Monday, January 22, 2018

Quote du Jour: The Importance of Seeing Past the Magician's Misdirection Move Edition

On the tech giants:
“These businesses have not redefined industries in a fundamental way; instead they are ‘old wines in new bottles’…and should be regulated accordingly.”
From the HBR
Many online platform businesses, such as Uber and Airbnb, have so far had a pretty easy ride when it comes to regulation. Your Airbnb host probably doesn’t have to worry about city fire-code inspections, for example, and it’s up to you, informed only by the driver review on the app, to decide whether you think the Uber vehicle you are about to step into is safe and road-worthy.
So far, the theory behind this laissez-fair regulatory approach — which many in Silicon Valley are happy to endorse — is that platform companies define new markets for which regulators were not prepared, and as such can’t be regulated in the same way as legacy companies. We believe, however, that these businesses have not redefined industries in a fundamental way; instead they are “old wines in new bottles.” They have more similarities than differences with traditional businesses, and should be regulated accordingly.

First, we should agree on a definition of a new market: in our view, it is commerce that brings together products and services with customers in a transaction that did not previously exist. A historical example of this is the introduction of cell phones, which created a fundamentally new market because consumers could connect with each other in ways that were just impossible with land lines. As a result, regulations influenced mainstream cell phone use differently depending on the country. In the UK, handsets and service plans were sold separately, giving rise to a whole new market of retailers and encouraging open competition among handset manufacturers. In contrast, in the U.S., regulators linked handsets to service plans, resulting in a telco-owned market and largely absent of any handset competition for years (until a certain smart phone came along)....MORE
HT: 13D Research, who writes:
Uber is a taxi company. AirBnB is a hotel company. Facebook and Google are media companies. Enforcing these classifications would strip tech giants of competitive advantages increasingly seen as unfair to incumbents. It could also eliminate many of the offshore tax practices that have enabled tech giant cash hoarding. The concern is how this would impact consumer benefits and freedoms, from the information they share to their ability to monetize assets like cars and homes....