Who wants to play by the rules? Why self-regulation and government intervention are at a crossroads

Can tech firms be trusted to know what's best for users?

For some politicians and business leaders, regulation is a dirty word. The arguments generally go that regulation is bad for economies as it stifles innovation and growth. Too much red tape and bureaucracy, too much government intervention. Triumphalist, propaganda-like statements from the White House in the US last October, and a bizarre Economic Report of the President 2020 have done little to clarify the argument, either for or against. Claims that the Trump administration's repeal of the net neutrality rules will increase real incomes by more than $50 billion per year and consumer welfare by almost $40 billion per year seem ridiculous. There is no evidence that de-regulation in the US has or will improve broadband prices or services, either now or in the future.  

The problem is that stories like this creates a false notion of regulation, what it's intended to do and its short and long-term impact. Is it good or bad for business? Should regulators take a more prudent approach to new technology or should they lay out a few ground rules early on in development cycles to avoid any later damage to consumers and businesses?

There is no one catch-all answer but what is becoming increasingly clear is that established big tech companies are not exactly covering themselves in glory when it comes to self-regulating. This is one of the key reasons behind the UK government's decision to empower watchdog OFCOM with regulating internet companies against harmful content (something which Germany and Australia have also done). This announcement in February seemed fair enough on the surface - who can really argue against shutting down abusive, illegal content? - but when it gets to harmful but not illegal content, it gets into grey areas.

For Ben Derrington, legal director at law firm Ashfords, this is problematic and, in some ways, fuels the critics of regulation.  

"What is notable about the UK proposals is their breadth, which is expressed to address not just illegal content but ‘harmful' content," he says adding that issues will arise if companies fail to create terms and conditions which are specific and accurate enough to allow breaches to be clearly identifiable for OFCOM.

"In response, will OFCOM be tempted to heavily prescribe specific terms and conditions for companies to publish?" asks Derrington. "This would produce a conflict with the Government's desire to protect freedom of expression. As such, the efficacy of regulatory enforcement is particularly reliant on the co-operation of those companies caught by their regulatory powers."

It's an interesting point because it highlights the complexities regulators face in policing regulations. We will of course have to wait and see whether OFCOM has got it right but as Derrington points out, it's a difficult line to walk to get the balance right.

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