The Law of Unintended Consequences – embedded business models in IT regulation by Chris Reed

Introduction: During the last quarter of a century, information technology (IT) has permeated most aspects of our daily lives. At the beginning of that period possession of a computer was still a rarity; today almost all businesses and the majority of UK homes make extensive use of IT. The processing and communication of digital information is now so deeply entrenched in modern life that many of the things on which we rely, such as telecommunications and finance, would cease to operate without it.As a consequence of this quiet revolution, legislators and regulators have made IT-specific provision in their laws and regulations. This is both sensible and understandable. IT is now as fundamental to both commercial and non-commercial activity as, say, motor transport, and one need only imagine the chaos which would ensue if the uses of motoring technology were completely unregulated.However, the experience of those who work with IT regulation on a daily basis is that it is often unsatisfactory in a number of respects. First, in spite of the best efforts of regulators, IT regulation has consistently failed to cope with the rapid changes in the technology and its uses which we have seen over that period. Second, sometimes as a consequence of technology change but on occasion from the outset, IT regulation has produced effects which were very different from those intended by the regulator, leading to a number of undesirable and unintended consequences.This article attempts to identify the structural defects in IT regulation which have produced these unintended consequences, and discusses how those defects might be remedied in future regulation. It concentrates on IT regulation at the European Union level, both because that regulation has wide geographical application and because it often serves as a model for other countries’ regulation. It should be noted that the structural defects identified are not unique to EU regulation, and some examples from other jurisdictions are given to demonstrate this.

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