Trump’s push to dump regulations divides Silicon Valley

Published on

Alphabet CEO Larry Page once proposed that we “set aside a small part of the world” free from laws because “there are many, many exciting and important things you just can’t do because they’re illegal or they’re not allowed by regulation.”

At least in theory, the country got one step closer to Page’s experimental paradise this week, when President Trump signed an executive order requiring two regulations to be deleted for every new one issued by a federal agency.

Trump hailed the order as a way to unburden businesses and grow jobs. But while some traditional industries agree that government regulations make doing business onerous, some in the entrepreneurial tech world worry that fewer regulations would be bad for companies.

Emerging industries, whether it’s autonomous cars or home-rental services like Airbnb, actually welcome government regulations that they see as leveling the playing field and helping them grow. Limiting those rules, some experts say, would actually do harm.

Trump’s Monday order, legal experts said, was poorly drafted and confusing. Its most likely effect is to slow down the regulatory process, making it more difficult for rule makers to grapple with technological advances that fundamentally change how our society works and leave existing regulations out of date.

“Regulations take a long time to put in place, and they take just as long to get rid of,” said David Chavern, former president of the U.S. Chamber Center for Advanced Technology and Innovation. “So the idea that somehow there’s this equation, where for every one you plop on you just knock two off is pretty simplistic.”

The burgeoning field of self-driving cars is a key example. There are currently no federal laws that cover autonomous vehicles, which has led to a confusing patchwork of regulations that vary from state to state.

As companies race to develop vehicles that don’t require human drivers, local governments are trying to figure out how to keep roads safe and woo this growing sector. John Simpson, a director at Consumer Watchdog, said self-driving cars will eventually need a federal safety standard.

But what should regulators junk to make room for self-driving rules? “I don’t know of any unreasonable or particularly burdensome National Highway Traffic Safety Administration regulations,” said Simpson. “Federal motor vehicle standards exist for good reason.”

When Silicon Valley startups are small, they often protest regulations that stand in the way of new ideas. But as they gain popularity and attract millions of dollars in venture capital, they seek to influence rule making instead of opposing it.

Uber and Airbnb are two key examples. The San Francisco companies once argued that their apps, which allowed drivers’ cars and hosts’ spare beds to find paying customers, fell outside of existing rules covering taxis and hotels. Those existing industries saw things differently. The resulting legal and political disputes more often than not led to new laws and regulations, like California’s creation of a category of “transportation network companies” to cover Uber and Lyft, and San Francisco’s rules governing short-term rentals.

“We want regulatory certainty, so there are rules that people are following that work,” said Chris Lehane, Airbnb’s head of global policy and communications, in a November editorial board meeting with The Chronicle.

Ride services and home rentals are likely to remain under state or local regulation. But for those seeking income as part-time drivers or casual hoteliers, questions remain about the nature of their relationship with the companies that often dictate how they run their businesses.

Some have proposed a category that lies between regular employment and independent contractor status for such gig workers. The creation of a “dependent contractor” status would require a wide number of tax and employment rules, allowing such companies to offer training and benefits to casual workers without turning them into employees.

Evolving areas of hardware, too, are challenging for regulators. A PricewaterhouseCoopers study last year found that the United States, which has been slow to issue nationwide regulations on drone use, isn’t even in the top 10 countries for drone testing. Poland was the best, the study found.

Wearable devices that track steps and other health data may also require clearer regulations as they grow in sophistication. The Food and Drug Administration said last year that it did not intend to regulate “low risk” devices. But as wearables gain the ability to gather more detailed, medically relevant information, that may require a fresh look.

Also racing past regulators’ abilities to regulate them are Google and Facebook, which have data on billions of consumers that they use to target ads. The European Union has generally taken a stronger stance on online privacy than U.S. regulators. But in order for these companies to operate globally, they may need new rules in the U.S. to line up with regulations elsewhere.

While Trump’s executive order has come under intense scrutiny for being extremely arbitrary and unrealistic, there is some wisdom in it, said Ian Adams, a senior fellow with the R Street Institute, a conservative think tank.

“It gives us a mechanism that forces us to review what’s on the books,” he said.

Being forced to get rid of some regulations before creating new ones could be a good thing for an agency like the Federal Communications Commission, which has many outdated rules bogging it down, said Kathleen Abernathy, a former FCC commissioner who is now a senior adviser at Frontier Communications.

Outdated rules that impose costs on companies could be eliminated with “no impact on competition or quality of products and services offered to consumers,”she said Thursday at an industry panel in Washington.

For some in Silicon Valley, the arbitrariness of the two-for-one swap ordered by Trump rubs analytical minds the wrong way.

“Like most things in life, there are few simple solutions,” said Carl Guardino, chief executive officer of the Silicon Valley Leadership Group, a trade association. “And in Silicon Valley, we deal in specifics — in data, not dogma. Which regulations do you think have run their course? Or have been inefficiently handled, or aren’t worth it?”

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases