A quantum-enabled future: legal and regulatory aspects of quantum technology

The current rate of technological development and investment suggests that quantum technology is likely to have a fundamental impact on the tech sector in the years to come. With the promise that this technology brings, particularly in computing and communications, comes legal and regulatory considerations which will be relevant to all stakeholders, both public and private.  As with frontier technologies generally, companies exploring the opportunities in quantum will need to navigate these issues – some of which can already be anticipated.

What is quantum computing?

Quantum computing harnesses the laws of quantum mechanics to handle operations at speeds that are exponentially faster than current conventional computers. Conventional computers use binary “bits” that depict either “0” or “1” to store and process data, typically in long strings of those zeros and ones. Meanwhile, quantum computers use quantum bits (or “qubits”), which can effectively represent both “0” and “1” simultaneously (due to the property of “quantum superposition”), effectively allowing  much more data to be stored in a string of qubits, when compared to an equivalent string of bits.

Quantum supercomputers have the potential to solve problems which are too complex to be solved by today’s computers, and in turn foster innovation across various sectors, with the near-impact expected to be in the chemicals, defence, banking, automotive and pharmaceutical sectors. Taking the pharmaceutical sector as an example, quantum computing may enable more sophisticated methods of modelling and simulation and speed up research and development processes. This has the potential to lead to quicker drug discovery and faster vaccine development – the effects of which we would all be likely to experience at some level.

Growing interest in public and private sectors

The UK established the National Quantum Technologies Programme (NQTP) in 2014, with a view to making the UK a global leader in the development and commercialisation of quantum technology. In 2020, the NQTP published its “Strategic Intent”, which sets out a vision for the next decade for the UK’s quantum-enabled economy: “one where quantum technologies are an integral part of the UK’s digital backbone and the manufacturing base, unlocking innovation across sectors to drive growth and help build a resilient, prosperous and secure nation.” In June 2022, it was announced that the UK Ministry of Defence acquired the UK government’s first quantum computer, to be used for “defence applications”.

On the commercial side, BT and Toshiba recently launched the first commercial trial of their quantum-secured data transmission service, with EY as their first commercial customer who will use the “metro network” to connect their two London offices. BT and Toshiba are not alone in developing and collaborating on quantum technology projects: several companies, from new entrants such as the UK-based Arqit, to incumbents such as IBM and Microsoft, have been making remarkable progress in the development of quantum technology techniques and hardware.

The market

Much of the funding behind quantum computing development still comes from the public sector. However, there is a notable growth in private investment and the emergence of new companies looking to commercialise quantum products.

The nascent state of the market, the challenges in developing hardware and the limited availability of end-to-end solutions (which would help assess potential business impact) make it difficult to predict, with certainty, the potential value of this market in the future. According to McKinsey, for instance, the market could be valued anywhere between $9 billion and $93 billion.

Establishing best practices in quantum

In January 2022, in response to the growth in private investment and new industry players, the World Economic Forum (WEF) published the first Quantum Computing Governance Principles. These principles are intended to provide an international framework for stakeholders across different industries, and cover various areas such as transparency, accessibility, non-maleficence and common good, which are then structured across different themes (including privacy, cybersecurity and sustainability). It remains to be seen the extent to which these Governance Principles become a benchmark for industry stakeholders.

What the Governance Principles do highlight, however, are some of the likely legal and regulatory issues that companies will need to bear in mind as they plan, develop and market products involving quantum computing. These are issues that our tech sector lawyers are focused on: anticipating the legal and regulatory challenges for all forms of frontier tech (including AI, crypto, NFTs and the tech associated with the metaverse).

Legal and regulatory issues

At this stage, we can only consider issues that any company involved in quantum computing may need to consider, though these are likely to differ by country or region. Here are a few headlines:

• Cybersecurity: The enhanced ability of quantum computing to break today’s encryption standards means the cybersecurity of networks and information systems will be key. Quantum-resistant cryptography may become increasingly necessary, and companies will need to assess the extent to which their developing networks/systems comply with applicable cybersecurity regulations, especially those operating in critical sectors which are subject to specific cybersecurity standards (such as defence, and financial services).
  
  
• Privacy and data protection: The improved capabilities offered by quantum computing are likely to substantially change the amount, manner in which and speed at which personal data can be processed. Further, the risk of quantum computing breaking current encryption standards raises potential questions about the requirements needed to comply with the data protection laws currently in force, such as the requirement to implement appropriate technical and organisational measures to safeguard data under the GDPR and the UK GDPR. Companies which handle personal data will need to assess whether their systems and measures to store and transfer personal data comply with these requirements.
  
  
• Liability: The emergence of quantum computing will likely have a bearing on contracting practices involving this technology, the complexity of which may make foreseeing potential losses challenging, including: (i) measuring performance (given the increased speed of quantum computing and, consequently, drafting service level agreements accurately); and (ii) formulating liability provisions, such as for a loss of data arising out of an error which was difficult or impossible to predict.
  
  
• Foreign investment: M&A transactions involving quantum computing may require regulatory clearance. For example, the UK’s National Security and Investment Act 2021, which allows the UK Government to scrutinise and intervene in certain acquisitions, requires parties to notify the UK Government where the acquisition involves quantum technologies  This can impact deal structures and timelines.

Looking ahead

There is clearly momentum to develop and eventually deploy quantum technologies, especially in computing. These technologies present exciting opportunities and will require strong collaboration between the private sector and governments.

For companies looking to be a part of the “quantum race”, considering the likely key legal and regulatory issues at an early stage is important. Of these, perhaps the most pressing will be the impact on quantum computing on the way we use data and how we transmit data in a quantum-secure way.