Who Is Doing It, And How Does It Affect U.S. Innovation

Regulation plays a pivotal role in how a nation benefits from revolutionary technology. First, regulation governs how a technology is applied. Second, it can be a brake or accelerator as new technology scales, impacting the level of productivity and competitiveness, economic and social gains, and the speed at which those gains will be achieved.

Around the world, regulators are scrutinizing disruptive technologies and their application across markets and societies. Here are snapshots of innovations that promise to change the way we work, live and play and are attracting the attention of global regulators.

Autonomous Vehicles — Hello Detroit, Meet Silicon Valley. The race is on to put autonomous vehicles on the road. But the drivers of today’s autonomous vehicle technologies are not necessarily the traditional auto companies. They include early innovators and adopters like Deere & Company — which began to explore precision agriculture, delivered autonomously, as early as 1994 — as well as impatient disruptors from the IT and microelectronics industries, such as Alphabet’s Waymo, Apple, Amazon’s Zoox, Argo AI, Intel’s Mobileye and Nvidia. Compared to Detroit, they are entrepreneurial, more comfortable with risk, value speed to market, and currently are subject to minimal regulation. Earlier this month, for instance, Tesla released its “Full-Self Driving” software in its vehicles, which has been met with hesitancy, if not backlash, from regulators.

With the world on the verge of a transportation revolution, regulators must keep pace. U.S. Department of Transportation recognizes this, saying the pace of innovation in automated vehicle technology is incompatible with lengthy rule-making proceedings, and highly prescriptive and feature- or design-specific safety standards. Future motor vehicle safety standards will need to be flexible, responsive, technology-neutral and performance-oriented to accommodate rapid innovation.

Gene-editing — Crossing the Bridge from ‘Can We?’ to ‘Should We?’ New gene-editing technology has given humankind the ability to cut and paste bits of DNA into the genome of living things with unprecedented precision and efficiency. Its applications are accelerating across the research, medical, industrial, environmental and agricultural fields. Some believe this technology could cure any genetic disease, extend life and “healthspans,” and become a major factor in environmental conservation.

This near omnipotence poses distinctive risks, with the potential for unintended consequences from malicious and unethical use. Researchers and governments are working to establish guardrails, but varying ethical standards that influence regulations can produce significant differences in outcomes.

For example, instead of establishing new regulations for genetically modified organisms (GMO) and associated food and agriculture, the United States applied its existing regulations in the food and agriculture space, focusing only on the end product rather than the process of genetic modification. The European Union adopted a stricter precautionary approach. While the U.S. approach was controversial when adopted, and created trade friction with Europe, it helped the American industry grow and maintain its dominance in agricultural biotech worldwide. Since their introduction in 1996, land devoted to cultivating GMO crops increased by more than a factor of 100.

Artificial Intelligence — The Apex Technology. Regulators are gearing up for the Age of Artificial Intelligence, and the rules are evolving. Currently, there are more than 50 AI regulatory or ethical advisory bodies. In 2021, 17 U.S. states have introduced AI bills or resolutions. The United Nations Commissioner for Human Rights has called for a moratorium on AI systems that could put human rights at risk, and the OECD has released its AI Principles. China, an authoritarian surveillance state, recently released draft regulations for algorithms that could also be globally influential, given the size of its market. Yet, in a recent McKinsey & Company survey, only half of companies saw regulatory compliance as a risk to the adoption of AI.

Recently, the EU drafted AI regulations that could become the de facto world standard even though the EU AI innovation community is dwarfed by U.S. The regulations cover “high risk AI systems” in areas such as safety systems for critical infrastructure, job recruitment, and applicant screening and biometric identification. The regulations call for a complex of authorities to implement, monitor and ensure compliance.

U.S. firms who want to put a “high risk” AI product on the EU market or whose AI-generated output is used within the EU would have to comply — and compliance could be expensive. Penalties for violating the regulations will be stiff: Up to 6% of global revenues, higher than fines under the EU General Data Protection Regulation (GDPR) that has had a negative impact on U.S. firms. The GDPR caused numerous U.S. news web sites and digital advertising firms to withdraw from the EU market, finding it too cumbersome and too costly to comply. Apple, Amazon, Google, Facebook, Netflix and Twitter are under investigation or scrutiny.

Whether it is autonomous vehicles, gene-editing or AI, U.S. competitive leadership could be at risk if other nations set the global standards for regulating high-tech. Our regulators need to keep pace with the rapid march of the technology juggernauts that promise to reshape our world. Operation Warp Speed, which catalyzed the rapid development and deployment of vaccines to combat the COVID-19 pandemic, demonstrated the U.S. regulatory apparatus can move quickly. It is time to reform and streamline the U.S. regulatory process to accelerate rulemaking for other emerging technologies, too.