Regulating and Legislating Tech and Tech Companies

Comments (Archived):

1. At the root of most challenges for this issues, is that most people enforcing any sort of regulation do not understand technology to begin with. Until this changes, it is always going to be an up-hill battle. A good example of this is what lead to the infamous bitlicense + many other instances.

   1. I recently heard a podcast that states that yes, you are correct, but no, that is not the largest issue as staffers are the prime collectors of information and the literacy of tech amongst them is extremely high.The issue is on the company’s side I believe, not thinking through their narrative with the government as one of the communities it needs to engage with.

2. .There is a lot of “tech” which is not tech from a regulatory perspective. While Uber is a disruptive approach and uses a mobile addressable app, it is not really a tech business. It is a new approach to ride hailing.What Uber did, as an example, was boldly and arrogantly pretend it was not subject to existing public transportation rules. In ATX, they operated for 6 months without any form of regulation totally ignoring an existing body of law. They were so arrogant they wanted to do their own driver licensing and not to subject their drivers to fingerrint based background checks. This had nothing to do with tech. This, ultimately, bit them in the ass.There are a lot of such disruptors who fall into this category.I think crypto is an entirely new game and it took a long time to answer what should have been three important questions – how are we to be received and treated as a security and how are we to be taxed? The big unanswered one is how is it going to be regulated in its admin?In the end, the failure to approach that up front resulted in a decent answer on the security issue (SEC: “Well, it depends, but it could be a security.”) and a very cumbersome answer from the tax angle (every use of a crypto currency requires an establishment of a LIFO/FIFO or other tax basis calculation).Crypto is considered a currency for the purposes of international movement though this doesn’t seem to actually register on anybody’s warning screen. The Bank Secrecy Act/IRC have dealt with cash transfer reporting for decades.The Securities Acts of 1933/34 are going to be the rule. The Bank Secrecy Act is not going away. There are ultimately going to be bank style “capital” requirements for anybody who aggregates crypto for others.One of the big problems is that the people who are driving the ship both don’t know much about regulation, but more important don’t want to be regulated.The shit is really going to hit the fan when some of these tokens are exposed for the crap they are, folks blow through the money, and somebody inside the deal steals some of it.Regulations are political. The best thing that ever happened for innovation regulation is the Trump admin.JLMwww.themusingsofthebigredca…

   1. Great comment. (except for the last sentence…not agreeing or disagreeing with that, just my utter ignorance prevents me from even being able to understand it).

      1. Spend some time going through the studies of Professor George Stigler, or the research being done at the Stigler Center at Chicago Booth. More regulation begats more crony capitalism and less competition

         1. I agree there is way too much regulation. But we all need to agree that regulation is needed when it benefits the common good. That should be the only regulations. So I do believe there should be regulations on things like Airbnb, Uber, and Crypto. History has shown us that with no regulations things get out of control, as the tragedy of the commons happens. I belong to a Catholic Fraternal Charity for Widows and Orphans. It was formed when the steel mills, coal mines, and railroads with no regulations literally chewed men up and left their wives and kids penniless.There is no need to extract money or put up barriers. But I also think those regulations should apply to everyone, and that includes those that want to sell here but are outside our borders. If I have to compete with somebody that dumps VOC’s into the river, spews toxins into the air, has no regulations for worker safety and works people 24/7 I cannot compete.

            1. sure, but the way they are currently regulating is downright stupid. It will mess up the market. Price ceilings and price floors create more disturbances than an outright tax.NYC should just implement a congestion tax. Those that want to pay it will pay it because the trade off between convenience and paying the tax works for them.Instead, a price ceiling puts more power in the hands of the government and encourages lobbying.

         2. Know regulatory capture. Have read a little of Stigler.

   2. it is not really a tech business. It is a new approach to ride hailing.I agree with this however take a look (which I just did) at what Wikipedia has to say about the subject:https://en.wikipedia.org/wi…Note also that two companies they mention (Amazon and Ebay) are no more tech companies than Uber is. (And I don’t think they mean AWS as it is part of Amazon and honestly really not the ‘main’ business).I think Fred is broadly using ‘tech’ to describe what would commonly be known as ‘this thing of ours’. In which case we simply label it as we see fit and everybody kind of sort of knows what we are talking about. [1]Along the same lines we will find that the word ‘crypto’ will be used very broadly to encompass a wide range of companies that could also be categorized if needed in a different way. But if crypto is newer and/or sexier or sounds more solid in some way (impresses) then go with that. Nobody hipster or millennial is going to brag about working for the local bank.What I think happens? People will attach the most prestigious sounding title to something that they can. This happens with career titles as well btw. For example if someone is a really big deal developer but also an attorney the ‘developer’ title probably takes prominence. On the other hand if they are a small time developer but also an attorney they probably prefer to be know that way. Goes my theory anyway.[1] That said you could argue that the computer code is so central to what Uber does (vs. the taxi dispatch company) that it is a tech company. After all the code is so special it allowed them to dominate a new way of getting transportation. [2][2] But by the same token I probably wouldn’t feel the same way if the code allowed someone to simply order pizza at a push of a button.

      1. .Perhaps the greatest unheralded tech rich industry is automobiles. There is no bit of equipment which the average American uses more intimately which has more tech within their control and fingertips than a modern car.Like a lot of things, one doesn’t even have to have a remote knowledge of even the existence of the tech incorporated therein to benefit from its deployment.If you get the benefit without knowledge of its presence, is it really tech?JLMwww.themusingsofthebigredca…

   3. I am no special pleader for Paul Manafort, but half the charges against him are directed to listing an Airbnb in New York and claiming it as his residence on a mortgage application for the property. It’s time for DAs around the US to get serious about the crypto criminal cabal

   4. > What Uber did, as an example, was boldly and arrogantly pretend it was not subject to existing public transportation rules.Is that true?In most cities, there’s a distinction between “street hail” and “town cars”. (I don’t know the legal terms.) In the former, the fare flags down a car on the street. In the latter, the fare calls a dispatcher or some agent of the car and arranges to be picked up.Street hail is typically heavily regulated while “town car” is significantly less regulated.Yes, taxi companies participate in both, but a lot of companies are just “town car”.Uber/lyft are a tech implementation of town cars; they don’t do street hail. Yes, they made “town cars” as convenient as “street hail” but that doesn’t make them street hail.

3. Fred, how do you feel about FB wanting to partner with banks to retrieve customers bank balances and enhance them with FB data?Feel free not to answer as it may not be appropriate in the comments section and may require a longer discourse. But I’d be interested in your view as a VC but also as a bank customer.I know it makes me quite uncomfortable that some corporation (regardless of how utopian they claim to be about ‘making the world a better place’) besides my bank would have my balances. That’s information my closest family members wouldn’t even dare to request.Now how I feel is obvious. But what do you think?

   1. I think consumers’ permission should be required before a bank shares their data with any third party

      1. I agree and it should not be a terms of service type thing. This is where you do need regulation. It should be I am going to share your balance with X. Do you agree? You do not have to. Double confirm you agree.

4. SO much education is required and it must be done pro-actively. In my experience, government is (mostly) always behind in terms of understanding the technology. Some governments (internationally) are better than others, but the better ones are typically more educated, more open minded, and have been pro-active, not reactive.

   1. Change is coming.Demographics of those on the challenge ballot this November are a completely different group and will change this. Younger, more diverse, more immigrant groups will hire younger more diverse staffers.Fast enough–fast as it is going to happen.

      1. Yes, but if a bunch of socialists are elected it only gets worse not better.

         1. Have no idea what you are taking about .

         2. Pointsandfigures:A college education should afford that person with discernment.If a person looks up the definition of Socialist there is no elected or candidate running for office who is a socialist as defined including Alexandria Ocasio-Cortez of the 4th Congressional District in New York City. A slogan word that people in the progressive Democratic Party use who don’t want to be associated with the old and outdated Democratic party or the noninclusive nationalistic Republican party.The elections will reveal what direction people want to follow. The liar and mob boss in office and his enablers or this new label progressive and young candidates are using.Socialism defined: a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.(in Marxist theory) a transitional social state between the overthrow of capitalism and the realization of communism.So you actually think in this free market society (United States of America) we have people running for office who benefit from capitalism and work for capitalist companies are Socialist. That is nothing but Right Wing rhetoric. Talking points from Fox Contributors.We are happily Independent. We recognize both parties don’t serve the people they say they serve.The economy is doing well and it didn’t start with Trump. Another false talking point from Fox contributors.There are traitors in that Whitehouse who have been compromised by Russia. The lies will catch the liars eventually.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

      2. .You display woeful ignorance of how The Hill operates.Let’s assume the Dems take control of the House.A freshman Dem Congressman will be one amongst 435 Congressman and one amongst 218 Dems.The new freshman will be on whatever committees the Speaker assigns them to be on. They will be the most junior members of that committee.The work of legislation is done by those committees and subcommittees. Those committees all have their staffs in place today. A freshman member of the Judicial Committee will never receive the time of day from that senior staff which has been working with the “ranking member” for years. Most of those staff seniors have 30 years experience on The Hill.A freshman Congressman will struggle to find a good Chief of Staff who will be an older, salty, experienced guy who will be loyal to the Speaker. He will likely hire somebody who worked for a former Congressman who knows their way around – so much for new ideas, diversity, or progressive thinking.The freshman will be running for re-election within 5 minutes of finding out where the bathrooms are in the Capitol.No freshman will have any impact on legislation, committee work, staffing of committees, or anything which will bear directly on their progressive leanings.Then, there are the lobbyists who ensured that the ranking members got re-elected. They are loyal to the leadership.Who do you think actually writes legislation in the Congress? It’s the lobbyists. Recall the jugfuck about Obama and all the bloodsuckers behind the curtain. Hell, the average Congressman never even read the damn legislation.So, no, there is no big change coming to the Congress.Now, let’s assume the Senate goes as predicted and the Republicans garner 56-58 seats.The Senate will block anything progressive that makes it out of the House with a heartbeat.I want the House to move on IMPEACHMENT immediately.It takes 67 votes in the Senate to remove a President from office.Let’s say the House votes articles of impeachment – charges. Then, the Senate hears the case.If the Dems hold 43 seats, then they require 24 votes from Republicans to get to the 67 vote threshold.Does that have a snowball’s chance in Hell of happening? Not. Bloody. Likely.But, what will happen is that the Republicans will win every race in 2020 just like after the Dems rammed Ocare down everybody’s throat.So, from my perspective, I truly hope that if the Dems get the House, THEY IMMEDIATELY VOTE OUT ARTICLES OF IMPEACHMENT. They get sworn in on 3 January 2019 – ARTICLES OF IMPEACHMENT ON 4 JANUARY, PLEASE, GOD. [Dear God, if you grant me this one prayer, I promise I will be a better person.]The truth of the matter is that when the Senate confirms Judge Kavanaugh to the SCOTUS, Pres Trump has delivered on the most important promise of his campaign. The SCOTUS will be slightly right of center for a third of a century.So, yeah, Hope & Change. One more time.JLMwww.themusingsofthebigredca…

5. CONTRIBUTORS:The New York City Council voted 39-6 in favor of capping the new licensing for Ride Sharing companies. That vote only shows the strength of the NYC Taxi & Limousine Union and how they really control the TLC.Average working class New Yorker don’t give a blip until they are unable to summon a ride. The ride sharing sector actually allowed people of color to summon a ride. People of color have known how difficult that was for two generations.Another thing Medallion for a Yellow cab was reduced from 2 Million to $200,000. Think that was a motivating factor? If you don’t advocate then you will be on the short end of those who have and those who don’t.https://www.law.com/newyork…https://en.wikipedia.org/wi…Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

6. Agree with the jist of you post. However, I would point out that the issues with AirBnB and Uber are decidedly non tech. Whether or not they have a great computer system to hook up users with providers has nothing to do with price inflation as speculators buy properties to rent them or too many cars get on the roads. These are pedistrian issues having to do with logistics more or less.Wrt cc’s, I think the regulators are aware of them already and have moved to squash them as best and quick as they can (which is a good thing imho). AI is the only thing you have on your list that fits this idea that builders need to think before the act. However, the technical aspects of AI really haven’t changed that much since the 80s and 90s. Its still basically fancy search, not really much of what I would call “intelligence”. The difference is there is a lot more data out there to throw those techniques up against. More sensors in more locations. As all these sensors get hooked into all these long ago discovered crunching techniques, I hope common sense will prevail.

7. So all day yesterday after reading the NYC Uber/Lyft Cap news…Porter’s 5 forces kept pushing to the front of my mind. I was almost convinced that I remember Gov’t regs as a force. I look it up and of course memory laughs in my face and my sourced search says…Factor, not Force. Daniel McGuinn wrote a really good piece in his first month as Senior Editor at HBR. I believe it is less about tech here and so much more about how government policy influences and impacts the 5 forces. That it is the structure via policy in most business models that is perhaps most greatly affected. I submit the link in which McGuinn reminds us with a Porter Quote in his May 14, 2010 article:“Government is not best understood as a sixth force because government involvement is neither inherently good nor bad for industry profitability,” Porter writes. “The best way to understand the influence of government on competition is to analyze how specific government policies affect the five competitive forces. For instance, patents raise barriers to entry, boosting industry profit potential. Conversely, government policies favoring unions may raise supplier power and diminish profit potential… Government operates at multiple levels and through many different policies, each of which will affect structure in different ways.”https://hbr.org/2010/05/mic…

8. Yes, but, politicians seek to retain their power base. Often, they are in bed with those that they seek to protect. Cab drivers+Politicians vs Ride Sharing for example. Big companies usual process is ignore innovation, then try to regulate it out of existence, then try to regulate so the incumbent is protected, then buy it.In Chicago, our mayor pays a lot of lip service while in the community about how startup friendly he is. Then, behind closed doors he tries to regulate ride sharing, regulate AirBnb, and passes things like a cloud tax that impact the startup community a lot more than incumbents.In the case of ride sharing, I do think it has increased congestion. I am all for a tax on it to curb congestion similar to what London did rather than a ceiling on licenses. I don’t think there should necessarily be licenses at all.One point that libertarian minded Republicans and Democrats can agree is that we have far too much crony capitalism in all levels of our governments. More regulation is only going to encourage more crony capitalism in a lot of cases.

   1. “Daylight is one of the best disinfectants” also for crony, patronage, Tammany Hall, pay off, kick back, etc. politics.Anytime enough people really care, we will have some news outlets that report the details, shine the light, etc.Maybe such media outlets already exist but so far are small and difficult to find. A keyword search with keywordsshine bright light politicsgivesAbout 114,000,000 results (0.36 seconds)and a start, e.g.,https://blogs.imf.org/2018/…https://www.theguardian.com…but not much more on the first two search result pages. Hmm …! Maybe something could be done!Uh, what is the meaning of the content that is desired? As theAbout 114,000,000 results (0.36 seconds)shows, even with several key words tough to characterize the desired content and meaning. Hmm.Meanwhile back to your regularly scheduled media and TV time, the Mets, the Yankees, the Pats, the Cavs, Real Housewives of Beverly Hills, the Mueller probe, fad diets, crackpot miracle cures, the threat to earth and human life from “global warming” caused by sinful, evil humans, claims from entertainment celebrities with no medical qualifications and no one on one examinations that Trump is “definitely insane”, etc.Somehow the flip side of all that total nonsense should be some money to be made.

9. The biggest issue is the Facebook, Twitter, Google impact on “free speech”. These platforms have way too much control over what people see and hear. (Take the case of Female Immigrant running for Congress who was banned by Facebook for “hate speech”. https://www.sfchronicle.com… Nothing short of censorship funded by the public markets. It needs to stop.90% of young people do not “watch the news” or “read the news” as we did. Instead they consume it from a narrow, curated platform – their phone. Just one look at the news sources for say (Yahoo News) show that they are heavily biased. Add to that the fact that FB, Twitter, Google are ACTIVELY filtering certain content, and you have censorship.I am amazed someone has not started at “we will not censor” social network. Like DDG did for search.

   1. Gab.ai is the social network for no filtering. They had a burst in traffic in the wake of the recent bout of kook censorship. Humorously and tragically, Microsoft azure said they would stop hosting the app if gab didn’t remove offensive content within 48 hours.

      1. is this a decentralised blockchain platform? how will they respond to a court order?

         1. no it’s not decentralized

            1. it needs to be. they will then not have the ability, under duress, to take down content. it goes to credibility. i’m not saying they are not sincere, but we know how the world works. money is power, and the more corrupt the more money the more powerful. it buys lawyers. it gets judgements. equal before the law? freedom of speech? in principle.

            2. decentralized stuff can get taken down too. but whatever app emerges has to be usable, and i doubt decentralized stuff can every become that easy to use. no one wants to pay a coin or wait an hour to post a message…..

            3. multiple nodes in multiple jurisdictions, plus private keys. having to wait an hour might not be an issue. not everything worth consuming has to be ‘now’. the instant can be worthless. have a nice weekend.

      2. Where are all the “save the free internet” people to come and save them? The net neutrality crowd should be up in arms if they were serious.

10. Murphy’s golden rule: whoever has the gold makes the rules.Coinbase is it one of the largest cryptocurrency exchanges in the world. Although Coinbase is a weak and tiny corporation compared to Apple, Microsoft, Google, and Facebook, it is still strong in the crypto world.Therefore, Coinbase will likely “shape” many of the laws and regulations enacted to regulate crypto currencies. It is likely that many of those laws and regulations will favor Coinbase. In the USA powerful incumbents inevitably clamor about the costs and problems associated with unfair and invasive government regulations but eventually they, for example, hire lobbyists on K Street to craft legislation that favors them.Enjoy this while it lasts Fred. This might be Union Square Ventures last hurrah. Large VC firms, investment banks, hedge funds, etc are quietly yet inexorably disintermediating boutique VC firms. How many lobbyists does Union Square Ventures pay in DC and around the world? How many lobbyists does do JPMorgan and Morgan Stanley pay in DC and around the world? How can Union Square Ventures effectively compete against large financial interests that are remarkably adept at seeing to it that laws are enacted in their favor?It is as if you have a nice hardware store on Main St USA Fred but Home Depot recently opened up a location a couple of miles away.

11. Data like that maybe could, would, should be relevant, interesting, etc. but in anything like the current context is just worthless noise.First concern: It does appear, e.g., with the Mueller prosecution of Manafort for some tax or some such back in 2005-7, a case that was already passed over (not prosecuted) when Mueller was head of the FBI, that such charges and pleadings can all be just from nasty prosecutors using tactics developed to go after the Mafia to pressure people, e.g., cause them massive legal bills, wreck their families, e.g., General Flynn, trying to get them to “compose” (agree to whatever the prosecutor wants to hear) and “sing” testify to that composition in court. I’m not a lawyer, but such tactics may be illegal as in “suborning perjury”, deliberately “withholding exculpatory evidence”, etc.Second, more generally, if only as in common high school term paper writing standards, need clear references to solid, primary sources. Actually wide areas of our society, serious areas, e.g., pure/applied math, physical science, huge ranges of engineering, law, finance, medical research/practice, commonly follow quite high standards.Otherwise, without such standards, all such lists are less useful than a urination into the wind.It’s true that the media likes to pump out such vague, unsupported nonsense, but that is much of why, all the way back to Jefferson, the media has been at best 99 44/100% meaningless light entertainment down to really serious shots in the gut of our society. E.g., for Jefferson, as athttp://press-pubs.uchicago….withNothing can now be believed which is seen in a newspaper. Truth itself becomes suspicious by being put into that polluted vehicle. The real extent of this state of misinformation is known only to those who are in situations to confront facts within their knolege with the lies of the day.IMHO, from current media, this statement remains correct. Moreover, in my experience, the last part is correct: If actually know something about a topic, then far too often a newspaper or similar media treatment of that subject is seen to be at best low grade stuff.E.g., if watch some old movies, say, at least one Andy Hardy movie from the 1930s, can see that the movie makers assumed that the audience would accept that nothing printed in a newspaper should ever be taken seriously.E.g., my view of the NYT is that on paper it can’t compete with Charmin and on the Internet is worthless for wrapping dead fish heads — much exposure to the NYT could leave one really confused and upset.

12. from what i observe many of the leading tech startups are run by people who score an A in egomania and an F in humility and diplomacy. that creates enemies. they need to look in the mirror, and beyond their narcissism. the problem is as much a human thing as a tech thing.

13. @fredwilson:disqus — Unfortunately, emerging tech (crypto & ML) are already on course to repeat the mistakes of Big Banks circa 2008 and Big Tech circa 2018. At the end of the day, the same ratings and weighting mechanisms and info_theory-probability-utility curve assumptions are being applied.https://uploads.disquscdn.c…Unless Sir Tim Berners-Lee and the MIT-Solid team bake better protocol topologies into Web 3.0 than the semantic graphs of Web 2.0, everyone will be in the same boat hitting the same icebergs.As for crypto, I watched the interview with Chris Dixon and Ali Yahya. Chris made the observation that Satoshi’s whitepaper [the original bitcoin paper outlining a peer-to-peer decentralized network and blockchain sans centralized third parties] is nine pages of incentives.We can treat the incentives as end-nodes that engineers (and later consumers) want to get to. The unfortunate thing is that every existing form of graph and game theory on how to arrive at a node is predicated on sets of mathematical values that don’t and can’t proxy human values expressed in language.There’s no consensus on what the mathematical values should be and whether they’re equivalent and have parity with human language and values.

14. I am not sure Uber and AirBnB had much choice but to enter the markets they did the way they did. To overcome taxi commissions and the hospitality industry they had to prove the overwhelming user demand for their services.But in general, and especially in finance and other highly regulated industries, engagement is a must. And sooner is better. For that to be effective, regulators need to be open to it and provide real feedback too.I hope it’s not too late for crypto – regulators have been patient given the sheer volume of fraudulent behavior. As for AI, i thought the Treasury’s recent report made an astute point in emphasizing the primacy of human decision making.

15. Great piece!

16. Opinions? Right, maybe disagree with his opinions of the best restaurants in Austin. I can’t do that because I’ve never been to Austin — was in Dallas once, and that’s the closest I’ve been.But facts? Where’d he go wrong on the facts? Pick the three worst mistakes and let us know?Otherwise, from what he wrote and more I’ve suspected, he’s at least about right. E.g., I heard a rumor: The Speaker of the House is supposed to raise money for the reelection campaigns for Members he likes. So, some special interests chat with the Speaker; the Speaker gets to direct some campaign bucks; the Member who benefits will owe the Speaker lots of votes the way the Speaker wants; bills the Speaker and the special interests like get passed; the Member who sold his vote might be pissed; the special interests are happy.Uh, “Money talks”. “Follow the money.”.I don’t understand all the details of the meaning of “progressive”, but my suspicion is that a good approximation is the average EU socialism.From all I’ve been able to see from the mostly junk news, Vermont, Martha’s Vineyard, most of NYC, much of the DC area, parts of Chicago, parts of Oregon, much of the San Francisco and Silicon Valley area, and most of Hollywood want “progressives”, with diversity, open border immigration, Medicare for all and really like Obama, Hillary, Pelosi, Fauxahontas, Joy Behar, Michael Moore, Rosie O’Donnell, Whoopi Goldberg, Bernie Sanders, and now Alexandria Ocasio-Cortez.Well, I don’t believe it: Outside the areas from Vermont, … to Hollywood, especially in the “flyover states”, the deep South, the Rust Belt, the progressives will have a tough time getting 10% of the vote.E.g., it appeared that last week Trump backed 5 candidates; and all 5 won; Ocasio-Cortez backed some candidates; and all or nearly all lost.My guess as to what happened: W’s absurd foreign adventures, the real estate crash, and John “Never wanted to miss a foreign war” McCain didn’t look good, and the Democrats were eager to play on “white guilt”, ignore huge negatives in Obama’s background, and we got Obama. We also got Speaker Pelosi. Then we were off to the far left together with a lot of dirty stuff.Well, that Obama far left stuff was just a mistake and is not going to win again for a long time.So, instead of all life’s necessities passed out directly from DC for all, with no doubt lots of waste and dirty politics, better to have a good economy with good jobs that pay well for nearly all and have a safety net for the rest. When the economy is working, plenty of voters can see this clearly.I might characterize the SCOTUS change differently: No longer will the progressives be able to get the SCOTUS to make rulings that in effect become laws that the progressives couldn’t get through Congress and signed by the POTUS into law.