The court’s order to make Elisa block access to certain websites became our most retweeted story yesterday. It received almost 1500 retweets in about 24 hours. I’m sure the plaintiff didn’t anticipate the implications this will have, not only on Elisa but on a variety of other things – potentially even harming themselves. The more significant result to this is perhaps that Finland received a lot of negative publicity in the digital media space for its court’s decision. In a time when countries are competing for appeal in the eye of digital media entrepreneurs, a lot of potential candidates saw Finland’s position diminish. This may sound far fetched, but it really isn’t. Let me explain why.
Firstly, our economies are built on the assumption that certain laws will safeguard industries and lower risk of doing business in those industries. By this I mean that certain activities are not deemed illegal next year, out of the blue. Industries that face legislative change are by nature considered more riskier.
This goes well in line with the definition of political risk when investing into emerging markets. As governments are forming their opinions on industries and corporations, they may make legislative changes quite fast to steer their country to the right direction. Unanticipated changes like this increase the risk of doing business and usually lower foreign investments.
The internet industry at large, is also built on this same assumption. Companies assume that they will be protected by similar laws that apply to the rest of the society at large. When Elisa was forced to block access to certain websites through copyright law, it changes the game completely. Extrapolating a little on this, the obvious question can be asked – what other laws can be used to force service providers to deny access to internet properties?
The valuations of thousands of internet companies are built on the assumption that they will be allowed to run their businesses as one would think. Even though the industry at hand is one that has suffered a lot from illegal activity, laws should not be used in the way they weren’t meant to be used. No amount of illegal activity should allow for that.
Secondly, Finland’s image as an interesting, advanced country in the realm of internet technologies and companies has definitely taken a dent. While the music industry is trying to save their dying business models, they are doing so by hurting the very future that could save them. Having an infrastructure in place, from not only a legislative point of view, but also economical, to support the growth and development of innovative and disruptive companies is crucial.
Using laws for something they are not meant to be used is dangerous and the most obvious false defense for this is that “this was a unique case and it won’t happen again”.
Of course these are only my thoughts, but I have a strong hunch that we haven’t seen the end of this yet.