Tuesday 18 February 2020

The Regulation of Technology Companies and Data: Is IP the Answer?

In a Brookings Institute Report titled “How to Regulate Big Tech,” Anwar Aridi, World Bank, and Urška Petrovčič, VP Criterion Economics and Fellow at the Hudson Institute, review the differences between U.S. and EU competition law and the purported impact of those distinctions on EU policy development concerning technology companies and data usage.  Notably, they frame the question for EU policy makers as whether to ease the EU’s regulatory scrutiny over technology companies to develop national champions or to continue existing regulatory scrutiny to develop an even-handed approach (another idea is to ratchet up scrutiny or develop new regulations).  They seem to favor the even-handed approach.  The framing of the issue is an interesting one.  Clearly, China has taken a very different approach that was relatively protectionist in nature.  And, what has happened?  China has fought off U.S. company dominance in their market—many may argue unfairly—and has some powerful and innovative technology companies: Baidu, Alibaba and Tencent. (affectionately or maybe not so affectionately known as BAT in China).  Moreover, China has a platform that is rivaling U.S. platforms in the U.S. market, particularly amongst youth—Tik Tok.  The development of powerful non-U.S. based platforms may be what ultimately leads to increased regulation of all platforms in the United States, including more antitrust enforcement.  However, I question whether incorporating additional values into antitrust analysis, such as national security, will be a good idea. National security as a value in antitrust analysis may be very difficult to cabin-in.  Indeed, there are also other laws available to police national security.  

Dr. Kai-Fu Lee, in his book, “China, Silicon Valley and the New World Order,” makes the case that the battle over artificial intelligence systems and data will be won by China over the United States—the advantage is China’s ambitious and win-at-all costs entrepreneurs that have had to operate in a Chinese system where the weak perish quickly and the Chinese are willing to part with their data.  Is there a way to check behavior that antitrust regulators are having difficulty with keeping up with in the fast-moving technology environment?  Perhaps the answer is private enforcement of intellectual property laws—with those laws structured to protect new entrants, and small and medium-sized companies to deter efficient infringement by large, entrenched companies.  That’s perhaps still too slow.  New state laws to protect privacy interests may be helpful as well—Facebook recently settled a case concerning violation of a state bioinformatic law for around $550 million. 

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