Google's EU fine, The Digital Single Market, and regulating IoT, drones and blockchain | What route will the UK's post-Brext regulatory roadmap take?

If there's a theme to my ramblings in this Legal Briefing opinion column over the past few years, it surely must be the growing ineffectiveness of lawmakers and regulators in the face of technical innovation.

It took until 1988 for software to merit a mention in copyright law: 40 years after a computer first held a piece of software in an electronic memory. The law may not now be four decades behind technology but, of course, the rate of technological innovation now is immeasurably greater than it was in those early days of computing. In legal terms, cloud computing is a new-fangled concept that the FCA has now finally cottoned on to for financial services businesses but which, in a general legal sense, has no specific legal regime.

And what of blockchain, the Internet of Things, robotics, artificial intelligence and drones? In a legal sense, nothing. Or, at least, nothing specific. There are plenty of laws that could be relevant and which might apply but those have to be culled from the established body of laws dealing with intellectual property, contracts, tortious liability and the like. Does it make sense that the entire system of 21st century online e-commerce is based on a legal regime developed in response to liability problems arising from Victorian theatre cloakrooms, snails in bottles of ginger beer and broken water-mill crankshafts? Probably not but it keeps law students entertained.

But is that lack of legal coverage really such a bad thing? Maybe what technology needs is freedom from regulation and the law. In the light of its recent EU fine, Google has 2.7 billion reasons for thinking that's the case.

So which does the technology industry prefer: a degree of legal certainty as to the regime applicable to its innovations or freedom to innovate free from constricting regulation?

To be fair to the UK parliament (not a phrase you hear very often), the UK has been pretty hands-off about regulating in the technology sector. Recent Digital Economy Bills in the UK have been heavily policy-based and light on specific regulation. And the current government's manifesto pledges in the recent election to digitise itself and public services will have little direct impact on how private digital businesses develop. History shows that the private sector leads and government follows when it comes to technology adoption.

The wider EU has been less hands-off, of course. The EU is midway through implementing a Digital Single Market Strategy designed (depending on your point of view) either to level the playing field for all digital technology providers and users or to support European technological development. But, in EU terms, implementing a strategy always means devising regulation and, if the European Commission sees an opportunity, imposing harmonised terms or standards.

Most recently for example, the European Council has adopted a general approach on the proposal for a Directive on certain aspects of contracts for the supply of digital content. While common requirements will be imposed on issues like remedies and guarantee periods for non-conforming digital content, EU Member States are going to be allowed a level of flexibility. While this may be good news for some Member States with a past track record of higher consumer protection standards, it will not be such good news to companies looking to supply digital content to EU consumers on a consistent, harmonised basis.

So is the Digital Single Market going to help or hinder? Probably not much of either in my view, largely because by the time the wheels of the EU grind to a legislative conclusion, the technology sector will have moved on by at least two waves of technical evolution.

And by the time the EU Digital Single Market comes to fruition, Brexit will have happened. One choice that the British government will need to face as part of Brexit is how closely to align itself with the EU in terms of technology regulation. On one view, it doesn't make sense to impose different standards or regulations on UK technology businesses for sales in the UK or into the EU. But if the EU continues to seek to regulate technology platforms more strictly than the UK, successive UK governments will increasingly use a lighter touch regulatory regime to attract technology businesses to use the UK rather than the EU as a point of entry into the European market.


Copyright © 2017 IDG Communications, Inc.

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