More digital technologies question traditional boundaries of regulators

With advances in knowledge and innovation outstripping regulation, especially in the digital arena, a star-studded lineup of speakers shared their views during a panel discussion on Regulation in the Digital Space and Using Data Effectively.

The discussion was part of the Better Regulation – Defining a Progressive Approach digital event, jointly organised by the European Justice Forum and FIPRA International. The panel was moderated by Robert Madelin, Chairman, FIPRA International and Ekkart Kaske, Executive Director, European Justice Forum.

Consensus emerged that getting regulation right on digital technologies is critical as it’s a fast-moving industry. 

Nick Malyshev, Head, Regulatory Policy Division, OECD, said: “Some tech firms have a strong tendency to evolve into natural monopolies, especially those operating as platforms. They have high fixed costs, low marginal costs, scale quickly, and there seems to be a ‘winner-takes-all’ attitude. So, clearly one needs to think carefully about how to regulate in this space because such firms tend to dominate markets.”

Many digital technologies also disrupt legacy industries, complicating matters for regulators. 

“We need to think both about new regulation to enable these technologies, but also about legacy regulation. Many of these technologies are questioning traditional boundaries of administrations,” Malyshev added.

Prabhat Agarwal, Head of Unit, Online Platforms & eCommerce, EU Commission addressed the need for a good, future-proof framework for regulating technology companies that is multi-dimensional and moves away from a static, enforcement-focused, deterrence-based approach. 

Discussions touched upon the need for a data-driven, interactive and transparent stakeholder processes, resulting in flexibility and dynamism. Speakers also pointed out to the fact that there’s no shortage of ethical guidelines on AI, with some companies appointing chief ethics officers enforcing internal accountability. 

Bruno Roche, Founder & Director, Economics of Mutuality, highlighted that discussions should grow beyond giving a monetary value to everything.

“Nowadays, on average, only 15% of the value created by businesses is captured by traditional accounting systems, which means that 85% of the value that is either created or destroyed happens outside the financial capital and traditional accounting system,” Roche said.

“This not only signals a duty to reorganize accounting systems to better report responsible corporate behavior, it also represents a real opportunity for businesses to understand how they can create much more value in society,” he added.

Conversations are needed to help businesses identify how they can mitigate risk, and improve reputation on specific issues. Roche said he foresaw a role for the European Union to intervene in this space to bring some order, and remove some confusion in the way companies report their performance.

“I think the EU has a real opportunity to position Europe’s regulatory model and be a leader in this space. That’s my call to action from the private sector,” Roche said.

Dr. Matthew Vickers, Chief Executive & Chief Ombudsman, Ombudsman Services, addressed the challenges faced by regulators, especially when regulated entities themselves might have incomplete control over a system. 

“Too often, the micro is viewed with suspicion by regulators at the macro level. Through better data, clearer channels and access to redress, we get a better understanding of the micro that helps at the macro level,” said Vickers.

“I find that many of the problems we face today are less about poor intent by firms and more to do with the challenges of execution,” he stated.

To know more about key messages and takeaways emanating from the event, please contact FIPRA’s Digital team.

(Written by Rahul Venkit)