Friction in the Digital Economy

Regulating the digital economy

Uber and other ride-hailing apps are facing more and varying regulation around the world. Recently: 

1. Chicago announced plans to charge traffic congestion tax on certain ride-hailing trips - https://twitter.com/DigitalAsian/status/1199892976119377920

2. India announced plans to cap ride-hailing firm fees at 10% - https://twitter.com/DigitalAsian/status/1199880095063609344

3. Transport authorities did not extend Uber's licence in London - https://twitter.com/DigitalAsian/status/1198912587309543425

Now that Uber and other ride-hailing apps have scaled up, they are having to deal with many different regulations around the globe. This is not just for ride-hailing apps but for virtually all tech startups that have scaled up internationally. Once you scale up you need to develop a department for handling compliance, regulation and governments worldwide and this imposes a huge cost on startups and their investors.

There has so far been no concerted effort into creating uniform global rules for the digital economy. Although, there has been some attempt to try to start discussions on a 'digital tax'.

These varying regulations are creating friction in the digital economy - and the costs for this are being payed by the users of the technology, in higher fees, and the investors in the startups.

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Video from The Economist