Plus, La Meme Chose

Global Digital Transformation began with landlines and is an ongoing journey that traversed mobiles, the internet, and social media. Now we have highly sophisticated virtual worlds with AR/VR and Immersive Gaming; The Metaverse is our future. Invariably a new technology awaits in the wings – beguiling customers but a threat to incumbents who seek to acquire, impede or crush it. It is piquantly thought-provoking that incumbents are often oblivious or ignore the writing on the wall. Would things be different if they genuinely acknowledged and adapted rather than resisted the onslaught of innovation, competition and regulation?

Regulation always plays catch up with technology and for a good reason. It is acknowledged that much as we might want to preempt and correct every consumer harm or anti-competitive conduct, regulators cannot afford to get it wrong. Market interventions should be eschewed unless they are necessary. Regulation must be carefully calibrated to rectify distortions without collateral damage. Simply put, it is safer not to regulate than to over-regulate or regulate in haste.

Thus, regulators take their time to gather information, analyse the impact of new technologies, consult stakeholders and conduct impact assessments. In the interim, the parties aggrieved by incumbents’ harmful or anti-competitive conduct go to court, and a wealth of illuminating jurisprudence helps regulators bridge the information asymmetries.

Finally, comprehensive consumer and competition-friendly regulation emerges to curb harm, clip the wings of incumbents and create a conducive environment for the new technology to flourish.

However, the seeds of the next cycle have already been sprouting. The innovators or challengers are not all equal. While battling incumbents’ tactics to suppress them, some challengers had already grown relatively large and popular, and now, they truly take off.

Compared to their counterparts, they have the advantage of time, consumer numbers, loyalty, and better ideas, and regulators see no reason to curb their growth or monitor their conduct. In any case, the regulatory machinery, busy tackling the incumbents, can pay scant attention to and does not fully understand or cannot entirely anticipate the more disturbing aspects of the new business models. If they try, information asymmetries and doubts nurtured by the new incumbents will keep them hesitant.

When regulators do act, harmful behaviour would already have played out. Another novel innovation will be struggling on the sidelines, and the cycle will repeat itself. Sounds familiar?