Compliance » Tech Regulation Will Stifle Start-Ups

Tech Regulation Will Stifle Start-Ups

April 3, 2018

A push is on to expand regulation of tech companies, but Simon Johnson, a former chief economist of the IMF, and a professor at MIT Sloan, is skeptical. He acknowledges recent high-profile tech scares – a fatality involving an Uber self-driving car, Facebook’s mishandling of users’ personal data – but says that responding with tighter federal regulation is premature even for these specific activities, let alone for the broader tech sector. In respect to the Uber fatality, he notes that road safety is generally a state responsibility, but acknowledges a role for the NTSB. As for Facebook, he simply hopes the public will find out more about the details of its decision-making on data privacy when Mark Zuckerberg testifies before Congress. He compares the financial industry, which merits tight regulation because bank failures can bring down the whole economy, and computer hardware, software, and digital services, where competition is likely to produce better results than regulation. He compares the EU’s regulatory agenda unfavorably with US, where entrepreneurship is driving the economy, and calls the impending repeal of the “net neutrality” rule by the Federal Communications Commission a big mistake, labeling it a major step favoring large incumbents over digital start-ups.

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