Regulation

Author: Roxana Radu

See also: Co-regulation, Self-regulation;

Regulation refers to a set of authoritative rules designed to control or govern conduct in a particular sector or domain by restricting or enabling specific activities. There are numerous definitions for this concept, influenced more broadly by ideology and disciplinary traditions. Generally understood as a form of “command and control” imposed by the state “through the use of legal rules backed by (often criminal) sanctions” (Black, 2002¹), regulation needs to be distinguished from the broader notion of “governance”. The promulgation of a binding set of rules designed to influence business or social behavior (Baldwin et al., 2012)² is what sets regulation apart from other forms of governmental intervention. Back in the 19th century, John Stuart Mill (1848) referred to it as a governmental intervention “in the affairs of society”³ and that understanding has also prevailed in relation to the digital world, which brought new regulatory concerns.

The objective of regulation is to foster equilibrium and ensure the proper functioning of complex systems which may or may not originate within the state. In the digital ecosystem, the most utilized and effective forms of regulation are those of a private nature, such as contractual agreements (terms of service, privacy policies, etc.) and the lex informatica (Reidenberg, 1998)⁴ composed of software and hardware that define the architecture of the Internet (Lessig, 2006)⁵. The dominance of such private forms of regulation does not mean that the classic tools of public regulation – such as international conventions, laws, decrees, administrative regulations, and decisions made by national courts and agencies – lose their relevance. It only implies that this normative pluralism must be considered by regulators when choosing the most pertinent regulatory techniques and elaborating the most effective tools, ideally via open and participatory governance processes (Belli, 2016⁶; 2019⁷).  

The opposite move, known as ‘deregulation’, refers to the reduction or elimination of government power in a particular sector or across the economy in order to foster competition within the industry and reduce the inefficiencies of public regulation. Without signifying a complete withdrawal of the state from defining conditions for rulemaking, deregulatory processes for the Internet economy in the early 1990s represented a balancing act between property rights regimes, existing governance structures and rules of exchange (Irion, Radu, 2013)⁸. They allowed the growth of Internet services, intermediaries, and platforms in the absence of strong public regulation frameworks.

An important tension in digital regulation has been the one between hard and soft law instruments, between what is legally codified and what is agreed informally in an attempt to influence behavior via institutional mandates and modelling (Radu, 2019)⁹. While the former exerts direct influence over the conduct of the addressee, soft forms of regulation are indirect means to shape intervention in the private domain, primarily by shaping a normative order (Kettemann, 2020)¹⁰ at the domestic, regional, and international level.

Regulatory debates have long focused on the relationship between the regulator and the regulated entity. Over time, digital regulation has grown in complexity due to the complex technical expertise required, the high levels of information asymmetry and the risk of ‘regulatory capture’ (the regulated industry exerting influence over the design of public rules in its interest). At an operational level, regulation happens through sets of practices, and it is thus “collectively mediated and legitimized by the key communities whose buy-in is necessary” (Radu, 2019, p. 25)¹¹.

Over time, the Internet has seen a regulatory shift, away from the application of general telecommunications rules towards the creation of Internet-specific provisions starting in the 1990s and culminating in harmonized legislation in the European Union. The focus of regulation has also changed in recent years: plans for state-mandated regulation addressing digital platforms are back in full swing, calling into question the efficacy of self- and co-regulation models (Marsden, 2011)¹².

References

1. Black, J. (2002). Critical reflections on regulation. Australian Journal of Legal Philosophy, 27. Available at: http://www.austlii.edu.au/au/journals/AUJlLegPhil/2002/1.pdf.
2. Baldwin, R., Cave, M., Lodge, M. (2012). Understanding Regulation. Theory, Strategy and Practice. Oxford, UK: Oxford University Press.
3. Mill, J. S. (1848). Principles of Political Economy. London: John W. Parker, West Strand.
4. Reidenberg, J. R. (1998). Lex Informatica: The Formulation of Information Policy Rules Through Technology. Texas Law Review. Vol. 76. N° 3.
5. Lessig, L. (2006). Code and Other Laws of Cyberspace. Version 2.0. New York: Basic Books.
6. Belli, Luca. (2016). De la gouvernance à la regulation de l’Internet. Paris: Berger-Levrault
7. Belli, Luca. (2019). Internet Governance and Regulation: A Critical Presentation. In: Belli, Luca and Cavalli Olga. Internet Governance and Regulations in Latin America. FGV Direito Rio. Available at: https://www.gobernanzainternet.org/book/book_en.pdf.
8. Irion, K., Radu, R. (2013). Delegation to independent regulatory authorities in the media sector: A paradigm shift through the lens of regulatory theory. In: Schulz, W., Valcke, P., Irion, K. The Independence of the Media and Its Regulatory Agencies: Shedding New Light on Formal and Actual Independence Against the National Context. Polity Press. 15-54.
9. Radu, R. (2019). Negotiating Internet Governance. Oxford: Oxford University Press.
10. Kettemann, M. (2020). The Normative Order of the Internet: A Theory of Rule and Regulation Online. Oxford: Oxford University Press.
11. Radu, R. (2019). Negotiating Internet Governance. Oxford: Oxford University Press.
12. Marsden, C. (2011). Internet Co-Regulation. European Law, Regulatory Governance and Legitimacy in Cyberspace. Cambridge: Cambridge University Press.