New Stuff & Old Laws

A common issue for new technology is the application of existing laws that were created before the new tech was contemplated. Examples include fintech (financial applications), fitness and health applications, and ridesharing services (such as Uber).

What is the issue?

Some activities and services are highly regulated. Financial services and the taxi industry are good examples. New entrants create innovative applications and services that compete with incumbents, but may or may not be regulated the same.

In some areas the entity may be regulated rather than the activity (often the case in fintech).

Laws sometimes prescribe a specific solution, rather than a desired result. Regulations around car headlights, for example, tend to specify how they must be built rather than how they must perform.

New tech may start out unregulated, but may as it develops creep into areas that are regulated. Fitness and health devices can easily become subject to medical device regulations (under the Food and Drugs Act) that impose certain requirements or licensing.

Why does it matter?

These issues for new tech have always been around – but the pace of change and innovation is getting much faster. Tech like cheap sensors, cheap connectivity, the increased power of smartphones, autonomous cars, blockchain, and artificial intelligence can be disruptive. Rapid, disruptive change makes it more difficult to get regulation right.

If you are the innovator, you may have legal issues to address that are not immediately apparent. The playing field may not be even, and can unfairly favour new players or incumbents. It can stifle or slow innovation – such as better headlight technology.

What to do about it?

Anyone developing new technology needs to think about where it fits within existing laws. Then either comply, make it different so it doesn’t need to comply, work with an incumbent, work with the regulators, or perhaps take some calculated risk.

Lawmakers face some tough issues. They should focus on evidenced based regulation rather than sticking with partisan or historical perspectives. Do existing regulations have the wrong focus and unintentionally distort the playing field? Does the new tech solve a problem in a different way than the regulations contemplate? Do existing regulations make sense in the modern context? Do they properly address a real issue? Do existing or proposed regulations help, or do they cause more problems than they solve?

Comments

  1. David Collier-Brown

    This is also a problem in the nerd world: people often describe requirements in terms of how they would implement them, like “headlights must be 7 inches in diameter and consume no less that 50 watts”.

    The bad part is they’re not relevant to, for example, LED lights.

    The good part is that one can often work backwards from the old regulation to develop a requirement that doesn’t dictate how one must implement it.

Leave a Reply

(Your email address will not be published or distributed)