Coronavirus and tech regulation in a new normal

Two month ago, plans to ramp up regulation of the digital economy under competition, privacy, and consumer protection laws looked like a head-first dive into the deep end of the pool. Now, as governments focus on keeping people safe and markets stable, a spotlight has been cast on the role of technology in our lives and economies. What might the coronavirus crisis mean for the future of tech regulation when restrictions subside and a new normal emerges?

What we do online lately is one of the few constants in our lives. There is not a maligned “big tech” player whose products have not helped us in some way to weather this ordeal. Online publishers keep us up to date on the latest developments. Working and shopping from home keeps our economies afloat and our supplies stocked. Being able to see and hear our friends and family on video calls or through social media lends us support, reassurance, and comfort. And that’s not to mention technology’s various cures for cabin fever.

Of course, online technology is uniquely able to fill the gaps only because we made ourselves so dependent on it. But that’s also why, when a new normal emerges, more regulation of the digital economy is on the way just as it was prior to the coronavirus crisis. Still, it’s difficult to imagine that regulators and policymakers focused on big tech will start back up in the high gear they were running on just a couple of months ago. Although tech companies have always argued that their innovations are transforming the world economy and making society better off, that message may carry more force as the world’s dependence on the digital economy starts to look a lot more like a life-line.

During the crisis, nimble tech companies will steer their resources and products to highlight their potential for helping society and the economy cope with a pandemic. Some of this will be little more than good marketing. But some of it will have a real impact: helping a restaurant to stay in business by switching to online deliveries, allowing a bed-ridden person to order necessary supplies from home, enabling a video call to a loved one under quarantine at a hospital. Those benefits may not fit snugly into the legal and regulatory framework governing the tech sector. But laws don’t write and enforce themselves, so the question for the new normal is: how much improved will be the sentiment of decision makers and the public towards big tech, and for how long can that goodwill last?

Because on the flip side, the stakes for effective regulation will be even higher as our societies, governments, and economies become more reliant on digital technologies. Whatever remains of the paper world in business and government is currently receiving an ultra-shock treatment in online connectivity. Working from home has become more practical, a trend that may survive the lifting of restrictions. Laws, corporate governance, and regulatory processes are being urgently revised to accommodate filings, proceedings, disclosures, and meetings on a remote basis–much of it likely to stay in effect after the crisis. Changing supply and demand conditions are causing some online business models to thrive and others to struggle, economic shifts that may become permanent in some markets.

Yet the fact that the coronavirus crisis has accelerated the digitization of the world has not changed the fundamental legal issues surrounding competition, transparency, and fairness that are the driving forces behind regulation of the digital economy. Even now, long-run antitrust investigations of big tech continue, as do routine regulatory screenings of tech mergers and enforcement of recently-enacted data protection rules.

But while the law holds constant during the crisis, changes in the factual circumstances that cause our society to become more intertwined with technology and more dependent on its providers may strengthen the case for regulation. Major tech players whose market shares increase or users and vendors become more dependent on access to their services may achieve “market power” and “dominant” market positions that warrant heightened scrutiny under antitrust laws. As some markets experience disruptions and volatility, smaller tech players may become more vulnerable to larger competitors engaging in “exclusionary”, “discriminatory”, or “unfair” trading practices prohibited by the competition and consumer protection laws. Increased demand for data-intensive online services such as cloud computing and telecommuting may leave users more vulnerable to the consequences of breaches of data privacy and protection rules.

In the new normal, the impact of coronavirus and tech regulation will not be separable. Although the legal landscape for the digital economy will continue to head in the direction of heightened scrutiny, the path may be a lot less clear and a lot more zig-zagged than it was just a couple of months ago. Opportunities and risks will lie scattered along the way for those doing the regulating as well as those being regulated.

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