Standardisation: A tool for addressing market failure within the software industry

Abstract Despite the maturity of the software industry, empirical research demonstrates that average software quality, when measured through the presence of software defects, is low. Such defects cause a wide array of issues, not least in the form of vulnerabilities, which support a multi-billion pound a year industry of fraud in cyber crime. This paper suggests that this is the result of market failure stemming from two factors: the first is that information asymmetry prevents the establishment of software quality prior to purchase; whilst the second is that the legal provisions available under private law are unable in their current form to adequately address software liability issues. On that basis this paper proposes the use of standardisation as a tool to address both of these shortcomings by providing an industry benchmark against which software quality can be ascertained, as well as forming a legal tool for determining causation for the purposes of establishing legal liability.