Time To Think About Regulation For Disruption

Live-streaming app Periscope was banned this week. Both the NHL and MLB have decided that it's not welcome in their stadiums, which — while totally unenforceable — raises another interesting question: If it's OK to Instagram artwork in museums, how do we make up such rules? How do we define these boundaries?  What about gifs?

While we are kidding ourselves if we think that Periscope viewing of the Manny Pacquiao fight had a demonstrable effect on box-office revenue, we do get glimpses into future quandaries. This is yet another company “disrupting”  a marketplace — and in the process, inventing new behaviors, creating new problems and new opportunities at the same time.

I’m always a bit scared using a word like disruption — it’s one of those ever-trendy terms that’s begun to lose all meaning (next on this list is reimagination, but that’s a piece for another day). For me, disruption isn’t a process, but an attitude: an arrogant dismissal of everything anyone has ever done before. In order to challenge everything that’s ever gone before, founders of disruptive products have also sought to escape not only the imaginary rules of business, but the real law of the land.



If Uber, AirBnb, and TaskRabbit were really part of the “sharing economy,” then so are taxis, hotels and pimps. What these and a generation of statups are really about are regulatory hacks: finding a way to exploit or circumvent the laws in new ways.

Uber is able to boast about creating millions of jobs, while denying it employs anyone, and avoiding any of the expensive requirements that burden large taxi companies.

AirBnb is a wonderful company, but still able to dance around the incredible planning, health, safety and taxation requirements that any other form of accommodation faces.

Periscope is seemingly a public broadcaster that doesn’t need to abide by any of the tough rules and rights management laws that radio or TV  broadcasters have faced.

From Aereo skirting TV broadcasting laws, Coursera avoiding rules governing education, PayPal being the most banklike bank that doesn’t abide by banking regulations, to Amazon avoiding sales tax or Starbucks not paying tax for foreign operations, it seems that part of the creativity of modern business is finding a way to exploit loopholes.

We've also seen companies actually stop doing the hard work of providing services and merely become the customer interface that matches wants and needs. If Alibaba holds no stock, what is the company’s liability if your product is defective or dangerous? From Facebook, to Uber to InstaCart to  Kayak, it's harder than ever to find responsibility, with the thinnest companies we've ever known.

It’s not an easy issue. I for one both love the service, convenience and abundance of the Uber app, but also concede that in markets where Medallions fetch seven figures, or where taxi drivers need to learn a significant amount of knowledge, the playing field isn’t level. Airbnb has changed the way I see the world, but I’m sympathetic to those who face misery at the hands of illegal hostels like Airbnbs.

We simply have no idea if all this disruption is in the public’s interest.

The best example for me right now is the tobacco industry. Electronic cigarettes are a perfect representation of a physical regulatory hack, in that they’re both tobacco and non-smoking at the same time.

What should we do about it ? They are generally not yet taxed, so shouldn’t we tax them? They are generally not permitted in non-smoking areas, but why is that? And above all else, are they a good thing?

We have little knowledge about the short-term — let alone long-term — effects of electronic cigarette smoking on the body. Are those who smoke eCigs doing so as a way to gradually stop the habit? Or are they doing it instead of stopping smoking altogether? Are eCigs actually bringing more people into the smoking category?

We’ve simply no idea if eCigs are the creator or solver of very significant problems. The same is true for Uber, Airbnb, Periscope, Facebook, Amazon and a generation of other companies.

Faced with new technologies, new behaviors and companies that seek to actively exploit any loophole, we need to have a serious conversation. How do we regulate or legislate for this trend?

We can’t keep sitting back — or shutting loopholes years after massive social change, destroyed marketplaces and bankrupt incumbents. Neither can we destroy fantastic business models that create public and business good.

We need authorities to take a proactive stance and protect business and societal interests.

What does Periscope mean for conversations about rights management? What will the first generation of self-driving cars mean for auto insurance? 

There will be conversations about data ownership — and the meaning of people -- in the age of head transplants. Fun times ahead — but let’s try to keep ahead.

4 comments about "Time To Think About Regulation For Disruption ".
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  1. Walter Sabo from SABO media, May 7, 2015 at 12:31 p.m.

    There is never any reason for government involvement except with airplanes.  Stop this.

  2. Jon Currie from Currie Communications, Inc., May 7, 2015 at 2:16 p.m.

    It's time to disrupt disruption.

  3. Paula Lynn from Who Else Unlimited, May 7, 2015 at 7:41 p.m.

    As someone of unusual tech gifts says, "Either I pay, you pay or someone else pays. Someone pays." So for all the services received by all these "companies" who refuse to take any responsibility for all that they use and refuse to pay, YOU pick up the slack for all the public services. The people who make sure the street lights are on and the materials to keep them on must be paid. Those psuedo companies make you pay. Watch your taxes increase if you want to keep those lights on. Someone pays.

  4. David Krulewich from Connexity, May 8, 2015 at 11:11 a.m.

    Interesting points. Thanks.

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