Are governments prepared to regulate the tech sector? Natalia Olson-Urtecho

Natalia Olson-Urtecho is the Co-founder and director of innovation and strategy at The Disruptive Factory. She’s an entrepreneur with more than 18 years of experience working with international, regional and local entities in Latin America, Central Europe, and Asia. She has professional experience in entrepreneurship, blockchain, smart cities, finance, government contracting, international collaboration, commercialization of technologies, environmental planning, sustainable building, zoning, land use, transportation, public engagement, and infrastructure development.

Cracking down on self-regulation in the tech sector seems like a positive step, but could this lead to even bigger problems in the long run?

The tech sector has given us great opportunities: we are able to communicate better, people who didn’t have information before, now have information. Society has become more democratized. More people have choices and there are better ways for us to understand people’s opinions. Technology provides a platform, not just for the privileged few but for millions of people worldwide.

How can governments avoid the risk of stunting the growth of emerging technologies through over-regulation?

When we overregulate, we are putting up too many barriers. The idea is to work with the private sector to figure out the best regulation for growth and innovation. The government’s role is to be a catalyst. To motivate, to be the parents, to figure out how to make a community so that citizens can grow and take their own steps. It’s like when you have a kid and you tell them not to do this or that all the time. The kid is going to grow up scared. In business it’s the same, if you keep putting up obstacles, the business is never going to grow. So this is why we have to be very balanced when it comes to regulation.

When it comes to being responsible for our data, can we trust the private sector before the regulations established by the public administrations? Are administrations well prepared to regulate technologies that come from the private sector?

The way we do regulation in the US -and I know it is very similar here in Europe- is to act when a problem arises. “Oh my god, we have very dirty water and our lakes are burning up.” When something happens, we realize we should do something about it. We have to start looking at chemical products and so on. But how can we figure out how to work as we solve the problem, rather than stopping the problem before we start? Because otherwise you live in a bubble andthat’s not how innovation grows. Government’s have to ask these questions to the public, the businesses and the people who work in the businesses, because they are the ones paying the taxes.

Are governments prepared to regulate the private sector?

Government’s role is to manage, to have a holistic approach. They don’t just have to manage what businesses do, they also have to manage the infrastructure, education, international policies, climate… everything. But, we cannot expect the government to be an expert on everything. The ability of governments is to bring stakeholders together to make better decisions. The government is a machine: we can do this in our own capacity, but it is going to take maybe 10 years. So let’s start creating a framework so that future generations can say: as far as our researchers are concerned, we can move the needle in this direction. The role of the government is to build an infrastructure and platform for future growth, to facilitate the next generation. Our job in politics is to make sure the ship starts moving in the right direction and doesn’t sink.

Should private companies be paying us for our data given it’s being used for commercial use? Again, what can the public administration do about this?

Nothing is free in life. We have to make a choice. We said we want all this information for free but we need the infrastructure to use it. So we made a contract. We said we want to be able to know what is going on in the rest of the world, but we don’t want to pay for it. Now what is happening is that we have created a new industry, a digital infrastructure, where all this communication is facilitated. Now we live in a digital industrial era. You as a journalist want to be paid for your information, for writing an amazing article, for being able to videotape… Why shouldn’t you be compensated? What’s great about being in Europe is that the GDPR is working towards this. This is just the start.

A lot of tech companies are saying: let’s figure out how to regulate while allowing companies to grow. If we make good policies and have open, fair conversations, we can help the industry. Thirty years ago, we had to restructure AT&T because we started talking about companies having the monopoly. Now AT&T is back, but it is working in a different way. So it didn’t kill the industry, it actually helped it. Now we know the parameters, the boundaries. What is it that we need to work with from a business perspective?

Big tech companies decide what content people see and when. This gives them the power to shape people’s decisions, from online shopping to voting. Should the use of our data be made more transparent?

Yes, data has to be more transparent, transparency is key. Should we be able to choose different servers? Should we have more than one option to manage our own personal data? We have to figure out the benefits, the fears, the strengths, the weaknesses, and the future. As individuals and as citizens, it is our duty to question all these things. You pay taxes and you want to know the benefits to your children, mother, grandmother. Is your money really creating new facilities?

We tried to do it 10 years ago with Obama when it was harder. We opened up the data and said: this information is now available to the public, so now you can tell us how you are going to use the data. This was one of the bases for our Affordable Healthcare Act. Thanks to that data, we figured out that 25% of the money owned by insurance companies was going to marketing and advertising, not towards healthcare. This should have been going to the doctors, to the citizens. Transparency makes us a lot more equitable, a lot more honest with our citizens and actually, in the end, it helps everyone.

The criteria behind the surveillance and censorship of offensive and criminal content is often opaque. How can tech companies inspire trust and confidence in their judgments?

Tech companies weren’t being asked before. The top companies have been created in the last 20 years. They were created because they were trying to solve a problem, a social problem. None of them thought they were ever going to be this huge. Amazon, for example, started with books. Facebook started in a dorm room and was designed to connect friends. Apple started in a garage. If you look at these types of companies, they didn’t make any money for a long time, it was all free. Only when they launched on the stock market, did they start to think: how can we take back all the money we have borrowed?

The opaque part has to do with regulation. For example, in the US, congresspeople didn’t have to declare who they met and who they got payments from. So we passed legislation which ruled that you have to say who are you meeting with because your salary is paid by taxpayers. Now those conversations are public. This brought a lot of controversies. But citizens need to know where their hard-earned taxes are going. It has to benefit you and your family and the community you live in.

How can we control what’s going on in the private sector?

The problem is that there has to be a balance between control and freedom. Nothing in life is free. Even freedom is not free. A lot of people died for our freedom and made a lot of sacrifices, so the idea of having control all the time is not good. The government doesn’t have to have full control because it doesn’t work, you can’t monitor everything. In the private sector, if you are too controlling, you have no space for innovation, you have no space for crazy ideas. It’s not about doing everything by the book. The crazy ideas are the ones that we all try to strive for because they are different, they give us a new perspective in history. If you look at history, it would be quite boring if we didn’t have disruptive ideas.

 

What are the challenges and opportunities of building public-private technology partnerships?

Public-private technology partnerships are very important for several reasons. First, it helps the public sector understand the future. We give a lot of grants to companies. These are small businesses that start at the kitchen table, or in a garage or a dorm room. We have to be able to provide opportunities to make these companies grow. The government doesn’t know everything, so we ask: what’s the next innovative thing from a research perspective? And they say blockchain, Quantum computing, Artificial Intelligence. These are things that we have invested in during the last government. Scientists, researchers, and entrepreneurs come back from the future, and it’s the government’s job to invest in it.

Recently, one of Facebook’s co-founders, Chris Hughes pointed out that Mark Zuckerberg (with Facebook, Instagram, and Whatsapp) has “too much power” and that the US is not a country of monopolies…How can this be tackled and how does this monopoly affect the rest of the industry?

That is a very good statement from Chris because Facebook has grown a lot and acquired many companies and we need to pay attention to that. We still see these companies as smaller, because they are young companies and we tend to focus on older companies. The US is also a new country, we sometimes have to remember that. Congresses like the one that recently took place at DFS and that had more women than ever before are tackling that. From a legislator’s perspective, we have to ask: how are these companies becoming larger and creating a monopoly? Are they a catalyst? Are they helping other businesses? Because what is interesting is that these companies are investing in small businesses. They have huge venture capital and sometimes they acquire them. But we need to look at how they are doing things. That is the job of the government. We are having these conversations because we learned a lot from the EU and GDPR. We are learning from what you guys are doing.

How can small businesses face the difficulty of fighting against big tech companies and how can the government help them challenge the monopoly? Should specific regulation for small businesses be promoted by the state?

I don’t think these large companies are actually damaging smaller businesses. Like I said before, every business starts small. Amazon is a perfect example: you had to figure out how to sell, and now everyone has their own little way of selling things because they have created a platform for small businesses to flourish. Another example is Uber, one of the companies in the sharing economy. People who didn’t and couldn’t have a job, could now drive and make money. These large companies are serving as a catalyst for small businesses. The question is how can we come together and figure out how to invest together. Take Google, for example: how could you sell online flowers or tell people that you are a mechanic based around the corner? How could you sell your digital graphic design company? It’s much easier to spread the word online than it is going door to door. You have a much bigger reach. We have more little businesses today than we ever had before. Two out of three jobs when I was in the Obama administration were created by small businesses. Necessity is the mother of innovation. We need tax incentives for small businesses. Once you make a revenue, then you can be taxed. You couldn’t have taxed Facebook when they made no money. The idea is to stimulate growth.

What are the major differences in terms of regulation and support of innovation in Europe and America?

We have stimulated a lot of venture capital. The venture capital community in the US is very big. But they didn’t start from anything. The US government programmed their regroup because the VC community knows how to invest. Policy makers have never started a company, so they don’t know how to invest. So we financed and asked them to go and invest in the craziest idea, or the most disruptive technologies: “we want you to invest in women, we want you to invest in veterans, we want you to invest in minorities, we want you to invest in disadvantaged areas.” Because we have a lot of resources that are not being used. And the government said that if these investments fail, we take the guarantee, and this makes the difference. We have 20 times more investment in the US than we do in Europe. Horizon 2020 was created with models like the SBIR program and it has accomplished Quacom, IRobot, Apple. All these companies that you see, started with help. For example, Under Armour started with a 17.500$ loan and now it is a 2 billion-dollar company. Also, 23% of everything that the US Government buys, has to come from small businesses, and 5% of that, has to come from a women-owned company. That’s 17 billion dollars a year that the government has to buy from a small women-owned company.

So empowering the business community and having governments stating and buying from small businesses is important. While the US government buys 23% of its needs from small businesses, in Spain this percentage is 2%. We have to make governments understand that this is something positive, that it encourages small businesses to grow and it doesn’t cost the government much. When I was in the Obama administration, we had a great partnership with Europe, for example, in intellectual property, in patent processes. We really worked with the EU to figure out how to make their process better and share the idea of IP. So if you have produced something here, it is much easier for you to also get the patent in the US, and vice versa. It is about dialogue, about having an honest conversation, sharing research, sharing information about innovation and opening our borders, because we don’t live in a bubble, we live in a world where there are no real boundaries.

Obama advised that the digital revolution has to evolve in parallel with society, this is also something we focus on at DFS. Disruptive innovation affects society at every level, cultural and political, and yet, it seems that innovation often comes before consideration of its ethical impact. How is this evolving?

From an ethical perspective, the question is: when do we cross the ethical line when it comes to figuring out the digital divide? DFS is a great organization, it is a great think tank and it has done an amazing job in making sure that there is an open discussion. Because we don’t come up with ideas just like that. President Obama’s first executive order was open data: how do we use what we have in the government in order for others to be able to take it and make it better? We are a small government, we can’t just invent everything. We need this idea of innovation, but there has to be infrastructure and a framework of policies for how are you going to use the data.

In the Obama administration, one of the things that the President really emphasized is to figure out how to trust each other. If we start by completely distrusting each other, then we don’t have a good conversation. We cannot move the needle and make things happen. President Obama repeated to us many many times how we had to be as ethical as possible and we had to make sure that nothing that we did was personal: everything we did had to be recorded so the public knew what we were talking about and that didn’t happen before. The data that we gave out was declassified as a way of saying this is information that can be useful. Before, reporters couldn’t get access to this information. And that information is key because the whole idea of doing reports, the whole idea of educating the public, is being able to use the data that you as a taxpayer pay for.

Has this been continued?

Our government still continues to run this very well. It is just that we have a lot of noise right now with interesting leaders. We believe very much in figuring out the greater good. We have great civil employees. When an administration comes in, this administration is small because they haven’t been able to get a lot of people in, so it has allowed for many civil employees to step up and continue our programs because they haven’t been able to develop new ones. As Americans, we try to come together as a country and we try to solve things making sure that there is a balance: that’s why we have the three branches in government. We have the right to many things. And that makes us as citizens able to step in if there are crazy leaders or if they do crazy things.

Recently, it has been announced that the next supercomputer will be installed in Barcelona, what do you think about this and how is it going to help?

I think innovation is terribly important, but technology like blockchain and quantum computing are just the tip of the iceberg. There is so much data out there, and younger generations are using it in any possible way. So, how do we make that data quality data? How do we quantify the ideas and bring more transparency? I am excited that Barcelona is a place where this will be installed, because here things that would normally take a couple of months, could take a couple of seconds. I am hoping that Barcelona will be a place in Europe where you can come and have that ability. With all the data that the government has, now they can create systems that will make it easier for journalists to report on. That is what is interesting about blockchain, that citizens will be able to have a bigger input. Having data in order to help people make better choices is the way to go. In fact, at the University of Pennsylvania, we had the first supercomputer. It was a partnership between the Department of Defense and my university, and we were able to access the facility which made us see what it meant for the rest of the world because it wasn’t just for the Department of Defense, now it was useful for academics too. That was a revolution in the IT world.