Regulating disruptive technology – are you an activist or a sceptic?

Gordon DowniePosted by

In his interview with the FT, published earlier this week, Jochen Homann, president of Germany’s Bundesnetzagentur or Federal Networks Authority, underlines his determination that US tech giants, such as Google and Facebook (and their services, such as Gmail and WhatsApp), should be regulated like conventional telecoms firms.  As he puts it:

“It cannot be right that a company providing traditional telecommunications services has to meet certain regulatory requirements, like those concerning data protection, while a company providing comparable services over the web does not”.

Adjudication in the European Court

In pursuing this line – which looks set for adjudication in the European Court – the German authorities are treading a familiar path to that of other regulators and public authorities across various sectors, such as utilities, banking and transportation, in seeking to grapple with the conundrum of how best to respond to the challenge of disruptive technology.

There seem to be two broad strands developing in the debate.

The first strand, which we could call ‘activist’, takes the stance that any new (unregulated) service that is viewed by consumers in a regulated sector as a substitute for an existing (regulated) service ought to subject to the same sectoral regulation as existing providers, in the interests of a level playing field.  A supporter of this viewpoint would argue, for instance, that the provider of a ride-sharing app should be regulated in the same way as a taxi service.

Application of existing sectoral regulation

The second strand, which could be described as ‘sceptical’, recognises not only the threat posed by the new (unregulated) service, but also questions the legitimacy of providing a response via the application of existing sectoral regulation.  Someone expressing this view might argue that, whilst a ride-sharing app is a direct competitor of a taxi service, it is a genuinely new service that does not ‘belong’ to the taxi sector and should not be regulated as such.

I am instinctively in the ‘sceptical’ camp on this one.  Whilst I can see the huge challenges posed to conventional models of delivering essential public services by disruptive technology, I think that the application of existing sectoral regulation risks dampening the sort of creative destruction that may ultimately lead to better outcomes for consumers and may, in the process, challenge the incumbent power of existing sectoral regulators.

 

 

 

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