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Advance amid choices: technological development, business innovation, laws and regulations

Rapid technological upgrades and commercial innovation, coupled with a slow legislative and regulatory process, have given rise to successive social issues and disputes: Should platforms like Uber be legalized or not? Should Apple’s encryption technology be restricted? Should search results be affected by keyword bidding? Such issues not only pose great challenges to state governance, but also arouse intense social debates and controversies.

June 2016
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Executive Summary

In 1996, John Perry Barlow published “A Declaration of the Independence of Cyberspace,” which said, “I come from Cyberspace, the new home of the mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.” Barlow envisioned an Internet “utopia.” David R. Johnson and David Post co-published an article that stated the “exceptionalism” of the Internet is the only choice, since no sovereign nation can effectively regulate the Internet, due to its loose structure.

The grand vision embraced by the cohort of cyber-libertarians represented by these people was not simply wishful thinking. In the early 1990s, the invention and proliferation of WWW protocol gave the mass public access to the Internet, which was previously a technology only available in academia and national defense. This marked the inception of the utopian ideal. In the midst of the information technology revolution, Robert Noyce, Bill Gates and Steve Jobs, among other great entrepreneurs, claimed that the revolution would bring new opportunities and hopes. Whether it is the cyber-libertarians or technology elites, they were scrambling for a brand new start before the dawn of the technology revolution. This is also a major reason that technological development is deemed the driving force for change and creation, and a beacon of a promising future.

If only history could be portrayed through such linear simplicity. Admittedly, the article by Barlow, Johnson and Post came under great criticism right after its publication, but it wasn’t until 1999, when Lawrence Lessig published his book Code and Other Laws of Cyberspace, that the Internet utopia built on the basis of the merit of the technology revolution faced a real danger of collapse. Before that, most of the debate pivoted around regulations and orders, focusing on the capability and legality of state governance of the Internet. Lessig proposed that, aside from laws, code is also a powerful means to regulate online behavior. Unlike how laws and orders regulate the Internet through punishment, deterrence and rectification that focuses on influencing results, ruling via code enables the “Perfect Control” that can rein in actions. Nevertheless, the dominance that comes with code ruling is controlled by large companies, which can hardly reject the power that comes with “Perfect Control.” They have little motivation to protect and safeguard the values and rights advocated by these cyber-libertarians. As such, Lessig believes it is important to use law enforcement as an authoritative power to squeeze out influence exerted by individual will. Effective governance of the Internet can only be achieved through a political and collective democratic decision-making process.

Lessig’s statement appears to be a depiction of reality. We have to face the growing dominance that platforms impose on cyberspace. Whether it is for advertising or services, all data is collected and applied to commercial usage. The line is getting increasingly blurred between the Internet and mass media, since all information is, to some extent, unable to stay impartial. Is it fair to conclude that this is the Internet “Utopia” championed by cyber-libertarians? Not likely. Commerce lessened the role of technological development as a future creator. Laws and regulations are barging into this domain as a controversial but inevitable source of power. Thus, Lessig brought up a paradox to early cyber-libertarians: To eliminate the private and commercial dominance of the Internet, it is critical to leverage the power of governance, which was tenaciously opposed in the first place. The focal point of the debate is no longer whether the Internet should be free of monitoring and regulations, but rather, who should be accountable for safeguarding the social benefits and individual rights to the data while combing through the relationship between technological development, commercial innovation and laws and regulations.

It is seemingly a straight forward question that is hard to answer. But its importance and urgency keeps growing as information technology sinks deeper into our daily lives. Recent rifts between Apple and the FBI were a good testament to such a challenge. Giving in to the will of the FBI would put the privacy of citizens at risk, while Apple’s refusal to unlock their phone stood in the way of lawful investigations, endangering public safety. It was a delicate balance that the court failed to reach. The FBI’s final withdrawal delayed the necessity of a solution.

Technology and the business world make policy choices

A question that is hard to find a good answer for may be a result of its intrinsic difficulty, or of the logical inconsistency of the question itself. Technological development, commercial innovation and laws and regulations are three independent, but also interconnected, entities. Technological development represents a promising future, relentlessly breaking the boundaries of the possible by its very nature. The world of business nimbly seizes on and taps into the groundbreaking opportunities enabled by the development, while it always takes time for laws and regulations to form a structure to rein in new inventions. The reality may embrace more complexity: technology will not always stay neutral; business is not motivated to utilize emerging technologies all the time; slow reactions from legislators are not always a result of lack of flexibility.

As Foucault once stated, technology is not just a means to an end. Technology is a political actor. Means and end are closely correlated. Running the same line of thinking as Martin Heidegger, Foucault distinguished technology as a substance and a skill. His focus fell on the latter, which he believed to have the power of changing the values, behaviors and social relationships of human beings. It’s the same as the panopticon raised by Foucault. It not only provided a means for monitoring, it also altered the psychological cognition of the prisoners who were tamed by such design as a result.

Looking through this lens, technology is not neutral. Neither is it a medium through which human beings transform nature. In fact, technology is subjective, and it is shaping and enabling various human acts. For instance, social network websites facilitate communication and exchanges among people, while they also drastically change our understanding and definition of social norms and privacy. Technological inventions should not be simply understood as “representing a promising future.” They accompany human, capital and institutions, altering the existing social relationships and ethos. It is noteworthy that technology is not merely an expression of will by its creators (aka human beings). Programmers install the capability to learn rules, just like artificial intelligence. The real decision maker is the algorithm which came as a result of large scale data training, which has nothing to do with the personal will of programmers. That is where the statement “technology is subjective” comes from.

If we try to understand technological development, business innovation, laws and regulations with the above mentioned preconditions in mind, it is easy to find common features shared by all of them: They all have a transformational role in changing and adjusting social relationships, authoritative relationships and the social benefits landscape. According to Foucault’s perception, institutions themselves come with a certain amount of technological sense. It is self-evident to find differences among hospitals, prisons, WWW protocols, P2P networks and encryption technologies, while they all wield the same power to change and rebuild the cognition and behavior of human beings. P2P networks are a distribution channel of information. They also play a role in overhauling the social definition of a patent, and subsequently topple the benefit sharing structure of the patent industry as a result of the rise of the Internet. Of course, P2P networks themselves are not potent enough to shatter the existing earnings distribution rules. Deleuze once said that technology is only a part of a much more scalable social network. In other words, the integration of technological development, business innovation and laws and regulations has been acting as a major driving force for social reforms.

Reforms imply clashes. A brand new set of social norms and interest distribution rules will ignite controversies between old and new schools. Hence, technological development, business innovation and laws and regulations are making their own “choices”: permit or motivate certain behaviors, and likewise, forbid or limit certain behaviors. As such, we may arrive at a conclusion where we have not fully understood the links that connect technological development, business innovation and laws and regulations. No force is wrangling with the other, or able to stand on the moral high ground with better advantages. They are independent entities making policy decisions in their own distinctive ways. Back to the intractable question we raised earlier. Perhaps there’s a better way for us to paraphrase it: how to make policy decisions?

In fact, the history of the rise of the Internet can be summarized as a process of making policy choices. One of the most important policy choices was the exemption principle enjoyed by the Internet medium platform responsibilities. With a widening adoption of the Internet and P2P technologies in the 1990s, defamation, pornography and infringement were rampant in the online world. Victims, short of legal protection, hoped to see binding powers override the Internet. Item 230 of the Communication Decency Act announced in 1996, and item 512 from the Digital Millennium Copyright Act published in 1998, asserted that the Internet medium platform bears no responsibility when its users upload illegal content (as long as it is able to notify the user and remove the content). Out of distinctive motives, technology, business and legislative people chose to make the same option to build a free and non-binding Internet atmosphere. Deemed as a critical contributor to the proliferation of the Internet, this decision was a prelude to an unalleviated situation for those whose interests were damaged as a result—such as traditionally rich and powerful publishing businesses, as well as normal people who suffered from online defamation and bullying.

Legislators do not always make policy choices in the same vein as technology developers and business runners, for they each pursue contradictory goals and values. Developers care little about the consequences of their inventions, which are unpredictable most of the time. The emergence of Bitcoin came on the coattails of the cohort of cyber punks, who believe in a government-or-institution-free world. It never occurred to them that such technology would be applied in other domains and cause a great impact. The business world is largely for profiteering. Money-making opportunities often lie in the latest technological innovation that is yet to be regulated. Uber is a good example here. Legislators will have to face impacts from different interest groups and also constraints and future uncertainties. It is in fact the complexity of decision-making that slows down the progress of institutions and regimes.

We need to make choices

It is challenging to make regulatory choices when facing global companies like Uber. Mobile Internet and cloud computing, the imperative technological foundations for the platform economy, perfectly match up supply with demand in the service sector. The innovative business model helped the company handle large scale transactions just like a data agency without investing big money in physical assets. Legislators are also embracing the new economy and have no choice but to consider the ramifications of their decisions. Can society weather the loss in cost while enjoying benefits? The birth of the platform economy also indicates the emergence of the gig economy. Is the social safety network ready to take care of contract-free workers? Will state tax income be affected by more and more freelancers? The platform economy will also create backlash toward traditional industries. Will the additional economic benefit make up for the consequential job loss? The value distribution is determined by private companies. Does it mean the flexibility of the labor market will continue to segregate society?

Legislative power has to make choices. It could be a direct yes or no, or instead, the introduction of a gradual set of institutional improvements. Nevertheless, they have to make a choice. Inaction is a form of acquiescence. As Foucault once stated, not all technology is bad, but it is all dangerous. We have to do something if there is looming danger. We are driven to make progress in the midst of conflicts and choices.

Jia Kai
Visiting Scholar at the University of California in Davis