How Not to Regulate Drones

In recent decades, the internet has altered our expectations of privacy, both online and offline. Ubiquitous smartphone cameras around us pose as much risk as large and distant government data collectors.

The rise of new technologies has jeopardized a way of life shielded from outside view that we took for granted. This trend will only accelerate as Unmanned Aerial Vehicles (UAV), commonly known as drones, increasingly become part of our urban landscapes. The number of drones employed for commercial use in the United States will surpass 420,000 in 2021, according to the US Federal Aviation Administration (FAA).

Concern about the potential privacy risks has grown, as have the calls for authorities to regulate UAVs before we reach an alleged Panopticon society.

However, regulations that target specific privacy concerns that haven’t occurred yet put the cart before the horse and will likely stifle innovation. Instead, drone regulations should be flexible and leave room to adapt to technological advances and consumers’ shifting expectations, as Ryan Hagemann, senior director for policy at the Niskanen Center, suggests.

In a recent article for the Independent Review, Consumer Privacy in an Age of Commercial Unmanned Aircraft Systems, Hagemann offers an insightful critique of the US federal government’s approach to regulating UAVs.

In the United States, there is no legal starting point for privacy policy at the federal level—only specific statutes for the likes of medical care and finance—and Hagemann wants to see a natural, bottom-up approach to regulation. He recommends avoiding yet another specific and strict norm that would become obsolete a few years down the road. The FAA rules already in place are enough to confuse the layman, and recent court decision in Washington, DC, means the FAA has jurisdiction over even hobby users of small UAVs, with more federal regulation in the pipeline.

Chris Coyne, an economics professor at George Mason University and co-editor of the Independent Review, writes in the introduction that “ultimately, the rules—both formal and informal—that end up governing commercial drone usage as they pertain to privacy will emerge from the interactions of private citizens, private companies, regulators, and the courts.“

To emphasize how quickly top-down policies would become outdated, Hagemann recalls the uncertainty that invaded us when the internet was taking off decades ago. If regulations similar to those proposed for drones had been enacted, they would have hindered or delayed the development of the internet as we now know it.

Hagemann explains that disruptive technologies go through a cycle of panic, followed by one of uncertainty and fear. Then, as mistrust decreases, the technology finally merges with our daily lives.

Drones promise to revolutionize a range of activities, from package delivery, which requires relatively non-invasive information, to real-time transmission of traffic and other road conditions.

Hagemann indicates that first identifying the types of information generated by commercial drones allows for a better understanding of their privacy risks. However, he also notes that regulators should be aware that cultural norms change over time as consumers adapt to new technologies. Maybe people will be more willing to share data as usage becomes more common and safe. Facebook or Uber would have been stopped dead in their tracks had the privacy concerns of a pre-social-media era eclipsed the potential benefits.

The author acknowledges that the commercial use of drones can affect our privacy, and that one of government’s basic functions is to protect citizens. But that doesn’t mean bureaucrats have free rein to apply excessive regulatory frameworks that distort market dynamics.

The process of adoption and feedback between businesses and consumers is the one that will strike the right balance. As in other areas, local and federal governments should limit themselves to establishing flexible rules that encourage innovation and long-term progress.