Anticipatory regulation: a way forward for platform governance? – Jelena Dzakula

12 10 2018

A wide consensus has emerged that regulatory framework for platforms like Google and Facebook needs to change. Calls for action are coming from a range of different stakeholders in the UK, with proposed solutions varying in terms of models of regulation, and who should implement them.

But what exactly are we trying to solve with regulation? Due to a series of scandals, some excellent investigatory reporting, and a number of government inquiries, we now have a much better picture, although not perfect, of what the problems associated with information platforms are. They range from the platforms’ inability (or unwillingness?) to effectively deal with the proliferation of extremist, harmful, hateful and illegal content, online bullying, data misuse and manipulation, fake news, filter bubbles, to a reluctance to pay tax, and the creation of monopolies. Overall, platforms have disrupted business models, democratic politics, and the way we have traditionally regulated. Problems are many and varied in their causes and potential solutions. However, they do have a few things in common for which an entirely new model of regulation might be helpful: structured experimentalism, anticipatory, or dynamic regulation.

With this type of regulation, rather than formulating new regulatory rules or adapting the existing ones after it becomes evident that a problem exists and the damage has been done, there are structures and mechanisms in place that enable a continuous conversation and feedback loop between regulators and industry players in all stages of service/product development. Therefore the regulators have sufficient information to create the rules ex-ante and anticipate revisions before potential failures happen on a grand scale. What this enables is responsible rather than permissionless innovation that has often proven to be unethical and harmful. Industry players are already testing products and services, but anticipatory regulation would entail a regulator to be aware and informed, confidentially, of what companies are working on.

Global innovation foundation Nesta is trying to promote this type of regulation in the UK, but more importantly, this model has been successfully applied in the financial sector with the establishment of ‘regulatory sandboxes’ by the UK’s Financial Conduct Authority in 2016. A sandbox regime allows entities to test their products, services or solutions in a live market environment but within a well-defined space and duration agreed with the regulators and with appropriate protections in place. For example, the FCA has used it for robo-advice services and savings tools that rely heavily on the use of consumer data. The FCA has been running the scheme successfully and wishes to expand it globally since it creates a good learning environment for both the regulator and the industry, while ensuring that users are protected. A number of countries across the world have set up similar schemes for their financial markets, and they are starting to emerge in other sectors as well: Ofgem has established one in 2017, and Catalonia provides sandbox facilities for autonomous vehicles, linking car manufacturers, industry representatives, telecommunication companies, academia and legislators.

Regulatory sandboxes are just one form of how anticipatory regulation can be institutionalised and there are other options. But why would an appropriate form of anticipatory regulation be beneficial for media and communications markets?

If we look at regulatory failures, two major problems are lack of information and timing. It is impossible to regulate activities and services that we do not know exist. For example, regulators and policy makers have not had an insight into the way platforms use data. The issues we need to regulate are no longer in the public eye in the way broadcast content or advertising have been. To regulate appropriately, access to relevant information is needed on an entirely different level than it had been the case.

And the issue of timing is crucial. It is too late to regulate once significant damage has been done – take the example of the data based targeted advertising during the Brexit referendum in the UK. Thisshould have been prevented. Regulators are facing a difficult dilemma since regulating too quickly is detrimental for innovation that could potentially be used for public good. But acting too late is also not in the public interest. Technology advances at a great speed and regulation does not. Optimal timing is imperative.

What anticipatory regulation could also achieve is providing structures that would appease the actors involved and help us move away from the obvious antagonism and threats. Calls for regulation tend to be very aggressive. Hopefully over time, structures and institutions of anticipatory regulation would enable the creation of a different, more collaborative and consensual culture among actors that are so evidently and inextricably interdependent. Constructive engagement is key and not a single actor poses the knowledge necessary to govern these technologies in the right direction.

Perhaps most importantly, we also need to break away from stifling and burdensome binaries: to regulate or not to regulate, top down or bottom up regulation, permissive or restrictive, rules or principles, platforms or publishers, infrastructure or content, etc. These are no longer appropriate conversations and they are not constructive. The recent DCMS report termed the platforms ‘tech companies’ which seems an appropriate and neutral enough term. Specific labelling is not useful since the industry changes so rapidly – Facebook has just bought rights to broadcast football matches in India, with its Free Basics it already acts as an internet provider, and with new Second Payment Services Directive it is able to offer financial services.

What are the boundaries of the communications sectors now? Things are not black or white and they will be so even less in the future. We need fluidity and dynamism in regulation that aligns more closely with the industry we are regulating. We should be informed by history, but we shouldn’t let the current debate and solutions we are trying to devise be burdened and restrained by legacy binaries. We need more radical and creative solutions that will be sustainable rather than quick fixes for immediate problems.

And crucially, creating institutions for anticipatory regulation would do away with the regulatory vacuum we currently have. Industry players might not welcome this, but the status quo can’t last forever. All good things must come to an end.

This post originally appeared on the LSE Media Policy Project Blog and is reproduced with permission and thanks.


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13 10 2018
UKC: Clearly Transfixed And Transfused |

[…] Anticipatory regulation: a way forward for platform governance? – Jelena Dzakula […]

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