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The obsolescence of technological law in the era of connected objects and peer-to-peer consumption

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THE FATAL ACCIDENT INVOLVING AN AUTONOMOUS UBER CAR, THE SCANDAL OF FACEBOOK AND CAMBRIDGE ANALYTICA OR THE RECORD FINE IMPOSED ON GOOGLE IN JULY 2018 …

THE LIST OF DESPICABLE EVENTS AROUND NEW TECHNOLOGIES IS GROWING, WHILE REGULATIONS STRUGGLE TO EVOLVE.

At the dawn of a new technological revolution based on Artificial Intelligence (AI), blockchain technology and more generally the spreading of the Internet of Things (IoT), it seems more than necessary to update our regulations to make it conform to the challenges that generate these innovations.

If not for a few minorities resistant to change, everyone agrees that new technologies have the potential to simplify our daily lives, improving communication between individuals and minimizing human effort, but also allowing us to better understand our environment thanks to ever more efficient systems. Virtual reality (VR) now allows surgeons to practice remote operations, artificial intelligence to make our cars autonomous or to inform us about how to dress according to the weather data, and digital platforms to remove the “middle- men “by directly connecting individuals in ” peer-to-peer “.

NEW TECHNOLOGIES ARE NOT WITHOUT CONTROVERSY

Despite all these benefits, it is important to recognize that the diffusion of these technologies and the change in our consumption patterns will not bring about a “new economic nirvana”. Indeed, miscellaneous facts related to negative externalities resulting from collaborative platforms and harming third parties are numerous. This type of externality is created when the production or consumption of a good or service has a negative or harmful impact on outsiders. The most common example of this concerns housing peer-to-peer platforms. For instance, with more than 100,000 ads in Paris, the growth of this activity combined with a lack of regulation has produced a direct externality: a shortage effect of small accommodations for Parisians. In New York, the behaviors of some users of these platforms have not only caused noise nuisance for the neighborhood but they have also led to an increase in home insurance premiums in the concerned neighborhoods due to the lack of regulation adapted to peer to peer rental.
More recently, the functioning of the Bitcoin has been debated, as it is suspected to have consumed more energy in 2017 than countries such as Morocco, Hungary or Lebanon while holders of cryptocurrencies saw their returns skyrocket in a few months of time: up to + 2000% over the year 2017.

Examples of negative externalities are multiplying as technologies spread to a wider audience. Thus, to minimize the impact of these costs on society, policy makers, lawyers and business advocates need to revisit old regulations considering the changes brought about by these innovations, whether in terms of tax policy, security and confidentiality of data, or labor law.
Historically, it is difficult to identify a developed market that would have been completely free of government intervention. Regulations to prevent anti-competitive practices date back to antiquity, when the authorities took swift action to mitigate fluctuations in grain prices related to natural phenomena and deliberate manipulation of markets by traders.
Also, it is crucial to separate the benefits and costs associated with new regulations. A total absence of regulation is likely to generate high social and economic costs due to persistent problems such as fraud, unfair competition, monopolistic and oligopolistic practices and market manipulation. On the other hand, a market with strong state intervention, as in some totalitarian countries, leads to other problems, such as corruption and lack of innovation.
It is therefore interesting to study the most controversial cases in the public opinion, to better understand the stakes and the obsolescence of the legal framework in technological matters.

CRYPTO-CURRENCIES AND ICOS, THE DIFFICULT BALANCE BETWEEN LEGAL VOID AND ADAPTED REGULATION

The lack of a legal definition of cryptocurrency is indicative of a legal vacuum. The expansion of virtual currencies generates a series of economic excesses that have already affected many individuals, hence the need to fill this legal gap: one can wonder if independent administrative authorities and judicial institutions are able to regulate transfers of electronic currencies and prosecute hackers that use these dematerialized resources. European authorities have been able to respond to some internal questions: in its decision of 22 October 2009, the Court of Justice of the European Union assimilated Bitcoin to a means of payment that can benefit from tax exemptions on the added value inherent to classic economic transactions. The French national authority for its part has established since July 11, 2014 that capital gains on virtual currencies are taxable, although it is difficult to measure the gains generated by each user.
Another deficiency to fill, the ICO process (Initial Coin Offering). This fundraising method works by issuing digital assets exchangeable for crypto-currencies during the start-up phase of a project. Today, no guarantee is asked at an ICO, no “proof of concept” or due diligence is required by the authorities to raise the funds. In contrast to an IPO, which allows the investor to enter the capital of the company, the ICO can acquire tokens (digital tokens), which will be exchangeable on specialized platforms, but which have no traditional monetary value and do not bind the entrepreneur to the investor in any way. Many investors have lost funds by not paying enough attention to the seriousness and sustainability of the funded project. The government is currently developing a new policy for these ICOs, flexible enough to attract foreign start-ups, but with sufficient guarantees to protect investors.

ANOTHER TRENDY SUBJECT WITH A STRONG ETHICAL COMPONENT: ARTIFICIAL INTELLIGENCE AND AUTONOMOUS CARS

One of the technologies with the widest spectrum of application is the Artificial Intelligence. One of the most popular use of AI, that concentrates large funds from technology giants and automakers is: the futuristic concept of autonomous cars. Although present in science fiction movies for at least 50 years, this idea should materialize by a first commercialization by 2021.
Statistics show that almost 90% of road accidents are due to human error, leaving commands to an AI would significantly increase road safety. However, the fatal accident of an autonomous vehicle developed by Uber last March marks a serious setback for the diffusion of this innovation. This event revived the debate on liability in the event of an accident while driving in an autonomous mode. Indeed, the Vienna Convention on Road Traffic establishes that the person responsible in the event of an accident is the person who “had control of the vehicle” at the time of the accident. This interpretation is no longer viable since the driving of the vehicle is provided by sensors and algorithms. Similarly, AI in the context of autonomous driving poses ethical problems.
Alain Bensoussan, a lawyer specializing in advanced technology law pointed to the obsolescence of traditional law to frame the concept of artificial intelligence. On the occasion of the 2nd Paris Salon on AI, Alain Bensoussan expressed these problems through the following situation: “On a mountain road, a car A goes up the coast, while a vehicle B without passengers down. Just behind it, a C vehicle with 4 people aboard, disembarks and accelerates to overtake vehicle B. The accident is unavoidable. But at the last minute, vehicle A turns the steering wheel and collides with vehicle B, causing the driver’s death “. Actually, Vehicle A was an autonomous vehicle driven by artificial intelligence. Choosing between a collision with vehicle B or C is a dilemma for a human, but it is a logical mathematical choice for a machine: 4 against 1.
Regarding this situation, there are different opinions. Alain Bensoussan advocates the creation of an identity for AI. The latter would be represented by a human being in a company, and would be recognizable via a unique IP address, and endowed with capital so that it can, through his representative, compensate victims in case of an accident. In the short and medium term, however, this recommendation seems unachievable. Volvo, for its part, has declared that it will be held liable in the event of an accident caused by one of its vehicles. Today, the most common solution to determine who should take responsibility for an accident requires the presence of a “black box” in autonomous vehicles. Following the example of the aerospace industry, autonomous cars could be equipped with a black box that records the last 5 minutes of driving, and lets you know if the fault lies in the algorithm or the passenger located in the driver’s seat. It remains to be seen who from the software publisher, the manufacturer or other parties will be held responsible. Despite these lines of thought, the question of responsibility of these driverless cars users and operators is far from clear.

Thus, among the most promising technologies, blockchain and Artificial Intelligence suggest a multitude of loopholes at the national and international level. Between science fiction and reality, it is now difficult to detect all the gates these innovations open and especially the ethical questions they raise, in a context of perpetual evolution.
Finally, it is obviously necessary to study all the technologies on a case-by-case basis, and to take the initiative to protect consumers who are more and more concerned about the use of their data and, for some, reluctant to adopt connected objects. Even more so when we know that between 50 and 80 billion connected objects will be in circulation by 2020, representing a lucrative market of nearly 1290 billion dollars, particularly in the fields of health, home automation and security.

References

Huffington Post : « 7 mesures à prendre face à la dérégulation du marché du logement à Paris » (7 septembre 2017)
Platform Revolution, Chapitre 11 : « How Platforms Should (and Should Not) Be Regulated», by G. Parker and Marshall Van Alstyne
Science et vie: « La crypto-monnaie Bitcoin consomme plus d’électricité que 159 États dans le monde » (29 novembre 2017)
Platform Revolution, Chapitre 11 : « How Platforms Should (and Should Not) Be Regulated», by G. Parker and Marshall Van Alstyne
ZDNet : « Descente aux enfers du Bitcoin et vide juridique de la cryptomonnaie » (27 décembre 2017)
Medium : «ICO in a nutshell » (3 janvier 2018)
Le Point : «Voiture autonome : feu vert pour l’expérimentation en France » (14 mai 2018)
Wikipédia : « La Convention de Vienne sur la sécurité routière »
t.o.m : «alerte sur les enjeux de régulation de l’intelligence artificielle » (13 juin 2018)
t.o.m : «alerte sur les enjeux de régulation de l’intelligence artificielle » (13 juin 2018)
Les Echos : « Volvo veut endosser la responsabilité de ses voitures autonomes » (5 juin 2018)
Distributique : « Le marché de l’IoT devrait représenter 1290 Md$ en 2020 » (5 janvier 2017)

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