Disruptive technology tends to precede the social, cultural and legal frameworks for managing the impact and risks of the new technology. Are we getting any better at managing this gap?
What is changing?
Technology and the business models technology enables often disrupt the status quo. At their initial point of introduction one of two things usually happens; the introduction is dismissed as insignificant and largely ignored, or people react very strongly. Both can be the result of misunderstanding the technology and its impacts.
Two recent developments from the last month serve as examples to illustrate these extremes: the legal case in New York City (NYC) involving a host on peer-to-peer (P2P) site AirBnB, and the introduction of Google Glass.
Two weeks ago a NYC host that had listed his apartment on AirBnB, the large P2P home sharing and rental site, was found guilty and fined for renting out his apartment in violation of a New York City law prohibiting the private renting of apartments for less than 30 days.
In what may be a precedent for others cities, NYC found that AirBnB facilitated private citizens operating much the same as hotel or Bed and Breakfast owners but allowed them to bypass the city’s legal frameworks for these establishments- including insurance requirements and hotel tax. Other cities are also looking at AirBnB hosts for similar infringements.
P2P applications were largely ignored and viewed as a small niche that some people would use over mainstream alternatives. Recently as the influence of P2P business models grow, some sites have attracted a lot of attention and not all of it is positive. AirBnB is not the only P2P site to run into legal trouble, think back to Napster (music), one of the first ones, and more recently Uber (private transport), Pinterest and Instagram (photo sharing), and there are many other examples.
At the other extreme is Google Glass, which even before it is widely available, has caused many establishments to ban their use, and Google has banned the use of facial recognition capability in applications for the glasses after widespread objections to the everyday use of the technology. Later Google also announced they would ban pornographic or adult content applications as well. This new technology has started with objections, largely based on the unknowns of the new technology, which may slow or inhibit use of the technology.
There is little in terms of legal and regulatory that covers the use of such technology for either public or private use. Social norms are governing what is acceptable and unacceptable at the moment. As the technology is better understood the context of the use will also evolve.
Why is this important?
New technologies and business models create opportunity for innovation in other areas impacted by their introduction. This includes legal, regulatory, tax systems, as well as consumer areas. New insurance products have been introduced to provide cover for drivers sharing cars or renting out their homes providing better consumer protection for both parties. The sites themselves have added safe guards and consumer guarantees to improve the user experience and provide safeguards.
Legal and regulatory systems must be innovative to find new ways to protect consumers, govern businesses and maintain their existing revenues. Incumbent businesses must watch for the early disruptors to understand how and where it will impact their own business models. Entrepreneurs will find opportunities to develop innovative products to close the gaps that are evident in the marketplace.
Once the technology exists, the way forward is to figure out how to make it work for all the parties involved. As technology and the use of technology become more ubiquitous the legal, regulatory and cultural spheres will also experience disruptive change as they attempt to catch-up.