of government, and regulators will learn to adopt creative solutions to new problems, just as in the early days of the Internet.
Policy Relevance
Regulators are necessary to solve problems that arise from innovation. Both regulators and firms will compromise and adopt practical solutions.
Main Points
- The next stage of the digital economy will be the Internet of the World; that is, trillions of networked devices.
- In the early days of the Internet, some idealists theorized that state power would wither away, and championed the idea of online self-governance; a second wave of realists expressed fears that the state would crush the Internet.
- Government then stepped in to solve difficult policy problems.
- Government intervention solved problems with Microsoft’s market power.
- The Internet Tax Freedom Act solved problems with state and local taxation of electronic commerce.
- Net neutrality addresses concerns about broadband markets.
- Today, similar issues arise with the Internet of the World and new entities like Uber and Airbnb. Regulatory issues include:
- Classification problems; governments will need to create new rules for firms like Uber.
- Monopoly issues, such as the question of whether Uber can manipulate markets through surge pricing.
- Taxation issues, as Airbnb trades willingness to pay with relaxation of rules against short-term rentals.
- Platform responsibility; Uber could safeguard consumers in exchange for limits on their liability for drivers’ behavior.
- Policy discourse will zigzag between advocacy of innovation through deregulation, back toward regulation, and ultimately will adopt practical regulatory solutions.
- Policymakers should avoid creating new institutional entities like ICANN, which was created in an atmosphere of disdain for traditional regulatory safeguards, and which exercises considerable power with no accountability.
- The digital world is not really different from the “real” world; when traditional regulatory solutions work, policymakers should use them.
- Firms are realizing that government is not an impediment to innovation, but a necessary facilitator of innovation.