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, font size, bolding – everything about them is regulated.

Policymakers are itching regulate the internet. Rep. Zoe Lofgren and Rep Eshoo proposed to create 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. A regulatory agency of experts in a field, dedicated to regulating that field would be more efficient and effective than an agency with a broad regulatory mandate. But is it? We need to remember what happens when agencies have too specific jurisdiction: regulatory capture.

Regulatory capture is the situation where regulatory industries 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” by George Stigler. He wrote that any regulated industry has strong incentives to form close connections with its regulators to seek its 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 specific jurisdiction over the internet, that makes it ripe for capture. Companies find it much easier to influence narrowly focused institution rather than institutions with broad law enforcement mandates. If a company is interacting with many companies from multiple industries, it is much harder for lobbyists to steal and co-opt the attention of regulators. “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 initiated with the intent to help consumers, we let our watchdogs become pets industries they’re supposed to regulate, that is 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 is 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. As consumers, parents, citizens, there are legitimate concerns with regard to how it impacts our lives. That is why in regulating the industry, those rules should be made in our interest and not in the corporates’. A new digital regulator would only provide opportunity for companies to take advantage of the power that government has.

Photo Credit: pxhere.com