Facebook’s leading the news again, at least in Europe and America. Its current ‘crisis’ – if that’s what it is – has focused attention on the desirability or otherwise of regulation: of itself, its peers, the Internet in general. Can online businesses be trusted to do what’s right (with data or in other ways), or should they be regulated like other economic sectors?
This week: a fundamental question about the balance between innovation, commercial interests and the regulation of the Internet: between ‘permissionless innovation’, which has been the norm online, and the ‘precautionary principle’ which is the norm in other economic sectors. I’ll identify six reasons why we need to think afresh on this, cite six areas in which other major industries are (often much) more regulated, and draw an (obvious) conclusion about why those two principles should be related.
First, that overarching issue, the difference between two visions of innovation, business and society.
The Internet community has argued that it should be free (or as free as it can be) of regulation; that the absence of rules restricting innovation’s what’s enabled it to achieve all that it has; that prior constraints on innovation will prevent it from achieving greater things in future. Internet businesses – Facebook, Google and their peers – enthusiastically endorse this case.
Eli Dourado summarised this principle of ‘permissionless innovation’ for the US Congress:
As an open platform, the Internet allows entrepreneurs to try new business models and offer new services without seeking the approval of regulators beforehand. … [T]here is little prior restraint on the business activities that may be tried online. When harms or failures occur, we address them in an ex post manner. (‘Ex post’, for those with little law or Latin, means ‘afterwards’.)
There’s a lot of truth in this. The freedom to innovate, unconstrained, on open platforms has undoubtedly led to more and faster innovation. This includes the absence of intellectual property constraints from the Internet’s core protocols and from the World Wide Web’s.
The ‘precautionary principle’
It’s not, however, the whole truth or the only truth. The Internet here’s been treated as exception. Other economic sectors are much more governed by rules and regs on what they can and cannot do.
Most societies don’t let businesses in oil or agriculture, mining, armaments or pharmaceuticals innovate with anything like the same degree of freedom. They impose many ‘prior restraints’ on innovation, concerned, for example, with preventing environmental harm, with employment and consumer rights, with animal welfare, with competition law, with security and human rights.
Here’s how UNESCO defines this ‘precautionary principle’:
When human activities may lead to morally unacceptable harm that is scientifically plausible but uncertain, actions shall be taken to avoid or diminish that harm. Morally unacceptable harm refers to harm to humans or the environment that is
threatening to human life or health, or
serious and effectively irreversible, or
inequitable to present or future generations, or
imposed without adequate consideration of the human rights of those affected.
That principle’s inherent in the idea of sustainable development 'that meets the needs of the present without compromising the ability of future generations to meet their own needs'. It's at the root of health and safety rules, environmental protections and gender equity assessments. It’s applied particularly to other forms of innovation that are vigorous and current, such as gene-editing and nano-technology, not to inhibit scientific advance but to mitigate potential risks.
The Internet community (and businesses) argue sometimes that potential impacts like these don’t arise where online innovation is concerned, but that’s not so. Online innovations have offline impacts that make big differences across societies. That’s why the Internet community calls them ‘transformative’.
Not all of these are positive, not all of these are planned. Facebook, Google and other data corporations run rings around the right of privacy. ‘Gig’ employment undermines employment rights. Airbnb’s affected housing markets, substantially some places. Bitcoin’s immensely wasteful of scarce energy resources. And so on.
Why does this matter now?
The Facebook ‘crisis’ has drawn attention to these two positions. Many who would previously have supported ‘Internet exceptionalism’ and permissionless innovation are now questioning what that means in a more digital society. Two questions increasingly are asked:
How do we clarify where there are problems that require prior restraints (for example in defence of human rights)?
How do we set about striking the right balance for an age that's digital, not analogue, by default?
I’ll briefly summarise some points arising here (material for future posts this year), then make some final points.
Reasons to think afresh
Here are six reasons why it makes sense to think afresh about this rather than relying on past nostrums.
First, innovations aren’t only benign. Some of the most successful innovators/entrepreneurs online are criminals. Viruses and malware are innovations too. The Internet would (arguably) have been even more successful if its pioneers had paid more attention to those risks beforehand rather than addressing them ex post.
Second, the Internet is different now from what it was. It’s not shy geeks in labs that lead its innovation now, it’s global corporations – and if shy geeks have bright ideas, they’re almost all snapped up by corporations long before they bloom. What’s more, as Douglas Rushkoff points out, those corporations govern much of how the Internet develops: ‘Selling on Amazon, promoting on Facebook or sharing data with Google are all regulated by the companies that own these platforms, and to their own advantage.’
Third, they do it with our data. Take that Dourado quote again and substitute, say, ‘Facebook’ for ‘entrepreneurs’ and ‘to comply with data protection rules' for ‘the approval of regulators’. Does that feel as comfortable?
Fourth, the Internet now has much more impact on everything than it had back in the day. Online innovations have offline impacts right across societies. And genies don’t go back in bottles. It’s relatively easy to fix things after the event when they’re unimportant or insignificant; impossible if they’ve transformed things in ways that turn out to be less desirable than optimists had hoped. You can't fix everything ex post.
Fifth, we’re no longer talking only about how we handle innovation on the Internet. The balance that we strike on this will be the balance that applies to other areas of digital development, including robotics and artificial intelligence. The importance of getting that balance right is therefore growing year by year: a point I made last week.
And sixth, it’s increasingly clear that both governments and users of the Internet see problems here. People may continue to use online platforms, because they value what they offer and have no real alternatives, but they no longer trust them. Internet innovators can no longer rely on people thinking what they do is in the public interest. Increasingly, they don’t, and will demand constraints, starting with privacy.
Six issues to think about
The issues here are more complex and widespread than much of the discussion round them so far recognises. I’ll identify six issues where data corporations aren’t regulated in the same way as other business sectors. There’s no time to address these in this post but I’ll explore them all in future ones.
First, competition. Leading platforms (Google, Facebook, Amazon, Uber, for example) are often near monopolies. Competition authorities would prevent such market dominance in other sectors.
Second, data protection. Those platforms have stretched their use of data beyond places that their users think appropriate. AI will allow them to do more with more. That’s a crucial regulatory challenge, not just concerned with rights.
Third, content, which is not just freedom of expression. Most societies seek to inhibit harm to individuals by regulating types of content. Rape victims in Britain, for example, have the right to anonymity. Advertisers must by law be truthful. Laws and norms like these are not applied on global platforms.
Fourth, politics. Facebook may not seek to exercise political influence but it clearly could do if it wished. Its algorithms do so unintendedly, in any case, and are open to manipulation.
Fifth, cultural autonomy. Dominant platforms in almost all countries are global multinationals, not domestic businesses. Local languages and cultures struggle to compete in the face of Spotify and Netflix. We’ve been here before, in debates about the New World Information and Communication Order in the 1970s.
Sixth, taxation. Global platforms routinely avoid paying local taxes, giving them an edge over local competitors and reducing the revenue that governments need to meet the needs of citizens.
Here’s how I’d summarise. Successful economies foster innovation. Successful societies ensure the whole community gains from innovation, and that those with power don’t benefit themselves at the expense of others.
Regulation’s where the balance lies between these goals. Getting it right’s part of good governance. Responsible businesses know this and work with society, indeed, with other stakeholders, to achieve it.
The Facebook ‘crisis’ shows the data industry’s some way to go. As in other areas, the Internet community and businesses, like governments and citizens, need to rethink 'permissionless innovation' and the 'precautionary principle', mental maps and business models, for the digital age that’s here and coming. Principles – whether ‘permissionless’ or ‘precautionary’ – need to change as circumstances change.
I’ll end by quoting another platform pioneer, Martha Lane Fox who co-founded Lastminute.com:
Regulation does not have to be oppressive; done well, it can be a positive articulation of who we are and what we value. But to succeed, we’re going to need a much more nuanced conversation than we’ve had so far – one where both politicians and the tech industry work harder to understand each other and recognise their obligations.
I’ll follow on next week.
Image credit: "Innovation", by Robert Occhialini on Flickr.