Legal Incentives and Constraints on Innovation: Keeping the Balance

Abstract

The COVID-19 pandemic forced civil society and business to face a new reality where much greater reliance needed to be placed on networked devices and internet distributed communications, including the provision of services ranging from medical advice to food, entertainment and even the facility to interact with family. The ability to meet in-person with family, friends, colleagues, business associates or customers was severely restricted leaving internationalisation as a utopian dream as borders were closed, students were denied access to a physical classrooms and businesses had to rapidly “pivot” or fail. These alternatives to real life have seemed less appealing to many, with every aspect of life “going online”, whether virtual lectures, exams, meetings, mediations, court appearances, job interviews, shopping for a piece of cheese or starting a new trade relationship.

Much innovation over the last two years has been around deploying online business models. There has also been a wider use of artificial intelligence to support “efficient” operations partly stimulated by the falling staffing levels due to the pandemic directly through sickness or forced isolations, or indirectly by a growing sense of the futility of working for a business, known as the Great Resignation (“Over the 12 months ending in January 2022, hires totalled 76.4 million and separations totalled 70.0 million…” indicating a huge refocusing on jobs in the USA) 

This paper looks at the challenge for legal systems to pivot around the growing trends in deployments of online innovation. Some businesses are now widely deploying software-based analysis systems, such as Airbnb, which is using them to “verify the identity and trustworthiness of a user of an online system” and flag potential guests who may be problematic. Although Airbnb is a multibillion-dollar business, it is a good example of how through using publicly available data, user supplied information, and smart software (artificial intelligence) a business can make predictions on the behaviour of its potential customers. Other AI resources have been creating new gaming scenarios, reporting on the news, and even creating new artworks and music. These kinds of use of AI in the marketplace have challenged the legal frameworks that support individual privacy and also ideas around human creativity.