Leading Technology Sector Disruptors Discuss the Challenges of Compliance in Uncharted Global Waters

Originally published for Thomson Reuters Legal Executive Institute on November 17, 2016

STANFORD, Calif. — We conducted a stimulating and provocative general counsel panel last week at Stanford University, as part of an ongoing collaboration between the Thomson Reuters’ Legal Executive Institute and the Stanford Law School Center on the Legal Profession.

We brought together leaders from the legal departments of a diverse set of iconic and market-leading technology firms — Google, Apple, 23andMe and Lyft — to discuss how they navigate the labyrinth of the world’s many regulatory schemes, as disruptors breaking new ground with the services they deliver.

This was our second general counsel panel this year. We did the first such panel in April in New York in conjunction with the Harvard Law School Center on the Legal Profession, focusing on Ben Heineman’s new book and its implications for the financial industry.

The Panel

We convened the panel on a warm November evening, less than 24 hours after the stunning outcome of the 2016 presidential election. The panel included leaders of a set of technology- and information-based companies, different from each other in many ways, but all confronting the need to deal with regulation from countless independent jurisdictions. The panelists included:

  • Kent Walker, Senior Vice President & General Counsel at Google;

  • B.J. Watrous, Vice President & Chief IP Counsel at Apple;

  • Kathy Hibbs, Chief Legal and Regulatory Officer at 23andMe; and

  • Kristen Sverchek, General Counsel for Lyft.

In addition, Gordy Davidson, legendary leader of Fenwick & West, provided perspective from more than 40 years advising technology companies; and Doug Melemud, former General Counsel of Intel and presently a professor at the Stanford Law School, moderated the panel.

Two Defining Dimensions of the Challenge

The panelists identified two parameters that characterize the regulatory challenge global technology disruptors confront.

First, they are in truly global businesses, operating beyond the physical limitations of any one nation, yet potentially subject to purported regulation by every jurisdiction in the world. There is no simple preemption doctrine to rescue them from the burden of inconsistent standards. This is perhaps most obvious and burdensome with the Internet-based business such as Google, but, as the discussion revealed, it raises serious issues for all global enterprises.

Each panelist shared details of what its company seeks to achieve, revealing a genuinely uplifting theme: they all seek to make the world a better place.

Second, because true disruptors are, by definition, conducting business in ways that are different from tradition, they often do not fit neatly in the regulatory scheme erected for a different time. This presents a constant challenge of applying rules to situations for which they were not designed. Each panelist provided concrete examples of how this dimension plays out in the context of their businesses.

Insights for Navigating Global Regulation

The panel provided some valuable insights into how these companies deal with these challenges, including off-the-record examples of situations they had confronted. Fundamentally, the panel emphasized the importance of basing legal advice and strategy squarely on the client’s objectives and its social utility. Gordy Davidson described the dynamics of interaction with the client to achieve clarity about what that client is trying to achieve. Google’s Walker stressed the importance of identifying the social value the client delivers in order to better provide counsel and the regulators with an adequate foundation for evaluating how a particular practice stacks up to the policies that underlie the rules.

As Apple’s Waltrous put it, the law is not a wall; it is more like a fabric that is flexible and can be molded to different situations.

Each panelist also was clear that part of their role was to help the company do what is “right” in addition to doing what merely meets the letter of the law. Recognizing that what is “right” is subjective and situational, and it was clear from the stories the panelists shared that this notion plays an important part in staking out a successful and sustainable strategy.

The panelists all discussed the value of effective communication with the regulators. This entails more than “making your case.” For example, it includes important human issues such as involving local users of a service and presenting them to tell the story of the product’s value. It’s also vital for the company and its counsel to become acquainted with the regulators so that mutual trust can develop, and so the company and its advisors understand as well as possible what the regulators are trying to achieve.

An Uplifting Session

Each panelist shared details of what its company seeks to achieve, revealing a genuinely uplifting theme: they all seek to make the world a better place. Far from seeking to skirt the rules or take advantage, the mission of each company was to work with regulators around the world to establish rules that will permit innovation and improvement, while protecting the privacy, safety and other interests that the regulators are responsible for safeguarding.

Ralph Baxter