The problem of global information flows via computer networks raises issues of competition, interoperability, and standard-setting parallel to those in the analysis of technical standards. Uniform standards, whether technical or legal, give rise to a constellation of positive and negative network effects. As a global network based upon the "end to end" principle of interoperability, the Internet mediates between different, otherwise incompatible computing platforms. To the extent that law and technological "code" may act as substitutes in shaping human behavior, the Internet similarly mediates between different, otherwise incompatible legal platforms. Much of the legal and social controversy surrounding the Internet stems from the interconnection of such incompatible legal systems. As with technical systems, problems of incompatibility may be addressed by the adoption of uniform legal standards. This, however, raises legal standard-setting problems similar to those seen in technical standard setting, where the standard may be "tipped" in favor of dominant producers. In particular, if law is considered a social product, the benefits of interjurisdictional competition and diversity may be lost as a single uniform legal standard dominates the market for law.
Global information flows are re-shaping the international information landscape, channeled from nation to nation through the new outlets provided by global computer networks. Such movement of information between jurisdictions invites conflicting application of local regulations over advertising, intellectual property, hate speech, personal data, and other communicative content. Understanding the role of the Internet in this context is crucial to understanding the phenomenon of transborder information exchanges, as the Internet both forms an active conduit for much of this information flow, and provides a case study for understanding information flows outside the network.
Thus, formulating an approach to regulation and control of the Internet provides a window to conceptualizing the regulation and control of information flows generally. To a greater extent than any previous communications medium, the Internet facilitates the interconnection of potentially incompatible law regimes. The natural response to such incompatibility is to seek harmonization or centralization of legal standards at a supranational level. The case for harmonization or centralization of regulation at the international level is in many instances compelling. However, enthusiasm for an international regulatory approach must be tempered by caution over the potential costs and drawbacks of centralized hierarchical control. Improperly applied, international Internet regulation threatens to negate the characteristics that make the network valuable, and could in fact eliminate the very benefits that network regulation is intended to preserve.
The cure may therefore be as bad as the disease; at a minimum it carries with it a variety of troublesome results. In this essay, I briefly discuss two related cautionary models implicated by the argument for international regulation. I shall argue that Internet regulation at an international level may be conceived as a standards setting problem, presenting, at a multi-national level the same dangers and benefits of uniformity, competition, and strategic behavior familiar from analyses of technical standards-setting. This approach arises from the conceptualization of law as a product, and from potential for interchanging law and technology as regulatory methods.
I begin by reviewing the interjurisdictional competitive literature analyzing law as a product. I then extend the basic concepts of that model to discuss implications of international regulation in light of network effects in the market for law. I conclude that these models point to only a limited and particularized case for international regulation in order to preserve the benefits of decentralized innovation in law. …