---
title: "Regulators Should Use Discretion to Promote Innovation, ITIF Argues"
date: "2015-02-02"
issues: ["Internet"]
content_type: "Press Releases"
canonical_url: "https://itif.org/publications/2015/02/02/regulators-should-use-discretion-promote-innovation-itif-argues/"
---

# Regulators Should Use Discretion to Promote Innovation, ITIF Argues

*New Report Shows How to Tell Mountains from Mole Hills*

WASHINGTON (February 2, 2015) – How should the Federal Trade Commission have responded when Google was found to be using ad-tracking cookies that circumvented Apple’s Safari web browser? Or when Amazon’s one-click technology allowed children to make in-app purchases too easily? Or when Uber’s staff was caught using the company’s so-called “God View” application to surreptitiously track people’s comings and goings?

A new report from the Information Technology and Innovation Foundation (ITIF) provides answers. *How and When Regulators Should Intervene* gives regulators an analytical framework to evaluate infractions and determine what types of penalties are called for based on a sliding scale of intent and resulting harm.

“Oversight keeps companies in check, promotes fair competition, and upholds consumer protections. But regulators can go too far and overzealously target companies acting in good faith. That is not just unfair, but harmful,” says Daniel Castro, Senior Analyst with ITIF and co-author of the report. “Heavy-handed enforcement diverts companies’ resources toward needless compliance at the expense of useful product advancements that can provide real value to consumers and society as a whole. To protect competitiveness in the innovation economy, policymakers need to distinguish serious harms from inconsequential mistakes.”

The report, co-authored by ITIF Research Assistant Alan McQuinn, offers a four-part typology for discouraging illegal and harmful practices while encouraging innovative risk-taking:

- If a company makes a mistake but no real consumer harm results, then regulators should resolve the complaint, but not impose penalties.
- If an action is unintentional but results in real harm to consumers, regulators should fix the problem but levy only a modest penalty against the company to mitigate any damage.
- If a company intentionally commits an infraction but no harm results regulators should seek resolution and modestly penalize the company to discourage future mistakes.
- If a company acts with intent, including negligence, and its actions harm consumers, then regulators should consider imposing significant penalties.

“Regulators should recognize that their actions can have a significant impact on innovation, and judiciously consider when to exercise their authority,” Castro says. “If they uniformly apply rules without considering the circumstances, they can end up discouraging risk-taking and stifling innovation. By exercising logic-based discretion, regulators can punish bad actors and protect consumers while encouraging companies acting in good faith to innovate.”

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*Source: Information Technology & Innovation Foundation (ITIF)*
*URL: https://itif.org/publications/2015/02/02/regulators-should-use-discretion-promote-innovation-itif-argues/*