How Will Tech Handle The Regulatory Microscope?

Racepoint Global

Written by: Kristin Brown – SVP, Racepoint Global D.C. & Lindsay Murphy – VP, Racepoint Global D.C.

For decades, Silicon Valley has largely managed to steer clear of Capitol Hill’s regulatory crosshairs. But in recent months, an avalanche of negative news cycles highlighting data breaches, election meddling, and privacy concerns has landed the tech industry squarely in the middle of some of the greatest controversies in recent time. One might argue that we haven’t seen this kind of downward spiral since the banking industry notoriously lost their footing among regulators, but we’ll leave that comparison for another day.

For an industry once viewed as the mecca of innovation and a darling of legislators, investors, and consumers alike, this kind of enhanced scrutiny is both uncharacteristic and uncomfortable. Tech “heroes” are now being cast as villains as Capitol Hill has begun calling Silicon Valley leaders to the carpet for answers.  The latest – Facebook’s Mark Zuckerberg will testify in front of the U.S. House Energy and Commerce Committee on April 11.

What’s the one-time darling industry to do when they find themselves thrust under a regulatory microscope?

Look inward

Leaders must first look inward and ask themselves the hard questions, particularly:  What went wrong? When did we first know? How did we get here?

Accept responsibility

It’s important to own any mistakes and whatever steps led to this situation. Apologize if necessary. Do it publicly and have senior leadership deliver the message.

Recognize you’re in a crisis

This is looking like a sea change for the industry with real consequences. Like any crisis, if it’s not handled well, the effects could be devastating.

Come to the table with humility and solutions

Legislators—and consumers, for that matter—want to know that the companies understand their concerns and are working on fixing the problems. If the industry can’t show that they are addressing issues in a way that adequately satisfies concerns, Congress will want to fill in the gaps, which often means onerous regulation. Having real solutions means more cooperation and could lead to more favorable results.

Technology companies have been able to grow for years, uninhibited within a culture where potential ramifications come secondary to innovating. By creating products and services that have made daily activities easier, the industry has endeared themselves deeply into people’s lives. With that access comes a great responsibility to protect those consumers. If the industry is perceived as not providing that protection, Congress and regulatory agencies will step in, as we are seeing now.

This is the area in which Racepoint plays. We are expert in guiding companies in nurturing their reputation among audiences that matter the most—especially when those audiences have the power to critically impact business.

In coming months, Racepoint will be examining how the tech industry can weather these storms by recognizing their challenges and communicating real solutions to both their customers and to Capitol Hill. If leaders aren’t ready or willing to take these steps, rest assured someone who doesn’t fully understand the business will come up with a solution for you.