Digital Regulation: Fleeting, Feature or Fallacy? Global Perspectives from our recent webinar

With the EU’s “digital omnibus” fuelling renewed debate about whether regulation is creating friction in the digital economy, we recently hosted a global webinar on digital regulation which examined whether this friction is ‘fleeting, a feature, or a fallacy’.

The panel was formed of Slaughter and May’s James Cook (as chair), Laura Houston (London) and Will Manley (Brussels), together with Harsh Walia (Khaitan & Co, India) and Andrew Klungness (Fenwick, US - Santa Monica). 

Through their different jurisdictional lenses, the panellists explored how legal teams can operate confidently amid accelerating digitisation and diverging regulatory philosophies. 

The Global Picture: Digital Regulation Today

Against the backdrop of regulation struggling to keep pace with technological development, the panel assessed the structural forces shaping regulatory activity.

Harsh described India’s ‘simple’ approach: “build the rails first and then private companies can scale on top of that.” In practice this means governmental support in building the digital infrastructure layer, controlling and securing essential elements (payment systems etc.), including by designating them as critical infrastructure and giving operators (the platforms etc.) responsibilities. 

Turning to Europe, Will characterised the EU as “values‑driven and rules‑first…”, where policymakers see the rules themselves as a way of driving trust and innovation. That regulatory layering has been especially visible in digital markets.   But, particularly post the Draghi report on European competitiveness, the EU is reassessing whether it needs to pull back in some areas, with the digital omnibus proposals (see our blog) signalling more flexibility, particularly for SMEs. 

The UK, Laura explained, is using post‑Brexit freedom to chart a more innovation‑led path while retaining its rights‑and‑safety foundations. The government’s ambition to become a “science and tech superpower” is shaping sector‑specific approaches and a deliberate national identity in digital policy.

In the US, Andrew emphasised that there is no single unifying approach – and while the federal government balances national‑security concerns with innovation incentives, “a lot of powers are reserved to the States [and some] States are taking an almost European style approach to regulation”. This creates complexity for national and global product deployments. He also highlighted the uniquely American litigation dimension: managing friction in the US therefore often means managing litigation exposure as much as regulatory compliance.

AI Regulation: Innovation Under Pressure

Across jurisdictions, AI regulation remains uneven, fast‑moving and (in many cases) still emerging. Laura highlighted, however, that we “[can’t] afford to wait for a position of perfect certainty, because it is not coming anytime soon.” 

The panel discussed the differing approach to AI regulation, from the EU’s AI-specific law (the AI Act), to the UK’s sector‑specific approach and divergence from the EU. India, Harsh explained, relies on existing regimes (data protection, platform rules, consumer and IP) combined with fast‑moving guidance. From a US perspective, Andrew noted that while the Trump administration is taking a ‘regulation light, innovation first’ approach to AI regulation, the fragmented state approach and class action risk creates complexity. He also noted, in relation to that litigation risk, that “Plaintiffs’ attorneys are a very significant political lobby” but that their approach can be less predictable and strategic than when dealing with legislative developments. 

Infrastructure Focus

Given that digital transformation depends on infrastructure, the panel noted a general drive across governments to increase investment in digital infrastructure and increasingly integrated supply chains in this space. It also explored whether regulation around digital infrastructure is becoming its own friction point. 

Andrew highlighted the demands increasing digitisation places on infrastructure: “It still boils down to energy, real estate and raw materials.” With compute demand soaring, US businesses are re‑evaluating architecture choices, including on‑prem and colocation options.

From a regulatory perspective, we are seeing increased competition scrutiny and security expectations on cloud providers in the UK and EU, as well as initiatives to make switching easier with a view to ensuring contestability in cloud services. National security and environmental issues must be considered - and from an Indian perspective, Harsh added data localisation as an additional friction (citing the example of rules requiring payment system data to stay in India). 

So, Is Friction Fleeting, Feature or Fallacy? And what can organisations do to combat friction?

The view of the panel was that while legal friction is not a fallacy - even in pro‑innovation jurisdictions - some friction is essential to ensure transparency, trust and safety. It was also noted that a lack of legal clarity (failing to have one single AI rulebook, for example) can create its own friction. 

The type of friction we are currently seeing may, however, be fleeting – with Laura concluding that in some respects - “as we start colouring in the picture with guidance, some of this friction will subside.”

What does this mean in practice for in‑house teams?