Safeguarding Progress: The risks of internet regulation
A new paper by Matthew Lesh, the ASI’s Head of Research, and Sam Dumitriu and Philip Salter of the The Entrepreneurs Network, makes the case for a free, open internet:
Technology is improving our lives, connecting people, creating communities and contributing to Britain’s economy to the tune of £170bn a year.
The policy environment is becoming increasingly hostile to technology, undermining the free exploration of ideas and innovation that is essential to economic progress.
If policymakers want to encourage entrepreneurship they should embrace a culture of ‘permissionless innovation’.
Permissionless innovation means allowing entrepreneurs to experiment with new business models and technologies, and only intervening when there are clear, demonstrable harms to the public.
Growing calls to regulate the internet risk undermining progress and threaten the future of the internet and the digital economy.
Platform liability exemptions are essential to the fabric of the internet, and promote free speech and enterprise.
The exemption of platforms, such as Google and Facebook, from liability for the activity of their users was essential for the development of the internet, and digital innovation, and has delivered massive benefits for consumers.
Laws forcing platforms to be liable for user content to restrict hate speech have prompted social media companies to engage in excessively risk-averse moderation, threatening freedom of expression. Further measures such as the EU’s new Copyright Directive threaten the capacity of ‘creators’ to remix copyrighted content and share memes, while the Online Harms White Paper is a serious threat to free expression.
Internet red tape undermines small business, competition, and entrepreneurial activity
There is intense competition within the technology sector, including between large online platforms and from startups and small businesses. Platforms help stimulate entrepreneurial activity by providing Corporate Venture Capital and opportunities for exit.
Controls such as excessive data regulations, by creating barriers to entry and excessive costs, are particularly harmful to startups and small-to-medium sized enterprises (SMEs) that have lesser financial capacity for compliance.
The report also explains that if the Government wants to achieve an open, competitive and entrepreneurial online space they would do well to follow these Five Principles for Permissionless Innovation:
Identify and remove barriers to entry and innovation;
Protect freedom of speech and entrepreneurship by retaining immunities for intermediaries from liability;
Rely on existing legal solutions, the common law, and competitive pressures to solve problems.
Push for industry self-regulation and best practices.
Adopt targeted, limited legal measures for truly hard problems based on evidence.