Originally Published by PwC.
New technologies promise to reshape markets in what many are calling the Fourth Industrial Revolution. Technologies being developed and deployed to solve problems have caused rapid societal shifts, creating new problems in their wake. Widespread breaches of personal data and automation-related job changes have made Big Tech the subject of increased government oversight, but policy is not keeping pace with technology. With little corrective power available in the short term, some policymakers and industry veterans are contemplating how Big Tech should self-correct. That is, how companies can manage innovation responsibly and restore public trust. Believers in self regulation advocate that a system for monitoring firms with systemic importance is most effective, while others prefer traditional oversight. Some have suggested a collective self-regulatory organization augmented by public-private partnerships, but this approach raises questions around membership, governance, enforcement, and consensus building.
Any approach that is applied will involve a balancing act that depends on the nature of the technology and the potential impact on public safety, national security, the workforce, and more. We see the balancing act occurring over three axes:
1. The public good vs. speed of innovation
Some policymakers reject regulations that may stifle innovation and development while more cautious lawmakers use them to protect the public. As technologies mature and their impacts crystallize, policymakers will be better equipped to introduce informed policies. Controls are not necessarily bad for industry, as clarity on a regulatory framework reduces uncertainty and risk. Some cases are obvious, such as passenger safety and software reliability for self-driving cars. Other areas require more forethought and public education. For example, artificial intelligence requires innovators, enterprise developers, and industry groups to develop frameworks with ethics, safety, and transparency as pillars. Companies should provide public officials with insight to create reasonable oversight, so the promotion of the public good is woven into the growth of these markets.
2. Data-driven value vs. privacy and security
Many see data as the “new oil” and those who mine it will have significant market power. Data provides benefits to consumers, businesses, and the economy, but also creates privacy and security concerns as personal information or business records become targets for bad actors. To empower consumers, the European Union is now enforcing its General Data Privacy Regulation (GDPR), which requires businesses to demonstrate purpose for collecting personal data and enables users to access or erase personal data. In contrast, the US Federal Trade Commission has taken a light-touch approach by only requiring companies to disclose their policies. States like California are trying to fill the void with the California Consumer Privacy Act, which echoes many of the rights protected in the GDPR. Business leaders must work with policymakers to balance the value of data as economic fuel with the privacy and security risks posed by its proliferation.
3. Local vs. national vs. global policy
While innovation has no boundaries, regulations do. This presents a challenge, as rules conflict across local, national, international, and global levels. The telecom industry is experiencing this with net neutrality policy. State legislatures are defying federal deregulation by passing net neutrality bills and coalitions of mayors and governors are applying net neutrality rules to ISPs that are state-government contractors. Meanwhile, next-generation satellite internet providers are aiming to provide global connectivity, but face a myriad of licensing and operational challenges across a massive patchwork environment. As companies grapple with this complexity, there is an opportunity to engage lawmakers across jurisdictions to address conflicting rules and advocate for consistency that transcends borders.
The future of emerging tech policy
As we wrote in “Don’t Fight Regulation. Reprogram It,” companies should not view the policy and regulatory environment as a maze of obstacles, but rather as a platform that evolves through active collaboration. Working closely with officials to re-engineer the policy platform will help shape the future of these emerging technologies.
As the federal government focuses on deregulation, state governments are more active than ever, thus increasing fragmentation and complexity. We’re also seeing splintered global coalitions due to the rise of protectionism. This is amplified through digital platforms and tighter interconnectivity that amplifies the most vocal. All of these trajectories along our three balancing axes show no signs of reversing.
While policy and regulatory uncertainty in the US and abroad remains, a company’s lack of tools and insight poses significant risks to its strategy and execution. Conversely, a company that approaches issues analytically with digital monitoring tools and active public engagement can create competitive advantages and strengthen its position in the market. So the question for companies is not “where is the balance,” but “how do we keep our balance”
PwC’s Strategic Policy Advisers continue to monitor policy developments across emerging technologies. We provide ongoing insight about the impact of specific policy and regulatory actions as well as their trajectories and contributions to overall trends. We look forward to being your go-to resource for strategically managing the latest in tech policy.