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Abstract

Technological changes in business, both in how business is conducted and the services it may provide, have demonstrated failures by regulatory bodies to accurately address and properly understand these issues. From the Wayfair decision on sales tax, to California’s Assembly Bill 5 distorting the definition of “employee,” to President Reagan legislating computer fraud based on a White House viewing of WarGames, executives, legislatures, and courts have relied on a forced approach to understanding and regulating technology: doing is better than understanding. The approach has relied on two false assumptions: (i) technological advancements are only different methods of conventional business; ride sharing is simply a digital way to hail a cab at the street corner; the gig economy is just parttime or a stopgap measure for those who cannot find full-time employment; ecommerce is the digital door-to-door salesman, and (ii) technological innovation necessitates innovative solutions when existing law already covers the issues. A technological educational awakening must occur amongst those seeking to regulate it. While others have written about the odd outcomes of regulation in regards to particular laws or court cases, this paper aims to illustrate how the failures to understand emerging technology are systemic within governmental entities. The paper analyzes failures to understand technology through three different examples: from Ronald Reagan’s Computer Fraud and Abuse Act of 1986, South Dakota vs. Wayfair, and California’s Assembly Bill 5. In each of these instances, government actors have failed to understand how and what the technology is doing. Instead of seeing a developing or emerging technology as an innovation and taking steps to foster it, it is erroneously and contradictorily viewed and regulated as a digital version of an already existing business dynamic, yet is addressed by requiring new laws. That is, by viewing these technologies as merely modern versions of preexisting business practices or products, they have been regulated as if they are as well by creating modern new versions of existing laws. This paper discusses how the regulated technologies should be viewed in the context of their innovation rather than a normative pigeonhole. Bringing these examples together offers a more complete perspective of the issue facing emerging technologies. They cannot be viewed and treated as a transformed predecessor rather than a creator of a new business model where existing law and tradition allowed the innovation to come to fruition and still have the necessary effect given proper understanding of the underlying technology.

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