The Uber effect: regulators must work harder to catch up with innovations in the new economy

Alice Wu says the speed and scale of growth in the peer-to-peer economy are seriously challenging government attempts to protect not just service users, but also the providers

PUBLISHED : Sunday, 16 August, 2015, 10:00am
UPDATED : Monday, 17 August, 2015, 12:42pm

Don't tell me, I know: Uber is great. In fact, it's uber-revolutionary. Uber - and all the other companies making gigantic amounts of money from the peer-to-peer economy - is for us today what the railway companies were to the Industrial Revolution: an inevitable development of true innovation.

It's hard not to be impressed. The people behind Uber aren't just your average tech-savvy people with a good idea. During the initial development of the app, the company gathered together extraordinarily smart people - a nuclear physicist, a computational neurosurgeon, a machinery expert, among others - to calculate the demand for drivers and match it with the supply, according to one report.

For many Hong Kong residents, Uber was a pleasant "disruptive innovation". Cabbies here, who felt threatened enough to have mobilised to try and take Uber off the roads, are going to have to shape up.

Uber gave commuters an alternative. It empowered consumers, and empowerment sells. The fact that it runs in legal grey areas isn't anything new. Local cabbies already know all about that; with their dashboards full of phones running a discount-cab network, they, too, are skirting the legalities to offer customers more access.

So Uber is part of a much larger revolution that dinosaurs need to reckon with. And that revolution isn't just a change in the way we communicate; the way our economy is organised has been fundamentally changed.

What's certain is the fact that those who remain protected under regulations will eventually need to face reality. Innovate or die - even for protected industries.

Just as online shopping has changed the retail industry, and new media has forever transformed the newspaper industry, Uber and other car-hiring tools will demand changes in the way our government makes public transport policies.

The fact that existing regulations are not up to date isn't surprising. Most were set up by governments to protect the people, but, over time, "regulatory capture" occurs, because it becomes the bread and butter for special interests. Regulated industries are motivated to influence regulations that benefit them and hurt their competition.

At the end of the day, industries that fail to reinvent themselves and adapt will die out. People are now calling that "getting Ubered". With the rapid pace of change, governments have their work cut out. In a way, it's not only industries that are getting Ubered. Governments can't play catch-up quickly enough.

There will always be a need for regulations, and governments will need to be much smarter: relying on industry insiders to help them craft new rules will become increasingly difficult and regulatory capture increasingly hard to fight, and they will find themselves going head to head with the very people they're supposed to protect.

The legal issues surrounding Uber and other innovative solutions offered by the dawn of the peer-to-peer era must be dealt with. There are serious issues that will demand more regulations, but of a new kind. Technology has made life more convenient, but it has also sprouted new platforms for criminals.

It has empowered commuters to track where their Uber drivers are, but allowing drivers, companies and god-knows-who-else access to track the whereabouts of individuals is a serious privacy and security issue.

There has been a lot of talk about protecting Uber customers, but what about Uber drivers? Finding a balance amid all these growing concerns, and to do so quickly, is the challenge before governments and regulators today.

Alice Wu is a political consultant and a former associate director of the Asia Pacific Media Network at UCLA