Governing the Digital Economy

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Someone once quipped that the only crime not covered by the Ten Commandments is computer hacking.  Whether that’s true or not I don’t know, but it is certainly against the law thanks to the Computer Misuse Act of 1990.  This however forms part of what is a surprisingly small amount of primary legislation relating to matters digital, particularly when one considers the impact that technology has had on almost every aspect of our lives in the last twenty or so years. 

So why is this? Have our politicians simply been lazy or slow to react?  Perhaps unsurprisingly it’s a little more complex than that, although previous attempts to legislate for the impact of the digital economy have certainly proved troublesome.  A substantial number of the provisions in the 2010 Digital Economy Act were never implemented whilst others were repealed.  A contemporary namesake for this bill is currently working its way through Parliament.  But it is also the case that, thanks to the role that judge-made law plays in our system of government, the British legal system has so-far proven to be remarkably adaptable to the digital era.  Whilst there is course both European and UK-specific legislation which explicitly recognises the existence of computers, a significant number of the policy and legal challenges associated with the online world have been addressed through legal findings that existing statute applies online.  Issues such as freedom of speech, pornography, hate, terrorism and copyright (amongst others) have often been dealt with in the online world using legislation framed before the Internet was mainstream.

So it’s interesting to ponder, as the pace of digital disruption increases, if we have the right public policy response to the digital economy.  Last October a landmark Employment Tribunal brought by the GMB union concluded that drivers engaged via taxi-app service Uber are “workers” and hence entitled to the minimum wage and holiday pay.  Whilst the firm is appealing the judgement, the fact that even the organisational “innovation” associated with the so-called sharing economy has proven itself to be subject to our Common Law tradition raises the question of whether this might not prove to be a storm in a teacup.

So what, if anything, is different about this round of technology-driven change? Though the impact of the networked computer on modern life and business has been profound and seemingly rapid, in practice we had a decade or two to get used to each of the previous generations of Information Technology, from the mainframe through minicomputers, to the PC and the first phase of the World-Wide Web.  As the new business models they enabled took hold, most industries had ample time to adapt.  To reskill their workforce or retire and replace through attrition.  But more recent innovations have arrived as relentless, overlapping waves; cloud computing, smart phones, social networks, big data, the Internet of Things, autonomous vehicles, artificial intelligence and the next generation of robotics. 

As usual, those in blue collar jobs have been the first to experience the consequences of these latest changes. But the wide-spread availability of digital technology through asset-free, “as a service” models underpinned by open standards means that they are accessible to any business, whether existing or start-up, with the skills to embrace and integrate them into their operations. And they now threaten the livelihoods of those whose white collar jobs can be successfully rendered into code.  Because these technologies allow new companies to be created and to grow without many of the traditional barriers, such as access to capital or the physical challenges traditionally associated with operating across geographic boundaries, the leaders in these fields become very big very quickly and often dominate the industries in which they operate.  The emergence of this phenomenon was noticed more than five years ago by Silicon Valley legend Marc Andreessen, an influential Venture Capitalist who founded Netscape, the company which first commercialised the Web Browser.  In a seminal 2011 Wall Street Journal article he claimed that “software is eating the world” and observed that in most sectors of the global economy, the fastest growing businesses were in effect software companies; Amazon in retail, Apple in music distribution, Facebook and Google in advertising, LinkedIn in recruitment, Netflix in video rental and so on. 

Whilst consumers of Internet services are undoubtedly benefitting from them, there are many citizens who find themselves negatively impacted as industries they work in or rely on are disrupted, as traditional labour models are replaced with more self-employment, or who are simply being left behind because they lack the skills or abilities to get online.  So notwithstanding the ability of the UK’s legal corpus to heal itself, it’s the pace and scale of the impact of these disruptive influences which raises the most significant questions for policymakers.  We need to decide as a nation how to respond to the societal changes that the digital economy will drive and to create a new generation of public policy which supports this innovation whilst appropriately sharing the benefits and protecting those impacted.  It feels like an inadequate response to wait until legal challenges are brought against established companies before we form a point of view on some of these matters.

Instead, I suggest our parliamentarians should give this more explicit consideration.  To actively consider when (and indeed if) to regulate, or whether to slacken regulation of traditional industries that are being disrupted by digital companies but are currently unable to respond.  To decide how they might embrace the productivity benefits of automation and the next generation of robotics whilst preserving employment opportunities for those whose jobs are threatened by them.  And how to adapt government functions such as taxation, welfare, education and our employment laws to better support those for whom the world of work will be immeasurably different to their parents. 

Last month Hewlett Packard Enterprise and the New Statesman convened a discussion on this topic with parliamentarians from each of the three main political parties and other experts.  This article forms an introduction to a series on the topic of columns from three of the MPs who took part.  It will be fascinating to compare how each of them responds to the challenges of governing the digital economy.

James Johns is director of Government Affairs for Hewlett Packard Enterprise Services in the Americas and EMEA.

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