June 30, 2017

Commemorating 20 Years of Grade-A Internet Policy



It’s been quite the week of milestone anniversaries in technology policy.

Yesterday, for example, marked the 10th anniversary of the day the first iPhone went on sale, ushering in a new era of mobile Internet access, and the many industries that have emerged to support it. Yesterday was also the day, in 1975, that Steve Wozniak first tested his Apple I computer, connecting his circuit board to a monitor and keyboard and kicking off the age of personal computing. Four days ago, on July 26, was the 20th anniversary of the Supreme Court’s ruling in Reno v. ACLU, in which the court struck down the provision of the Communications Decency Act that would have permitted the regulation of online content. And tomorrow marks one of the most momentous policy decisions ever promulgated by an American president. It was 20 years ago, on July 1, 1997, that the Clinton Administration released its Framework for Global Electronic Commerce.

Mercatus senior fellow Adam Thierer aptly summed up the effects of Clinton’s Framework on the Internet ecosystem:

While it is easy to take all this for granted today, it is worth remembering that, in the long arc of human history, no technology or medium has more rapidly expanded the range of human liberties — both speech and commercial liberties — than the Internet and digital technologies. But things could have turned out much differently if not for the crucially important policy choices the United States made for the Internet two decades ago.

Indeed, things could have turned out much differently. As it stands, however, these policy decisions helped clear a path for the United States to emerge as the world leader in technology. American technology firms have flourished under this Framework, the top 15 of which account for over $2.5 trillion in market value. Europe, by contrast, has long struggled with an innovation “deficit.” Why is this? Thierer and others (myself included) are of the opinion that the Clinton Administration’s policy approaches set reasonable, predictable, and light-touch rules of the road, striking an important balance between the needs of innovators and the public interest.

Our friends across the Atlantic, however, chose a far more prescriptive and burdensome regulatory approach, making it difficult for new market entrants to break out in cyberspace. This regime continues in force today, much to the detriment of would-be entrepreneurs in Europe. The recent European Commission decision to fine Google $2.7 billion is actually a good example of this difference in approach. As Sam Bowman of the Adam Smith Institute so astutely pointed out in a recent article:

Some have said that the European Commission only ever seems to punish American tech firms, not European ones. The reason is simple. Because of rulings like this, there are no European tech giants to regulate in the first place.

Between fines like the one levied on Google, onerous rules like the General Data Protection Regulation, and prophylactic privacy statutes that vary country-by-country, it’s no wonder Europe’s innovation economy lags behind the United States. Imagine what might have been had the EU considered adopting a regulatory approach that more closely mirrored the Clinton Administration’s Framework.

While the future of Europe’s digital economy is still up in the air, there are positive signs that the United States will continue with its emphasis on the the principles outlined in the Framework. This past January, for example, the National Telecommunications and Information Administration (NTIA) released a green paper on the future of the Internet of Things. In particular, it pays homage to the Clinton Administration’s policy approach:

Dating back at least to the 1997 Framework for Global Electronic Commerce, the U.S. Government has been operating under the principle that the private sector should lead in digital technology advancement. Even where collective action is necessary, the U.S. Government has encouraged multistakeholder approaches and private sector coordination and leadership where possible. When governmental involvement is needed, it should support and enforce a predictable, minimalist, consistent, and simple legal environment for commerce.

In response, the Niskanen Center submitted comments agreeing with NTIA’s reaffirmation of the Framework’s essence. In particular, we argued that the Framework, far from being an ethereal statement of abstract assumptions, has had a practical impact on how government, industry, and other stakeholders have contributed to a process by which new technologies can be effectively governed.

If given the necessary breathing room, private industry stakeholders are well-positioned to apply unique, specialized knowledge to the creation of standards and best practices that can address public interest concerns. Third parties can serve as watchdogs and certifiers in ensuring compliance with industry-approved guidelines. Additionally, nonprofits and civil society organizations can play a vital role in contributing to the development of guidance documents that inform best practices.

This approach helped the Internet economy blossom into a juggernaut of economic growth. That in turn paved the way for an environment in which creativity could flourish unimpeded by the constraints of the analog world. Interconnectivity and information abundance, for the first time in history, became the norm in much of the world. Imagine what could happen if those same principles could be applied not just to the Internet, but to all emerging technologies, from autonomous vehicles and commercial drones to the Internet of Things and supersonic flight.

The Framework for Global Electronic Commerce was the Clinton Administration’s finest hour of policy. In fact, it was probably the finest policy document of any American presidency in history. That’s a bold statement, but one wholly merited by the changes we’ve seen over the past two decades. The next 20 years will undoubtedly see new changes that we cannot yet conceive. Just as the Framework helped lay the groundwork for the modern digital revolution, its principles can help guide our thinking about policy responses to emerging technologies in the years and decades to come.