Regulation is usually presented as a burden to business. The default position of politicians keen to win the corporate vote is to promise to cut ‘red tape’ and free up innovation.
However, this is just a caricature. Companies certainly dislike bad regulation. But sensible, targeted regulation can deliver commercial benefits. Businesses themselves are sometimes among the loudest voices calling for regulation in areas where it does not already exist. This is especially true in relatively young industries, where the superficial attraction of an innovative ‘Wild West’, freed from government control, is often illusory.
A case in point is that of autonomous and connected vehicles (AVs), for which there is little or no well-designed regulation at present, says John Cooper, partner, and Kieran Laird, principal associate, both at Gowling WLG.
The need for regulation
AVs have the potential to improve our lives in many ways. However, their biggest promise is safety. The majority of road accidents are caused when a driver makes a bad choice. AVs should make us safer by removing the driver from the decision-making process, and relying instead on a set of pre-programmed algorithms that determine how the AV reacts in certain situations.
Regulation of these algorithms is important for two reasons.
Firstly, any safety benefits of AVs are directly proportional to their take-up. Take-up requires that the public trusts the technology – trust is essential to us relinquishing the control that we currently have as drivers, and becoming comfortable with entrusting our safety to algorithms.
Regulation has a large part to play in creating that trust by standing behind the algorithms that are used and assuring that they are safe, ethical and reliable.
Secondly, in order to ensure that the benefits of AVs are realised, some degree of uniformity will be required in how the algorithms of different manufacturers deal with real world situations. Although co-operation within the industry may go some way to achieving this, at some point regulators are going to need to step in and make choices. Until that time, companies developing this technology are working at risk.
It is for these reasons that many want to see regulatory certainty sooner rather than later.
What should regulation look like?
So how does regulation work in a relatively young industry that is still in a state of developmental flux?
The fundamental requirement is a clear regulatory framework which facilitates the introduction of new products and provides the legal certainty needed to ensure that companies are not working at risk.
As a rule, the application of old law to new technology does not work. It is a bad fit, and stifles product development and innovation.
So new law is required that accommodates products in advance of them being produced. Without this, those products will be slow to come to market, or be more expensive as companies need to price in the costs of regulatory uncertainty. In either case, product take-up will be frustrated by the regulatory system.
Current developments on either side of the Atlantic exhibit very different reactions to this challenge. The UK government is taking an incrementalist approach, which explicitly aims to follow technological development rather than get ahead of it. At this stage, the UK’s focus is on changes to insurance conditions for AVs and basic amendments to traffic laws that permit individual technologies which are already in development, such as remote control parking.
In contrast, the US Department of Transportation has published an ‘Automated Vehicles Policy’ which recognises the need for a root and branch reappraisal of regulation in order to put in place a structure that enables the new technology to flourish.
The US approach shows much greater vision, and we prefer it. It correctly frames the issue in terms of legality, safety and commerciality, and the need for regulation to strike a balance between these three aims.
Given their benefits, governments should seek to encourage the take-up of as many AVs as possible, as quickly as possible. This means that regulation, for once, needs to get ahead of the curve. For this, law-makers need to show clarity of purpose, co-ordination (both at state level and internationally), and a clear vision for how regulation drives growth. Huge rewards are available to the countries that grasp this more quickly than their international competitors.
The authors of this blog are John Cooper, partner, and Kieran Laird, principal associate, both at Gowling WLG
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