I’ve been floating around in conservative policy circles for 30 years and I have spent much of that time covering media policy and child safety issues. My time in conservative circles began in 1992 with a 9-year stint at the Heritage Foundation, where I launched the organization’s policy efforts on media regulation, the Internet, and digital technology. Meanwhile, my work on child safety has spanned 4 think tanks, multiple blue ribbon child safety commissions, countless essays, dozens of filings and testimonies, and even a multi-edition book.

During this three-decade run, I’ve tried my hardest to find balanced ways of addressing some of the legitimate concerns that many conservatives have about kids, media content, and online safety issues. Raising kids is the hardest job in the world. My daughter and son are now off at college, but the last twenty years of helping them figure out how to navigate the world and all the challenges it poses was filled with difficulties. This was especially true because my daughter and son faced completely different challenges when it came to media content and online interactions. Simply put, there is no one-size-fits-all playbook when it comes to raising kids or addressing concerns about healthy media interactions.

Something Must Be Done!

My personal approach, as I summarized in my book on these issues, was to first and foremost do everything in my power to (a) keep an open mind about new media content and platforms, and (b) ensure an open line of ongoing communication with my kids about the issues they might be facing. Shutting down conversation or calling for others to come in and save the day were the worst two options, in my opinion. As I summarized in my book, “At the end of the day, there is simply no substitute for talking to our children in an open, loving, and understanding fashion about the realities of-this world, including the more distasteful bits.” This was my Parental Prime Directive, if you will. I just always wanted to make sure that my kids felt like they could talk to me about their issues, no matter how varied, horrible, or heart-breaking those problems might be.

When talking with other parents through the years, I’ve heard about their own unique concerns and struggles. Every family faces different challenges because no two kids or situations are alike. Moreover, the challenges can feel overwhelming in our modern world of information abundance, which is flush with ubiquitous communications and media options. Sometimes these parental frustrations can fester and grow into a sort of rage until you finally hear folks utter that famous phrase: Something must be done! And that “something” is often some sort of government regulation “for the children.”

Again, I get it. When all your best efforts to help or protect your kids don’t seem to work according to plan, it’s only natural to call for help. But there are very serious problems associated with calling on government for that help. When legislators and regulators are asked to play the role of National Nanny, it comes with all the same baggage that accompanies many other efforts by the government to intervene in our lives or control what people or organizations can say or do.

Conservative Contradictions

These are particularly sensitive issues for many conservatives, both because conservatives tend to have more heightened concerns about media content and online safety issues, and also because the steps they often recommend to address these issues can quickly come into conflict with their own first principles.

Let me run through six ways that support for media content controls and child safety regulations can sometimes run afoul of conservative principles.

1) It’s a rejection of personal responsibility

Again, I understand all too well how hard parenting can be. But that does not mean we should abdicate our parental responsibilities to the State. Conservatives have spent decades fighting government when it comes to broken schools and the supposed brainwashing many kids get in them. The rallying cry of conservatives has long been: Let us have a greater say in how we raise and educate our children because the State is failing us or betraying our values.

Thus, when conservatives suggest that the State should be making decisions for us as it pertains to anything the government says is a “child safety” issue, there is some serious cognitive dissonance going on there. In his humorous Devil’s Dictionary, Ambrose Bierce jokingly defined responsibility as, “A detachable burden easily shifted to the shoulders of God, Fate, Fortune, Luck or one’s neighbor. In the days of astrology it was customary to unload it upon a star.” For parental responsibility to actually mean something, it has to be more than a “detachable burden” that we unload upon government.

2) It’s an embrace of the administrative state & arbitrary rule by unelected bureaucrats

Beyond the classroom, conservatives have long been concerned about the specter of massive administrative agencies and armies of unelected bureaucrats controlling our lives from the shadows. I’ve spent decades working with conservative organizations and scholars trying to get the administrative state under some control to scale back its enormous power, arbitrary edicts, and costly burdens. Over-criminalization has become such a problem that, according to the Heritage Foundation, “regulatory offenses… have proliferated to the point that, literally, nobody knows how many federal criminal regulations exist today.” We’re all criminals of some sort in the eyes of the modern regulatory state.

Yet, when conservatives advocate the expansion of the administrative state through new “online safety” regulations, they are just making the over-criminalization problem worse, including by treating our own children as guilty parties for simply trying to access the primary media platforms of their generation and interact with their friends there. For example, calls to ban all teens from social media until they’re 18 would result in the most massive “forbidden fruit” nightmare in American history, with every teen suddenly becoming a criminal actor and working together to tunnel around bans using the same sort of VPNs and evasion technologies people in China and other repressive nations use to get around over-bearing speech policies. [See: “Again, We Should Not Ban All Teens from Social Media”]

Needless to say, all this regulation and bureaucratic empowerment would have massive negative externalities for online freedom more generally as the era of “permissionless innovation” is replaced by a new age of permission-slip regulation.

3) It’s a rejection of the First Amendment & free speech rights

Conservatives have spent many decades pushing for greater First Amendment-based freedoms as it pertains to religious liberty and or organizational/corporate speech issues. Thus, when conservatives seek to undermine free speech principles and jurisprudence in the name of child safety, it could undo everything conservatives have been fighting to accomplish in those other contexts.

Conservatives are understandably upset with some social media platforms for being too over-zealous with certain types of speech takedowns or de-platformings. But two wrongs don’t make a right, and they should not be calling on Big Government to be imposing its own editorial judgments in place of private actors. [See: “The Great Deplatforming of 2021“ and “When It Comes to Fighting Social Media Bias, More Regulation Is Not the Answer.“]

4) It’s a rejection of property rights and freedom more generally

Related to the previous two points, conservatives have long upheld the sanctity of property rights in many different contexts. This includes the property rights that private establishments enjoy under the Constitution to generally decide how to structure their operations, who they will do business with, and how they will do so. Private organizations and religious institutions possess not only free speech rights in this regard, but property and contractual rights, too.

But when it comes to “child safety” mandates, some conservatives would toss all this out the window and undermine those rights, replacing them with burdensome regulatory mandates that tell private parties how to conduct their affairs. Again, there’s a lot of cognitive dissonance going on here and it could have serious blowback for conservatives when the property / contractual rights of other people or organizations are undermined on similar grounds.

5) It’s an embrace of frivolous lawsuits & the trial lawyers that bring them

The last time I checked, trial lawyers were not exactly the most conservative-friendly constituency. For many decades, conservatives have looked to advance tort reform, limit junk science and frivolous lawsuits, and make sure that the courts don’t engage in excessive judicial activism.

Unfortunately, many of the child safety regulations being proposed today would empower the regulatory state and trial lawyers at the same time. Many of the bills being floated open the door to open-ended litigation and potentially punishing liability for private platforms — and not just against deep-pocketed “Big Tech” companies. The fact is, once conservatives open the litigation floodgates based on amorphous accusations of potential online safety harms, they will be empowering the tort bar (one of the biggest supporters of the Democratic Party, no less) to launch a legal jihad against any and every media platform out there. Good luck putting that genie back in the bottle once you unleash it.

6) It’s an embrace of the same moral panic arguments your parents leveled against you

How quickly we forget the accusations our own parents and others leveled against us as children. Remember when video games were going to make us a lost generation of murderous youth? Or when rap and rock-and-roll music were going to send us straight to hell? Today, those kids are all grown up and trying to tell us that they are fine but it’s this latest generation that is doomed. It’s just an endless generational cycle of moral panics. [See: “Why Do We Always Sell the Next Generation Short?” and “Confessions of a ‘Vidiot’: 50 Years of Video Games & Moral Panics”] Today’s conservatives need to remember that they, too, were once kids and somehow muddled through to adulthood.

The “3-E” Approach Is the Better Answer

At this point, some of the people who’ve read this far are screaming at the screen: “So, are you saying we should just do nothing!?”

Absolutely not. But it is important that we consider less onerous and more practical ways to address these challenging issues without falling prey to Big Government gimmicks that would undermine other important principles. We should start by acknowledging that there are no easy fixes or silver-bullet solutions. The plain truth of the matter is that the best solutions here can seem messy and unsatisfying to many because they require enormous ongoing efforts to mentor and assist our kids at a far deeper level than some folks are comfortable with.

For example, it is just insanely uncomfortable to have to speak with your kids about online bullying or harassment, pornography, violence in movies and games, hate speech, and so on. And I haven’t even mentioned the hardest things to talk to kids about: The daily news of the real world: wars, violence, tragic accidents, famines, etc. Honestly, the hardest conversations I’ve had to have with my kids were those about school shootings. By comparison, many other discussions about online content and interactions were much easier. To the extent that we’re attempting to measure and address negative media affects, I firmly believe that there a few things in this world more horrifying to kids — or harder to talk with them about — than the first 10 minutes of what’s on cable news each hour of the day.

Regardless, whether we’re talking about the potential “harms” or mass media or online content, we cannot pretend there exists a simple solution to any of it. Here’s the better approach.

I recently authored a study for the American Enterprise Institute on, “Governing Emerging Technology in an Age of Policy Fragmentation and Disequilibrium.” It was my attempt to sketch out a flexible, pragmatic, bottom-up set of governance principles for modern technology platforms and issues. In that report, I noted how “[t]he First Amendment constitutes a particularly high barrier to the use of hard law in the United States,” and that court challenges were likely to continue to block many of the regulatory efforts being floated today, just as been the case countless times before in recent decades. Thus, we need to have backup approaches to online safety beyond one-size-fits-all regulatory Hail Mary passes.

I have described that backup plan as the “3-E” approach or “layered approach” to online safety:

• Empowerment of parents: Parental controls cannot solve all the world’s problems. It’s better to view them as helpful speed bumps or emergency alerts for when things are going badly for your child. In the old days, we placed a lot of faith in filtering, and that still has a role along with other tools that help place some reasonable limits not only on content but also overall consumption. But the best types of parental empowerment are those that force conversations between parents and kids by allowing reasonable monitoring to happen that is scaled by age (as in more limits for younger kids until they are gradually relaxed over time). And other carrot-and-stick tools and approaches are incredibly useful in helping parents place smart limits on youth activity and overall consumption.
• Education of youth: Education is the strategy with the most lasting impact for online safety. Education and digital literacy provide skills and wisdom that can last a lifetime. Specifically, education can help teach both kids (and adults!) how to behave in — or respond to — a wide variety of situations. Building resiliency and encouraging healthy interactions is the goal.
• Enforcement of existing laws: There are many sensible and straightforward laws already in place that address more concrete types of harm and harassment. And we have lots of laws pertaining to fraud and unfair and deceptive practices. Sometimes these rules can be challenging (and time-consuming) to enforce, but they constitute an existing backstop that can handle most worst-case scenarios when other less-restrictive steps fall short. And we should certainly tap these existing remedies before advancing unworkable new regulatory regimes.

I noted in my AEI study that, between 2000 and 2010, six major online-safety task forces or blue-ribbon commissions were formed to study online-safety issues and consider what should be done to address them. Each of them recommended some variant of the “3-E” approach as they encouraged a variety of best practices, educational approaches, and technological-empowerment solutions to address various safety concerns. Self-regulatory codes, private content-rating systems, and a wide variety of different parental-control technologies all proliferated during this period. Many multi-stakeholder initiatives and other organizations were also formed to address governance issues collaboratively. There are countless groups doing important work on this front today, including my old friends at the Family Online Safety Institute (FOSI) among many others.

These organizations push for a layered approach to online safety and work closely with educators, child development experts, and other academics and activists to find workable solutions to new online safety challenges as they arise. Their work is never done, and at times it can feel overwhelming. But, again, it’s the nature of the task at hand. We all must work together to continuously devise new and better approaches to addressing these challenges, because they will be endless. But let’s please not expect that we can unload these responsibilities on government and expect regulators to somehow handle it for us.

Do the Ends Justify the Means When it Comes to Media & Content Control?

I could be wasting my breath here because I’ve been attempting to appeal to conservative principles that may be rapidly disappearing from the modern conservative movement. Donald Trump radically disrupted everything in American politics, but especially the Republican Party. Many so-called national conservatives now live by Trump’s central operating principle: The ends justify the means. The ends are “owning the libs” in any way possible. And “the libs” include not only anyone on the Left of the political spectrum, but even those individuals and institutions that Trumpian conservatives believe are “the enemy” and controlled by “liberal interests.” By their definition, this now includes virtually all large media and technology companies and platforms. Thus, when we turn to the means, it’s increasingly the case that just about anything goes — including many traditional conservative principles.

To see how far we’ve come, recall what President Ronald Reagan said 35 years ago when vetoing an effort to reinstate the Fairness Doctrine. “History has shown that the dangers of an overly timid or biased press cannot be averted through bureaucratic regulation, but only through the freedom and compe­tition that the First Amendment sought to guarantee,” he said. At the time, President Reagan was confronted with some of the same arguments we hear today about media being too biased or conservatives not getting a fair shake. But he called upon his fellow conservatives to reject the idea that Big Government was the solution to such problems.

Unfortunately, Mr. Trump and some of his most loyal followers and even some major conservative groups today have largely given up on this logic and instead embraced regulation. While Trumpian conservatives love to decry everyone they oppose as “communists,” ironically it is this same group that is embracing a sort of communications collectivism as it pertains to modern media control. In the Trumpian worldview, media and tech platforms are useful only to the extent they carry out the will of the party — or at least the man on top of it.

These national conservatives have made a horrible miscalculation. Feeling aggrieved by Big Tech “bias,” or just feeling overwhelmed by things they don’t like about online platforms, they’ve decided that two wrongs make a right. In reality, two political wrongs never make a right, but they almost always combine to make government a lot bigger and more powerful.

It’s an incredibly naïve gamble almost certainly destined to fail, but they should ask themselves what it means if it works. This endless ratcheting effect will result in comprehensive state control of most channels of communications and information dissemination. Is this a game that you really think you can play better than the Lefties?

I’ll close by returning to one of Reagan’s favorite jokes. He always used to say that, “The nine most terrifying words in the English language are: I’m from the government and I’m here to help.” I would suggest that an even scarier version of that line would be, “We’re from the government and we’re here to help you parent your kids.”

Don’t let it be you uttering that line.

______________

Additional Reading

· Adam Thierer, “Again, We Should Not Ban All Teens from Social Media”

· Adam Thierer, “Why Do We Always Sell the Next Generation Short?”

· Adam Thierer, “The Classical Liberal Approach to Digital Media Free Speech Issues”

· Adam Thierer, “Confessions of a ‘Vidiot’: 50 Years of Video Games & Moral Panics”

· Adam Thierer, “Left and right take aim at Big Tech — and the First Amendment“

· Adam Thierer, “When It Comes to Fighting Social Media Bias, More Regulation Is Not the Answer“

· Adam Thierer, “Ongoing Series: Moral Panics / Techno-Panics”

· Adam Thierer, “No Goldilocks Formula for Content Moderation in Social Media or the Metaverse, But Algorithms Still Help”

· Adam Thierer, “FCC’s O’Rielly on First Amendment & Fairness Doctrine Dangers“

· Adam Thierer, “Conservatives & Common Carriage: Contradictions & Challenges“

· Adam Thierer, “The Great Deplatforming of 2021“

· Adam Thierer, “A Good Time to Re-Read Reagan’s Fairness Doctrine Veto“

· Adam Thierer, “Sen. Hawley’s Radical, Paternalistic Plan to Remake the Internet“

· Adam Thierer, “How Conservatives Came to Favor the Fairness Doctrine & Net Neutrality“

· Adam Thierer, “Sen. Hawley’s Moral Panic Over Social Media“

· Adam Thierer, “The White House Social Media Summit and the Return of ‘Regulation by Raised Eyebrow’“

· Adam Thierer, “The Surprising Ideological Origins of Trump’s Communications Collectivism“

· Adam Thierer, Parental Controls & Online Child Protection: A Survey of Tools and Methods (2009).

This weekend, The Wall Street Journal ran my short letter to the editor entitled, “We Can Protect Children and Keep the Internet Free.” My letter was a response to columnist Peggy Noonan’s April 9 oped, “Can Anyone Tame Big Tech?” in which she proposed banning everyone under 18 from all social-media sites. She specifically singled out TikTok, Youtube, and Instagram and argued “You’re not allowed to drink at 14 or drive at 12; you can’t vote at 15. Isn’t there a public interest here?”

I briefly explained why Noonan’s proposal is neither practical nor sensible, noting how it:

would turn every kid into an instant criminal for seeking access to information and culture on the dominant medium of their generation. I wonder how she would have felt about adults proposing to ban all kids from listening to TV or radio during her youth. Let’s work to empower parents to help them guide their children’s digital experiences. Better online-safety and media-literacy efforts can prepare kids for a hyperconnected future. We can find workable solutions that wouldn’t usher in unprecedented government control of speech.

Let me elaborate just a bit because this was the focus of much of my writing a decade ago, including my book, Parental Controls & Online Child Protection: A Survey of Tools & Methods, which spanned several editions. Online child safety is a matter I take seriously and the concerns that Noonan raised in her oped have been heard repeatedly since the earliest days of the Internet. Regulatory efforts were immediately tried. They focused on restricting underage access to objectionable online content (as well as video games), but were immediately challenged and struck down as unconstitutionally overbroad restrictions on free speech and a violation of the First Amendment of the U.S. Constitution.

But practically speaking, most of these efforts were never going to work anyway. There was almost no way to bottle up all the content flowing in the modern information ecosystem without highly repressive regulation, and it was going to be nearly impossible to keep kids off the Internet altogether when it was the dominant communications and entertainment medium of their generation. The first instinct of every moral panic wave–from the waltz to comic books to rock or rap music to video games–has often been to take the easy way out by proposing sweeping bans on all access by kids to the content or platforms of their generation. It never works.

Nor should it. There is a huge amount of entirely beneficial speech, content, and communications that kids would be denied by such sweeping bans. That would make such ban highly counter-productive. But, again, usually such efforts just were not practically enforceable because kids are often better at the cat-and-mouse game than adults give them credit for. Moreover, imposing age limitations of speech or content are far more difficult than age-related bans on specific tangible products, like tobacco or other dangerous physical products.

Acknowledging these realities, most sensible people quickly move on from extreme proposals like flat bans of all kids using the popular media platforms and systems of the day. Over the past half century in the U.S., this has led to a flowering of more decentralized governance approach to kids and media that I have referred to as the “3E approach.” That stands for empowerment (of parents), education (of youth), and enforcement (of existing laws). The 3E approach includes a variety of mechanisms and approaches, including: self-regulatory codes, private content rating systems, a wide variety of different parental control technologies, and much more.

Over the past two decades, many multistakeholder initiatives and blue-ribbon commissions were created to address online safety issues in a holistic fashion. I summarized their conclusions in my 2009 report, “Five Online Safety Task Forces Agree: Education, Empowerment & Self-Regulation Are the Answer.” The crucial takeaway from all these task forces and commissions is that no silver-bullet solutions exist to hard problems. Child safety demands a vigilant but adaptive approach, rooted in a variety of best practices, educational approaches, and technological empowerment solutions to address various safety concerns. Digital literacy is particularly crucial to building wiser, more resilient kids and adults, who can work together to find constructive approaches to hard problems.

Importantly, our task here is never done. This is an ongoing and evolving process. Issues like underage access to pornography or violent content have been with us for a very long time and will never be completely “solved.” We must constantly work to improve existing online safety mechanisms while also devising new solutions for our rapidly evolving information ecosystem. Nothing should be off the table except the one solution that Noonan suggested in her essay. Just proposing outright bans on kids on social media or any other new media platform (VR will be next) is an unworkable and illogical response that we should dismiss fairly quickly. No matter how well-intentioned such proposals may be, moral panic-induced prohibitions on kids and media ultimately are not going to help them learn to live better, safer, and more enriching lives in the new media ecosystems of today or the future. We can do better.

Over at Discourse magazine, Connor Haaland and I have an new essay (“Can European-Style Industrial Policies Create Tech Supremacy?”) examining Europe’s effort to develop national champion in a variety of tech sectors using highly targeted industrial policy efforts. The results have not been encouraging, we find.

Thus far, however, the Europeans don’t have much to show for their attempts to produce home-grown tech champions. Despite highly targeted and expensive efforts to foster a domestic tech base, the EU has instead generated a string of industrial policy failures that should serve as a cautionary tale for U.S. pundits and policymakers, who seem increasingly open to more government-steered innovation efforts.

We examine case studies in internet access, search, GPS, video services, and the sharing economy. We then explore newly-proposed industrial policy efforts aimed at developing their domestic AI market. We note how:

no amount of centralized state planning or spending will be able to overcome Europe’s aversion to technological risk-taking and disruption. The EU’s innovation culture generally values stability—of existing laws, institutions and businesses—over disruptive technological change. […] There are no European versions of Microsoft, Google or Apple, even though Europeans obviously demand and consume the sort of products and services those U.S.-based companies provide. It’s simply not possible given the EU’s current regulatory regime.

It seems unlikely that Europe will have much better luck developing home-grown champions in AI and robotics using this same playbook. “American academics and policymakers with an affinity for industrial policy might want to consider a model other than Europe’s misguided combination of fruitless state planning and heavy-handed regulatory edicts,” we conclude.

Head over to Discourse  to read the entire essay.

[Co-authored with Connor Haaland and originally published on The Bridge as, “Do Our Leaders Believe in Free Speech and Online Freedom Anymore?”]

A major policy battle has developed regarding the wisdom of regulating social media platforms in the United States, with the internet’s most important law potentially in the crosshairs. Leaders in both major parties are calling for sweeping regulation.

Specifically, President Trump and his presumptive opponent in the coming presidential election, former Vice President Joe Biden, have both called for “Section 230” of the Communications Decency Act to be repealed. Last week, the president took a misguided step in this direction by signing an executive order that, if fully carried out, will result in significantly greater regulation of the internet and of speech.

A Growing Call to Regulate Internet Platforms

The ramifications of these threats and steps could not be more profound. Without Section 230—also known as “the 26 words that created the internet”—we would have a much less advanced internet ecosystem. Twitter, Facebook, YouTube, and Wikipedia would have never grown as quickly. Indeed, the repeal of Section 230 means many fewer jobs, less information distribution, and, frankly, less joy.

Shockingly, by backing Trump’s recent push for regulating these internet platforms, many conservatives are betraying their own principles—the ones that support freedom of expression and the ability to run private businesses without government interference.

Section 230 limits the liability online intermediaries face for the content and communications that travel over their networks. The immunities granted by Section 230 let online speech and commerce flow freely, without the constant threat of legal action or onerous liability looming overhead for digital platforms. To put it another way, without this provision, today’s vibrant internet ecosystem likely would not exist.

For completely different reasons, however, Biden and Trump want it axed. “Section 230 should be revoked, immediately should be revoked, number one. For [Facebook CEO Mark] Zuckerberg and other platforms,” said Biden in a New York Times interview. Like many other Democrats, Biden wants social media platforms to do far more to block speech they find to be offensive in various ways. If they fail to do more, Biden and other Democrats want Sec. 230 revised or repealed.

In contrast, Trump and his allies want these same platforms to do far less to curate content. Although lacking any empirical evidence, they allege that massive anti-conservative bias exists across today’s most popular platforms. As a result, they want Sec. 230 gutted. “Repeal 230,” said Trump in a tweet. Tensions reached a boiling point last week following a public fight between the president and Twitter after the social networking platform on May 27 added a fact-check notice to one of the president’s tweets about the supposed dangers of mail-in voting.

Retaliating Against Social Media

On May 28, Trump struck back against Twitter by signing an executive order on “preventing online censorship.” The EO cited Twitter six times but also went after Facebook, Instagram, and YouTube by name. Paradoxically, it also noted that the “freedom to express and debate ideas is the foundation for all of our rights as a free people,” even though the order will result in arbitrary government rule over our free speech rights.

Indeed, Trump’s executive order runs afoul of traditional conservative principles in several ways:

1. It expands the power of the government by delegating more authority to the administrative state and expanding arbitrary bureaucratic rule and regulatory abuse. It encourages the Federal Communications Commission (FCC) and the Federal Trade Commission to take a more active interest in content policy decisions, which is of dubious legality. Section 3 of the EO also says the Department of Justice “shall review the viewpoint-based speech restrictions imposed by each online platform identified in the report … and assess whether any online platforms are problematic vehicles for government speech due to viewpoint discrimination, deception to consumers, or other bad practices.” (emphasis added)

   What do other bad practices entail, and who in the government gets to make the call? It is not prudent to delegate authority over something as sacred as our rights to free speech to unelected government bureaucrats. Such power will stifle civil discourse and increase the possibility for special interests to co-opt the government by using its power for their own desires.

2. It undermines property rights of private companies by letting Big Government dictate how they use their business platforms. Carrying out the president’s executive order would amount to a taking of private property by the government, an action that conservatives have historically loathed. Our Founding Fathers considered property rights to be the cornerstone of a free and just society, yet Trump pays that fact little respect in this EO, running afoul of a centuries-old American tradition.

3. It will encourage frivolous lawsuits. By gutting Sec. 230, a law that protects online platforms from punishing liability for third-party speech, Trump’s EO would empower trial lawyers. We are already too litigious a country, filing over 80 million cases in state courts every year, and we do not need another reason to be in the courtroom. Repealing 230 would open the floodgates to endless lawsuits about online speech and clog up our judicial system, using resources that could be directed to more important matters.

4. It undermines free speech and would likely hurt conservative voices most. Trump’s executive order makes a mockery of the First Amendment by applying the Fairness Doctrine and net neutrality notions to social media, regulations that conservatives have vociferously opposed. A recent lawsuit filed by the Center for Democracy and Technology that seeks to challenge the EO alleges this exact point, saying it could chill free speech. In the past we have seen such concepts applied arbitrarily, harming free speech and media competition.

   For instance, our colleague Brent Skorup, has written on how the FCC exploited another arbitrary rule—the “public interest” standard. He points to the fact that a documentary portraying former Sen. John Kerry in a negative light was taken off the air thanks to the authority of the public interest standard as a paradigmatic example of how arbitrary regulatory power can harm free speech. The EO also undermines platforms that have greatly amplified conservative voices in recent years. On Facebook, for instance, 7 of the top 10 most cited news outlets were conservative. Meanwhile, Trump and other conservative leaders have tapped the power of Twitter to directly communicate with their base. The EO would therefore likely result in much conservative content being removed quickly to avoid legal hassles with regulators or the courts.

5. The combined effect of all these other factors will undermine the global competitiveness of US-based firms, potentially benefiting Chinese internet companies the most. Willingly giving up a comparative advantage would be foolish, considering how America’s tech companies are the envy of the world. Not only does the EO affect existing social platforms, but it could stifle innovation throughout the digital economy moving forward. Who wants to try and innovate in a field that is subject to regulations that can change on a president’s whim?

6. It could be used by future politicians against conservative platforms, like Fox News and other right-leaning outlets. This is clearly not the intent of Trump’s executive order, but that will eventually be the result nonetheless. Going forward, we will have different presidents with different political outlooks. When making laws, regulations, and executive orders, it is always important to consider how they could be applied by successive administrations with opposite political and ideological stripes.

Today’s social media platforms are not perfect, but it is impossible for them to please everyone. There is no Goldilocks formula whereby they can get speech policies just right and make everyone happy. Instead, the ideal policy for speech platforms is: Let a thousand flowers bloom. One-size-fits-all content management and community standards shouldn’t be the goal. We need diverse platforms and approaches for a diverse citizenry.

But when presidential candidates and their allies line up in support of repealing Sec. 230 and opening the door to speech controls, the end result will be homogenized conformity with the will of those in power. That’s a horrible result for a nation that values diversity of opinion and freedom of speech, and it will only end up hurting those who seek to change the conversation.

Also see: Brent Skorup, “The Section 230 Executive Order, Free Speech, and the FCC,” Technology Liberation Front, June 3, 2010.

That’s all nice-sounding rhetoric but it sure doesn’t seem to match up with Hawley’s recent essays and policy proposals, which are straight out of the old era’s elitist and highly paternalistic Washington-Knows-Best playbook. Specifically, Hawley has called for a top-down, technocratic regulatory regime for the Internet and the digital economy more generally. Hawley has repeatedly made claims that digital technology companies have gotten a sweetheart deal from government and they they have censored conservative voices. That’s utter nonsense, but those arguments have driven his increasingly fanatic rhetoric and command-and-control policy proposals. If he succeeds in his plan to empower unelected bureaucrats inside the Beltway to reshape the Internet, it will destroy one of the greatest American success stories in recent memory. It’s hard to understand how that could be labelled “conservative” in any sense of the word.

I’ve been tracking Sen. Hawley’s increasingly radical plans for the digital economy in a series of essays, including:

• “Sen. Hawley’s Moral Panic Over Social Media“
• “How Conservatives Came to Favor the Fairness Doctrine & Net Neutrality“
• “The White House Social Media Summit and the Return of ‘Regulation by Raised Eyebrow’“
• “The Not-So-SMART Act“

In these articles, I have documented how Sen. Hawley has been whipping up a panic about digital technology companies and social media platforms to soften to ground for massive intervention by DC elites. Consider his hotly-worded USA Today op-ed from May in which he argued that, “social media wastes our time and resources,” and is “a field of little productive value” that have only “given us an addiction economy.” Sen. Hawley refers to sites like Facebook, Instagram, and Twitter as “parasites” and blames them for a litany of social problems (including an unproven link to increased suicide). He has even suggested that, “we’d be better off if Facebook disappeared” and seems to hope the same for other sites.

More insultingly, he has argued that the entire digital economy was basically one giant mistake. He says that America’s recent focus on growing the Internet and information technology sectors has “encouraged a generation of our brightest engineers to enter a field of little productive value,” which he regards as “an opportunity missed for the nation.” “What marvels might these bright minds have produced,” Hawley asks, “had they been oriented toward the common good?”

Again, this isn’t the sort of rhetoric that conservatives are usually known for. This is elitist, paternalistic tripe that we usually hear from market-hating neo-Marxists. It takes a lot of hubris for Sen. Hawley to suggest that he knows best which professions or sectors are in “the common good.” As I responded in one of my essays:

Had some benevolent philosopher kings in Washington stopped the digital economy from developing over the past quarter century, would all those tech workers really have chosen more noble-minded and worthwhile professions? Could he or others in Congress really have had the foresight to steer us in a better direction?

Why would Sen. Hawley think DC elites could do a better job centrally planning the economy? He doesn’t really tell us, instead preferring to fall back on conspiratorial rhetoric about evil “Big Tech” companies “censoring” conservatives voices. That’s the same card he played when he joined President Trump at the White House for the surreal, rambling “Social Media Summit” that took place last month. Trump used the same approach that Sen. Hawley and Sen. Ted Cruz (R-TX) have been using during recently Senate Judiciary Committee hearings: brow-beat witnesses and make wild claims about the whole digital world being out to muzzle conservative voices. As Andrea O’Sullivan and I noted in our essay about the Social Media Summit:

The President and other conservatives are tapping another approach: indirect censorship through both subtle and direct threats. This is an old playbook that goes by many different names: “jawboning,” “administrative arm-twisting,” “agency threats,” and “regulation by raised eyebrow.” These were the names given to broadcast-era efforts to pressure old radio and TV outlets to bring their programming choices in line with the desires of politicians and bureaucrats.

This is an old DC playbook that elites have used for decades to “work the refs” and try to extract promises from various parties under threat of more far-reaching regulation if they fail to comply with the demands of politicians. Again, there’s nothing remotely “conservative” about it.

Brushing aside such concerns, Sen. Hawley has started sketching out what a comprehensive regulatory regime for the Internet and social media might look like. He does so in two new bills, the “Ending Support for Internet Censorship Act” (co-sponsored by Sen. Cruz) and the “Social Media Addiction Reduction Technology (SMART) Act.” These two measures, if implemented, would radically remake the digital economy and lead to a remarkably intrusive regulatory regime for online speech and commerce.

The ridiculously named “Ending Support for Internet Censorship Act” would actually encourage the exact opposite result than its title suggests. The proposal would mandate that regulators at the Federal Trade Commission evaluate whether platforms have engaged in “politically biased moderation,” which is defined as moderation practices that are supposedly, “designed to negatively affect” or those that “disproportionately [restrict] or promote access to … a political party, political candidate, or political viewpoint.” Social media providers would need to petition the FTC for “immunity certifications” to then get regular audits to ensure they are moderating content in a government-approved manner. If they didn’t, they would lose their platform liability protections, which could effectively run them out of business.

This is permission slip-based regulation and it makes the old Federal Communications Commission licensing regime for broadcast radio and television look like child’s play by comparison. Hawley’s “Mother, May I?” licensing scheme for the Net would have unelected FTC bureaucrats make speech decisions for the entire Internet. It’s a massive First Amendment violation, and it would almost certainly face constitutional challenge if implemented.

What makes this all the more shocking, as I noted in response, this measure combines core elements of the old Fairness Doctrine as well as “net neutrality” mandates that conservatives have traditionally decried. The bill would also empower insider-the-Beltway lawyers, lobbyists, and consultants, who would be needed to navigate the maze of red tape this measure would give rise to. Worst of all, the measure is a massive gift to the trial lawyers Republicans love to hate because Hawley’s new regulatory regime would empower them to file an endless string of frivolous suits aimed at simply shaking down companies through early settlements. Again, how is this “conservative”?

Then there’s Hawley’s new “SMART Act,” which as Andrea O’Sullivan and I argue in our latest essay is really quite stupid. The highly technocratic measure lists a variety of business practices that would be automatically verboten. As Andrea and I summarize:

On the chopping block are infinite scrolling, video autoplay, and “gamification” features like offering badges or streaks for accomplishing certain feats. The bill would also require that social media companies build default time limits and pop-up notifications telling users how long they’ve been on a platform within six months of the bill passing. Weirdly, the bill specifies a time limit of 30 minutes on all social media platforms on all devices per day, after which point they will be locked out. The user would be able to raise that limit through platform settings, but it would reset to 30 minutes at the beginning of each month.

Who would have ever thought we now be living in a world where conservatives are calling for paternalistic, Washington-knows-best nannyism that lets agency bureaucrats forcibly shut down your social media access each day after just 30 minutes of use? Hell, why stop there? Perhaps Sen. Hawley could next impose daily limits how many Netflix shows we stream, how many podcasts we listen to, or how much time we spend playing video games. After all, he clearly thinks he knows what is in our own best interest.

No matter how much Sen. Hawley rails against elites and big government, what he has been saying and proposing represent elitism and regulatory paternalism of the very highest order. He may say that “the old era is ending and the old ways will not do” in his speeches, but through his actions he has whole-hardheartedly embraced the old order. And while he can mouth lines about how “it’s time that we stood up to big government, to the people in government who think they know better,” and while he might claim that he is “for free competition [and] the free market,” in reality, Sen. Hawley has become the most aggressive Republican booster of Big Government and managed markets that I have seen in my 30 years covering technology policy.

Hopefully, the real conservatives left out there will make a stand against Sen. Hawley’s abominable corruption of their movement and ideals.

I have been covering telecom and Internet policy for almost 30 years now. During much of that time – which included a nine year stint at the Heritage Foundation — I have interacted with conservatives on various policy issues and often worked very closely with them to advance certain reforms.

If I divided my time in Tech Policy Land into two big chunks of time, I’d say the biggest tech-related policy issue for conservatives during the first 15 years I was in the business (roughly 1990 – 2005) was preventing the resurrection of the so-called Fairness Doctrine. And the biggest issue during the second 15-year period (roughly 2005 – present) was stopping the imposition of “Net neutrality” mandates on the Internet. In both cases, conservatives vociferously blasted the notion that unelected government bureaucrats should sit in judgment of what constituted “fairness” in media or “neutrality” online.

Many conservatives are suddenly changing their tune, however. President Trump and Sen. Ted Cruz, for example, have been increasingly critical of both traditional media and new tech companies in various public statements and suggested an openness to increased regulation. The President has gone after old and new media outlets alike, while Sen. Cruz (along with others like Sen. Lindsay Graham) has suggested during congressional hearings that increased oversight of social media platforms is needed, including potential antitrust action.

Meanwhile, during his short time in office, Sen. Josh Hawley (R-Mo.) has become one of the most vocal Internet critics on the Right. In a shockingly-worded USA Today editorial in late May, Hawley said, “social media wastes our time and resources” and is “a field of little productive value” that have only “given us an addiction economy.” He even referred to these sites as “parasites” and blamed them for a long list of social problems, leading him to suggest that, “we’d be better off if Facebook disappeared” along with various other sites and services.

Hawley’s moral panic over social media has now bubbled over into a regulatory crusade that would unleash federal bureaucrats on the Internet in an attempt to dictate “fair” speech on the Internet. He has introduced an astonishing piece of legislation aimed at undoing the liability protections that Internet providers rely upon to provide open platforms for speech and commerce. If Hawley’s absurdly misnamed new “Ending Support for Internet Censorship Act” is implemented, it would essentially combine the core elements of the Fairness Doctrine and Net Neutrality to create a massive new regulatory regime for the Internet.

The bill would gut the immunities Internet companies enjoy under 47 USC 230 (“Section 230”) of the Communications Decency Act. Eric Goldman of the Santa Clara University School of Law has described Section 230 as the “best Internet law” and “a big part of the reason why the Internet has been such a massive success.” Indeed, as I pointed out in a Forbes column on the occasion of its 15^th anniversary, Section 230 is “the foundation of our Internet freedoms” because it gives online intermediaries generous leeway to determine what content and commerce travels over their systems without the fear that they will be overwhelmed by lawsuits if other parties object to some of that content.

The Hawley bill would overturn this important legal framework for Internet freedom and instead replace it with a new “permissioned” approach. In true “Mother-May-I” style, Internet companies would need to apply for an “immunity certification” from the FTC, which would undertake investigations to determine if the petitioning platform satisfied a “requirement of politically unbiased content moderation.”

The vague language of the measure is an open invitation to massive political abuse. The entirety of the bill hinges upon the ability of Federal Trade Commission officials to define and enforce “political neutrality” online. Let’s consider what this will mean in practice.

Under the bill, the FTC must evaluate whether platforms have engaged in “politically biased moderation,” which is defined as moderation practices that are supposedly, “designed to negatively affect” or “disproportionately restricts or promote access to … a political party, political candidate, or political viewpoint.” As Blake Reid of the University of Colorado Law School rightly asks, “How, exactly, is the FTC supposed to figure out what the baseline is for ‘disproportionately restricting or promoting’? How much access or availability to information about political parties, candidates, or viewpoints is enough, or not enough, or too much?”

There is no Goldilocks formula for getting things just right when it comes to content moderation. It’s a trial-and-error process that is nightmarishly difficult because of the endless eye-of-the-beholder problems associated with constructing acceptable use policies for large speech platforms. We struggled with the same issues in the broadcast and cable era, but they have been magnified a million-fold in the era of the global Internet with the endless tsunami of new content that hits our screens and devices every day. “Do we want less moderation?” asks Sec, 230 guru Jeff Kosseff. “I think we need to look at that question hard.  Because we’re seeing two competing criticisms of Section 230,” he notes. “Some argue that there is too much moderation, others argue that there is not enough.”

The Hawley bill seems to imagine that a handful of FTC officials will magically be able to strike the right balance through regulatory investigations. That’s a pipe dream, of course, but let’s imagine for a moment that regulators could somehow sort through all the content on message boards, tweets, video clips, live streams, gaming sites, and whatever else, and then somehow figure out what constituted a violation of “political neutrality” in any given context. That would actually be a horrible result because let’s be perfectly clear about what that would really be: It would be a censorship board. By empowering unelected bureaucrats to make decisions about what constitutes “neutral” or “fair” speech, the Hawley measure would, as Elizabeth Nolan Brown of Reason summarizes, “put Washington in charge of Internet speech.” Or, as Sen. Ron Wyden argues more bluntly, the bill “will turn the federal government into Speech Police.” “Perhaps a more accurate title for this bill would be ‘Creating Internet Censorship Act,'” Eric Goldman is forced to conclude.

The measure is creating other strange bedfellows. You won’t see Berin Szoka of TechFreedom and Harold Feld of Public Knowledge ever agreeing on much, but they both quickly and correctly labelled Hawley’s bill a “Fairness Doctrine for the Internet.” That is quite right, and much like the old Fairness Doctrine, Hawley’s new Internet speech control regime would be open to endless political shenanigans as parties, policymakers, companies, and the various complainants line up to have their various political beefs heard and acted upon. “That’s the kind of thing Republicans said was unconstitutional (and subject to FCC agency capture and political manipulation) for decades,” says Daphne Keller of the Stanford Center for Internet & Society. Moreover, during the Net Neutrality holy wars, GOP conservatives endlessly blasted the notion that bureaucrats should be determining what constitute “neutrality” online because it, too, would result in abuses of the regulatory process. Yet, Sen. Hawley’s bill would now mandate that exact same thing.

What is even worse is that, as law professor Josh Blackman observes, “the bill also makes it exceedingly difficult to obtain a certification” because applicants need a supermajority of 4 of the 5 FTC Commissioners. This is public choice fiasco waiting to happen. Anyone who has studied the long, sordid history of broadcast radio and television licensing understands the danger associated with politicizing certification processes. The lawyers and lobbyists in the DC “swamp” will benefit from all the petitioning and paperwork, but it is not clear how creating a regulatory certification regime for Internet speech really benefits the general public (or even conservatives, for that matter).

Former FTC Commissioner Josh Wright identifies another obvious problem with the Hawley Bill: it “offers the choice of death by bureaucratic board or the plaintiffs’ bar.” That’s because by weakening Sec. 230’s protections, Hawley’s bill could open the floodgates to waves of frivolous legal claims in the courts if companies can’t get (or lose) certification. The irony of that result, of course, is that this bill could become a massive gift to the tort bar that Republicans love to hate!

Of course, if the law ever gets to court, it might be ruled unconstitutional. “The terms ‘politically biased’ and ‘moderation’ would have vagueness and overbreadth problems, as they can chill protected speech,” Josh Blackman argues. So it could, perhaps, be thrown out like earlier online censorship efforts. But a lot of harm could be done—both to online speech and competition—in the years leading up to a final determination about the law’s constitutionality by higher courts.

What is most outrageous about all this is that the core rationale behind Hawley’s effort—the idea that conservatives are somehow uniquely disadvantaged by large social media platforms—is utterly preposterous. In May, the Trump Administration launched a “tech bias” portal which “asked Americans to share their stories of suspected political bias.” The portal is already closed and it is unclear what, if anything, will come out of this effort. But this move and Hawley’s proposal point to the broader trend of conservatives getting more comfortable asking Big Government to redress imaginary grievances about supposed “bias” or “exclusion.”

In reality, today’s social media tools and platforms have been the greatest thing that ever happened to conservatives. Mr. Trump owes his presidency to his unparalleled ability to directly reach his audience through Twitter and other platforms. As recently as June 12, President Trump tweeted, “The Fake News has never been more dishonest than it is today. Thank goodness we can fight back on Social Media.” Well, there you have it!

Beyond the President, one need only peruse any social media site for a few minutes to find an endless stream of conservative perspectives on display. This isn’t exclusion; it’s amplification on steroids. Conservatives have more soapboxes to stand on and preach than ever before in the history of this nation.

Finally, if they were true to their philosophical priors, then conservatives also would not be insisting that they have any sort of “right” to be on any platform. These are private platforms, after all, and it is outrageous to suggest that conservatives (or any other person or group) are entitled to have a spot on any other them.

Some conservatives are fond of ridiculing liberals for being “snowflakes” when it comes to other free speech matters, such as free speech on college campuses. Many times they are right. But one has to ask who the real snowflakes are when conservative lawmakers are calling on regulatory bureaucracies to reorder speech on private platform based on the mythical fear of not getting “fair” treatment. One also cannot help but wonder if those conservatives have thought through how this new Internet regulatory regime will play out once a more liberal administration takes back the reins of power. Conservatives will only have themselves to blame when the Speech Police come for them.

Addendum: Several folks have pointed out another irony associated with Hawley’s bill is that it would greatly expand the powers of the administrative state, which conservatives already (correctly) feel has too much broad, unaccountable power. I should have said more on that point, but here’s a nice comment from David French of National Review, which alludes to that problem and then ties it back to my closing argument above: i.e., that this proposal will come back to haunt conservatives in the long-run:

when coercion locks in — especially when that coercion is tied to constitutionally suspect broad and vague policies that delegate immense powers to the federal government — conservatives should sound the alarm. One of the best ways to evaluate the merits of legislation is to ask yourself whether the bill would still seem wise if the power you give the government were to end up in the hands of your political opponents. Is Hawley striking a blow for freedom if he ends up handing oversight of Facebook’s political content to Bernie Sanders? I think not.

Additional thoughts on the Hawley bill:

Josh Wright

Daphne Keller

Blake Reid

TechFreedom

Josh Blackman

Sen. Ron Wyden

Jeff Kosseff

Eric Goldman

CCIA

NetChoice

Internet Association

David French at National Review

John Samples

[This essay originally appeared on the AIER blog on May 28, 2019. The USA TODAY also ran a shorter version of this essay as a letter to the editor on June 2, 2019.]

In a hotly-worded USA Today op-ed last week, Senator Josh Hawley (R-Missouri) railed against social media sites Facebook, Instagram, and Twitter. He argued that, “social media wastes our time and resources,” and is “a field of little productive value” that have only “given us an addiction economy.” Sen. Hawley refers to these sites as “parasites” and blames them for a litany of social problems (including an unproven link to increased suicide), leading him to declare that, “we’d be better off if Facebook disappeared.”

As far as moral panics go, Sen. Hawley’s will go down as one for the ages. Politicians have always castigated new technologies, media platforms, and content for supposedly corrupting the youth of their generation. But Sen. Hawley’s inflammatory rhetoric and proposals are something we haven’t seen in quite some time.

He sounds like those fire-breathing politicians and pundits of the past century who vociferously protested everything from comic books to cable television, the waltz to the Walkman, and rock-and-roll to rap music. In order to save the youth of America, many past critics said, we must destroy the media or media platforms they are supposedly addicted to. That is exactly what Sen. Hawley would have us do to today’s leading media platforms because, in his opinion, they “do our country more harm than good.”

We have to hope that Sen. Hawley is no more successful than past critics and politicians who wanted to take these choices away from the public. Paternalistic politicians should not be dictating content choices for the rest of us or destroying technologies and platforms that millions of people benefit from.

Addiction Panics: We’ve Been Here Before

Ironically, Sen. Hawley isn’t even right about what the youth of America are apparently obsessed with. Most kids view Facebook and Twitter as places where old people hang out. My teenage kids laugh when I ask them about those sites. Pew Research polling finds that many younger users are increasingly deleting Facebook (if they used it at all) or flocking to other platforms, such as Snapchat or YouTube.

But shouldn’t we be concerned with kids overusing social media more generally? Yes, of course we should—but that’s no reason to call for their outright elimination, as Sen. Hawley recommends. Such rhetoric is particularly concerning at a time when critics are proposing a “break up” of tech companies. Sen. Hawley sits on the U.S. Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights. It is likely he and others will employ these arguments to fan the flames of regulatory intervention or antitrust action against at least Facebook.

Forcing social media sites to “disappear” or be broken up is one of the worst ways to deal with these concerns. It is always wise to mentor our youth and teach them how to achieve a balanced media diet. Many youths—and many adults—are probably overusing certain technologies (smartphones, in particular) and over-consuming some types of media. For those truly suffering from addiction, it is worth considering targeted strategies to address that problem. However, that is not what antitrust law is meant to address.

Moreover, concerns about addiction and distraction have popped up repeatedly during past moral panics and we should take such claims with a big grain of salt. Sociologist Frank Furedi has documented how, “inattention has served as a sublimated focus for apprehensions about moral authority” going back to at least the early 1700s. With each new form of media or means of communication, the older generation taps into the same “kids-these-days!” fears about how the younger generation has apparently lost the ability to concentrate or reason effectively.

For example, in the past century, critics said the same thing about radio and television broadcasting, comparing them to tobacco in terms of addiction and suggesting that media companies were “manipulating” us into listening or watching. Rock-and-roll and rap music got the same treatment, and similar panics about video games are still with us today.

Strangely, many elites, politicians, and parents forget that they, too, were once kids and that their generation was probably also considered hopelessly lost in the “vast wasteland” of whatever the popular technology or content of the day was. The Pessimists Archive podcast has documented dozens of examples of this reoccurring phenomenon. Each generation makes it through the panic du jour, only to turn around and start lambasting newer media or technologies that they worry might be rotting their kids to the core. While these panics come and go, the real danger is that they sometimes result in concrete policy actions that censor content or eliminate choices that the public enjoys. Such regulatory actions can also discourage the emergence of new choices.

Missed Opportunity, or Marvelous Achievement?

Sen. Hawley makes another audacious assertion in his essay when he suggests that social media has not provided any real benefit to American workers or consumers. He says the rise of the Digital Economy has “encouraged a generation of our brightest engineers to enter a field of little productive value,” which he regards as “an opportunity missed for the nation.”

This is an astonishing statement, made more troubling by Hawley’s claim that all these digital innovators could have done far more good by choosing other professions. “What marvels might these bright minds have produced,” Hawley asks, “had they been oriented toward the common good?”

Why is it that Sen. Hawley gets to decide which professions are in “the common good”? This logic is insulting to all those who make a living in these sectors, but there is a deeper hubris in Sen. Hawley’s argument that social media does not serve “the common good.” Had some benevolent philosopher kings in Washington stopped the digital economy from developing over the past quarter century, would all those tech workers really have chosen more noble-minded and worthwhile professions? Could he or others in Congress really have had the foresight to steer us in a better direction?

In reality, U.S. tech companies produce high-quality jobs and affordable, collaborative communications platforms that are popular across the globe. In response to Sen. Hawley’s screed, the Internet Association, which represents America’s leading digital technology companies, noted that, in Sen. Hawley’s home state of Missouri alone, the Internet supports 63,000 jobs at 3,400 companies and contributed $17 billion in GDP to the state’s economy. Presumably, Sen. Hawley would not want to see those benefits “disappear” along with the social media sites that helped give rise to them.

But the Internet and social media have an equally profound impact on the entire U.S. economy, adding over 9,000 jobs and nearly 570 businesses to each metropolitan statistical area. The Digital Economy is a great American success story that is the envy of the world, not something to be lamented and disparaged as Sen. Hawley has.

For someone who believes that Facebook is a “drug” and a “parasite,” it is curious how active Sen. Hawley is on Facebook, as well as on Twitter. If he really believes that “we’d be better off if Facebook disappeared,” then he should lead by example and get off the sites. But that is a decision he will have to make for himself. He should not, however, make it for the rest of us.

“You don’t gank the noobs” my friend’s brother explained to me, growing angrier as he watched a high-level player repeatedly stalk and then cut down my feeble, low-level night elf cleric in the massively multiplayer online roleplaying game World of Warcraft. He logged on to the server to his “main,” a high-level gnome mage and went in search of my killer, carrying out two-dimensional justice. What he meant by his exclamation was that players have developed a social norm banning the “ganking” or killing of low-level “noobs” just starting out in the game. He reinforced that norm by punishing the overzealous player with premature annihilation.

Ganking noobs is an example of undesirable social behavior in a virtual space on par with cutting people off in traffic or budging people in line. Punishments for these behaviors take a variety of forms, from honking, to verbal confrontation, to virtual manslaughter. Virtual reality social spaces, defined as fully artificial digital environments, are the newest medium for social interaction. Increased agency and a sense of physical presence within a VR social world like VRChat allows users to more intensely experience both positive and negative situations, thus reopening the discussion for how best to govern these spaces.

When the late John Perry Barlow, the founder of the Electronic Frontier Foundation, published his declaration of the Independence of Cyberspace in 1996, humanity stood on the frontier of an online world bereft of physical borders and open to new emergent codes of conduct. He wrote, “I declare the global social space we are building to be naturally independent of the tyrannies [governments] seek to impose on us.” He also stressed the role of “culture, ethics and unwritten codes” in governing the new social society where the First Amendment served as the law of the virtual land. Yet, Barlow’s optimism about the capacity of users to build a better society online stands in stark contrast to current criticisms of social platforms as cesspools of misinformation, extremism, and other forms of undesirable behavior.

As the result of VRChat’s largely open-ended design and its wide user base from the PC and headset gaming communities, there is a broad spectrum of user behavior.  On one hand, users experienced virtual sexual harassment and the incessant trolling of mobs of poorly rendered “echidna” consistent with the Ugandan Knuckles meme. However, VRChat is also the source of creativity and positive experience including collective concerts and dance parties. When a player suffered a seizure in VRChat, players stopped and waited to make sure he was okay and sanctioned other players who were trying to make fun of the situation. VRChat’s response to social discord provides a good example of governance in virtual spaces and how layers of governance interact to improve user experiences.

Governance is the process of decision-making among stakeholders involved in a collective problem that leads to the production of social norms and institutions. In virtual social spaces such as VRChat, layers of formal and informal governance are setting the stage for norms of behavior to emerge. The work of political scientist Elinor Ostrom provides a framework through which to understand the evolution of rules to solve social problems. In her research on governing a common resource, she emphasized the importance of including multiple stakeholders in the governing process, instituting a mechanism for dispute resolution and sanctioning, and making sure the rules and norms that emerge are tailored to the community of users. She wrote, “building trust in one another and developing institutional rules that are well matched to the ecological systems being used are of central importance for solving social dilemmas.” Likewise, the governance structure that emerge in VRChat is game-specific and dependent on the enforcement of explicit formal and informal laws, physical game design characteristics, and social norms of users. I delve into each layer of governance in turn.

At the highest level, the U.S. government passed formal laws and policies that affect virtual social spaces. For example, the Computer Fraud and Abuse Act governs computer-related crimes and prohibits unauthorized access to user’s accounts. Certain types of content, such as child pornography, are illegal under federal law. At the intersection of VR video games and intellectual property law, publicity rights govern the permissions process for using celebrities’ likenesses in an avatar. Trademark and copyright laws determine limitations on what words, phrases, symbols, logos, videos or music can be reproduced in VR and what is considered “fair use.”

Game designers and gaming platforms can also employ an explicit code of conduct that goes beyond formal federal laws and policies. For example, VRChat’s code of conduct details proper Mic etiquette and includes rules about profanity, sexual conduct, self-promotion and discrimination. Social platforms rely on a team of enforcers. VRChat has a moderation team that monitors virtual worlds constantly. External reviewers look at flagged content and in-game bouncers monitor behavior in real time and remove the bad eggs.

By virtue of their technical decisions, game designers also govern the virtual spaces they create. For example, the design decision to put a knife or a banana in a VR social space will affect how users behave. VRChat has virtual presentation rooms, court rooms and stages that prompt users to do anything from singing, to stand-up comedy to prosecuting other users in fake trials. Furthermore, game designers can include in-game mechanisms to empower users to flag inappropriate behavior or mute obnoxious players, a function that exists in VRChat.

Earning a reputation for malfeasance and poor user experience is bad business for VRChat, so the company recently re-envisioned their governance approach. They acknowledge their task in an open letter to their users: “One of the biggest challenges with rapid growth is trying to maintain and shape a community that is fun and safe for everyone. We’re aware there’s a percentage of users that choose to engage in disrespectful or harmful behavior…we’re working on new systems to allow the community to better self-moderate and for our moderation team to be more effective.” The memo detailed where users could provide feedback and ideas to improve VRChat, suggesting that users can be actively involved in the rule-making process.

In Elinor Ostrom’s nobel-prize lecture she criticizes the oft-made assumption that enlightened policymakers or external designers should be the ones “to impose an optimal set of  rules on individuals involved.” Instead, she argued that the self-reflection and creativity of those users within a game could serve “to restructure their own patterns of interaction.” The resulting social norms are a form of governance at the most local level.

Ostrom’s framework demonstrates that good social outcomes emerge through our collective actions, which are influenced by top-down formal rules from platforms and bottom-up norms from users. The goal of stakeholders involved in social VR should be to foster the development of codes of conduct that bring out the best in humanity. Governance in virtual worlds is a process, and players in social spaces have a large role to play. Are you ready for that responsibility, player one?

There is growing interest in the market potential of artificial intelligence (AI) technologies and applications as well as in the potential risks that these technologies might pose. As a result, questions are being raised about the legal and regulatory governance of AI, machine learning, “autonomous” systems, and related robotic and data technologies. Fearing concerns about labor market effects, social inequality, and even physical harm, some have called for precautionary regulations that could have the effect of limiting AI development and deployment. In this paper, we recommend a different policy framework for AI technologies. At this nascent stage of AI technology development, we think a better case can be made for prudence, patience, and a continuing embrace of “permissionless innovation” as it pertains to modern digital technologies. 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.

[originally published on Plaintext on June 21, 2017.]

This summer, we celebrate the 20th anniversary of two developments that gave us the modern Internet as we know it. One was a court case that guaranteed online speech would flow freely, without government prior restraints or censorship threats. The other was an official White House framework for digital markets that ensured the free movement of goods and services online.

The result of these two vital policy decisions was an unprecedented explosion of speech freedoms and commercial opportunities that we continue to enjoy the benefits of twenty years later.

While it is easy to take all this for granted today, it is worth remembering that, in the long arc of human history, no technology or medium has more rapidly expanded the range of human liberties — both speech and commercial liberties — than the Internet and digital technologies. But things could have turned out much differently if not for the crucially important policy choices the United States made for the Internet two decades ago.

First, on June 26, 1997, the Supreme Court handed down its landmark decision in Reno v. ACLU, which struck down the Communications Decency Act’s provisions seeking to regulate online content under the old broadcast media standard. The Court concluded that there was “no basis for qualifying the level of First Amendment scrutiny that should be applied to this medium” and rejected the congressional effort to pigeonhole this exciting new medium into the archaic censorship regimes of the past.

The Reno decision was tremendously important in protecting online speakers from the chilling effect of government “indecency” regulations. The decision also set a strong legal precedent and was cited in countless subsequent decisions involving not only online speech, but also efforts to regulate video game content.

Second, in July 1997, the Clinton Administration released The Framework for Global Electronic Commerce, a document that outlined the US government’s new policy approach toward the Internet and the emerging digital economy. The Framework was a bold vision statement that endorsed comprehensive online freedom of exchange, saying that “the private sector should lead [and] the Internet should develop as a market driven arena not a regulated industry.” The Administration rejected a restrictive regulatory regime for commercial activities and instead recommended reliance on civil society, contractual negotiations, voluntary agreements, and industry self-regulation.

To “avoid undue restrictions on electronic commerce,” the vision statement recommended that “parties should be able to enter into legitimate agreements to buy and sell products and services across the Internet with minimal government involvement or intervention.” But, “[w]here governmental involvement is needed, its aim should be to support and enforce a predictable, minimalist, consistent and simple legal environment for commerce.”

Taken together, the Reno decision and the Clinton Administration’s Framework acted as a Magna Carta moment for the Internet and digital technologies. It signaled that “permissionless innovation” would become America’s governance stance toward online speech and commerce.

As I defined it in a book on the subject, permissionless innovation, “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 any develop, can be addressed later.” The primary advantage of permissionless innovation as a governance disposition is that it sends a clear green light to citizens telling them they are at liberty to pursue their own interests and passions, free from the suffocating grip of prior restraints on free speech and free exchange.

But the Reno decision and the Clinton Administration’s Framework are not the only critical policy decisions that helped enshrine permissionless innovation as the lodestar of online policy in the US. In the mid-1990s, the Clinton Administration made the decision to allow open commercialization of the Internet, which was previously just the domain of government agencies and university researchers. Even more crucially, when Congress passed and President Bill Clinton signed into law the Telecommunications Act of 1996, lawmakers made it clear that traditional analog-era communications and media regulatory regimes would generally not be applied to the Internet.

The Telecom Act also included an obscure provision known as “Section 230,” which immunized online intermediaries from onerous liability for the content and communications that traveled over their networks. Section 230 was hugely important in that it let online speech and commerce flourish without the constant threat of frivolous lawsuits looming overhead. Internet scholar David Post has argued that “it is impossible to imagine what the Internet ecosystem would look like today without [Section 230]. Virtually every successful online venture that emerged after 1996 — including all the usual suspects, viz. Google, Facebook, Tumblr, Twitter, Reddit, Craigslist, YouTube, Instagram, eBay, Amazon — relies in large part (or entirely) on content provided by their users, who number in the hundreds of millions, or billions,” he notes. It is unlikely that the vibrant marketplace of online speech and commerce we enjoy today could have existed without the protections afforded by Section 230.

Finally, in 1998, another important legislative development occurred when Congress passed the Internet Tax Freedom Act, which blocked all levels of government in the US from imposing discriminatory taxes on the Internet. That made it clear that the Net would not be milked as a “cash cow” the way previous communications systems had been.

So, let’s recap how policymakers generally got policy right for the Internet in the mid-1990s by enshrining permissionless innovation as the law of the land:

• The Executive Branch set the tone for online freedom by fully privatizing the underlying network and then establishing a governance vision based upon minimal government interference with online speech and exchange.
• The Legislative Branch generally endorsed the Clinton Administration’s vision for the Internet and digital technologies by ensuring that new policies would not be based upon the failed regulatory and tax policies of the past.
• The Judicial Branch upheld the centrality of the First Amendment in the Information Age and made it clear that this new medium for speech would be granted the strongest protection against government encroachments on freedom of speech and expression.

The combined effect of these wise, bipartisan policy decisions was that the Net and digital tech were “born free” instead of being born into regulatory captivity. We continue to enjoy the fruits of these freedoms today as citizens here in the US and across the world take advantage of the unprecedented ability to connect and communicate to pursue their passions and interests as they see fit.

There’s still more work to be done, however. Online platforms and digital technologies continue to come under attack from regulatory activists both here and abroad. Many governments continue to push back against these online speech and commercial freedoms, meaning we’ll need to redouble our efforts to highlight and defend the benefits of preserving these important victories.

Finally, as the underlying drivers of the Digital Revolution continue to spread into other segments of the economy, these freedoms will come into conflict with older top-down regulatory regimes for automobiles, aviation, medical technology, finance, and much more. This will create an epic conflict of governance visions between the Internet’s permissionless innovation model versus the precautionary, command-and-control regulatory regimes of the industrial age. We already see tension at work in policy deliberations over the Internet of Things, “big data,” driverless cars, commercial drones, robotics, artificial intelligence, 3D printing, virtual reality, the sharing economy, and others.

If policymakers hope to preserve and extend the benefits of the hard-fought victories of the Internet’s past twenty years, they will need to restate and reinvigorate their commitment to permissionless innovation to help spur the next great technological revolutions in these and other fields.

[Remarks p repared for Fifth Annual Conference on Governance of Emerging Technologies: Law, Policy & Ethics at Arizona State University, Phoenix, AZ, May 18, 2017.]

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What are we to make of this peculiar new term “permissionless innovation,” which has gained increasing currency in modern technology policy discussions? And how much relevance has this notion had—or should it have—on those conversations about the governance of emerging technologies? That’s what I’d like to discuss here today.

Uncertain Origins, Unclear Definitions

I should begin by noting that while I have written a book with the term in the title, I take no credit for coining the phrase “permissionless innovation,” nor have I been able to determine who the first person was to use the term. The phrase is sometimes attributed to Grace M. Hopper, a computer scientist who was a rear admiral in the United States Navy. She once famously noted that, “It’s easier to ask forgiveness than it is to get permission.”

“Hopper’s Law,” as it has come to be known in engineering circles, is probably the most concise articulation of the general notion of “permissionless innovation” that I’ve ever heard, but Hopper does not appear to have ever used the actual phrase anywhere. Moreover, Hopper was not necessarily applying this notion to the realm of technological governance, but was seemingly speaking more generically about the benefit of trying new things without asking for the blessing of any number of unnamed authorities or overseers—which could include businesses, bosses, teachers, or perhaps even government officials.

Today, however, we most often hear the “permissionless innovation” used in discussions about the governance of information technologies as well as a wide variety of emerging technologies. Unfortunately, scholars and advocates who have suggested that permissionless innovation should serve as the governing lodestar in these areas do not always precisely define what they mean by the term.

None of them seem to be suggesting, however, that permissionless innovation is synonymous with anarchy. To the contrary, many of them are quick to note that governments will continue to have a role to play. It is even rare to see advocates of permissionless innovation in these varied contexts calling for the abolition of any laws, programs, or agencies.

Instead, it seems to be the case that most of those defenders of permissionless innovation are using the term as a sort of shorthand when what they really mean to say is something like: “give innovators a bit more breathing room,” or, “don’t rush to regulate.”

This is consistent with my own articulation of the term, which goes as follows:

“Permissionless innovation 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 any develop, can be addressed later.”

Default Policy Positions

Framing the term in this fashion makes it clear that, as it pertains to technological governance, permissionless innovation is about setting our public policy defaults closer to green lights rather than red ones.

It switches the burden of proof to the opponents of ongoing technological change by asserting five things:

• First, technological innovation is the single most important determinant of long-term human well-being.
• Second, there is real value to learning through continued trial-and-error experimentation, resiliency, and ongoing adaptation to technological change.
• Third, constraints on new innovation should be the last resort, not the first. Innovation should be innocent until proven guilty.
• Fourth, as regulatory interventions are considered, policy should be based on evidence of concrete potential harm and not fear of worst-case hypotheticals.
• Fifth, and finally, where policy interventions are deemed needed, flexible, bottom-up solutions of an ex post (responsive) nature are almost always preferable to rigid, top-down controls of an ex ante (anticipatory) nature.

Shared Shortcomings of Both Visions

At least on the surface, that sort of governance vision stands in stark contrast to the “precautionary principle.” Defenders of the precautionary principle as the general default position in technology policy debates generally believe that new innovations should be curtailed or disallowed until their developers can prove that they will not cause any harm to individuals, groups, specific entities, cultural norms, or various existing laws, norms, or traditions.

That being said, I’d like to point out some of the shared shortcomings of both of these governance visions.

First, as with attempts to define the parameters of “permissionless innovation,” the precautionary principle is not always as rigid as its critics sometimes suggest. There are as many flavors of the precautionary principle as there are ice cream. Indeed, this is why many have criticized the precautionary principle not for what it says but rather for what it doesn’t say. It doesn’t tell us exactly how and when to apply precautionary measures, or how to evaluate the trade-offs associated with precaution.

This points the second and deeper underlying problem faced by advocates of both precautionary measures and permissionless innovation: Our collective inability to craft a widely-shared definition of what constitutes “technological harm” in various contexts. This is certainly not to suggest that no attempt has been made to do so. Rather, simply that we don’t seem to be any closer to concrete agreement about how or where to draw those lines.

Of course, let’s not kid ourselves into thinking that we can find bright-line answers to all these questions. After all, for many of these technological governance issues we are operating in the realm of “Level 3” or “Earth-level” systems, as Professors Allenby and Sarewitz refer to it in their book, The Techno-Human Condition. These are systems in which we deal with, as they say, “a context that is always shifting, and on meanings that are never fixed.”

That makes it even more challenging to define what we mean by “responsible innovation” or “socially desirable innovation” for purposes of determining optimal technology policy.

Risk Analysis through the Lens of Permissionless Innovation

For me, there are no easy ways out of this mess. But I do know two things for certain.

First, we must continue to refine and improve our risk analysis tools and techniques to make better determinations of when proposed interventions are sensible and cost-effective relative to the many trade-offs at work.

Again, I recognize the challenge of doing this when many of the issues and values in play are amorphous and metaphysical conflicts exist about how to even define some of these things. Most of the emerging technology policy issues I write about today, for example, involve some sort of privacy, safety, or security concern. In each case, however, very little consensus exists about what those terms even mean in varied contexts.

Nonetheless, the fact that benefit-cost analysis is hard should not serve as an excuse for failing to go through the exercise of attempting some sort of valuation of the many variables in play.

Soft Law Alternatives

The second thing I know for certain is that, due the combination of both definitional complexity regarding what constitutes technological harm, as well as the ever-accelerating pace of the so-called “pacing problem,” all roads lead back to soft law solutions instead of hard law remedies.

Last year, I had the pleasure of reading and reviewing Wendell Wallach’s new book and then having a nice conversation with him about it at Microsoft’s DC headquarters. The most interesting thing about our exchange was that, although we do not begin in the same place philosophically-speaking, we largely end up in the same place practically-speaking.

That is, there seemed to be some grudging acceptance on both our parts that “soft law” systems, multistakeholder processes, and various other informal governance mechanisms will need to fill the governance gap left by the gradual erosion of hard law.

Many other scholars, including many of you in this room, have discussed the growth of soft law mechanisms in specific contexts, but I believe we have probably failed to acknowledge the extent to which these informal governance models have already become the dominant form of technological governance, at least in the United States.

I’m currently co-authoring a very long study which documents how the Obama Administration came to rely quite heavily on multistakeholder processes, negotiated “best practices,” and industry codes of conduct as the primary governance mechanisms for a long list of emerging tech issues, including: driverless cars, commercial drones, big data, facial recognition, the Internet of Things and wearable technology, mobile medical applications, 3D printing, artificial intelligence, the Sharing Economy, and much more.

Most of these soft law processes were driven by the NTIA and FTC, but plenty of other agencies with an “N” or an “F” at the beginning of their name have undertaken some sort of soft law process, including NHTSA, the FDA, the FAA, and so on.

Now, I’m willing to bet that many of those involved in these processes who generally favor more anticipatory regulatory approaches would have preferred to start with hard law solutions to some of these issues. And I am equally certain that many of the innovators involved in those multistakeholder processes would have probably preferred not to have had to come to the table at all.

But at the end of the day, for the most part, all sides did come to the table and worked together in a good faith effort to find some rough consensus about what sort of informal guidelines would govern the future of innovation in these sectors.

The Worst of All Systems, Except All the Others

Plenty of questions remain about such soft law systems, and the irony is that defenders of both permissionless innovation and the precautionary principle will quite often be raising very similar concerns regarding the transparency, accountability, and enforceability of these systems.

But I’m inclined to believe that no matter where you sit on the permissionless vs. precautionary spectrum, and no matter what your reservations may be about it the new world of soft law governance that we find ourselves moving into, this is the future and the future is now.

Much as Churchill said of democracy being “the worst form of Government except for all those other forms that have been tried from time to time,” I think we are well on our way to a world in which soft law is the worst form of technological governance except for all those others that have been tried before.

Of course, the devil is always in the details and I suspect that we’ll have plenty of discuss and debate in that regard. Let’s get that conversation going.

Federal Communications Commission (FCC) Chairman Ajit Pai today announced plans to expand the role of economic analysis at the FCC in a speech at the Hudson Institute. This is an eminently sensible idea that other regulatory agencies (both independent and executive branch) could learn from.

Pai first made the case that when the FCC listened to its economists in the past, it unlocked billions of dollars of value for consumers. The most prominent example was the switch from hearings to auctions in order to allocate spectrum licenses. He perceptively noted that the biggest effect of auctions was the massive improvement in consumer welfare, not just the more than $100 billion raised for the Treasury. Other examples of the FCC using the best ideas of its economists include:

• Use of reverse auctions to allocate universal service funds to reduce costs.
• Incentive auctions that reward broadcasters for transferring licenses to other uses – an idea initially proposed in a 2002 working paper by Evan Kwerel and John Williams at the FCC.
• The move from rate of return to price cap regulation for long distance carriers.

More recently, Pai argued, the FCC has failed to use economics effectively. He identified four key problems:

1. Economics is not systematically employed in policy decisions and often employed late in the process. The FCC has no guiding principles for conduct and use of economic analysis.
2. Economists work in silos. They are divided up among bureaus. Economists should be able to work together on a wide variety of issues, as they do in the Federal Trade Commission’s Bureau of Economics, the Department of Justice Antitrust Division’s economic analysis unit, and the Securities and Exchange Commission’s Division of Economic and Risk Analysis.
3. Benefit-cost analysis is not conducted well or often, and the FCC does not take Regulatory Flexibility Act analysis (which assesses effects of regulations on small entities) seriously. The FCC should use Office of Management and Budget guidance as its guide to doing good analysis, but OMB’s 2016 draft report on the benefits and costs of federal regulations shows that the FCC has estimated neither benefits nor costs of any of its major regulations issued in the past 10 years. Yet executive orders from multiple administrations demonstrate that “Serious cost-benefit analysis is a bipartisan tradition.”
4. Poor use of data. The FCC probably collects a lot of data that’s unnecessary, at a paperwork cost of $800 million per year, not including opportunity costs of the private sector. But even useful data are not utilized well. For example, a few years ago the FCC stopped trying to determine whether the wireless market is effectively competitive even though it collects lots of data on the wireless market.

To remedy these problems, Pai announced an initiative to establish an Office of Economics and Data that would house the FCC’s economists and data analysts. An internal working group will be established to collect input within the FCC and from the public. He hopes to have the new office up and running by the end of the year. The purpose of this change is to give economists early input into the rulemaking process, better manage the FCC’s data resources, and conduct strategic research to help find solutions to “the next set of difficult issues.”

Can this initiative significantly improve the quality and use of economic analysis at the FCC?

There’s evidence that independent regulatory agencies are capable of making some decent improvements in their economic analysis when they are sufficiently motivated to do so. For example, the Securities and Exchange Commission’s authorizing statue contains language that requires benefit-cost analysis of regulations when the commission seeks to determine whether they are in the public interest. Between 2005 and 2011, the SEC lost several major court cases due to inadequate economic analysis.

In 2012, the commission’s general counsel and chief economist issued new economic analysis guidance that pledged to assess regulations according to the principal criteria identified in executive orders, guidance from the Office of Management and Budget, and independent research. In a recent study, I found that the economic analysis accompanying a sample of major SEC regulations issued after this guidance was measurably better than the analysis accompanying regulations issued prior to the new guidance. The SEC improved on all five aspects of economic analysis it identified as critical: assessment of the need for the regulation, assessment of the baseline outcomes that will likely occur in the absence of new regulation, identification of alternatives, and assessment of the benefits and costs of alternatives.

Unlike the SEC, the FCC faces no statutory benefit-cost analysis requirement for its regulations. Unlike the executive branch agencies, the FCC is under no executive order requiring economic analysis of regulations. Unlike the Federal Trade Commission in the early 1980s, the FCC faces little congressional pressure for abolition.

But Congress is considering legislation that would require all regulatory agencies to conduct economic analysis of major regulations and subject that analysis to limited judicial review. Proponents of executive branch regulatory review have always contended that the president has legal authority to extend the executive orders on regulatory impact analysis to cover independent agencies, and perhaps President Trump is audacious enough to try this. Thus, it appears Chairman Pai is trying to get the FCC out ahead of the curve.

Yesterday, almost exactly one year after the FCC classified Internet service as a common carrier service, Sen. Mike Lee and his Senate cosponsors (including presidential candidates Cruz and Rubio) introduced the Restoring Internet Freedom Act. Sen. Lee also published an op-ed about the motivation for his bill, pointing out the folly of applying a 1930s AT&T Bell monopoly law to the Internet. It’s a short bill, simply declaring that the FCC’s Title II rules shall have no force and it precludes the FCC from enacting similar rules absent an act of Congress.

It’s a shame such a bill even has to be proposed, but then again these are unusual times in politics. The FCC has a history of regulating new industries, like cable TV, without congressional authority. However, enforcing Title II, its most intrusive regulations, on the Internet is something different altogether. Congress was not silent on the issue of Internet regulation, like it was regarding cable TV in the 1960s when the FCC began regulating.

Former Clinton staffer John Podesta said after Clinton signed the 1996 Telecom Act, “Congress simply legislated as if the Net were not there.” That’s a slight overstatement. There is one section of the Telecommunications Act, Section 230, devoted to the Internet and it is completely unhelpful for the FCC’s Open Internet rules. Section 230 declares a US policy of unregulation of the Internet and, in fact, actually encourages what net neutrality proponents seek to prohibit: content filtering by ISPs.

The FCC is filled with telecom lawyers who know existing law doesn’t leave room for much regulation, which is why top FCC officials resisted common carrier regulation until the end. Chairman Wheeler by all accounts wanted to avoid the Title II option until pressured by the President in November 2014. As the Wall Street Journal reported last year, the White House push for Title II “blindsided officials at the FCC” who then had to scramble to construct legal arguments defending this reversal. The piece noted,

The president’s words swept aside more than a decade of light-touch regulation of the Internet and months of work by Mr. Wheeler toward a compromise.

The ersatz “parallel version of the FCC” in the White House didn’t understand the implications of what they were asking for and put the FCC in a tough spot. The Title II rules and legal justifications required incredible wordsmithing but still created internal tensions and undesirable effects, as pointed out by the Phoenix Center and others. This policy reversal, to go the Title II route per the President’s request, also created First Amendment and Section 230 problems for the FCC. At oral argument the FCC lawyer disclaimed any notion that the FCC would regulate filtered or curated Internet access. This may leave a gaping hole in Title II enforcement since all Internet access is filtered to some degree, and new Internet services, like LTE Broadcast, Free Basics, and zero-rated video, involve curated IP content. As I said at the time, the FCC “is stating outright that ISPs have the option to filter and to avoid the rules.”

Nevertheless, Title II creates a permission slip regime for new Internet services that forces tech and telecom companies to invest in compliance lawyers rather than engineers and designers. Hopefully in the next few months the DC Circuit Court of Appeals will strike down the FCC’s net neutrality efforts for a third time. In any case, it’s great to see that Sen. Lee and his cosponsors have made innovation policy priority and want to continue the light-touch regulation of the Internet.

Throughout the year, I collect some of the more notable tech policy-related essays that I’ve read and then publish an end-of-year list here. (Here, for example, are my end-of-year lists from 2014 and 2013.) So, here are some of my favorite essays and editorials from 2015. (Note: They are just in chronological order. No ranking here.)

1. Larry Downes – “Take note Republicans and Democrats, this is what a pro-innovation platform looks like,” Washington Post, January 7. (Downes explains how governments need to adapt to accommodate and embrace new forms of technological innovation. He notes: “Here at home, the opportunity to wrap themselves in the flag of innovation is knocking for both parties, but so far there are few takers. Republicans and Democrats regularly invoke the rhetoric of innovation, entrepreneurship, and the transformative power of technology. But in reality neither party pursues policies that favor the disruptors. Instead, where lawmakers once took a largely hands-off approach to Silicon Valley, as the Internet revolution enters a new stage of industry transformation, the temptation to intervene, to usurp, to micromanage, to circumscribe the future — becomes irresistible.”) Equally excellent was Larry’s essay later in the year, “Fewer, Faster, Smarter.” (“As the technology revolution proceeds, the concept of government may return to its pre-industrial roots, setting the most basic rules of the economy and standing by as regulator of last resort when markets fail for some or all consumers over an extended period of time. Even then, the solution may simply be to tweak the incentives to encourage better behavior, rather than more full-fledged—and usually ill-fated—micromanagement of fast-changing industries.”)
2. Bryant Walker Smith – “Slow Down That Runaway Ethical Trolley,” CIS Blog, January 12. (Smith, a leading expert on autonomous vehicle systems, notes that, while serious ethical dilemmas will always be present with such technologies, we should not allow the perfect to be the enemy of the good. “The fundamental ethical question, in my opinion, is this: In the United States alone, tens of thousands of people die in motor vehicle crashes every year, and many more are injured. Automated vehicles have great potential to one day reduce this toll, but the path to this point will involve mistakes and crashes and fatalities. Given this stark choice, what is the proper balance between caution and urgency in bringing these systems to the market? How safe is safe enough?”)
3. Tim Worstall – “Google gets my data, I get search and email and that. Help help, I’m being OPPRESSED!” The Register, February 4. (A wicked tongue-lashing of the critics of the data-driven economy.)
4. Aki Ito – “Six Things Technology Has Made Insanely Cheap: Behold the power of American progress,” Bloomberg Business, February 5. (The title says it all.)
5. Andrew McAfee – “Who are the humanists, and why do they dislike technology so much?” Financial Times, July 7, 2015. (A brief but brilliant exploration of the philosophical fight over differing conceptions of “humanism.” McAfee, appropriately in my opinion, calls into question technological critics who self-label themselves “humanists” and then suggest that those who believe in the benefits of technological innovation and progress are somehow opposed to humanity. In reality, of course, nothing could be further from the truth!)
6. Jocelyn Brewer – “Techno-Fear is Hurting Kids, Not Their Use of Digital Devices,” July 7, 2015. (A beautiful piece that makes it clear why “the Internet… is not addictive. Technology is not a drug.” Brewer continues on to make the case for avoiding fear-based messaging about Internet problems and instead adopting a more sensible approach: “Rather than trotting out interminable lists of the negative consequences of our adoption of technology lets raise awareness of how to avoid the pitfalls of not approaching this new era with solutions and proactive thinking.” Amen, sister!)
7. Evan Ackerman – “We Should Not Ban ‘Killer Robots,’ and Here’s Why,” IEEE Spectrum, July 29, 2015, (A thought-provoking piece about a controversial subject in which Ackerman argues that “banning the technology is not going to solve the problem if the problem is the willingness of humans to use technology for evil”)
8. Tim O’Reilly – “Networks and the Nature of the Firm,” Medium, August 14, 2015.  (Explores the economics of the sharing economy and “the huge economic shift led by software and connectedness.”)
9. Joe Queenan – “America’s Need for Pointless Updates and Cat Videos,” Wall Street Journal, December 3, 2015. (“The back-to-nature, turn-off-your-cellphone movement is based on a false assumption.  . . .  Time not spent doing dumb stuff would otherwise be wasted doing other dumb stuff. It’s called ‘play,’ without which Jack is a dull boy. It is a variation on the old saying that nature abhors a vacuum. So nature created the Internet.”)
10. Dominic Basulto – “Can we just stop with all these tech dystopia stories?” Washington Post, Dec 8, 2015. (“Yes, a dystopian future is possible, but so is a utopian future. Most likely, the answer is somewhere in the middle, the way it’s been for millennia.”)

The big news out of Europe today is that the European Court of Justice (ECJ) has invalidated the 15-year old EU-US safe harbor agreement, which facilitated data transfers between the EU and US. American tech companies have relied on the safe harbor to do business in the European Union, which has more onerous data handling regulations than the US. [PDF summary of decision here.] Below I offer some quick thoughts about the decision and some of its potential unintended consequences.

#1) Another blow to new entry / competition in the EU: While some pundits are claiming this is a huge blow to big US tech firms, in reality, the irony of the ruling is that it will bolster the market power of the biggest US tech firms, because they are the only ones that will be able to afford the formidable compliance costs associated with the resulting regulatory regime. In fact, with each EU privacy decision, Google, Facebook, and other big US tech firms just get more dominant. Small firms just can’t comply with the EU’s expanding regulatory thicket. “It will involve lots of contracts between lots of parties and it’s going to be a bit of a nightmare administratively,” said Nicola Fulford, head of data protection at the UK law firm Kemp Little when commenting on the ruling to the BBC. “It’s not that we’re going to be negotiating them individually, as the legal terms are mostly fixed, but it does mean a lot more paperwork and they have legal implications.” And by driving up regulatory compliance costs and causing constant delays in how online business is conducted, the ruling will (again, on top of all the others) greatly limits entry and innovation by new, smaller players in the digital world. In essence, EU data regulations have already wiped out much of the digital competition in Europe and now this ruling finishes off any global new entrants who might have hoped of breaking in and offering competitive alternatives. These are the sorts of stories never told in antitrust circles: costly government rulings often solidify and extend the market dominance of existing companies. Dynamic effects matter. That is certainly going to be the case here.

#2) Cross-border digital trade suffers: This conclusion follows from point #1, of course. Writing just before the decision was announced, lawyers as Norton Rose Fulbright’s Data Compliance Report blog noted that if the safe harbor was invalidated, “the impact on the world economy would be immense.” Well, here we are.  Dan Castro of ITIF hopes that EU and US officials can pull back from the brink of this impending disaster and “finish the process of creating a Safe Harbor 2.0 with terms that give comfort to all parties.” I suspect that many tech companies are hoping for the same miracle to occur. But don’t hold your breath. The Europeans have decided that this is the hill that they will die on. They haven’t shown too much interest in preserving an innovative tech market or enhancing global digital trade flows in the past due to heightened concerns about privacy, and there’s no reason to think they will back down now with a more measured approach. Importantly, as I noted in my earlier essay, “How Attitudes about Risk & Failure Affect Innovation on Either Side of the Atlantic,” this trans-Atlantic clash of vision transcends the debate over privacy law. It’s about broader cultural and political attitudes toward risk-taking and disruption. Most leaders in Europe value stability–both economic and cultural stability–more than US officials and citizens. This tension was always bound to reach a breaking point and the Digital Economy and data handling policies is where the you-know-what is finally hitting the fan.

#3) Web Balkanization accelerates: This is just another blow to the idea of a seamless global Internet. But as tech lawyer Tiffany C. Li pointed out on Twitter this morning in response to the decision, while Web pundits decry balkanization in other contexts, many of them seem to be cheering it on in this case because this decision deals with privacy and data regulation, which they favor more regulation of. But you can’t have your cake and eat it to. Indeed, the great irony of so many “Internet freedom” debates today is that pundits absolutely hate the idea of Internet control and Web balkanization… right up until the point where they absolutely love it! Think of this as the tech policy world’s selective morality problem. (I elaborated on these themes in my essays “When It Comes to Information Control, Everybody Has a Pet Issue & Everyone Will Be Disappointed,” and “Copyright, Privacy, Property Rights & Information Control: Common Themes, Common Challenges.”)

Interesting that the same ppl who decried Russia’s data localization law now cheer EU upping extraterritorial data regulation. #SafeHarbor

— Tiffany C. Li (@tiffanycli) October 6, 2015

@AnupamChander @AdamThierer Yes, #Schrems opens up possibility that companies will now have to comply w/28 different DPAs applying 95/46/EC. — Tiffany C. Li (@tiffanycli) October 6, 2015

This is the beginning of the Balkanization of the Internet: http://t.co/mbFxxhN7tQ

— Dino A. Dai Zovi (@dinodaizovi) October 6, 2015

Another step toward the jurisdictional balkanization of the Internet https://t.co/83FIYvU2Sm — Milton Mueller (@miltonmueller) October 6, 2015

#4) But the big dogs won’t bolt out of Europe: But this should also be another reminder that there are no “John Galt moments” in the world of tech, as some tech libertarians hope. The biggest players won’t pack their bags and head home because there’s still too much money sitting on the table in Europe. Big firms will instead scramble to comply, just as they are trying to do with the so-called Right to Be Forgotten ruling. Of course, this just exacerbates problem #1 already discussed above: The big dogs stay and do their best to comply with the costly regulatory regime while smaller players get crushed by the rules and all the other potential new entrants just stay home.

#5) The decision ignores the real problem: widespread government surveillance: I don’t often find myself agreeing with Cory Doctorow on much, but he gets it exactly right when he notes that, “this doesn’t mean that Europeans won’t be subjected to mass surveillance, including mass surveillance by the NSA.” He elaborates:

If the European Court of Justice wants to end mass surveillance of Europeans, it can only do so by banning mass surveillance — by ruling that laws that treat foreigners’ data as fair game are unconstitutional. If US tech giants want to get loose from a farcical, expensive, and pointless exercise that continues to treat them as adjuncts to the world’s spy agencies, they need to lobby the US government to change the laws under which it treats foreigners as fair game.

Thus, it would certainly be nice if, as CDT suggested in response to the ruling, that the “EU Safe Harbour Ruling Should Reinvigorate Surveillance Reform Efforts.” Of course, that requires that tech companies muster the courage to stand up to public officials here in the States who always want them to (literally) hand over the keys to the kingdom. That’s why the current debate over crypto backdoors is so essential. It’s good to see a number of tech companies pushing back on that front and refusing to get rolled by law enforcement and national security agencies the way that far too many telecom and tech companies have been in the past. Following today’s ECJ ruling, tech companies are realizing just how serious this problem really is because now European officials are striking out against the safe harbor agreement as a surrogate for their general frustrations with US surveillance more generally. Indeed, in a press release following today’s ECJ ruling, the Internet Association, which represents major US tech firms, noted that, “The Internet industry has consistently supported surveillance reform” and the Association pushed for swift congressional action to clarify and limit existing surveillance powers. It remains to be seen whether the US tech sector and other related industries will be able to push back effectively against the growing surveillance state leviathan, but it’s more clear today than ever before why that’s a fight worth having.

The “Internet of Things” (IoT) is already growing at a breakneck pace and is expected to continue to accelerate rapidly. In a short new paper (“Projecting the Growth and Economic Impact of the Internet of Things“) that I’ve just released with my Mercatus Center colleague Andrea Castillo, we provide a brief explanation of IoT technologies before describing the current projections of the economic and technological impacts that IoT could have on society. In addition to creating massive gains for consumers, IoT is projected to provide dramatic improvements in manufacturing, health care, energy, transportation, retail services, government, and general economic growth. Take a look at our paper if you’re interested, and you might also want to check out my 118-page law review article, “The Internet of Things and Wearable Technology: Addressing Privacy and Security Concerns without Derailing Innovation” as well as my recent congressional testimony on the policy issues surrounding the IoT.)

Yesterday, the Federal Trade Commission (FTC) released its long-awaited report on “The Internet of Things: Privacy and Security in a Connected World.” The 55-page report is the result of a lengthy staff exploration of the issue, which kicked off with an FTC workshop on the issue that was held on November 19, 2013.

I’m still digesting all the details in the report, but I thought I’d offer a few quick thoughts on some of the major findings and recommendations from it. As I’ve noted here before, I’ve made the Internet of Things my top priority over the past year and have penned several essays about it here, as well as in a big 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 shortly. (Also, here’s a compendium of most of what I’ve done on the issue thus far.)

I’ll begin with a few general thoughts on the FTC’s report and its overall approach to the Internet of Things and then discuss a few specific issues that I believe deserve attention.

Big Picture, Part 1: Should Best Practices Be Voluntary or Mandatory?

Generally speaking, the FTC’s report contains a variety of “best practice” recommendations to get Internet of Things innovators to take steps to ensure greater privacy and security “by design” in their products. Most of those recommended best practices are sensible as general guidelines for innovators, but the really sticky question here continued to be this: When, if ever, should “best practices” become binding regulatory requirements?

The FTC does a bit of a dance when answering that question. Consider how, in the executive summary of the report, the Commission answers the question regarding the need for additional privacy and security regulation: “Commission staff agrees with those commenters who stated that there is great potential for innovation in this area, and that IoT-specific legislation at this stage would be premature.” But, just a few lines later, the agency (1) “reiterates the Commission’s previous recommendation for Congress to enact strong, flexible, and technology-neutral federal legislation to strengthen its existing data security enforcement tools and to provide notification to consumers when there is a security breach;” and (2) “recommends that Congress enact broad-based (as opposed to IoT-specific) privacy legislation.”

Here and elsewhere, the agency repeatedly stresses that it is not seeking IoT-specific regulation; merely “broad-based” digital privacy and security legislation. The problem is that once you understand what the IoT is all about you come to realize that this largely represents a distinction without a difference. The Internet of Things is simply the extension of the Net into everything we own or come into contact with. Thus, this idea that the agency is not seeking IoT-specific rule sounds terrific until you realize that it is actually seeking something far more sweeping: greater regulation of all online / digital interactions. And because “the Internet” and “the Internet of Things” will eventually (if they are not already) be considered synonymous, this notion that the agency is not proposing technology-specific regulation is really quite silly.

Now, it remains unclear whether there exists any appetite on Capitol Hill for “comprehensive” legislation of any variety – although perhaps we’ll learn more about that possibility when the Senate Commerce Committee hosts a hearing on these issues on February 11. But at least thus far, “comprehensive” or “baseline” digital privacy and security bills have been non-starters.

And that’s for good reason in my opinion: Such regulatory proposals could take us down the path that Europe charted in the late 1990s with onerous “data directives” and suffocating regulatory mandates for the IT / computing sector. The results of this experiment have been unambiguous, as I documented in congressional testimony in 2013. I noted there how America’s Internet sector came to be the envy of the world while it was hard to name any major Internet company from Europe. Whereas America embraced “permissionless innovation” and let creative minds develop one of the greatest success stories in modern history, the Europeans adopted a “Mother, May I” regulatory approach for the digital economy. America’s more flexible, light-touch regulatory regime leaves more room for competition and innovation compared to Europe’s top-down regime. Digital innovation suffered over there while it blossomed here.

That’s why we need to be careful about adopting the sort of “broad-based” regulatory regime that the FTC recommends in this and previous reports.

Big Picture, Part 2: Does the FTC Really Need More Authority?

Something else is going on in this report that has also been happening in all the FTC’s recent activity on digital privacy and security matters: The agency has been busy laying the groundwork for its own expansion.

In this latest report, for example, the FTC argues that

Although the Commission currently has authority to take action against some IoT-related practices, it cannot mandate certain basic privacy protections… The Commission has continued to recommend that Congress enact strong, flexible, and technology-neutral legislation to strengthen the Commission’s existing data security enforcement tools and require companies to notify consumers when there is a security breach.

In other words, this agency wants more authority. And we are talking about sweeping authority here that would transcend its already sweeping authority to police “unfair and deceptive practices” under Section 5 of the FTC Act. Let’s be clear: It would be hard to craft a law that grants an agency more comprehensive and open-ended consumer protection authority than Section 5. The meaning of those terms — “unfairness” and “deception” — has always been a contentious matter, and at times the agency has abused its discretion by exploiting that ambiguity.

Nonetheless, Sec. 5 remains a powerful enforcement tool for the agency and one that has been wielded aggressively in recently years to police digital economy giants and small operators alike. Generally speaking, I’m alright with most Sec. 5 enforcement, especially since that sort of retrospective policing of unfair and deceptive practices is far less likely to disrupt permissionless innovation in the digital economy. That’s because it does not subject digital innovators to the sort of “Mother, May I” regulatory system that European entrepreneurs face. But an expansion of the FTC’s authority via more “comprehensive, baseline” privacy and security regulatory policies threatens to convert America’s more sensible bottom-up and responsive regulatory system into the sort of innovation-killing regime we see on the other side of the Atlantic.

Here’s the other thing we can’t forget when it comes to the question of what additional authority to give the FTC over privacy and security matters: The FTC is not the end of the enforcement story in America. Other enforcement mechanism exist, including: privacy torts, class action litigation, property and contract law, state enforcement agencies, and other targeted privacy statutes. I’ve summarized all these additional enforcement mechanisms in my recent law review article referenced above. (See section VI of the paper.)

FIPPS, Part 1: Notice & Choice vs. Use-Based Restrictions

Next, let’s drill down a bit and examine some of the specific privacy and security best practices that the agency discusses in its new IoT report.

The FTC report highlights how the IoT creates serious tensions for many traditional Fair Information Practice Principles (FIPPs). The FIPPs generally include: (1) notice, (2) choice, (3) purpose specification, (4) use limitation, and (5) data minimization. But the report is mostly focused on notice and choice as well as data minimization.

When it comes to notice and choice, the agency wants to keep hope alive that it will still be applicable in an IoT world. I’m sympathetic to this effort because it is quite sensible for all digital innovators to do their best to provide consumers with adequate notice about data collection practices and then give them sensible choices about it. Yet, like the agency, I agree that “offering notice and choice is challenging in the IoT because of the ubiquity of data collection and the practical obstacles to providing information without a user interface.”

The agency has a nuanced discussion of how context matters in providing notice and choice for IoT, but one can’t help but think that even they must realize that the game is over, to some extent. The increasing miniaturization of IoT devices and the ease with which they suck up data means that traditional approaches to notice and choice just aren’t going to work all that well going forward. It is almost impossible to envision how a rigid application of traditional notice and choice procedures would work in practice for the IoT.

Relatedly, as I wrote here last week, the Future of Privacy Forum (FPF) recently released a new white paper entitled, “A Practical Privacy Paradigm for Wearables,” that notes how FIPPs “are a valuable set of high-level guidelines for promoting privacy, [but] given the nature of the technologies involved, traditional implementations of the FIPPs may not always be practical as the Internet of Things matures.” That’s particularly true of the notice and choice FIPPS.

But the FTC isn’t quite ready to throw in the towel and make the complete move toward “use-based restrictions,” as many academics have. (Note: I have lengthy discussion of this migration toward use-based restrictions in my law review article in section IV.D.). Use-based restrictions would focus on specific uses of data that are particularly sensitive and for which there is widespread agreement they should be limited or disallowed altogether. But use-based restrictions are, ironically, controversial from both the perspective of industry and privacy advocates (albeit for different reasons, obviously).

The FTC doesn’t really know where to go next with use-based restrictions. The agency says that, on one hand, “has incorporated certain elements of the use-based model into its approach” to enforcement in the past. On the other hand, the agency says it has concerns “about adopting a pure use-based model for the Internet of Things,” since it may not go far enough in addressing the growth of more widespread data collection, especially of more sensitive information.

In sum, the agency appears to be keeping the door open on this front and hoping that a best-of-all-worlds solution miraculously emerges that extends both notice and choice and use-based limitations as the IoT expands. But the agency’s new report doesn’t give us any sort of blueprint for how that might work, and that’s likely for good reason: because it probably won’t work at that well in practice and there will be serious costs in terms of lost innovation if they try to force unworkable solutions on this rapidly evolving marketplace.

FIPPS, Part 2: Data Minimization

The biggest policy fight that is likely to come out of this report involves the agency’s push for data minimization. The report recommends that, to minimize the risks associated with excessive data collection:

companies should examine their data practices and business needs and develop policies and practices that impose reasonable limits on the collection and retention of consumer data. However, recognizing the need to balance future, beneficial uses of data with privacy protection, staff’s recommendation on data minimization is a flexible one that gives companies many options. They can decide not to collect data at all; collect only the fields of data necessary to the product or service being offered; collect data that is less sensitive; or deidentify the data they collect. If a company determines that none of these options will fulfill its business goals, it can seek consumers’ consent for collecting additional, unexpected categories of data…

This is an unsurprising recommendation in light of the fact that, in previous major speeches on the issue, FTC Chairwoman Edith Ramirez argued that, “information that is not collected in the first place can’t be misused,” and that:

The indiscriminate collection of data violates the First Commandment of data hygiene: Thou shall not collect and hold onto personal information unnecessary to an identified purpose. Keeping data on the off chance that it might prove useful is not consistent with privacy best practices. And remember, not all data is created equally. Just as there is low quality iron ore and coal, there is low quality, unreliable data. And old data is of little value.

In my forthcoming law review article, I discussed the problem with such reasoning at length and note:

if Chairwoman Ramirez’s approach to a preemptive data use “commandment” were enshrined into a law that said, “Thou shall not collect and hold onto personal information unnecessary to an identified purpose.” Such a precautionary limitation would certainly satisfy her desire to avoid hypothetical worst-case outcomes because, as she noted, “information that is not collected in the first place can’t be misused,” but it is equally true that information that is never collected may never lead to serendipitous data discoveries or new products and services that could offer consumers concrete benefits. “The socially beneficial uses of data made possible by data analytics are often not immediately evident to data subjects at the time of data collection,” notes Ken Wasch, president of the Software & Information Industry Association. If academics and lawmakers succeed in imposing such precautionary rules on the development of IoT and wearable technologies, many important innovations may never see the light of day.

FTC Commissioner Josh Wright issued a dissenting statement to the report that lambasted the staff for not conducting more robust cost-benefit analysis of the new proposed restrictions, and specifically cited how problematic the agency’s approach to data minimization was. “[S]taff merely acknowledges it would potentially curtail innovative uses of data. . . [w]ithout providing any sense of the magnitude of the costs to consumers of foregoing this innovation or of the benefits to consumers of data minimization,” he says. Similarly, in her separate statement, FTC Commissioner Maureen K. Ohlhausen worried about the report’s overly precautionary approach on data minimization when noting that, “without examining costs or benefits, [the staff report] encourages companies to delete valuable data — primarily to avoid hypothetical future harms. Even though the report recognizes the need for flexibility for companies weighing whether and what data to retain, the recommendation remains overly prescriptive,” she concludes.

Regardless, the battle lines have been drawn by the FTC staff report as the agency has made it clear that it will be stepping up its efforts to get IoT innovators to significantly slow or scale back their data collection efforts. It will be very interesting to see how the agency enforces that vision going forward and how it impacts innovation in this space. All I know is that the agency has not conducted a serious evaluation here of the trade-offs associated with such restrictions. I penned another law review article last year offering “A Framework for Benefit-Cost Analysis in Digital Privacy Debates” that they could use to begin that process if they wanted to get serious about it.

The Problem with the “Regulation Builds Trust” Argument

One of the interesting things about this and previous FTC reports on privacy and security matters is how often the agency premises the case for expanded regulation on “building trust.” The argument goes something like this (as found on page 51 of the new IoT report): “Staff believes such legislation will help build trust in new technologies that rely on consumer data, such as the IoT. Consumers are more likely to buy connected devices if they feel that their information is adequately protected.”

This is one of those commonly-heard claims that sounds so straight-forward and intuitive that few dare question it. But there are problems with the logic of the “we-need-regulation-to-build-trust-and boost adoption” arguments we often hear in debates over digital privacy.

First, the agency bases its argument mostly on polling data. “Surveys also show that consumers are more likely to trust companies that provide them with transparency and choices,” the report says. Well, of course surveys say that! It’s only logical that consumers will say this, just as they will always say they value privacy and security more generally when asked. You might as well ask people if they love their mothers!

But what consumers claim to care about and what they actually do in the real-world are often two very different things. In the real-world, people balance privacy and security alongside many other values, including choice, convenience, cost, and more. This leads to the so-called “privacy paradox,” or the problem of many people saying one thing and doing quite another when it comes to privacy matters. Put simply, people take some risks — including some privacy and security risks — in order to reap other rewards or benefits. (See this essay for more on the problem with most privacy polls.)

Second, online activity and the Internet of Things are both growing like gangbusters despite the privacy and security concerns that the FTC raises. Virtually every metric I’ve looked at that track IoT activity show astonishing growth and product adoption, and projections by all the major consultancies that have studied this consistently predict the continued rapid growth of IoT activity. Now, how can this be the case if, as the FTC claims, we’ll only see the IoT really take off after we get more regulation aimed at bolstering consumer trust? Of course, the agency might argue that the IoT will grow at an even faster clip than it is right now, but there is no way to prove one way or the other. In any event, the agency cannot possible claim that the IoT isn’t already growing at a very healthy clip — indeed, a lot of the hand-wringing the staff engages in throughout the report is premised precisely on the fact that the IoT is exploding faster that our ability to keep up with it!! In reality, it seems far more likely that cost and complexity are the bigger impediments to faster IoT adoption, just as cost and complexity have always been the factors weighing most heavily on the adoption of other digital technologies.

Third, let’s say that the FTC is correct – and it is – when it says that a certain amount of trust is needed in terms of IoT privacy and security before consumers are willing to use more of these devices and services in their everyday lives. Does the agency imagine that IoT innovators don’t know that? Are markets and consumers completely irrational? The FTC says on page 44 of the report that, “If a company decides that a particular data use is beneficial and consumers disagree with that decision, this may erode consumer trust.” Well, if such a mismatch does exist, then the assumption should be that consumers can and will push back, or seek out new and better options. And other companies should be able to sense the market opportunity here to offer a more privacy-centric offering for those consumers who demand it in order to win their trust and business.

Finally, and perhaps most obviously, the problem with the argument that increased regulation will help IoT adoption is that it ignores how the regulations put in place to achieve greater “trust” might become so onerous or costly in practice that there won’t be as many innovations for us to adopt to begin with! Again, regulation — even very well-intentioned regulation — has costs and trade-offs.

In any event, if the agency is going to premise the case for expanded privacy regulation on this notion, they are going to have to do far more to make their case besides simply asserting it.

Once Again, No Appreciation of the Potential for Societal Adaptation

Let’s briefly shift to a subject that isn’t discussed in the FTC’s new IoT report at all.

Regular readers may get tired of me making this point, but I feel it is worth stressing again: Major reports and statements by public policymakers about rapidly-evolving emerging technologies are always initially prone to stress panic over patience. Rarely are public officials willing to step-back, take a deep breath, and consider how a resilient citizenry might adapt to new technologies as they gradually assimilate new tools into their lives.

That is really sad, when you think about it, since humans have again and again proven capable of responding to technological change in creative ways by adopting new personal and social norms. I won’t belabor the point because I’ve already written volumes on this issue elsewhere. I tried to condense all my work into a single essay entitled, “Muddling Through: How We Learn to Cope with Technological Change.” Here’s the key takeaway:

humans have exhibited the uncanny ability to adapt to changes in their environment, bounce back from adversity, and learn to be resilient over time. A great deal of wisdom is born of experience, including experiences that involve risk and the possibility of occasional mistakes and failures while both developing new technologies and learning how to live with them. I believe it wise to continue to be open to new forms of innovation and technological change, not only because it provides breathing space for future entrepreneurialism and invention, but also because it provides an opportunity to see how societal attitudes toward new technologies evolve — and to learn from it. More often than not, I argue, citizens have found ways to adapt to technological change by employing a variety of coping mechanisms, new norms, or other creative fixes.

Again, you almost never hear regulators or lawmakers discuss this process of individual and social adaptation even though they must know there is something to it. One explanation is that every generation has their own techno-boogeymen and lose faith in the ability of humanity to adapt to it.

To believe that we humans are resilient, adaptable creatures should not be read as being indifferent to the significant privacy and security challenges associated with any of the new technologies in our lives today, including IoT technologies. Overly-exuberant techno-optimists are often too quick to adopt a “Just-Get-Over-It!” attitude in response to the privacy and security concerns raised by others. But it is equally unforgivable for those who are worried about those same concerns to utterly ignore the reality of human adaptation to new technologies realities.

Why are Educational Approaches Merely an Afterthought?

One final thing that troubled me about the FTC report was the way consumer and business education is mostly an afterthought. This is one of the most important roles that the FTC can and should play in terms of explaining potential privacy and security vulnerabilities to the general public and product developers alike.

Alas, the agency devotes so much ink to the more legalistic questions about how to address these issues, that all we end up with in the report is this one paragraph on consumer and business education:

Consumers should understand how to get more information about the privacy of their IoT devices, how to secure their home networks that connect to IoT devices, and how to use any available privacy settings. Businesses, and in particular small businesses, would benefit from additional information about how to reasonably secure IoT devices. The Commission staff will develop new consumer and business education materials in this area.

I applaud that language, and I very much hope that the agency is serious about plowing more effort and resources into developing new consumer and business education materials in this area. But I’m a bit shocked that the FTC report didn’t even bother mentioning the excellent material already available on the “On Guard Online” website it helped created with a dozen other federal agencies. Worse yet, the agency failed to highlight the many other privacy education and “digital citizenship” efforts that are underway today to help on this front. I discuss those efforts in more detail in the closing section of my recent law review article.

I hope that the agency spends a little more time working on the development of new consumer and business education materials in this area instead of trying to figure out how to craft a quasi-regulatory regime for the Internet of Things. As I noted last year in this Maine Law Review article, that would be a far more productive use of the agency’s expertise and resources. I argued there that “policymakers can draw important lessons from the debate over how best to protect children from objectionable online content” and apply them to debates about digital privacy. Specifically, after a decade of searching for legalistic solutions to online safety concerns — and convening a half-dozen blue ribbon task forces to study the issue — we finally saw a rough consensus emerge that no single “silver-bullet” technological solutions or legal quick-fixes would work and that, ultimately, education and empowerment represented the better use of our time and resources. What was true for child safety is equally true for privacy and security for the Internet of Things.

It’s a shame the FTC staff squandered the opportunity it had with this new report to highlight all the good that could be done by getting more serious about focusing first on those alternative, bottom-up, less costly, and less controversial solutions to these challenging problems. One day we’ll all wake up and realize that we spent a lost decade debating legalistic solutions that were either technically unworkable or politically impossible. Just imagine if all the smart people who were spending all their time and energy on those approaches right now were instead busy devising and pushing educational and empowerment-based solutions instead!

One day we’ll get there. Sadly, if the FTC report is any indication, that day is still a ways off.

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.

Sen. Deb Fischer

In her opening remarks at the CDI event last week, Sen. Deb Fischer explained how “the Internet of Things can be a game changer for the U.S. economy and for the American consumer.” “It gives people more information and better tools to analyze data to make more informed choices,” she noted.

After outlining some of the potential benefits associated with the Internet of Things, Sen. Fischer continued on to explain why it is essential we get public policy incentives right first if we hope to unlock the full potential of these new technologies. Specifically, she argued that:

In order for Americans to receive the maximum benefits from increased connectivity, there are two things the government must avoid. First, policymakers can’t bury their heads in the sand and pretend this technological revolution isn’t happening only to wake up years down the road and try to micromanage a fast-changing, dynamic industry. Second, the federal government must also avoid regulation just for the sake of regulation. We need thoughtful, pragmatic responses and narrow solutions to any policy issues that arise. For too long, the only “strategy” in Washington policy-making has been to react to crisis after crisis. We should dive into what this means for U.S. global competitiveness, consumer welfare, and economic opportunity before the public policy challenges overwhelm us, before legislative and executive branches of government – or foreign governments – react without all the facts.

Fischer concluded by noting that, “it’s entirely appropriate for the U.S. government to think about how to modernize its regulatory frameworks, consolidate, renovate, and overhaul obsolete rules. We’re destined to lose to the Chinese or others if the Internet of Things is governed in the United States by rules that pre-date the VCR.”

Sen. Kelly Ayotte

Like Sen. Fischer, Ayotte similarly stressed the many economic opportunities associated with IoT technologies for both consumers and producers alike. [Note: Sen. Ayotte did not publish her remarks on her website, but you can watch her speech from the CDI event beginning around the 17-minute mark of the event video.]

Ayotte also noted that IoT is going to be a major topic for the Senate Commerce Committee and that there will be an upcoming hearing on the issue. She said that the role of the Committee will be to ensure that the various agencies looking into IoT issues are not issuing “conflicting regulatory directives” and “that what is being done makes sense and allows for future innovation that we can’t even anticipate right now.” Among the agencies she cited that are currently looking into IoT issues: FTC (privacy & security), FDA (medical device apps), FCC (wireless issues), FAA (commercial drones), NHTSA (intelligent vehicle technology), NTIA (multistakeholder privacy reviews), as well as state lawmakers and regulatory agencies.

Sen. Ayotte then explained what sort of policy framework America needed to adopt to ensure that the full potential of the Internet of Things could be realized. She framed the choice lawmakers are confronted with as follows:

we as policymakers we can either create an environment that allows that to continue to grow, or one that thwarts that. To stay on the cutting edge, we need to make sure that our regulatory environment is conducive to fostering innovation.” […] “we’re living in the Dark Ages in the ways the some of the regulations have been framed. Companies must be properly incentivized to invest in the future, and government shouldn’t be a deterrent to innovation and job-creation.

Ayotte also stressed that “technology continues to evolve so rapidly there is no one-size-fits-all regulatory approach” that can work for a dynamic environment like this. “If legislation drives technology, the technology will be outdated almost instantly,” and “that is why humility is so important,” she concluded.

The better approach, she argued was to let technology evolve freely in a “permissionless” fashion and then see what problems developed and then address them accordingly. “[A] top-down, preemptive approach is never the best policy” and will only serve to stifle innovation, she argued. “If all regulators looked with some humility at how technology is used and whether we need to regulate or not to regulate, I think innovation would stand to benefit.”

FTC Commissioner Maureen K. Ohlhausen

Fischer and Ayotte’s remarks reflect a vision for the Internet of Things that FTC Commissioner Maureen K. Ohlhausen has articulated in recent months. In fact, Sen. Ayotte specifically cited Ohlhausen in her remarks.

Ohlhausen has actually delivered several excellent speeches on these issues and has become one of the leading public policy thought leaders on the Internet of Things in the United States today. One of her first major speeches on these issues was her October 2013 address entitled, “The Internet of Things and the FTC: Does Innovation Require Intervention?” In that speech, Ohlhausen noted that, “The success of the Internet has in large part been driven by the freedom to experiment with different business models, the best of which have survived and thrived, even in the face of initial unfamiliarity and unease about the impact on consumers and competitors.”

She also issued a wise word of caution to her fellow regulators:

It is . . . vital that government officials, like myself, approach new technologies with a dose of regulatory humility, by working hard to educate ourselves and others about the innovation, understand its effects on consumers and the marketplace, identify benefits and likely harms, and, if harms do arise, consider whether existing laws and regulations are sufficient to address them, before assuming that new rules are required.

In this and other speeches, Ohlhausen has highlighted the various other remedies that already exist when things do go wrong, including FTC enforcement of “unfair and deceptive practices,” common law solutions (torts and class actions), private self-regulation and best practices, social pressure, and so on. (Note: Inspired by Ohlhausen’s approach, I devoted the final section of my big law review article on IoT issues to a deeper exploration of all those “bottom-up” solutions to privacy and security concerns surrounding the IoT and wearable tech.)

The Clinton Administration Vision

These three women have articulated what I regard as the ideal vision for fostering the growth of the Internet of Things. It should be noted, however, that their framework is really just an extension of the Clinton Administration’s outstanding vision for the Internet more generally.

In the 1997 Framework for Global Electronic Commerce, the Clinton Administration outlined its approach toward the Internet and the emerging digital economy. As I’ve noted many times before, the Framework was a succinct and bold market-oriented vision for cyberspace governance that recommended reliance upon civil society, contractual negotiations, voluntary agreements, and ongoing marketplace experiments to solve information age problems. Specifically, it stated that “the private sector should lead [and] the Internet should develop as a market driven arena not a regulated industry.” “[G]overnments should encourage industry self-regulation and private sector leadership where possible” and “avoid undue restrictions on electronic commerce.”

Sen. Ayotte specifically cited those Clinton principles in her speech and said, “I think those words, given twenty years ago at the infancy of the Internet, are today even more relevant as we look at the challenges and the issues that we continue to face as regulators and policymakers.”

I completely agree. This is exactly the sort of vision that we need to keep innovation moving forward to benefit consumers and the economy, and this also illustrates how IoT policy can be a nonpartisan effort.

Why does this matter so much? As I noted in this recent essay, thanks to the Clinton Administration’s bold vision for the Internet:

This policy disposition resulted in an unambiguous green light for a rising generation of creative minds who were eager to explore this new frontier for commerce and communications. . . . The result of this freedom to experiment was an outpouring of innovation. America’s info-tech sectors thrived thanks to permissionless innovation, and they still do today. An annual Booz & Company report on the world’s most innovative companies revealed that 9 of the top 10 most innovative companies are based in the U.S. and that most of them are involved in computing, software, and digital technology.

In other words, America got policy right before and we can get policy right again to ensure we are again global innovation leaders. Patience, flexibility, and forbearance are the key policy virtues that nurture an environment conducive to entrepreneurial creativity, economic progress, and greater consumer choice.

Other policymakers should endorse the vision originally sketched out by the Clinton Administration and now so eloquently embraced and extended by Sen. Fischer, Sen. Ayotte, and Commissioner Ohlhausen. This is the path forward if we hope to realize the full potential of the Internet of Things.

I’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.”

We note that this is especially likely to be the case when the failure of traditional regulatory models is taken into account. As we document in the paper, all too often, well-intentioned “public interest” regulation is often captured by industry and used to to serve their interests:

by limiting entry, or by raising rivals’ costs, regulations can be useful to the regulated firms. Though regulations often make consumers worse off, they are often sustained by political pressure from consumer advocates because they can be disguised as “consumer protection.”

We provide evidence of the problem of regulatory capture and note it has been a particular problem in many of the sectors that are now being disrupted by sharing economy innovators–such as taxi and transportation services. It is evident that regulation has not lived up to its lofty expectations in many sectors. Accordingly, when market circumstances change dramatically—or when new technology or competition alleviate the need for regulation—then public policy should evolve and adapt to accommodate these new realities.

Of course, many bad laws and regulations that policymakers remain on the books and have constituencies who will defend them vociferously. Our paper concludes with some recommendations for how to “level the regulatory playing field” in a pro-consumer, pro-innovation fashion. We note that while differential regulatory treatment of incumbents and new entrants does represent a potential problem, there’s a sensible, pro-consumer and pro-innovation way to solve that problem:

such regulatory asymmetries represent a legitimate policy problem. But the solution is not to punish new innovations by simply rolling old regulatory regimes onto new technologies and sectors. The better alternative is to level the playing field by “deregulating down” to put everyone on equal footing, not by “regulating up” to achieve parity. Policymakers should relax old rules on incumbents as new entrants and new technologies challenge the status quo. By extension, new entrants should only face minimal regulatory requirements as more onerous and unnecessary restrictions on incumbents are relaxed.

Download this new paper on the Mercatus website or via SSRN or ResearchGate. Incidentally, we plan to release a much longer Mercatus Center white paper early next year that will explore reputational feedback mechanisms in far greater detail and explain how these systems help address the problem of “asymmetrical information” in these and other contexts.

Also see: “The Debate over the Sharing Economy: Talking Points & Recommended Reading,” which includes the following video of me on the Stossel Show discussing these issues recently.

Writing last week in The Wall Street Journal, Matt Moffett noted how many European countries continue to struggle with chronic unemployment and general economic malaise.  (“New Entrepreneurs Find Pain in Spain“) It’s a dismal but highly instructive tale about how much policy incentives matter when it comes to innovation and job creation–especially the sort of entrepreneurial activity from small start-ups that is so essential for economic growth. Here’s the key takeaway:

Scarce capital, dense bureaucracy, a culture deeply averse to risk and a cratered consumer market all suppress startups in Europe. The Global Entrepreneurship Monitor, a survey of startup activity, found the percentage of the adult population involved in early stage entrepreneurial activity last year was just 5% in Germany, 4.6% in France and 3.4% in Italy. That compares with 12.7% in the U.S. Even once they are established, European businesses are, on average, smaller and slower growing than those in the U.S.  The problems of entrepreneurs are one reason Europe’s economy continues to struggle after six years of crisis. The European Union this month cut its growth forecasts for the region for this year and next, citing weaker than expected performance in the eurozone’s biggest economies, Germany, France and Italy. This week, the Organization for Economic Cooperation and Development delivered its own pessimistic appraisal, with chief economist Catherine Mann saying, “The eurozone is the locus of the weakness in the global economy.” […] Europe’s unemployment crisis may be eroding a deeply ingrained fear of failure that is a bigger impediment to entrepreneurship on the Continent than in other regions, according to academic surveys. “Fear of failure is less of an issue because the whole country is a failure, and most of us are out of business or have a hard time paying our bills,” said Nick Drandakis of Athens, who in 2011 founded Taxibeat, an app that provides passenger ratings on taxi drivers.

I found Moffett’s article interesting because I write a lot about entrepreneurialism, innovation, long-term economic growth, and the public policies that facilitate all these things. This has also been the subject of an excellent Cato Institute online forum about “Reviving Economic Growth,” which asked leading economists and policy experts to answer the following question: “If you could wave a magic wand and make one or two policy or institutional changes to brighten the U.S. economy’s long-term growth prospects, what would you change and why?”

Many of the entries in that forum dealt with the importance of removing barriers to new start-ups so that entrepreneurs can help spark new innovations and spur economic growth. My entry, which was entitled, “Embracing a Culture of Permissionless Innovation,” kicked off with a quote from the great Joel Mokyr: “Why does economic growth… occur in some societies and not in others?” I noted that “debate has raged among generations of economists, historians, and business theorists about that question and the specific forces and policies that prompt long-term growth.” Generally speaking, however, there actually exists a great deal of consensus about the importance of small business entrepreneurship and the need for openness to change if an economy is going to grow. (See the studies from Ian Hathaway and Robert E. Litan that I cite in my essay among many others.)

Which brings us back to the situation in Europe. It seems clear that strong cultural and legal impediments to change exist in many European countries and that they discourage risk-taking and prevent the formation of new ventures. Many of us here in the United States worry about similar impediments and their impact on entrepreneurialism, but as those statistics in Moffett’s article make clear, the situation in Europe is far more grim. While some European policymakers seem willing to acknowledge that the deck has been stacked against innovators across the continent, few seem willing to embrace a comprehensive liberalization agenda to begin clearing away the legal and regulatory impediments that are negatively affecting startups and creating economic stagnation there. The primary reason for that goes back to the values and attitudes problem that Moffett highlighted in his article: When a country or continent’s culture is so deeply averse to risk and the possibility of disruptions or failures, then the exact sort of risk-taking that is so essential to economic growth will become increasingly difficult.

This was the focus of my Cato essay and it is what I meant by embracing a culture of permissionless innovation. As I noted in my essay, “many scholars and policymakers [often] speak of innovation policy as if it is simply a Goldilocks-like formula that entails tweaking various policy dials to get innovation just right,” which leads them to propose an endless litany of programs and policies to jump-start innovation and economic growth. But this puts the cart before the horse. Getting values right first is what really matters. Here is how I put it in my essay:

For innovation and growth to blossom, entrepreneurs need a clear green light from policymakers that signals a general acceptance of risk-taking—especially risk-taking that challenges existing business models and traditional ways of doing things. We can think of this disposition as permissionless innovation and if there was one thing every policymaker could do to help advance long-term growth, it is to first commit themselves to advancing this ethic and making it the lodestar for all their future policy pronouncements and decisions.

While there are limits to how much policymakers can influence these attitudes and values, any serious effort to foster the positive factors that give rise to expanded entrepreneurial opportunities must begin with an appreciation of how growth-oriented innovation policy begins with the proper policy disposition toward risk-taking and the possibility of significant economic and cultural disruption. As I put it in my recent book on the importance  Permissionless Innovation as a vision for innovation and growth, “living in constant fear of worst-case scenarios—and premising public policy upon them—means that best-case scenarios will never come about. When public policy is shaped by precautionary principle reasoning, it poses a serious threat to technological progress, economic entrepreneurialism, social adaptation, and long-run prosperity.”

But let’s be clear about what the “permissionless innovation” vision is all about, because it is not the same as anarchy. As I noted in the Cato essay:

Permissionless innovation is not an absolutist position that rejects any role for government. Rather, it is an aspirational goal that stresses the benefit of “innovation allowed” as the default position to begin policy debates. It switches the burden of proof to those who favor preemptive regulation and asks them to explain why ongoing trial-and-error experimentation with new technologies or business models should be disallowed.

Again, it’s about getting attitudes and incentives right. Specifically, it’s about being willing to embrace risk-taking and even failure, because that is the only way you get growth. As the old adage goes, “Nothing ventured, nothing gained.”  And our recent experience with the Internet and the Information Revolution offers the perfect case study of why getting values right and embracing a culture of permissionless innovation matters so much. As I noted in my Cato essay,

permissionless innovation powered the explosive growth of the Internet and America’s information technology sectors (computing, software, Internet services, etc.) over the past two decades. Those sectors have ushered in a generation of innovations and innovators that are now the envy of the world. This happened because the default position for the digital economy was permissionless innovation. No one had to ask anyone for the right to develop these new technologies and platforms.

The U.S. got policy right by getting our values right first. Thanks to a series of very smart pronouncements and decisions in the early and mid-1990s (all detailed in my essay and this Medium essay), digital age entrepreneurs were given a clear green light to take risks without fear of a political backlash.

Unfortunately for European innovators, a different message was sent from the start, with layers of “data directives” and other red tape encumbering new ventures. As a result, it’s hard today to name many innovators in this arena which originated in Europe. Instead, Europe’s household Internet names are mostly American companies. Europe is hoping to reverse that with the rise of the Internet of Things, since many European companies appear poised to become global leaders on that front. For that happen, however, the continent’s attitudes toward risk-taking will have to evolve to accommodate these highly disruptive technologies.

In particular, the Internet of Things will raise a variety of privacy and security-related concern (see my new 93-page paper on this), as well as economic-related fears associated with automation and job disruption. These are serious issues that deserve serious consideration and constructive solutions. But if Europe decides to put the Internet of Things revolution on hold in an attempt to preemptively plan for every theoretical downside, then they will miss the boat again and potentially lose many of the amazing benefits that will accompany these new innovations. Again, if you live in fear of the future, then an innovative future won’t happen. And looking backwards and holding onto the past is no way to grow an economy or achieve long-term prosperity.

The Mercatus Center at George Mason University has just released my latest working paper, “The Internet of Things and Wearable Technology: Addressing Privacy and Security Concerns without Derailing Innovation.” The “Internet of Things” (IoT) generally refers to “smart” devices that are connected to both the Internet and other devices. Wearable technologies are IoT devices that are worn somewhere on the body and which gather data about us for various purposes. These technologies promise to usher in the next wave of Internet-enabled services and data-driven innovation. Basically, the Internet will be “baked in” to almost everything that consumers own and come into contact with.

Some critics are worried about the privacy and security implications of the Internet of Things and wearable technology, however, and are proposing regulation to address these concerns. In my new 93-page article, I explain why preemptive, top-down regulation would derail the many life-enriching innovations that could come from these new IoT technologies. Building on a recent book of mine, I argue that “permissionless innovation,” which allows new technology to flourish and develop in a relatively unabated fashion, is the superior approach to the Internet of Things.

As I note in the paper and my earlier book, if we spend all our time living in fear of the worst-case scenarios — and basing public policies on them — then best-case scenarios can never come about. As the old saying goes: nothing ventured, nothing gained. Precautionary principle-based regulation paralyzes progress and must be avoided.  We instead need to find constructive, “bottom-up” solutions to the privacy and security risks accompanying these new IoT technologies instead of top-down controls that would limit the development of life-enriching IoT innovations.

The better alternative is to deal with concerns creatively as they develop, using a balanced, layered approach  involving many different solutions, including: educational efforts, technological empowerment tools, social norms, public and watchdog pressure, industry best practices and self-regulation, transparency, torts and products liability law, and targeted enforcement of existing legal standards as needed.

Generally speaking, patience, humility, and forbearance by policymakers is crucial to allowing greater innovation and consumer choice in this arena. Importantly, policymakers should not forget that societal and individual adaptation will play a role here, just as it has during so many other turbulent technological transformations.

This article can be downloaded on my Mercatus Center page, on SSRN, or at Research Gate. I am hoping to find a law or policy journal interested in publishing this paper soon. If you with a journal and are interested, please contact me. [UPDATE 12/3/14: This paper has been accepted for publication in the Richmond Journal of Law & Technology, Vol. 21, Issue 6 (2015).]

Finally, if you are interested in this topic, you might want to flip through these slides I prepared for a presentation on this topic that I made at the Federal Communications Commission in September:

I want to bring to everyone’s attention an important new white paper by Dr. Robert Graboyes, a colleague of mine at the Mercatus Center at George Mason University who specializes in the economics of health care. His new 67-page study, Fortress and Frontier in American Health Care, seeks to move away from the tired old dichotomies that drive health care policy discussions: Left versus Right, Democrat versus Republican, federal versus state, and public versus private, and so on. Instead, Graboyes seeks to reframe the debate over the future of health care innovation in terms of “Fortress versus Frontier” and to highlight what lessons we can learn from the Internet and the Information Revolution when considering health care policy.

What does Graboyes mean by “Fortress and Frontier”? Here’s how he explains this conflict of visions:

The Fortress is an institutional environment that aims to obviate risk and protect established producers (insiders) against competition from newcomers (outsiders). The Frontier, in contrast, tolerates risk and allows outsiders to compete against established insiders. . . .  The Fortress-Frontier divide does not correspond neatly with the more familiar partisan or ideological divides. Framing health care policy issues in this way opens the door for a more productive national health care discussion and for unconventional policy alliances. (p. 4)

He elaborates in more detail later in the paper:

the Frontier encourages creative destruction and disruptive innovation. Undreamed-of products arise and old, revered ones vanish. New production processes sweep away old ones. This is a place where unknown innovators in garages destroy titans of industry. The Frontier celebrates and rewards risk, and there is a brutal egalitarianism to the creative process. In contrast, the Fortress discourages creative destruction and disruptive innovation. Insiders are protected from competition by government or by private organizations (such as insurers and medical societies) acting in quasigovernmental fashion. In the Fortress, insiders preserve the existing order. Innovation comes from well-established, credentialed insiders who, it is presumed, have the wisdom and motives and competence to identify opportunities for innovation.

In framing the debate in this fashion, Graboyes hopes that we will start paying more attention to the supply side of health care policy debates:

The debate over coverage (and over related issues concerning how health care providers are paid) has focused attention almost exclusively on the demand side of health care markets—who pays how much to whom for which currently offered services. The debate underplays questions of supply—how innovation can alter the very nature of the health care delivery system. (p. 3-4)

This is where Graboyes brings the Internet and information technology into the story to illustrate a powerful point: We could unlock many important life-enriching and potentially life-saving innovations by embracing the same vision we applied to the Internet and IT sectors. Graboyes is kind enough to cite my work on permissionless innovation and the importance of not letting public policy be dictated by excessive fear of worst-case scenarios regarding new technological innovations. As I noted in my book on the topic, “living in constant fear of worst-case scenarios—and premising public policy upon them—means that best-case scenarios will never come about. When public policy is shaped by precautionary principle reasoning, it poses a serious threat to technological progress, economic entrepreneurialism, social adaptation, and long-run prosperity.”

Had fear of potential worst-case outcomes driven policy for the Net, we might have never seen many of the life-enriching innovations that we enjoy today, as Graboyes explains eloquently in this passage:

Knowing what we know today, it would not be hard to persuade a cautious observer in 1989 to radically slow the pace of IT innovation. IT arguably poses personal risks as grave as those that health care poses. Cell phones have been essential components of improvised explosive devices in war zones. The 9/11 atrocities would have been difficult or impossible to carry out without cell phones. Thieves have used the Internet to steal. Stalkers have used the Internet to terrify their prey. Child predators find their victims on the web. People have been murdered by strangers they met in chatrooms. IT has allowed individuals and governments to violate others’ privacy in countless ways. Drug dealers and terrorist networks organize their efforts via cell phone and Internet. The Internet has greatly reduced the cost of destroying another’s reputation, and news accounts tell of suicides following cyberbullying. Our laws demand terribly high standards of safety and efficacy for drugs. We require no such standards for computers, cell phones, and software, but given the nefarious uses to which they are sometimes put, decades ago one could easily have argued for doing so. Had we done so, we would now be living in a much poorer, less interesting world—and perhaps one with even greater risks to life and limb than we have now. No online predators or improvised explosive devices, but also no OnStar to save you after an automobile crash or smartphone to alert police to your life-threatening situation and geographic location. (p. 41)

In other words–and this is another lesson I stress at length in my work–precautionary policies create profound trade-offs that are not always well understood upon enactment of new laws or regulations. As I noted in my book, “When commercial uses of an important resource or technology are arbitrarily prohibited or curtailed, the opportunity costs of such exclusion may not always be immediately evident. Nonetheless, those ‘unseen’ effects are very real and have profound consequences for individuals, the economy, and society.”

What Graboyes does so well in his new paper is prove that these trade-offs are already at work in the American health care system and that we had better get serious about acknowledging them before real damage is done. And what makes Fortress and Frontier such an enjoyable read is that Graboyes is a gifted story-teller who explains in clear terms how expanded health care innovation opportunities could improve the lives of real people. It’s not just abstract, textbook talk. We hear stories of real-world innovators and the patients who need their inventions. For example, Graboyes tells of “an unheralded doctor who pioneered stem-cell therapy in a small-town hospital, a carpenter and puppet-maker who invented functional prosthetic hands costing one-thousandth the price of professionally made devices (aided by an evolutionary biologist who started a worldwide consortium of amateur prosthetists), and college students who devised a low-cost treatment for clubfoot.” (p. 4) And much, much more.

“The most important thing to understand about disruptive innovation is that it often comes (perhaps usually comes) from strange and unexpected places,” Graboyes notes. (p. 20) “[A] shift from Fortress to Frontier would benefit the health and finances of Americans,” he argues, and “the task begins by easing limits on the supply of health care services, thereby clearing the way for innovators to take health care in directions we cannot yet imagine.” (p. 39)

Importantly, Graboyes also offers another reason why America should embrace the “frontier” spirit: Our global competitive advantage in this space is at risk if we don’t:

Moving health care from the Fortress to the Frontier may be more a matter of necessity than of choice. We are entering a period of rapid technological advances that will radically alter health care. Many of these advances require only modest capital and labor inputs that governments cannot easily control or prohibit. If US law obstructs these technologies here, it will be feasible for Americans to obtain them by Internet, by mail, or by travel. (p. 41-2)

He highlights several areas in which this debate will play out going forward including (and notice the intersection with the modern digital technologies and tech policy debates we often discuss here): genomic knowledge and personalized medicine, 3-D printing, artificial intelligence, information sharing via social media, wearable technology, and telemedicine.

To make sure that America can capitalize on the same innovative spirit that gave us the Information Revolution, Graboyes concludes his study with a laundry list of needed policy reforms. These include:

• reform of FDA drug & device approval process to expedite reviews.
• ensure that Americans have a “right to know” about themselves and their health (i.e., that individuals have a right to possess their own genetic information and to receive information about how to interpret the results.)
• abolish state certificate-of-need laws, which unnecessarily “require that hospital developers obtain government permission before building a new facility, or expanding an existing one, or even adding a specific piece of medical equipment.”
• reform state-based licensing laws, which “put barriers in the way of doctors moving from other states” and create physician shortages. Also need to reform state laws to allow nurse practitioners, optometrists, and others to practice independently of physicians.
• reform tort law by capping noneconomic damages, instituting a “loser pays” rule to discourage frivolous lawsuits, establishing safe harbors for vaccine developers, and more.
• revising tax laws to make sure medical devices are not hit with discriminatory tax burdens that discourage innovation, and then also revising other taxes that skew incentives in the health insurance marketplace.

Graboyes itemizes dozens of other potential reforms to give policymakers a smorgasbord of options from which to choose. It is unlikely that all the reforms he lists will be adopted, but even if policymakers would just pick a few of those proposed action items, it could provide a real boost to medical innovation in the short term. Importantly, most of these proposed reforms could be implemented without stirring up contentious debate over the future of the Affordable Care Act (ACA).

Needless to say, I highly recommend Fortress and Frontier and I very much hope that the vision that Graboyes articulates in it comes to influence public thinking and future policymaking in the health care arena. In a follow-up post, I will also discuss how Fortress versus Frontier provides us with another “innovation paradigm” that can help us frame future innovation policy debates in many other contexts.

Last week, I participated in a program co-sponsored by the Progressive Policy Institute, the Lisbon Council, and the Georgetown Center for Business and Public Policy on “Growing the Transatlantic Digital Economy.”

The complete program, including keynote remarks from EU VP Neelie Kroes and U.S. Under Secretary of State Catherine A. Novelli, is available below.

My remarks reviewed worrying signs of old-style interventionist trade practices creeping into the digital economy in new guises, and urged traditional governments to stay the course (or correct it) on leaving the Internet ecosystem largely to its own organic forms of regulation and market correctives:

Vice President Kroes’s comments underscore an important reality about innovation and regulation. Innovation, thanks to exponential technological trends including Moore’s Law and Metcalfe’s Law, gets faster and more disruptive all the time, a phenomenon my co-author and I have coined “Big Bang Disruption.” Regulation, on the other hand, happens at the same pace (at best). Even the most well-intentioned regulators, and I certainly include Vice President Kroes in that list, find in retrospect that interventions aimed at heading off possible competitive problems and potential consumer harms rarely achieve their objectives, and, indeed, generate more harmful unintended consequences. This is not a failure of government. The clock speeds of innovation and regulation are simply different, and diverging faster all the time. The Internet economy has been governed from its inception by the engineering-driven multistakeholder process embodied in the task forces and standards groups that operate under the umbrella of the Internet Society.   Innovation, for better or for worse, is regulated more by Moore’s Law than traditional law. I happen to think the answer is “for better,” but I am not one of those who take that to the extreme in arguing that there is no place for traditional governments in the digital economy. Governments have and continue to play an essential part in laying the legal foundations for the remarkable growth of that economy and in providing incentives if not funding for basic research that might not otherwise find investors. And when genuine market failures appear, traditional regulators can and should step in to correct them as efficiently and narrowly as they can. Sometimes this has happened. Sometimes it has not. Where in particular I think regulatory intervention is least effective and most dangerous is in regulating ahead of problems—in enacting what the FCC calls “prophylactic rules.” The effort to create legally sound Open Internet regulations in the U.S. has faltered repeatedly, yet in the interim investment in both infrastructure and applications continues at a rapid pace—far outstripping the rest of the world. The results speak for themselves. U.S. companies dominate the digital economy, and, as Prof. Christopher Yoo has definitively demonstrated, U.S. consumers overall enjoy the best wired and mobile infrastructure in the world at competitive prices. At the same time, those who continue to pursue interventionist regulation in this area often have hidden agendas. Let me give three examples: 1.  As we saw earlier this month at the Internet Governance Forum, which I attended along with Vice President Kroes and 2,500 other delegates, representatives of the developing world were told by so-called consumer advocates from the U.S. and the EU that they must reject so-called “zero rated” services, in which mobile network operators partner with service providers including Facebook, Twitter and Wikimedia to provide their popular services to new Internet users without use applying to data costs. Zero rating is an extremely popular tool for helping the 2/3 of the world’s population not currently on the Internet get connected and, likely, from these services to many others. But such services violate the “principle” of neutrality that has mutated from an engineering concept to a nearly-religious conviction. And so zero rating must be sacrificed, along with users who are too poor to otherwise join the digital economy. 2.  Closer to home, we see the wildly successful Netflix service making a play to hijack the Open Internet debate into one about back-end interconnection, peering, and transit—engineering features that work so well that 99% of the agreements involved between networks, according to the OECD, aren’t even written down. 3.  And in Europe, there are other efforts to turn the neutrality principle on its head, using it as a hammer not to regulate ISPs but to slow the progress of leading content and service providers, including Apple, Amazon and Google, who have what the French Digital Council and others refer to as non-neutral “platform monopolies” which must be broken. To me, these are in fact new faces on very old strategies—colonialism, rent-seeking, and protectionist trade warfare respectively. My hope is that Internet users—an increasingly powerful and independent source of regulatory discipline in the Internet economy—will see these efforts for what they truly are…and reject them resoundingly. The more we trust (but also verify) the engineers, the faster the Internet economy will grow, both in the U.S. and Europe, and the greater our trade in digital goods and services will strengthen the ties between our traditional economies. It’s worked brilliantly for almost two decades. The alternatives, not so much.

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).

2) The Internet and information technology alleviates the need for top-down regulation & actually does a better job of serving consumers.

1. Ease of entry/innovation in online world means that new entrants can come in to provide better options and solve problems previously thought to be unsolvable in the absence of regulation.
2. Informational empowerment: The Internet and information technology solves old problem of lack of consumer access to information about products and services. This gives them monitoring tools to find more and better choices. (i.e., it lowers both search costs & transaction costs). (“To the extent that consumer protection regulation is based on the claim that consumers lack adequate information, the case for government intervention is weakened by the Internet’s powerful and unprecedented ability to provide timely and pointed consumer information.” – John C. Moorhouse)
3. Feedback mechanisms (product & service rating / review systems) create powerful reputational incentives for all parties involved in transactions to perform better.
4. Self-regulating markets: The combination of these three factors results in a powerful check on market power or abusive behavior. The result is reasonably well-functioning and self-regulating markets. Bad actors get weeded out.
5. Law should evolve: When circumstances change dramatically, regulation should as well. If traditional rationales for regulation evaporate, or new technology or competition alleviates need for it, then the law should adapt.

3) Sharing economy has demonstrably improved consumer welfare. It provides:

1. more choices / competition
2. more service innovation / differentiation
3. better prices
4. higher quality services  (safety & cleanliness /convenience / peace of mind)
5. Better options & conditions for workers

4) If we need to “level the (regulatory) playing field,” best way to do so is by “deregulating down” to put everyone on equal footing; not by “regulating up” to achieve parity.

1. Regulatory asymmetry is real: Incumbents are right that they are at disadvantage relative to new sharing economy start-ups.
2. Don’t punish new innovations for it: But solution is not to just roll the old regulatory regime onto the new innovators.
3. Parity through liberalization: Instead, policymakers should “deregulate down” to achieve regulatory parity. Loosen old rules on incumbents as new entrants challenge status quo.
4. “Permissionless innovation” should trump “precautionary principle” regulation: Preemptive, precautionary regulation does not improve consumer welfare. Competition and choice do better. Thus, our default position toward the sharing economy should be “innovation allowed” or permissionless innovation.
5. Alternative remedies exist: Accidents will always happen, of course. But insurance, contracts, product liability, and other legal remedies exist when things go wrong. The difference is that ex post remedies don’t discourage innovation and competition like ex ante regulation does. By trying to head off every hypothetical worst-case scenario, preemptive regulations actually discourage many best-case scenarios from ever coming about.

5) Bottom line = Good intentions only get you so far in this world.

1. Just because a law was put on the books for noble purposes, it does not mean it really accomplished those goals, or still does so today.
2. Markets, competition, and ongoing innovation typically solve problems better than law when we give them a chance to do so.

[P.S. On 9/30, my Mercatus Center colleague Matt Mitchell posted this excellent follow-up essay building on my outline and improving it greatly.]

Additional Reading

• Randolph J. May & Michael J. Horney, “The Sharing Economy: A Positive Shared Vision for the Future,” Free State Foundation, Perspectives from FSF Scholars, Vol. 9, No. 26, July 30, 2014.
• R.J. Lehmann, “The Sharing Economy Will Thrive Only If Government Doesn’t Strangle It,” Reason, August 2, 2014.
• Andrew Moylan and R.J. Lehmann, “Five Principles for Regulating the Sharing Economy,” R Street, Policy Study No. 26, July 2014.
• Eli Lehrer & Andrew Moylan, “Embracing the Peer-Production Economy,” National Affairs, 2014, p. 51-63.
• Arun Sundararajan, “Why the Government Doesn’t Need to Regulate the Sharing Economy,” Wired, October 22, 2012.
• Matthew Mitchell and Michael Farren, “If you Like Uber, You Would’ve Loved the Jitney,” LA Times, July 12, 2014.
• Daniel M. Rothschild, “How Uber and Airbnb Resurrect ‘Dead Capital,’” The Umlaut, April 9, 2014.
• Daniel M. Rothschild, “Renters and Rent-Seeking in San Francisco,” Technology Liberation Front, April 15, 2014.
• [podcast] Michael Munger on the Sharing Economy, EconTalk, July 7, 2014.
• video of Michael Munger talk on the Sharing Economy, September 25, 2014.
• John C. Moorhouse, “Consumer Protection Regulation and Information on the Internet,” in Fred E. Foldvary & Daniel B. Klein (eds), The Half-Life of Policy Rationales: How New Technology Affects Old Policy Issues (Cato Institute, 2003).
• Rachel Bostman, What’s Mine is Yours: The Rise of Collaborative Consumption (2010).
• Jeremiah Owyang, A Glossary of Emerging Terms in the Collaborative Economy, August 29, 2014

On Thursday, it was my great pleasure to present a draft of my forthcoming paper, “The Internet of Things & Wearable Technology: Addressing Privacy & Security Concerns without Derailing Innovation,” at a conference that took place at the Federal Communications Commission on “Regulating the Evolving Broadband Ecosystem.” The 3-day event was co-sponsored by the American Enterprise Institute and the University of Nebraska College of Law.

The 65-page working paper I presented is still going through final peer review and copyediting, but I posted a very rough first draft on SSRN for conference participants. I expect the paper to be released as a Mercatus Center working paper in October and then I hope to find a home for it in a law review. I will post the final version once it is released. [UPDATE:The final version of this working paper was released on November 19, 2014.]

In the meantime, however, I thought I would post the 46 slides I presented at the conference, which offer an overview of the nature of the Internet of Things and wearable technology, the potential economic opportunities that exist in this space, and the various privacy and security challenges that could hold this technological revolution back. I also outlined some constructive solutions to those concerns. I plan to be very active on these issues in coming months.

Additional Reading

• “The Growing Conflict of Visions over the Internet of Things & Privacy,” January 14, 2012
• “Can We Adapt to the Internet of Things?” IAPP Privacy Perspectives, June 19, 2013
• My Filing to the FTC in its ‘Internet of Things’ Proceeding, May 31, 2013
• Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom (2014)
• [Video] Cap Hill Briefing on Emerging Tech Policy Issues (June 2014)

There’s a small but influential number of tech reporters and scholars who seem to delight in making the US sound like a broadband and technology backwater. A new Mercatus working paper by Roslyn Layton, a PhD fellow at a research center at Aalborg University, and Michael Horney a researcher at the Free State Foundation, counter that narrative and highlight data from several studies that show the US is at or near the top in important broadband categories.

For example, per Pew and ITU data, the vast majority of Americans use the Internet and the US is second in the world in data consumption per capita, trailing only South Korea. Pew reveals that for those who are not online the leading reasons are lack of usability and the Internet’s perceived lack of benefits. High cost, notably, is not the primary reason for infrequent use.

I’ve noted before some of the methodological problems in studies claiming the US has unusually high broadband prices. In what I consider their biggest contribution to the literature, Layton and Horney highlight another broadband cost frequently omitted in international comparisons: the mandatory media license fees many nations impose on broadband and television subscribers.

These fees can add as much as $44 to the monthly cost of broadband. When these fees are included in comparisons, American prices are frequently an even better value. In two-thirds of European countries and half of Asian countries, households pay a media license fee on top of the subscription fees to use devices such as connected computers and TVs. …When calculating the real cost of international broadband prices, one needs to take into account media license fees, taxation, and subsidies. …[T]hese inputs can materially affect the cost of broadband, especially in countries where broadband is subject to value-added taxes as high as 27 percent, not to mention media license fees of hundreds of dollars per year.

US broadband providers, the authors point out, have priced broadband relatively efficiently for heterogenous uses–there are low-cost, low-bandwidth connections available as well as more expensive, higher-quality connections for intensive users.

Further, the US is well-positioned for future broadband use. Unlike many wealthy countries, Americans typically have access, at least, to broadband from telephone companies (like AT&T DSL or UVerse) as well as from a local cable provider. Competition between ISPs has meant steady investment in network upgrades, despite the 2008 global recession. The story is very different in much of Europe, where broadband investment, as a percentage of the global total, has fallen noticeably in recent years. US wireless broadband is also a bright spot: 97% of Americans can subscribe to 4G LTE while only 26% in the EU have access (which partially explains, by the way, why Europeans often pay less for mobile subscriptions–they’re using an inferior product).

There’s a lot to praise in the study and it’s necessary reading for anyone looking to understand how US broadband policy compares to other nations’. The fashionable arguments that the US is at risk of falling behind technologically were never convincing–the US is THE place to be if you’re a tech company or startup, for one–but Layton and Horney show the vulnerability of that narrative with data and rigor.

My latest law review article is entitled, “Privacy Law’s Precautionary Principle Problem,” and it appears in Vol. 66, No. 2 of the Maine Law Review. You can download the article on my Mercatus Center page, on the Maine Law Review website, or via SSRN. Here’s the abstract for the article:

Privacy law today faces two interrelated problems. The first is an information control problem. Like so many other fields of modern cyberlaw—intellectual property, online safety, cybersecurity, etc.—privacy law is being challenged by intractable Information Age realities. Specifically, it is easier than ever before for information to circulate freely and harder than ever to bottle it up once it is released.

This has not slowed efforts to fashion new rules aimed at bottling up those information flows. If anything, the pace of privacy-related regulatory proposals has been steadily increasing in recent years even as these information control challenges multiply.

This has led to privacy law’s second major problem: the precautionary principle problem. The precautionary principle generally holds that new innovations should be curbed or even forbidden until they are proven safe. Fashioning privacy rules based on precautionary principle reasoning necessitates prophylactic regulation that makes new forms of digital innovation guilty until proven innocent.

This puts privacy law on a collision course with the general freedom to innovate that has thus far powered the Internet revolution, and privacy law threatens to limit innovations consumers have come to expect or even raise prices for services consumers currently receive free of charge. As a result, even if new regulations are pursued or imposed, there will likely be formidable push-back not just from affected industries but also from their consumers.

In light of both these information control and precautionary principle problems, new approaches to privacy protection are necessary. We need to invert the process of how we go about protecting privacy by focusing more on practical “bottom-up” solutions—education, empowerment, public and media pressure, social norms and etiquette, industry self-regulation and best practices, and an enhanced role for privacy professionals within organizations—instead of “top-down” legalistic solutions and regulatory techno-fixes. Resources expended on top-down regulatory pursuits should instead be put into bottom-up efforts to help citizens better prepare for an uncertain future.

In this regard, policymakers can draw important lessons from the debate over how best to protect children from objectionable online content. In a sense, there is nothing new under the sun; the current debate over privacy protection has many parallels with earlier debates about how best to protect online child safety. Most notably, just as top-down regulatory constraints came to be viewed as constitutionally-suspect and economically inefficient, and also highly unlikely to even be workable in the long-run for protecting online child safety, the same will likely be true for most privacy related regulatory enactments.

This article sketches out some general lessons from those online safety debates and discusses their implications for privacy policy going forward.

Read the full article here [PDF].

Related Material:

• Book: Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom
• Law review article: “The Pursuit of Privacy in a World Where Information Control Is Failing,” Harvard Journal of Law & Public Policy, 36 (2013): 409–55.
• Law review article: “A Framework for Benefit-Cost Analysis in Digital Privacy Debates,” George Mason University Law Review, 20, no. 4 (Summer 2013): 1055–105.
• Law review article: “Technopanics, Threat Inflation, and the Danger of an Information Technology Precautionary Principle,” Minnesota Journal of Law, Science & Technology, 14 (2013): 309–86.

Adam Thierer – Privacy Law’s Precautionary Problem (Maine Law Review, 2014) by Adam Thierer

I recently did a presentation for Capitol Hill staffers about emerging technology policy issues (driverless cars, the “Internet of Things,” wearable tech, private drones, “biohacking,” etc) and the various policy issues they would give rise to (privacy, safety, security, economic disruptions, etc.). The talk is derived from my new little book on “Permissionless Innovation,” but in coming months I will be releasing big papers on each of the topics discussed here.

Additional Reading:

• Technology Policy: A Look Ahead by Jerry Brito, Eli Dourado, and Adam Thierer
• Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom by Adam Thierer
• Why Permissionless Innovation Matters: Why does economic growth occur in some societies & not in others? by Adam Thierer
• Where is the innovation in health care? by Veronique De Rugy

Few people have been more tireless in their defense of the notion of “permissionless innovation” than Wall Street Journal columnist L. Gordon Crovitz. In his weekly “Information Age” column for the Journal (which appears each Monday), Crovitz has consistently sounded the alarm regarding new threats to Internet freedom, technological freedom, and individual liberties. It was, therefore, a great honor for me to wake up Monday morning and read his latest post, “The End of the Permissionless Web,” which discussed my new book “Permissionless Innovation: The Continuing Case for Comprehensive Technological Freedom.”

“The first generation of the Internet did not go well for regulators,” Crovitz begins his column. “Despite early proposals to register websites and require government approval for business practices, the Internet in the U.S. developed largely without bureaucratic control and became an unstoppable engine of innovation and economic growth.” Unfortunately, he correctly notes:

Regulators don’t plan to make the same mistake with the next generation of innovations. Bureaucrats and prosecutors are moving in to undermine services that use the Internet in new ways to offer everything from getting a taxi to using self-driving cars to finding a place to stay.

This is exactly why I penned my little manifesto. As Crovitz continues on to note in his essay, new regulatory threats to both existing and emerging technologies are popping up on almost a daily basis. He highlights currently battles over Uber, Airbnb, 23andme, commercial drones, and more. And his previous columns have discussed many other efforts to “permission” innovation and force heavy-handed top-down regulatory schemes on fast-paced and rapidly-evolving sectors and technologies. As he argues:

The hardest thing for government regulators to do is to regulate less, which is why the development of the open-innovation Internet was a rare achievement. The regulation the digital economy needs most now is for permissionless innovation to become the default law of the land, not the exception.

Amen, brother! What we need to do is find more constructive ways to deal with some of the fears that motivate calls for regulation. But, as I noted in my little book,  how we address these concerns matters greatly. If and when problems develop, there are many less burdensome ways to address them than through preemptive technological controls. The best solutions to complex social problems are almost always organic and “bottom-up” in nature. Luckily, there exists a wide variety of constructive approaches that can be tapped to address or alleviate concerns associated with new innovations. I get very specific about those approaches in Chapter 5 of my book, which is entitled, “Preserving Permissionless Innovation: Principles of Progress.”

So, I hope you’ll download a free copy of the book and take a look. And my sincerest thanks to Gordon Crovitz for featuring it in his excellent new column.

Additional Reading:

• I summarized the major themes and conclusions of my book in this Medium essay, “Why Permissionless Innovation Matters” (4/24/14).
• A short essay I penned for the R Street Blog, “Bucking the ‘Mother, May I?’ Mentality.”
• I discussed my book on the “New Books in Technology” podcast (4/4/14).
• Konstantinos Komaitis discusses my book in his essay, “Permissionless Innovation: Why It Matters” (4/24/14).