Navigating the Patchwork: A Case for Choice of Law in Privacy Regulation

In a world where national markets are becoming increasingly interconnected, the issue of multiple regulators for large American companies has become a hot topic of debate. The inefficiencies and complexities of having to navigate through as many as 50 different regulators have led some to call for a global regulatory body, such as the UN, to oversee multi-national companies.

However, a new proposal put forth by Geoff Manne of the International Center for Law and Economics and his colleague suggests a different solution: choice of law. This concept, which is already utilized by national businesses in selecting the laws that apply to their operations, could potentially streamline the regulatory process and address the issue of the legal “patchwork” that currently exists.

The idea behind choice of law is to allow companies to choose the laws that govern their operations, within reason. This would not only give businesses more control over their regulatory environment but also create a competitive landscape around privacy practices. Companies could choose to adhere to more stringent state laws on privacy and use that as a selling point to consumers, while also highlighting the privacy risks associated with competitors who opt for more lax regulations.

By shifting the focus of the privacy debate to consumer choice and competition, the proposal aims to create a more dynamic and responsive regulatory environment. It also seeks to address concerns about a potential “race to the bottom” in a choice-of-law system by emphasizing the role of ongoing consumer feedback and market dynamics in shaping privacy practices.

While the idea of choice of law may face skepticism from some quarters, particularly those concerned about the power of corporations in influencing regulatory outcomes, Manne and his colleague argue that it could offer a more flexible and effective alternative to federal preemption of state privacy laws. By empowering businesses and consumers to make informed choices about privacy practices, the proposal seeks to strike a balance between national oversight and local autonomy in regulatory matters.

As the debate over privacy and regulatory reform continues to evolve, the concept of choice of law offers a novel approach to addressing the challenges of a fragmented regulatory landscape. Whether this proposal gains traction remains to be seen, but it certainly adds an intriguing new dimension to the ongoing discussion about the future of regulatory governance in an increasingly interconnected world.