As the country reels from a presidential debate that left no one looking good, the Supreme Court has stepped in with what could be one of the most consequential decisions it has ever made, in the context of the tech industry. By reversing a 40-year-old decision, the court has opened regulators to endless interference from the industry and the whims of judges as compromised and out of touch as they are.
The Supreme Court announced Friday morning that it had ruled 6-3 (you know who voted) to overturn Chevron v. Natural Resources Defense Council, a 1984 case that established a very important doctrine in federal regulations.
Federal law is by definition broad and applies to so many areas of the law. Furthermore, some laws remain on the books for decades without amendment. And so the wording of any law — like the Constitution — requires interpretation, a task shared among all parties in the legal system, from lawyers to judges to friends curae.
The 1984 Chevron decision established that independent bodies such as the EPA, SEC and FCC also have a say in this. In fact, in cases where the law is ambiguous, the court must address these bodies in their capacity as experts in their field.
For example, consider something like the Clean Water Act, which provides certain legal protections to wetlands. Who decides whether a piece of land qualifies as a wetland? They cannot be interested parties such as heavy industry or conservation groups, as their interpretations are likely to be mutually exclusive. And what are the chances that the judge who gets the case has any expertise in the matter? Instead, the EPA, staffed with seemingly disinterested wetlands experts, has the authority to resolve ambiguities.
Okay, what do wetlands and the EPA have to do with technology? Well, who do you think defines “encryption” in law, or “communications”, “search and seizure” or “reasonable expectation of privacy”?
The whole concept of net neutrality is based on the FCC's interpretation of whether broadband data is an “information service” or a “communications service.” The terms in the law give that agency powers.
If the FCC doesn’t have the authority to resolve this ambiguity in a very old law that was written long before today’s broadband and mobile networks, who does? Whichever court hears the case brought by the telecommunications industry, which hates net neutrality and would prefer an interpretation that doesn’t allow the FCC to regulate it at all. And if the industry doesn’t like that court’s interpretation, it gets a few more chances if the case heads to — oh, the Supreme Court.
Interestingly, Justice Elena Kagan noted (as quoted by court reporter Amy Howe), that the court had “in one fell swoop” granted itself “exclusive power over every open issue – no matter how expert or policy-related – concerning the meaning of supervisory law.” In other words, the Supreme Court self-assigned the powers currently exercised by each regulatory authority in the country.
Tech's time game pays off
Why is this so important for tech? Because the tech industry has been facing a wave of regulatory activity led by these agencies, which are operating in the vacuum of congressional action. Due to a lack of effective federal laws governing tech, agencies have had to step in and provide updated interpretations of the laws on the books.
Tech leaders have loudly and repeatedly called for federal laws — not government regulations — that define and limit their industries. “Please,” they cry, “Give us a federal privacy law! Introduce a law on location data! Introduce a nice big law on how artificial intelligence should be used!”
They know full well that Congress is virtually incapable of passing such laws, in part because tech lobbyists quietly fight them in the background whenever one with teeth is proposed. You'll be shocked to learn that despite the tech industry calling for these laws for a decade or more, few, if any, have actually been passed! And when California passes one, they all complain: Not like That! The supplications are made with crossed fingers, purely for optics.
Let’s be optimistic once and for all and imagine that Congress passes a major law about AI that protects certain information, requires certain disclosures, and so on. There’s no way that such a law wouldn’t contain ambiguities or intentional vagueness that would allow it to apply to yet unknown situations or applications. Thanks to the Supreme Court, those ambiguities will no longer be resolved by experts.
(As an example of how this will play out, in today's decision, Justice Gorsuch repeatedly referred to nitrous oxide, a pollutant in question, as nitrous oxide, laughing gas. This is the level of expertise we should expect.)
Every law has ambiguities. And at the frontiers of technology, ambiguity is even more common, because there is no precedent and lawmakers don't understand technical matters.
And so, looking ahead, who defines “artificial intelligence” or “scraping” or “personal information” or “invasive”? Yesterday, it might have been the FCC or FTC, with their experts on technology, industry, markets, and so on, who would have made an informed decision and perhaps even sought public opinion, as they often do in regulatory processes. Today, it will be a judge in whatever state decides the industry who has the friendliest or most gullible court.
As Kagan argued: again summarized by Howe:
Kagan gave the example of a hypothetical bill to regulate artificial intelligence. Congress, she said, “knows there are going to be gaps because Congress can barely see a week ahead.” So it would want people “who actually understand AI and are accountable to the political process to make decisions” about AI. Courts, she pointed out, “don’t even know what the questions are about AI,” let alone the answers.
This decision is probably the single largest deregulatory measure that can be taken, and as we have all seen, tech, like any other major industry, will consolidate and prosper without regulation. The next few years, even under a pro-regulation Democratic administration, will be a free-for-all. There is no barrier, and likely no downside, for industry lawyers to challenge every regulatory decision in court and argue for a more favorable interpretation of the law.
We are entering a favorable environment for large companies that would likely face regulatory scrutiny. They are now much less likely to be punished for bad behavior because they can redefine “bad” by a jurisdiction of their choice.
But chaos favors the agile, and big tech has proven slow to react when faced with an industry-changing technology (or so they believe) like AI. There is, frankly, an opportunity here for those with money and ambition, but who are thankfully unburdened by particular moral imperatives, to explore new methods and business models that might previously have attracted the attention of regulators.
If you ever thought you were being exploited, you ain't seen nothing yet.
