Mobile apps serve as a problem solver, an entertainment package, a service provider or much more for users, but on the other hand, it is ruining the regulations, already existed with the services, it provides. Apps are opening the holes of regulations and agencies – working at the command of incumbent firms – are finding the ways to close them. Apps like Uber Taxi causes threats to incumbent firms for which the Department of Motor Vehicles in Virginia has issued a cease-and-desist letter, threatening to halt and arrest drivers using such services.
So, what should regulators do to fight against the threats entering to incumbent firms because of mobile apps? Probably, they have three options to select from. Here, they are:
Existing regulatory structure can be used to apply equally within all firms, no matter whether the firm is operating through mobile apps or not. This method allows existing cartels to shelter their position as a part of confidential incumbents while pushing the startup competition out of the field.
Firms must leave the current regulatory structure and apply another model – made on the basis of mobile apps. Consumers will enjoy the entire benefit of this model as it lets them to compare prices, choose the lowest one, and much more than that. On the other hand, by leaving the existing regulations, cartelized incumbents will also lose the benefits – they are receiving from it.
Last option is to leave the things as it is. Let the new technologies break out the burden of regulations and chip away at the old rules. Most of firms reject this option as they think they didn’t reach any result with this and they will lose their benefits entirely.
Regulators don’t want to eliminate app driven services; instead, they want to apply the existing regulation structure on them. Doing such, results in losing the consumer benefits, loss of revenue, and diminishing incentives for innovation. One must think of regulations that include benefits for both regulators as well as for consumers. Also, one must make regulations with a preferred set of rules while not ignoring the innovation and creativity along.
Related: Enterprise Mobility Is More Than the Devices You Use