Does Big Tech Need Its Own Regulator?

42 Pages Posted: 19 Nov 2020

Date Written: November 19, 2020

Abstract

In this chapter we explain that creating a new agency has potential benefits and risks. The typical anticipated benefit of creating a new agency is specialized expertise. An expert agency holds a comparative advantage over general regulators or legislators that justifies its existence. Those who propose a new agency must, therefore, identify what unique, necessary, but unavailable expertise justifies the creation of the new agency.

The principle risk of creating a new sector-specific agency is regulatory capture. An agency that primarily serves industry’s interest can leave the public worse off than no agency at all. This is particularly true in rapidly innovating sectors, where incumbents have a strong incentive to use government to prevent disruptive innovation by potential competitors. Those who propose a new agency must acknowledge and at least attempt to mitigate this risk.

Have digital regulator advocates demonstrated that its specialized expertise will generate benefits that outweigh the threat of regulatory capture favoring incumbents? This chapter examines four different representative regulatory proposals to answer that question.

Suggested Citation

Chilson, Neil, Does Big Tech Need Its Own Regulator? (November 19, 2020). The Global Antitrust Institute Report on the Digital Economy 21, Available at SSRN: https://ssrn.com/abstract=3733726 or http://dx.doi.org/10.2139/ssrn.3733726

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