Big Questions About Tech Regulation

What balance ought we seek in corralling the worst of tech companies while not killing innovation? At a time when everyone has a beef with tech, this question has never been more important. Republicans want tech to allow more speech, Democrats want tech to moderate more content. Competitors want to break up the biggest companies, customers want to pay them less. Tech’s spouse wants it to clean out the garage.

Still, nearly everyone recognizes tech’s value to the economy and to the country. Even as policymakers propose new rules, no one wants to “throw out the baby with the bathwater.” So, what principles should apply to tech regulation? A sixteenth-century German idiom has only limited utility as a touchstone for regulating a quarter of the U.S. economy.

As an alternate framework, policymakers should ask themselves certain key questions as they evaluate new rules. By inquiring about these topics, policymakers could ensure that they tailor any proposals to address genuine gaps in the market and the law and continue to promote innovation and investment.

Are there existing processes in place to corral the perceived troubling behavior?

Before enacting any new law, policymakers should ask themselves whether existing laws and processes already address any troubling behavior. If so, let those processes play out fully and enact new rules only if they fall short, because new rules could have damaging unforeseen and unintended consequences, particularly in such a dynamic and consequential sector of the economy.

U.S. policymakers must maintain the law’s focus on consumers, rather than competitors. This focus encourages innovation and investment by allowing companies to reap the benefits of new products and technologies.

When it comes to tech, both market dynamics and current laws are working to corral troubling behavior. In terms of speech, the market is already adjusting to allow more fulsome discourse online, irrespective of political viewpoint. Elon Musk, a prominent advocate of free speech, has purchased Twitter and released a number of “Twitter Files” revealing how Twitter has amplified or downplayed certain controversial stories. Conservative platforms such as TruthSocial, Gettr, and Parler are widely available and have gained millions of users. Meta itself has acknowledged past mistakes and vowed to improve its transparency.

In terms of competitive concerns, the existing antitrust laws can address any genuine anticompetitive conduct that harms consumers. Every major tech platform—Apple, Amazon, Google, Meta, and Microsoft—is facing significant antitrust litigation, investigation, or both. If a court finds that these companies are harming consumers or reducing innovation, they can impose a range of significant remedies that include treble damages or even partial divestment. Policymakers should enact new laws only if the courts find that these companies are harming competition and that the current laws fail to provide adequate remedies. Otherwise, new rules could cause more harm than good. 

Is the proposal good for consumers?

At a very basic level, policymakers should ask themselves whether a given proposal is good for consumers, or if the proposal is mere rent-seeking designed to help other companies at the expense of their competitors, and often consumers.

For decades, U.S. antitrust law has centered on the venerable, bipartisan “consumer welfare standard,” which evaluates business conduct based on whether the practice helps or harms consumers. Europe, in contrast, uses the “abuse of dominance” standard which, in effect, evaluates business conduct based on whether the practice harms competitors.

U.S. policymakers must maintain the law’s focus on consumers, rather than competitors. This focus encourages innovation and investment by allowing companies to reap the benefits of new products and technologies. It incentivizes them to enter new markets and to out-compete their rivals. 

In sharp contrast, the European standard punishes companies for taking away market share from their competitors. It encourages less successful companies to complain to regulators rather than fight to compete. It lets the government pick winners and losers in the marketplace, irrespective of the merits of a business practice, and often for political reasons.

Unfortunately, the United States is creeping toward adoption of the European standard. Several recent federal and state bills would move American antitrust law closer to the European model. Moreover, the Federal Trade Commission recently adopted policy guidance that expressly embraces the idea that U.S. competition law should protect competitors. American policymakers should resist these proposals at every opportunity.

Does the proposal improve the operation of the marketplace by giving more choice to consumers, or does it threaten the marketplace by giving more power to regulators? 

Virtually every recent policy proposal promises to improve competition and to provide consumers with more choice. Upon closer review, however, most proposals actually would empower government regulators far more than consumers. Many bills would allow, say, the Federal Trade Commission to determine whether, when, where, and how companies can compete, force companies to share sensitive data with competitors, and require them to seek prior approval from regulators for routine business decisions from when to update their software to whether they can acquire small companies.

In contrast, other proposals would empower consumers by giving them more information and choice. For instance, provisions of state laws in Texas and Florida, and federal bills like the PACT Act, require companies to give their customers information about their content moderation decisions and the right to appeal those decisions internally. Another interesting bill would effectively devolve content moderation decisions to consumers. 

To be sure, each of these proposals may have its own constitutional infirmities given the paramount interests protected by the First Amendment, and the bills ultimately may prove unnecessary as private companies like Meta and Twitter are already adopting some of these concepts on their own. Still, to the extent that policymakers consider any new proposals, they should seek to empower consumers, not regulators.

Would the proposal encourage or discourage investment?

As above, virtually every recent policy proposal promises to enhance innovation—just like every food, beverage, and air freshener promises to help you lose weight and improve your social standing. Buyers should beware. Accordingly, a better, more tailored question is whether a particular proposal would encourage or discourage investment. Innovation is often intangible and amorphous; we can measure investment.

On this score, many recent policy proposals fall short. They expressly prohibit or discourage large companies from entering new markets or from investing in startups. Proponents argue that such limits would help smaller companies, without recognizing that those companies often need venture capital and technical expertise to monetize their technology and to bring new products to market. Throughout history, in both the tech sector and the economy at large, larger companies have helped to spur innovation through such investments.

Washington cannot credibly encourage other countries to adopt free market policies even as it seeks to kneecap its own tech companies with aggressive regulation.

Instead of limiting investment, policymakers should seek to reduce the cost of capital for newer companies—indeed, ease of financing is a key reason why the U.S. far surpasses Europe in investment and innovation.

How would the proposal affect the ability of the United States to further its interests abroad and to safeguard its national security?

Around the globe, many countries have placed a target on the U.S. tech sector. Europe, the United Kingdom, Turkey, Saudi Arabia, Australia, and many other countries have enacted or are considering new rules that would disadvantage U.S. tech companies. Many proposals stem from protectionist impulses, out of a desire to kickstart domestic tech companies, while others simply seek to transfer wealth from U.S. companies to their foreign counterparts. 

Our domestic policies can influence developments abroad. When Congress and the White House pursue anti-tech policies at home, those arguments undermine U.S. interests overseas. Washington cannot credibly encourage other countries to adopt free market policies even as it seeks to kneecap its own tech companies with aggressive regulation. On the other hand, when Washington embraces traditional principles of antitrust law, and when it allows the market and legal process to play out freely, those actions send powerful messages to other capitals around the world. The same might be said of speech—the more Washington seeks to dictate what private companies must say, the more comfortable other countries may feel in imposing even more significant constraints.

Finally, looming over everything is the specter of China, which wants to use its tech sector to supplant the United States as the world’s leading power. Whatever their complaints, policymakers should ensure that they allow the tech sector the freedom to develop the new technologies that underpin America’s economy and security. At the very least, every tech “reform” bill should undergo a rigorous analysis of its potential impact on national security.

Would the proposal impose unsustainable compliance and litigation costs, especially on smaller companies?

In evaluating tech proposals, at least three truths are self-evident: (a) the law should apply equally to everyone, (b) high litigation and compliance costs discourage innovation, and (c) large companies can absorb regulatory and litigation costs more easily than smaller companies.

Accordingly, policymakers should keep in mind the impact of new proposals on smaller companies and startups. Although seemingly everyone wants to regulate Big Tech, policymakers must consider whether smaller companies can absorb the costs and risks of new proposals, such as changes to Section 230 or forced interoperability among competing platforms. New regulations could strangle in their infancy startups and smaller companies which, by definition, have lower revenue and less of a legal and policy infrastructure. 

Some recent tech proposals exempted smaller companies through artificial thresholds based on market capitalization or number of users. Whether or not those proposals would have withstood legal scrutiny, they flouted the American legal tradition of equality before the law—if a proposal is good policy, it should apply to everyone.

Bonus question, for tech companies: Are you imposing political policy preferences on the public?

With great power comes great responsibility. 

Much of the concern with tech companies flows from their content moderation decisions, or lack thereof. As policymakers consider various proposals in Washington, it would behoove the companies to ask themselves if they are serving as honest speech brokers or, as Musk’s Twitter Files seem to suggest, if certain companies have used their platforms to tilt the discourse in favor of certain policy preferences. This is particularly true when many of the most controversial speech decisions were made at the behest of government officials who had their own agendas, whether at the FBI, the White House, or the Department of Health and Human Services. To that end, one bill would prohibit government officials from using their authority to influence companies to suppress speech. 

The Supreme Court will soon provide guidance about the scope of legal immunity when tech companies moderate, or fail to moderate, content on their platforms. Regardless of how the Court answers that question, the tech companies should ask themselves whether they are exercising their rights in ways that are consistent with the American tradition of free speech. No doubt the companies have a right to run their businesses as they see fit and a responsibility to maximize shareholder value. Still, although the companies may have the right to suppress certain speech on their platforms, it does not necessarily follow that it is just and proper for them to do so. 


As the public, policymakers, and the private sector consider how to balance innovation and regulation, everyone could benefit from a little humility. Policymakers should recognize that sometimes problems can take care of themselves, whether through market forces or existing laws. The private sector should consider that a little transparency and neutrality could go a long way in forestalling the enactment of onerous rules that could hamstring innovation for years to come. 

Should we expect real humility in Silicon Valley and Washington? Who knows—as the Germans might say, man hat schon Pferde kotzen gesehen—“You already saw horses vomiting,” or, “crazier things have happened.”