A New Digital Regulator is Not the Answer we Need

By: Noah Vehafric

The internet has changed our lives in more ways than we can understand, and it’s going to continue changing our lives for the foreseeable future. With its large influence, many have the desire to use the force of law to regulate it. But should we?

The United States has dozens of federal agencies that regulate all sorts of industries from food and air travel, to nuclear energy and farming. We even have a body that regulates postage stamps! And you know those nutrition fact labels we see on our food? Yup they’re regulated too. The font, the size, what gets bolded – everything about them is regulated.

Policymakers are itching regulate the internet. Representatives Zoe Lofgren (CA-19) and Anna Eshoo (CA-18) proposed the creation of a new 1600-employee digital privacy agency, while Sen. Josh Hawley introduced a bill to limit the amount of content shown to consumers to help fight internet addiction.

Creating a new federal agency that has specific jurisdiction over the internet seems reasonable right? A regulatory agency made of in-the-field experts, dedicated to regulating that field would be more efficient and effective than an agency with a broad regulatory mandate right – but is it? We need to remember what happens when agencies have too specific jurisdiction: regulatory capture.

Regulatory capture is the situation where regulatory agencies become dominated by the industries they were meant to regulate; thus working in the interest of the industry and not the public per se. Regulatory capture is often seen in state licensing boards where the majority of the board members are practicing members of their industry.

This idea was popularized in “The Theory of Economic Regulation” an essay by George Stigler. He wrote that any regulated industry has strong incentives to form close connections with its regulators to seek an advantage. The result is that industries disproportionately influence the agency’s agenda, shape its rulemaking and even supply it with personnel.

If we have an agency that has such a specific jurisdiction over the internet, that would make it ripe for capture. Companies find it much easier to influence narrowly focused institutions than one with broad law mandates. If a company is competing with other companies across multiple industries, it is much harder for a single special interest to steal and co-opt the attention of regulators. A perfect example is the speeding ticket analogy:

Think about how much easier it is to talk your way out of a speeding ticket from the local police officer, who knows your family, than it is to deal with an effectively anonymous city cop who pulls over dozens of drivers a day.”

Regulation may be initiated with the intent to help consumers, but if we let our watchdogs become pets to the industries they’re supposed to regulate, that’s only going to hurt consumers more.

Our solution to regulating the internet can’t be found by giving old tools to rookie regulators, but rather giving new tools to experienced professionals.

The Federal Trade Commission has the experienced professionals we need. It has a broad mandate (the entire economy), decades of experience, and has been resistant to regulatory capture. While the FCC so far has most of the jurisdiction over the internet, they have been working with the FTC to ensure that their expertise in consumer protection can take place.

The internet is often equated to an ocean. The sea of information that we surf on provides for limitless opportunities right in our own home. From the position of consumers, parents, citizens, there are legitimate concerns with regard to how it impacts our lives. That is why in regulating the industry, the rules should be made in our interest and not in the corporations. A new digital regulator would only provide opportunity for companies to take advantage of the power that government has.

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