Late last year, the Providence Business News published an article about short-term rental ordinance that made me stop and think. It wasn’t the content of the article itself that gave me pause, but rather the underlying trend that became apparent as I was reading: now more than ever before, transformative and disruptive businesses are a key driver behind legislative action.
The PBN article covers the short-term rental ordinance in Providence that went into effect on November 30, 2019. Now, only owner-occupied dwellings can be offered as short-term rentals, and these rentals are also required to implement specific safety standards. This ordinance affects people using short-term rental platforms such as Airbnb and VRBO. These platforms may not seem new to use today – Airbnb celebrated its 10th anniversary last year, and VRBO has been around since 1995 - but both have been very disruptive to the hospitality industry.
The impact of disruptive business models on the laws that govern our economy and society at large is certainly noteworthy, and the short-term rental industry isn’t the only industry that’s actively and rapidly altering legislation. Emerging businesses today are changing the rules – they’re more nimble, aggressive, and customer-focused than ever before. The moral of the story? No matter what industry your business resides in, no one is immune to the changes and challenges wrought by disruptive companies, particularly if your organization is change averse.
Businesses That Affect Government Laws, Not the Other Way Around
Right now, we’re smack in the middle of the Fourth Industrial Revolution – a term coined by the World Economic Forum’s (WEF) founder, Klaus Schwab. According to the WEF, “It [the Fourth Industrial Revolution] is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.”
The current rate of technological innovation is astonishing, and as Forbes predicts, the AI economy will only further accelerate the pace of innovation. Digital Transformation is fundamentally changing the way organizations operate, forcing business leaders to reevaluate their platforms, people, processes, and products. As new business models, products, services, and technologies continue to flood the sphere of commerce, regulators will be hard-pressed to keep up with the changes wrought by the cutting-edge nature of these innovations. In the near and continued future, I expect to see more businesses shaping regulatory policies - not the other way around. Let’s look at some other industries that have played a direct role in shaping laws within the last decade.
Data and Content Concerns Grow Alongside Social Networks
LinkedIn, YouTube, Facebook, and Twitter came in the first wave of the social media flood in the early 2000’s. In the last decade alone, Snapchat, Instagram, WhatsApp, Pinterest, Vine, and TikTok have all emerged as major players in the social media industry, encouraging new trends and fostering brief, image and video-focused methods of communication. Approximately 223 million Americans use social media in 2019 – and that number will only continue to grow. This influx of new social platforms has had a direct and significant impact on government regulations. Regulatory topics that have emerged as a direct result of the increased usage of social media include information archiving and retention, the posting of inappropriate, defamatory, or illegal content, live streaming violent actions, copyright infringement, and employee rights.
PHI and Privacy Issues Within the Wearable Tech Market
When the term “wearable device” comes into play, most people’s first thoughts are of smart watches like the Apple Watch or Fitbit. However, wearable devices extend far beyond just wristwear – smart glasses, clothing, jewelry, head-mounted displays, and implantable tech are all booming branches of the wearable devices industry. These devices collect a lengthy list of personal information about its wearer – everything from activity levels and exercise regime, to nutritional intake and sleep patterns. According to the American Bar Association, fitness trackers and wearable devices have brought forward concerns about FDA regulation, privacy implications, and consumer fraud claims.
HIPAA regulatory concerns also come into play when wearable tech crosses over into medical device territory. An article published by Harvard distinguishes the limitations of HIPAA’s reach:
“Federal and state laws designed to protect PHI (Personal Health Information), such as HIPAA, are only enforced on ‘covered entities’ – health care providers, health care plans, and research institutions…private companies can solicit health data from users without having to conform to HIPAA regulations.”
As federal agencies work to improve the security and privacy of sharing PHI collected by wearable devices, a change in legislation – perhaps one that would expand the requirements for HIPAA compliancy – is likely to occur down the road.
Insurance Controversy Sparked from Ride-Share Companies
The rapid rise in popularity of ride-sharing services like Uber and Lyft have brought unique regulatory challenges on a state-by-state basis since 2013. According to The Council of State Governments, state rideshare legislation has sought to address the following major legislative issues:
- Legality of ridesharing
- Adequacy of insurance coverage and background checks for drivers
- Disclosure requirements for regulators and insurers;
- Generation of employment opportunities
- Conflicts with the taxi industry
Insurance legislature surrounding ridesharing has been a particularly hot topic of discussion. Uber and Lyft have expanded their insurance policies to include $1 million in liability protection, yet gaps in coverage still exist. For example, only drivers who have been matched with a fare, or are actively transporting a passenger, are covered by insurance.
What’s in Store for the Future?
Short-term rentals, social media, wearable tech, and ridesharing are just a few of the many industries responsible for sparking massive regulation overhauls. Currently, the pace of technological innovation seems to be pushing more legislature modification than regulators can reasonably handle. It’s time to face the harsh reality that no one, not even the Google’s and Microsoft’s of the world, can be considered exempt from the effects of new and disruptive business models.
So – what can you do? If all businesses are at risk of being dragged by their more innovative counterparts, how can you differentiate your organization in this contemporary day and age? The answer lies in embracing a Digital Transformation mindset. By leveraging the latest in technology tools that are well-suited to your unique business goals and objectives – Cloud, Internet of Things, Data Analytics, Mobility, and a host of Collaborative Technologies – you can support both a more modern workforce and a more competitive landscape. Are you ready to embrace this change? We offer a no-cost, 90-minute workshop to help companies explore strategies for how they can define what Digital Transformation means for their company, and what they can do to take full advantage of the incredible landscape in which all our businesses now reside. Contact our experts today to schedule a workshop and learn how we can help you remain competitive in a disruptive business economy.
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