Businesses that are bad for business

There is a tendency to take a simplistic view of technology-driven disruptive businesses. That’s because, generally, they offer better deals for consumers.

But, often glossed over, is the reality that disruption is possible, not because of the intrinsic brilliance of a product, but because it is only able to offer lower prices through not complying with legislation and rules that its competitors must abide by.

So, Uber is able to offer hundreds of millions of urban commuters a cheaper transport option – because it does not class itself as a conventional taxi service and, therefore, either does not comply with the rules set down for taxi businesses, or it has to be forced into line.

Paying the required fees and meeting the required safety, insurance and training requirements of conventional taxi fleets would destroy the Uber competitive business advantage.

And, even then, Uber has enraged many of its driver partners, who are only barely scraping a living driving people around, despite providing the vehicles.

The situation is the same with accommodation agency Airbnb.

Originally, it was touted as an amateur swap-type service, with homeowners able to rent out their properties while they were on holiday. Now, it has become a mega business – and a very real threat to conventional hospitality businesses, because it is unregulated.

Overseas, Airbnb has badly damaged hotels and driven up property prices to the extent that locals can no longer afford to buy in some places.

In many countries, the service is dominated by big companies and commercial operations. Now, our government is proposing to restrict Airbnb and there have been complaints. We agree with government.

Either you have regulation or no regulation at all.

Disruptive businesses can negatively disrupt the fundamentals of your economy.

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