May 19, 2021

Soft Law: The Reconciliation of Permissionless & Responsible Innovation

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For almost 25 years, information and communication technology flourished under “permissionless innovation,” or the presumption that entrepreneurs should be allowed to develop new technologies without legal interference. But with policymakers discussing a more interventionist approach to competition in digital markets and online speech, the era of permissionless innovation in the U.S. may be ending.

In its place, a number of scholars, policymakers, and pundits have proposed that government and industry pursue “responsible innovation.” The formal aim of responsible innovation is to anticipate ethical issues with new innovations and make sure that they are equitable, transparent, and non-discriminatory before being made widely available to consumers, businesses, and governments.

In Chapters 6 and 7 of his book Evasive Entrepreneurs and the Future of Governance, Adam Thierer discusses the relationship between permissionless innovation and responsible innovation. While most discussions of these technological governance paradigms emphasize their differences, in fact, they are compatible in their pursuit of technological innovations that better humankind and incorporate ethics into their development. Further, the two paradigms are constantly being balanced through a variety of governance practices called “soft law.”

Entrepreneurs are Humanists

Thierer argues that entrepreneurs work toward, not against, the goals of individual freedom and human betterment. Optimism about technological progress has been derided as technological determinism, or even “techno-chauvinism.” Some advocates of responsible innovation describe new technologies as dehumanizing, when, in fact, the history of technological progress tells us exactly the opposite.

On net and over time, technological innovation allows us to be more productive at work, connects us with more people, and provides us with new ways to enjoy our leisure. In short, we live healthier, happier, and wealthier lives now than ever before, and technological progress and economic growth are primary drivers of this profound fact.

Precaution & “The Goldilocks Myth”

New technologies have downsides, and each innovation presents its own social dilemma. A key tension between permissionless and responsible innovation is how and when such issues should be analyzed and addressed.

Those who defend responsible innovation believe that the ethical issues of new innovations can be anticipated and precisely addressed. In this view, government regulations can be designed “just right” to find the perfect balance between the preemption of harms and the encouragement of beneficial innovation.

Meanwhile, Thierer argues that technological design is a dynamic, iterative, and quite imprecise process, and most ethical dilemmas that arise from new innovations cannot be known until these technologies are put to use by consumers, businesses, and governments. Further, precautionary rules that are designed to address hypothetical worst-case scenarios often foreclose beneficial innovations, and preventing these innovations from coming to fruition has serious unseen consequences.

Soft Law & Informal Technological Governance

Supporters of responsible innovation emphasize that technologies have many stakeholders beyond the direct consumers of new products and services. Standards and rules that govern the development and use of new technologies ought to include input from government, academics, and non-profit advocacy groups.

In Chapter 7 of Evasive Entrepreneurs and the Future of Governance, Thierer describes how informal governance mechanisms known as “soft law” balance the principles of both permissionless and responsible innovation.

Soft law is a broad set of informal, non-enforceable mechanisms that are more adaptive, collaborative, and risk-weighted than traditional forms of “hard” law and regulation. Because of these advantages, soft law has become the dominant mode of technological governance in the United States.

Soft law methods include multistakeholder processes, industry codes of conduct, technical standards, private certification, agency workshops, guidance documents, and informal negotiations. In July 1997, the Clinton Administration released The Framework for Global Electronic Commerce, which established a co-regulatory multistakeholder model that was instrumental in establishing a collaborative environment in which information and communications technologies flourished. More recently, multistakeholder efforts among industry, government, and other interested parties have established principles that govern the development and uses of big data, machine learning, and artificial intelligence.

Such frameworks lack the enforceability of traditional law and regulation, and some advocates of responsible innovation criticize them for “lacking teeth.” But soft law is superior to precautionary rules that slow or outright prevent the development of beneficial technologies. Further, in light of the “pacing problem,” or the fact that technological progress outpaces the creation of new laws and regulations, soft law provides governance where, in its absence, there would be no applicable hard law to oversee new innovations. Soft law may represent the worst form of technological governance, but by striking this balance, it may be better than all those tried before.