It is all about the superstars - by Pieter Garicano
An explanation for why there has been so much more progress in software than anywhere else is that it is one of few areas where firms have been able to experiment and release products unhindered. 1 One reason is that for the purposes of the law, software is treated as a service, meaning that malfunctions are not exposed to the same legal risk as products. This week the EU released a rule that ends this freedom. The new Product Liability Directive says:
“Software is a product for the purposes of applying no-fault liability, irrespective of the mode of its supply or usage, and therefore irrespective of whether the software is stored on a device, accessed through a communication network or cloud technologies, or supplied through a software-as-a-service model 2
The shift is important. The change makes developers legally liable for defects up to 10 years after the last release, regardless of fault. 3 It affects AI in particular: claimants will likely not even need to establish a causal link between an AI system’s operations and the damage caused — if someone is hurt, a judge will presume defectiveness. 4
