'Soft Law' Is Eating the World

In his widely-cited 2011 Wall Street Journal essay, “Software is eating the world,” venture capitalist Marc Andreessen famously noted that software and digital communications platforms were increasingly disrupting nearly all economic sectors and precincts of modern life. He was right. Now “soft law” is eating the world of technological governance and regulation more generally. The evolution of automotive technology, particularly the increases in automation, is proof positive of both points. We are witnessing a radical metamorphosis in the way that cars and the laws that govern them operate—and in both cases for the better.  

Andreessen’s point about software devouring everything was based on the realization that the underlying drivers of the digital revolution—massive increases in processing power, exploding storage capacity, steady miniaturization of computing, ubiquitous communications and networking capabilities, and the digitization of all data—were rapidly spreading to other sectors of the economy. No longer was information technology or software its own isolated silo, but industries from farming to communications were being revolutionized by it. This affected not only new, emerging areas but also long-standing and mature sectors like the automotive industry, which is now being further revolutionized by intelligent driving and autonomous vehicle (AV) technologies.

Driverless Tech: From Sci-Fi to Reality

In the short span of 15 years, AV technology has gone from science fiction to government-sponsored research projects and now to regular headline news. Major technology companies, such as Waymo and Apple, and legacy automobile manufacturers, such as General Motors and Toyota, have all increasingly invested substantial sums in this potentially socially-transformative technology—whether through R&D, roadway testing, information-sharing associations, or formal partnerships. Elon Musk recently hinted that Tesla vehicles could soon receive a new software upgrade that enables a “fully driverless option” via their Autopilot system. Uber, Waymo, and others have already started testing their driverless cars on public roads.

These companies have recognized how imperative it is to join the AV race, despite the law’s failure to keep pace with the technological development. That’s led some entrepreneurs, such as Musk and Comma.ai’s George Holz, to push the regulatory boundaries as regulators and policymakers grapple with the difficulty of regulating 21st century technologies with a set of 20th century institutions. This problem is what scholars refer to as the “pacing problem”—referring to the fact that technological change is unfolding faster than public policy’s ability to keep up with it. This gap has grown so wide, in fact, that it is even posing a vexing challenge for incumbent automakers who may lack the experience, resources, and staff necessary to address regulatory compliance.

For example, Audi recently announced that its new A8 will be the first commercially-available vehicle capable of operating at Level 3 autonomy . Unfortunately for American consumers, that functionality won’t be coming to these shores any time soon. Despite the lack of rules that affirmatively prohibit the operation of AVs on American roadways, lingering uncertainty about the domestic regulatory environment is enough to dissuade the German automaker from exporting its cutting-edge technology in the United States. While a few individual states have begun to embrace the autonomous future, the patchwork of regulatory uncertainty on a national level is enough to discourage some companies from believing the technology will be welcome here.

How Soft Law Solves Hard Problems

What are lawmakers and regulators doing to bring some order to this uncertainty and chaos? There have been attempts by Congress to enact new laws like the AV START and SELF DRIVE Acts, which would create a national framework for driverless car governance. But these efforts have largely stalled, leaving a governance void. “Soft law” is filling that void and providing the “rules for the road.”

What is “soft law”? As we explain in a forthcoming law review article, soft law represents a set of informal norms, multistakeholder arrangements, and non-binding guidance standards that provide an adaptable alternative to more traditional regulations or legislation. As Gary Marchant and Braden Allenby note, soft law can be described as “instruments or arrangements that create substantive expectations that are not directly enforceable, unlike ‘hard law’ requirements such as treaties and statutes.” These “instruments or arrangements” have played a significant role in promoting the rapid emergence of numerous life-changing technologies over the past quarter-century, including the rise of the Internet. Now, soft law is once more plugging the “pacing problem” gap—this time, for the governance of AVs.

Last week, the US Department of Transportation (DOT) released its third iteration of guidelines for autonomous vehicles. “Preparing for the Future of Transportation: Automated Vehicles 3.0” (AV 3.0) builds upon the DOT’s earlier “2.0” guidance document. It reiterates many of the points outlined in the previous version, maintaining a staunch commitment to the voluntary, non-binding nature of the provisions while expanding consideration to include commercial trucking and other surface vehicles. Most notably, AV 3.0 avows that the DOT will no longer assume the driver of a vehicle is human, and outlines a strategy for addressing the numerous regulations (especially the Federal Motor Vehicle Safety Standards) that need to be updated in order to alleviate the uncertainty currently discouraging companies like Audi from deploying their AVs on American roads. DOT has come a long way from its first iteration of the AV guidance released under the Obama administration, which provided a far more prescriptive and “hard law”-oriented approach to governing this emerging technology.

Why Soft Law Dominates Emerging Tech Policy

The fact that the agency is “versioning” its guidance as if it is a software release (i.e., “2.0,” “3.0”) provides even further evidence that Andreessen was on to something when he predicted that software was eating the world, and that even included the world of laws and regulations. Some might find it shocking that an undated slideshow presentation is essentially all that now guides federal AV policy, but that is an indication of just how pervasive soft law approaches are becoming in the modern regulatory environment. It also underscores the extent to which many policymakers and agency officials—much to their credit—have recognized the institutional limits of their ability to effectively govern new technologies. In essence, technologies like AVs are forcing policymakers and agency officials to increasingly rely on more adaptive, informal, and flexible rules to govern this new era of punctuated change.

In our new law review article and subsequent essays, we document how soft law is being tapped in countless other sectors, such as artificial intelligence, the Internet of Things, advanced medical technologies, and many more. These approaches are not merely limited to the federal level, but are also being utilized by state regulators in fields such as autonomous vehicles and FinTech and even by cities collaboratively working on regulatory schemes for disruptive technology such as electric scooters. The “soft law-ization” of technological governance is probably inevitable for two primary reasons. The first explanation goes back to Andreessen’s point about software eating the world, and the increasing gap between the rate of innovation and policymakers’ ability to achieve legal and regulatory parity without strangling innovation in the cradle (i.e., the “pacing problem”).  

The second reason soft law is now ascendant is that traditional legislative and regulatory hard law processes are somewhat broken. The combination of regulatory accumulation, over-bureaucratization, and the influence of special interests has led to increasingly dysfunctional governing mechanisms. This is a particularly acute problem in the field of technological governance, compounded by a lack of technical expertise in Congress. Similarly, while the courts may still serve as a check on administrative actions in some cases, judicial deference makes it increasingly less likely that they will overrule most agency actions, barring some particularly egregious circumstances.  

The Worst of All Systems, except All the Others before It

For better or worse, soft law is becoming the dominant modus operandi for modern technological governance. Conservative critics may take issue with its informal, open-ended nature, thinking it will be ripe for abuse. Liberal critics might be angry that stricter rules are not being put on the books.

Both sides have a point, but both sides should be cognizant of the realities on the ground. With the “pacing problem” and dysfunctional “demosclerosis” of government becoming the new norm, something needs to fill the governance gap. That something will increasingly be soft law. On the upside, soft law offers a chance to finally craft policy in a more flexible, adaptive fashion. It can adjust to fast-changing markets in a more reasonable and efficient way. While it won't be perfect, it may provide the best solutions we can hope for.

For driverless cars, the proverbial “rules of the road” may not end up being formal rules so much as an amalgam of informal guidelines, self-regulatory standards, ongoing oversight by regulators, and targeted enforcement of some older laws that still make sense (like recall notices for defective products). That mix of policies will be married up with ex post enforcement of torts and other consumer protection laws in the courts.

This is the future of technological governance. Few will love it, but all will need to adjust and figure out how to make it work so that innovation keeps flowing while important social goals are still addressed. In an age where regulators confront a variety of new and unique governance challenges, balancing these aims is more crucial than ever. What comes next is anyone’s guess, but one thing is clear: software has already eaten the world; now soft law is eating the regulatory state.

Photo credit: Jae C. Hong/AP/Shutterstock