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Should Government Step In To Regulate Disruptive Technology?

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"You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." -R. Buckminster Fuller

We live in an amazing time. A decade where technological advancements are happening so frequently that we may take for granted the monumental innovations that are occurring on a seemingly regular basis. Revolutionary ideas have always been prevalent, but disruptive innovations are game changers. More than just innovative, many of today's largest companies aren't just revolutionary -- they're disruptive.

From your choice of transportation with Uber, to the world's largest marketplace you visit to make your purchases, Amazon, disruptive technology plays a bigger role in your life than you may be aware of. There are a handful of companies today that changed the way business in their niche will forever be done. Think of the companies that improved the current business model by drastic amounts; enough to change the economy of that particular sector. For example, one of the earliest disruptors of the last decade was Wikipedia.

As Wikipedia grew in popularity, the print media industry began to dissolve, especially in the educational sector. Non-profit digital encyclopedias became obsolete (anyone remember Encarta?), and, very quickly, for-profit printed information resources faded to obscurity. It's painful to explain to a 20-year-old how much money it used to cost to buy university textbooks or how much time was spent in a library physically scanning through pages of books. Needless to say, few elementary school student knows what the Britannica Encyclopedia is, which primarily exists as an online information portal at this point... just like Wikipedia.

Not everyone is ready to embrace change (especially when billions of dollars are at stake) and disruptive technology isn't without opposition.

Wikipedia changed the way people found information, and also had a drastic impact on the financial economy of printed information. Instead of buying a limited amount of information, through donations they managed to provide the world with an incredible amount of information. A $1,000 set of Britannica Encyclopaedias offers 120,000 articles, while the English Wikipedia has over 5 million, all available at the click of a button, and free. In cases like this, it's hard to see the negative side of disruptive innovation.

Disruptive innovation can be considered a technological advancement that drastically changed the existing market and value network. A fairly recent term coined by the brilliant Clayton M. Christensen, today's technology driven society has created the ideal environment for new ideas to flourish. However, not everyone is ready to embrace change (especially when billions of dollars are at stake) and disruptive technology isn't without opposition.

Today's Disruptors

Let's look at a few examples of companies that brought forth disruptive technology and the influence of their rise to the top. Airbnb had a profound impact on the travel industry.

Travellers no longer needed a travel agent to make suggestions or complete bookings. Furthermore, travellers no longer needed hotels to be able to stay in their desired destination. Even more important for the travel industry was the surge in new opportunities to stay in fun and unique locations, a trend that coincided nicely with travel bloggers sharing "unique getaways" that offered a change from the hotel or motel option that dominated in years past.

The ability to rent out your own property to raise money to travel also spurred its own industry, truly disrupting travel industry economics. What is most interesting about Airbnb is that it's a travel and property rental company that doesn't own any property, yet transformed the travel and hospitality industry.

In the real estate sector, companies like Zilllow.com and our team over at RentSeeker.ca are continuing to revolutionize the real estate markets by giving buyers and renters direct access to listings and with feature-rich services like virtual tours and property videos, 3D floor plans and other digital tools for real estate owners, realtors and property managers, which have been generating quite a bit of interest from Silicon Valley and venture capital, and generating quite a bit of attention with large acquisitions taking place in this space with these companies moving forward in eliminating the need to deal with a real estate agent.

Consequence of Change

Uber is a great example of disruptive technology, as they not only completely overhauled the taxi industry, but changed the world. In fact, they had such a profound change that backlash included world-wide protests, fights (many Canadians will recognize this clip) and eventually government intervention.

For the most part, Uber seems to have won the battle, but the company serves as an important example of the negative side effects of disruptive innovation; old, obsolete ways of doing business seemingly change overnight, affecting the livelihood of thousands of people. When change impacts economics, governments can be pressured to step in, and there will be proponents on both sides of the argument.

Free-market capitalism went head to head with government regulation, and in this specific example, it seems the free markets won (for now). RentSeeker.ca ran an online Twitter poll, and with over 700 votes, it provides a good snapshot of various opinions on the Free Markets vs. Government Regulation debate.

2016-11-02-1478050409-383618-RentSeeker.caTwitterPollDisruptiveTechnology.JPG

The key element all of these disruptive businesses have in common is social connectivity.

Looking at this list is simply fascinating:

• Spotify is the world's most popular music service, yet it owns no music.

• Facebook is the world's most popular media provider, yet it produces no original content.

• Alibaba is the world's largest retailer, yet it only sells other companies products.

• Uber is the world's largest Taxi company, yet owns no automobiles.

• AirBnb is the world's largest accommodation provider, yet it owns no real estate.

The advance and acceptance of the internet has connected people in profound ways, and many companies have thrived through innovation by leveraging the global connections. The crucial question is, if companies become so successful (i.e. Uber, Airbnb) that they start to impact local economies, job markets, real estate prices, etc., should government intervene with regulation or let free markets reign?

Let us know what you think by joining the conversation by following RentSeeker.ca and Huffington Post on Facebook and Twitter.

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