Technology, Business & Cool Toys

What sort of public policy vision should govern the Internet of Things? I’ve spent a lot of time thinking about that question in essays here over the past year, as well as in a new white paper (“The Internet of Things and Wearable Technology: Addressing Privacy and Security Concerns without Derailing Innovation”) that will be published in the Richmond Journal of Law & Technology early next year.

But I recently heard three policymakers articulate their recommended vision for the Internet of Things (IoT) and I found their approach so inspiring that I wanted to discuss it here in the hopes that it will become the foundation for future policy in this arena.

Last Thursday, it was my pleasure to attend a Center for Data Innovation (CDI) event on “How Can Policymakers Help Build the Internet of Things?” As the title implied, the goal of the event was to discuss how to achieve the vision of a more fully-connected world and, more specifically, how public policymakers can help facilitate that objective. It was a terrific event with many excellent panel discussions and keynote addresses.

Two of those keynotes were delivered by Senators Deb Fischer (R-Neb.) and Kelly Ayotte (R-N.H.). Below I will offer some highlights from their remarks and then relate them to the vision set forth by Federal Trade Commission (FTC) Commissioner Maureen K. Ohlhausen in some of her recent speeches. I will conclude by discussing how the Ayotte-Fischer-Ohlhausen vision can be seen as the logical extension of the Clinton Administration’s excellent 1997 Framework for Global Electronic Commerce, which proposed a similar policy paradigm for the Internet more generally. This shows how crafting policy for the IoT can and should be a nonpartisan affair. Continue reading →

Capital moves like quicksilver around the globe today as investors and entrepreneurs look for more hospitable tax and regulatory environments. The same is increasingly true for innovation. Innovators can, and increasingly will, move to those countries and continents that provide a legal and regulatory environment more hospitable to entrepreneurial activity. I was reminded of that fact today while reading two different reports about commercial drones and the sharing economy and the global competition to attract investment on both fronts. First, on commercial drone policy, a new Wall Street Journal article notes that:

Amazon.com Inc., which recently began testing delivery drones in the U.K., is warning American officials it plans to move even more of its drone research abroad if it doesn’t get permission to test-fly in the U.S. soon. The statement is the latest sign that the burgeoning drone industry is shifting overseas in response to the Federal Aviation Administration’s cautious approach to regulating unmanned aircraft.

According to the Journal reporters, Amazon has sent a letter to the FAA warning that, “Without the ability to test outdoors in the United States soon, we will have no choice but to divert even more of our [drone] research and development resources abroad.” And another report in the U.K. Telegraph notes that other countries are ready and willing to open their skies to the same innovation that the FAA is thwarting in America. Both the UK and Australia have been more welcoming to drone innovators recently. Here’s a report from an Australian newspaper about Google drone services testing there. (For more details, see this excellent piece by Alan McQuinn, a research assistant with the Information Technology and Innovation Foundation: “Commercial Drone Companies Fly Away from FAA Regulations, Go Abroad.”) None of this should be a surprise, as I’ve noted in recent essays and filings. With the FAA adopting such a highly precautionary regulatory approach, innovation has been actively disincentivized. America runs the risk of driving still more private drone innovation offshore in coming months since all signs are that the FAA intends to drag its feet on this front as long as it can, even though Congress has told to agency to take steps to integrate these technologies into national airspace.  Continue reading →

Sharing Economy paper from MercatusI’ve just released a short new paper, co-authored with my Mercatus Center colleagues Christopher Koopman and Matthew Mitchell, on “The Sharing Economy and Consumer Protection Regulation: The Case for Policy Change.” The paper is being released to coincide with a Congressional Internet Caucus Advisory Committee event that I am speaking at today on “Should Congress be Caring About Sharing? Regulation and the Future of Uber, Airbnb and the Sharing Economy.”

In this new paper, Koopman, Mitchell, and I discuss how the sharing economy has changed the way many Americans commute, shop, vacation, borrow, and so on. Of course, the sharing economy “has also disrupted long-established industries, from taxis to hotels, and has confounded policymakers,” we note. “In particular, regulators are trying to determine how to apply many of the traditional ‘consumer protection’ regulations to these new and innovative firms.” This has led to a major debate over the public policies that should govern the sharing economy.

We argue that, coupled with the Internet and various new informational resources, the rapid growth of the sharing economy alleviates the need for much traditional top-down regulation. These recent innovations are likely doing a much better job of serving consumer needs by offering new innovations, more choices, more service differentiation, better prices, and higher-quality services. In particular, the sharing economy and the various feedback mechanism it relies upon helps solve the tradition economic problem of “asymmetrical information,” which is often cited as a rationale for regulation. We conclude, therefore, that “the key contribution of the sharing economy is that it has overcome market imperfections without recourse to traditional forms of regulation. Continued application of these outmoded regulatory regimes is likely to harm consumers.” Continue reading →

This Thanksgiving holiday season, an estimated 39 million people plan on traveling by car. Sadly, according to the National Safety Council, some 418 Americans may lose their lives on the roads over the next few days, in addition to over 44,000 injuries from car crashes.

In a new oped for the Orange County Register, Ryan Hagemann and I argue that many of these accidents and fatalities could be averted if more “intelligent” vehicles were on the road. That’s why it is so important that policymakers clear away roadblocks to intelligent vehicle technology (including driverless cars) as quickly as possible. The benefits would be absolutely enormous.

Read our oped, and for more details check out our recent Mercatus Center white paper, “Removing Roadblocks to Intelligent Vehicles and Driverless Cars.”

Last week, it was my pleasure to speak at a Cato Institute event on “The End of Transit and the Beginning of the New Mobility: Policy Implications of Self-Driving Cars.” I followed Cato Institute Senior Fellow Randal O’Toole and Marc Scribner, a Research Fellow at the Competitive Enterprise Institute. They provided a broad and quite excellent overview of all the major issues at play in the debate over driverless cars. I highly recommend you read the excellent papers that Randal and Marc have published on these issues.

My role on the panel was to do a deeper dive into the privacy and security implications of not just the autonomous vehicles of our future, but also the intelligent vehicle technologies of the present. I discussed these issues in greater detail in my recent Mercatus Center working paper, “Removing Roadblocks to Intelligent Vehicles and Driverless Cars,” which was co-authored with Ryan Hagemann. (That article will appear in a forthcoming edition of the Wake Forest Journal of Law & Policy.)  I’ve embedded the video of the event down below (my remarks begin at the 38:15 mark) as well as my speaking notes. Again, please consult the longer paper for details.


Continue reading →

The sharing economy is growing faster than ever and becoming a hot policy topic these days. I’ve been fielding a lot of media calls lately about the nature of the sharing economy and how it should be regulated. (See latest clip below from the Stossel show on Fox Business Network.) Thus, I sketched out some general thoughts about the issue and thought I would share them here, along with some helpful additional reading I have come across while researching the issue. I’d welcome comments on this outline as well as suggestions for additional reading. (Note: I’ve also embedded some useful images from Jeremiah Owyang of Crowd Companies.)

1) Just because policymakers claim that regulation is meant to protect consumers does not mean it actually does so.

  1. Cronyism/ Rent-seeking: Regulation is often “captured” by powerful and politically well-connected incumbents and used to their own benefit. (+ Lobbying activity creates deadweight losses for society.)
  2. Innovation-killing: Regulations become a formidable barrier to new innovation, entry, and entrepreneurism.
  3. Unintended consequences: Instead of resulting in lower prices & better service, the opposite often happens: Higher prices & lower quality service. (Example: Painting all cabs same color destroying branding & ability to differentiate).

Continue reading →

[Last updated September 2016.]

I spend a lot of time reading books and essays about technology; more specifically, books and essays about technology history and criticism. Yet, I am often struck by how few of the authors of these works even bother defining what they mean by “technology.” I find that frustrating because, if you are going to make an attempt to either study or critique a particular technology or technological practice or development, then you probably should take the time to tell us how broadly or narrowly you are defining the term “technology” or “technological process.”

Photo: David HartsteinOf course, it’s not easy. “In fact, technology is a word we use all of the time, and ordinarily it seems to work well enough as a shorthand, catch-all sort of word,” notes the always-insightful Michael Sacasas in his essay “Traditions of Technological Criticism.” “That same sometimes useful quality, however, makes it inadequate and counter-productive in situations that call for more precise terminology,” he says.

Quite right, and for a more detailed and critical discussion of how earlier scholars, historians, and intellectuals have defined or thought about the term “technology,” you’ll want to check out Michael’s other recent essay, “What Are We Talking About When We Talk About Technology?” which preceded the one cited above. We don’t always agree on things — in fact, I am quite certain that most of my comparatively amateurish work must make his blood boil at times! — but you won’t find a more thoughtful technology scholar alive today than Michael Sacasas. If you’re serious about studying technology history and criticism, you should follow his blog and check out his book, The Tourist and The Pilgrim: Essays on Life and Technology in the Digital Age, which is a collection of some of his finest essays.

Anyway, for what it’s worth, I figured I would create this post to list some of the more interesting definitions of “technology” that I have uncovered in my own research. I suspect I will add to it in coming months and years, so please feel free to suggest other additions since I would like this to be a useful resource to others. Continue reading →

This past week I posted two new essays related to my new book, “Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom.” Just thought I would post quick links here.

First, my old colleague Dan Rothschild was kind enough to ask me to contribute a post to the R Street Blog entitled, “Bucking the ‘Mother, May I?’ Mentality.” In it, I offered this definition and defense of permissionless innovation as a policy norm:

Permissionless innovation is about the creativity of the human mind to run wild in its inherent curiosity and inventiveness, even when it disrupts certain cultural norms or economic business models. It is that unhindered freedom to experiment that ushered in many of the remarkable technological advances of modern times. In particular, all the digital devices, systems and networks that we now take for granted came about because innovators were at liberty to let their minds run wild.

Steve Jobs and Apple didn’t need a permit to produce the first iPhone. Jeff Bezos and Amazon didn’t need to ask anyone for the right to create a massive online marketplace. When Sergey Brin and Larry Page wanted to release Google’s innovative search engine into the wild, they didn’t need to get a license first. And Mark Zuckerberg never had to get anyone’s blessing to launch Facebook or let people freely create their own profile pages.

All of these digital tools and services were creatively disruptive technologies that altered the fortunes of existing companies and challenged various social norms. Luckily, however, nothing preemptively stopped that innovation from happening. Today, the world is better off because of it, with more and better information choices than ever before.

I also posted an essay over on Medium entitled, “Why Permissionless Innovation Matters.” It’s a longer essay that seeks to answer the question: Why does economic growth occur in some societies & not in others? I build on the recent comments of venture capitalist Fred Wilson of Union Square Ventures noted during recent testimony: “If you look at the countries around the world where the most innovation happens, you will see a very high, I would argue a direct, correlation between innovation and freedom. They are two sides of the same coin.” Continue reading →

book cover (small)I am pleased to announce the release of my latest book, “Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom.” It’s a short manifesto (just under 100 pages) that condenses — and attempts to make more accessible — arguments that I have developed in various law review articles, working papers, and blog posts over the past few years. I have two goals with this book.

First, I attempt to show how the central fault line in almost all modern technology policy debates revolves around “the permission question,” which asks: Must the creators of new technologies seek the blessing of public officials before they develop and deploy their innovations? How that question is answered depends on the disposition one adopts toward new inventions. Two conflicting attitudes are evident.

One disposition is known as the “precautionary principle.” Generally speaking, it refers to the belief that new innovations should be curtailed or disallowed until their developers can prove that they will not cause any harms to individuals, groups, specific entities, cultural norms, or various existing laws, norms, or traditions.

The other vision can be labeled “permissionless innovation.” It refers to the notion that experimentation with new technologies and business models should generally be permitted by default. Unless a compelling case can be made that a new invention will bring serious harm to society, innovation should be allowed to continue unabated and problems, if they develop at all, can be addressed later.

I argue that we are witnessing a grand clash of visions between these two mindsets today in almost all major technology policy discussions today. Continue reading →

Google’s announcement this week of plans to expand to dozens of more cities got me thinking about the broadband market and some parallels to transportation markets. Taxi cab and broadband companies are seeing business plans undermined with the emergence of nimble Silicon Valley firms–Uber and Google Fiber, respectively.

The incumbent operators in both cases were subject to costly regulatory obligations in the past but in return they were given some protection from competitors. The taxi medallion system and local cable franchise requirements made new entry difficult. Uber and Google have managed to break into the market through popular innovations, the persistence to work with local regulators, and motivated supporters. Now, in both industries, localities are considering forbearing from regulations and welcoming a competitor that poses an economic threat to the existing operators.

Notably, Google Fiber will not be subject to the extensive build-out requirements imposed on cable companies who typically built their networks according to local franchise agreements in the 1970s and 1980s. Google, in contrast, generally does substantial market research to see if there is an adequate uptake rate among households in particular areas. Neighborhoods that have sufficient interest in Google Fiber become Fiberhoods.

Similarly, companies like Uber and Lyft are exempted from many of the regulations governing taxis. Taxi rates are regulated and drivers have little discretion in deciding who to transport, for instance. Uber and Lyft drivers, in contrast, are not price-regulated and can allow rates to rise and fall with demand. Further, Uber and Lyft have a two-way rating system: drivers rate passengers and passengers rate drivers via smartphone apps. This innovation lowers costs and improves safety: the rider who throws up in cars after bar-hopping, who verbally or physically abuses drivers (one Chicago cab driver told me he was held up at gunpoint several times per year), or who is constantly late will eventually have a hard time hailing an Uber or Lyft. The ratings system naturally forces out expensive riders (and ill-tempered drivers).

Interestingly, support and opposition for Uber and Google Fiber cuts across partisan lines (and across households–my wife, after hearing my argument, is not as sanguine about these upstarts). Because these companies upset long-held expectations, express or implied, strong opposition remains. Nevertheless, states and localities should welcome the rapid expansion of both Uber and Google Fiber.

The taxi registration systems and the cable franchise agreements were major regulatory mistakes. Local regulators should reduce regulations for all similarly-situated competitors and resist the temptation to remedy past errors with more distortions. Of course, there is a decades-long debate about when deregulation turns into subsidies, and this conversation applies to Uber and Google Fiber.

That debate is important, but regulators and policymakers should take every chance to roll back the rules of the past–not layer on more mandates in an ill-conceived attempt to “level the playing field.” Transportation and broadband markets are changing for the better with more competition and localities should generally stand aside.