Regulating the digital economy
On 6 July, the Government released details of a new approach to regulation designed to maximize the potential of the UK’s thriving digital economy. It is hoped this will be achieved by reducing ‘red-tape’ and simplifying policies, so that digital businesses can focus on innovation and growth. A copy of the plan can be accessed here.
In 2018, a total of 34,000 new tech/digital businesses were established in the UK. By the end of 2019, the value of the UK’s digital economy had grown to £151 billion and, by the end of 2020, more than £11.2 billion of new venture capital had been invested into the digital sector. More than 2 million people are now employed in digital businesses in the UK.
Alongside this growth, the question of how our digital economy can be regulated, effectively and efficiently, has become increasingly important. We all recognise that digital technologies have had a transformative effect on our society and our lives – especially on the way we communicate with each other. But that they have also brought with them brand new challenges and risks.
The Government’s new approach to regulating the digital sector will be based on 3 main principles:
- Promoting innovation: where possible, legislators must support innovation by reducing or removing regulation and using other measures (such as imposing industry-led technical standards or codes of conduct) as an alternative. Government should only regulate when it is absolutely required, and then in a proportionate way.
- Coherent legislation: the UK’s digital economy is developing incredibly quickly, and helping to revitalise more ‘traditional’ business sectors, so new digital regulation must complement, not contradict, the existing legislative framework.
- Exploiting international opportunities: policymakers must take a global view – digital technologies are borderless, so new regulation needs to allow for the impact of international issues (such as existing and future trade deals, and regulations imposed by other countries).
To support a more coherent approach to the future regulation of the digital economy, and to facilitate information-sharing between the key regulators for that purpose, the government will be working with the newly-formed Digital Regulation Cooperation Forum (DRCF), which currently consists of:
- the Competition and Markets Authority (CMA);
- the Financial Conduct Authority (FCA);
- the Information Commissioner’s Office (ICO); and
- Ofcom (the regulator for communications services).
Encouraging innovation is at the heart of this new approach, so that technology can drive growth and create a flourishing digital economy. However, the new plan is not set in stone – the Government is seeking views from industry, professionals, academia and the public on laying down the right rules for digital technologies and creating the best possible environment for the UK’s digital economy to grow. If you would like to, you can send your views to: firstname.lastname@example.org.