If the digital economy age seemed to be an idea of a distant future some years ago, today it’s becoming a living reality. With the changes brought about by the digital economy and technologies which enable it – evolving the regulatory framework is a must.
Progression into a safer Digital Economy was the topic of the latest World Economic Forum working group that took place in February in London. Passing new regulations to serve the digital age will be more complicated than one thinks, as there is no past model to follow. Therefore regulators will need to adapt their mindset (and experience); otherwise, they will be looking for the lost key under the existing spotlight.
Regulating for the digital economy requires a fine balance between safeguarding personal privacy and democratic values while still encouraging entrepreneurship and not harming competition. Moreover digital regulations need to consider the ecosystem at large and the needs of every player rather than just being single-sided.
Therefore, regulating for the digital age will present unique challenges for both the regulatory bodies as well as for the economic players – in particular, the large established organizations. The benefits of digitalisation are becoming more evident and apparent to these companies, with efficacy increases as the number one. However, the digital economy is bringing about a reduction in the cost of starting up, which in term will have direct implications on competition. With a low cost of starting up competition becomes even more fears – in particular the competition between legacy organizations and startups. Hence large established businesses might be very tempted to use their positions as major employers and significant contributors to the national budget, to influence regulation that will help them shield themselves from more nimble or technologically minded competitors.
Take, for example, the push for regulation of autonomous driving in Germany. Is this in the interest of society or just in the interest of corporations that are falling behind Tesla? One can easily argue for the latter in the light of the recent teardown of a VW and Tesla, which found the US manufacturer to have electronics and software six years ahead of its German competitor.
Another aspect regulatory bodies like the local and national governments as well as the EU need to consider when passing regulation for the digital economy is how do you protect individual values, for example, privacy without hindering entrepreneurial activities.
Government regulations need to be more desirable and accommodating for digital business startups to flourish; otherwise, the economy will suffer from a lack of innovation as startups cannot progress.
In developing ecosystems, governmental states rely on business and pursue open, innovative economic avenues. Developing ecosystems that encourage entrepreneurship, are less strict, controlling, and look for new ways as they have nothing to lose and everything to gain from a free, open economy. Less structured governments are the breeding ground for innovation as governments hold less importance, case in point, Southeast Asia. Other countries that are incredibly traditional are hindering progress in terms of innovation, technological implementation, and deny policy changes that can unify global business and societal advancements.
Privacy is the primary concern to keep information and personal data safe in a less regulated world. Technology such as AI becomes of excellent necessary service; however, society as a whole is at risk as adaptations are made to accommodate new technology advancements. The tightrope of devising a liberal government and an assisted tech-driven economy is the striving winning formula. Good policies require an understanding of the limitations and opportunities of technology that will be used to execute them. Good regulations require a genuine understanding of characteristics of the technology they seek to regulate as well as a high degree of empathy for all parties involved.