Is it just me, or does it seem like an increasing number of successful technology startups are running into growing legal and regulatory issues? Specifically, the incumbents getting disrupted aren’t always fighting back in the market; they’re fighting back with lobbyists.
Consider these current examples:
Aereo. This company receives free over-the-air signals (using mini antennas, one per subscriber) and streams them on-line. The networks aren’t happy because they’re not getting paid the way cable companies have to pay. This case is pending at the Supreme Court, and the press is comparing it to the 1984 Betamax ruling that made it legal to record TV shows at home.
Uber. There are so many lawsuits from taxi companies and associations, I don’t even know where to start.
Airbnb. Cities want the hospitality tax (Airbnb is moving to collect taxes in New York, San Francisco, and Portland) and the hospitality industry doesn’t want the competition.
Tesla. Can you name any other industry where a manufacturer can’t sell their own product? Laws designed to protect auto dealerships from anti-competitive moves by their current manufacturers are now being used by dealers to prevent new manufacturers.
Google Fiber. The ISP lobby has gotten limits on municipal broadband in 20 states, and a fairly extreme (restrictive) bill was proposed in Kansas (but doesn’t seem to be going anywhere). ISPs don’t think it’s fair to compete with municipalities who take matters into their own hands to get competitive broadband service.
Every Bitcoin startup. This one is so early, most folks don’t even know where to start lobbying. That didn’t stop my home state senator, Joe Manchin to call for a complete ban. It was embarrassing (he’s since backed off, a little).
What’s most interesting: in every single case (except Bitcoin, too early), the consumers are very happy (often extremely so). They’re enjoying the fruits of innovation and competition — exactly the way things are supposed to work.
By virtually any test of our fundamental policies regarding free markets, anti-competitive practices, and restraint of trade, these innovators should not have so much regulatory headwind!