A three-point plan to improve tech policy formulation
Regulating technology is challenging due to its rapid evolution, leading to a disjointed patchwork of rules. Governments often react to technology’s harmful impacts rather than proactively anticipating them. Regulatory entrepreneurship, where changing laws is part of the business strategy, complicates this further. To improve technology regulation, the government should focus on real objectives, adopt principle-based laws, and seek expertise from various fields. This approach would ensure more effective, adaptable, and comprehensive technology regulation.
This article was first published in The Mint. You can read the original at this link.
Technology regulation is hard. Governments struggle to keep up with all they need to do to stay abreast of new technology. No sooner do they figure out what restrictions to impose on a particular business than that business itself becomes yesterday’s news and they find themselves having to deal with a whole new set of challenges. As a result, the regulations that govern the sector are a patchwork quilt of rules, guidelines and notifications that individually make sense but when viewed as a whole look like something Piet Mondrian dreamed up.
Bureaucrats are simply not equipped to anticipate the outcomes of new technologies. As a result, laws only get enacted when the harmful consequences of a given businesses model become so apparent that they are impossible to overlook. This is most acute when businesses use technology to transform established industries, and in particular when they indulge in regulatory entrepreneurship—a term coined by Prof. Jordan Barry and Elizabeth Pollman to describe the strategy where “changing the law is a significant part of the business plan".
In recent times, we’ve seen many examples of regulatory entrepreneurship. The sharing economy came to be because entrepreneurs promoting their app-based ride-hailing and apartment-renting businesses consciously chose to operate in a regulatory grey zone that potentially violated taxi and hotel regulations, knowing full well that had they sought permission before rolling out their services, they may never have been permitted to scale up as quickly as they did.
Regulators particularly detest models that straddle multiple sectors without fitting neatly into one bucket or the other. They like certainty and abhor ambiguity—which is why they try and force-fit every new technology model into convenient pigeon-holes so that they can regulate them better. This is how the government of Karnataka ended up classifying ride-hailing services as radio-taxi operators—even though doing so had the absurd consequence of requiring drivers install physical meters in their vehicle when the real reason behind the business model was to provide a more convenient mobile alternative. This is also why we’re the only country in the world that distinguishes between inventory and marketplace models in e-commerce and why our telecom regulations have features so unique that global cloud service providers carve India out of their network design like an island where the rules of physics that apply to rest of their global network have to be suspended.
Regular readers of this column will know that I often use my column inches here to highlight the flaws in various technology regulations. It is my hope that by shining a light on consequences overlooked or misunderstood, subsequent revisions of the law might consider these suggestions favourably and make necessary amendments to change the regulatory outcome. But this is legislation in hindsight—an exercise that rarely serves any purpose beyond the purely academic. It would be far more useful if we could develop a framework that the Indian government could use while framing future technology policies—a workflow they could follow as they go down the path of regulating newer areas.
Here, then, is my three-point suggestion for what the government should start doing if it wants to better regulate the technology sector.
(1) Identify the real objective: Too often, technology laws end up missing the real issues they should be addressing, focusing instead on hot-button issues that we are led to believe are more immediate. When we regulated the sharing economy, our focus was on making these new business models comply with the rules that taxi companies and hotel businesses had to follow. As a matter of fact, all these businesses were doing was providing a platform on which offers could be exchanged. We might have been better off regulating them as platforms, requiring them to ensure transparency and traceability in their operations so that the customers using their services could be protected against unfair trade practices.
(2) Think principles not details: Too often, our technology laws get lost in the weeds trying to come up with more and more detailed regulations for technology that is changing too quickly to govern. It is impossible to make laws future-proof. This is why we should never aim to have our laws articulate anything more than broad principles, leaving it to the executive to translate these principles into specific details. At the very least, regulations need to be technology-neutral—both in the definitions of their terms as well as in the specific procedures they spell out. The Personal Data Protection Bill drafted by the [[[[Justice Srikrishna]] Committee]] is an excellent example of how to set out broad principles in the statute while allowing for a greater level of detail to be spelled out through “codes of practice" that are issued subsequently.
(3) Get help: Technology is complex. If it is to be effectively regulated, it needs to be well understood. As astute as our bureaucrats are, they are generalists and, in this age of specialization, cannot hope to appreciate the many layers of nuance necessary in order to properly regulate technology. They should never attempt to go it on their own, but instead should actively co-opt experts from all relevant fields—behavioural economists, technologists, lawyers and the like— so thatthe laws we pass can be truly robust.
