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Business Continuity

Tech disruptors get backlash from industries they revolutionise

Protests by cab drivers against ride-hailing app Uber have gone global again as drivers in a number of countries including France, China, India, the UK and Canada have joined peers in cities across the US in blockading streets and bringing traffic to a standstill. It’s the latest in a series of protests against digital disruptors. In April, residents in Venice, Italy staged a protest against AirBnB, while, also in Italy, interior design crowdsourcing site CoContest has claimed a number of politicians and architects called for its business to be investigated under anti-competitive legislation.

In fact, Italy is in danger of getting a reputation. CoContest, an Italian business that has been chosen by 500 Startups to join its incubator lab in California, should surely be championed by its country of birth. Italy has one of the highest unemployment rates in the Eurozone at over 12%, while its youth unemployment figures are hitting over 40%, according to EU figures. Given that the online design and architecture site is the only Italian start-up to be chosen by 500 Startups, you’d think the Ministry for Economic Development would be jumping for joy.

Not so it seems. Eight Italian MPs submitted a complaint to the Ministry in Rome in May. The written complaint is still working its way through the system and our request for comment has so far fallen on deaf ears in the Italian capital. So, do the MPs have a legitimate complaint or is there a dubious overlap of interest here, as all eight are in fact trained architects and planners, with either an outside interest in the profession or strong industry connections?

The complaint is interesting. On the surface it would suggest that the concerns are legitimate, if anything born out of an old-school idea of how business should be conducted.

“It is not clear who certifies the skills of designers,” says the complaint, suggesting concern for the professional standards of service providers. Is this protecting the consumer’s interest or the interest of the traditional architects?

Filippo Schiano di Pepe, CEO of CoContest, is clearly not impressed.

“This was an attack by an elite group of architects who were scared of losing their status quo. They are against innovation,” he says.

He may have a point. Italy has form when it comes to tech disruptors. In May the government introduced a nationwide ban on Uber POP and any other unlicensed car sharing services. The ruling was triggered by a petition from taxi associations claiming Uber was anti-competitive. It looks as though CoContest could come under similar scrutiny although which direction this will go is uncertain.

“Are the eight MPs asking the Italian government to put in place new regulation or are they asking the courts to ban it? It’s not clear,” says Chris Dyson, partner at UK law firm Ashfords.

It’s a good question. We will however have to wait for the answer, given the fact that the Ministry has gone silent. But given its previous dealings with disruptors the forecast is somewhat uncertain for CoContest, at least in its home country.

When it comes to reaction to disruptive tech there is certainly a recurring theme and not just in Italy. While London mayor Boris Johnson puts the emphasis on the need for Uber drivers to prove their worth. He is calling on Uber drivers to take a “mini Knowledge” test; ‘The Knowledge’ refers to gaining a deep understanding of London streets, required for drivers of the city’s famous ‘black cabs’. Former UK MP Derek Wyatt put it more succinctly; “Reform or die” he wrote on Twitter in the aftermath of the Black Cab protests in London last month. He has a point.

Can the old world business model beat the digital world juggernaut through protests alone? Offline disruption can win the battle but it is unlikely to win the war. Another UK MP, Ian Austin, came in for some stick after posting on his Twitter account that the delays caused by the Black Cab protest were actually prompting him to sign-up to Uber:

It seems to be a typical reaction but it is unlikely it will dent the will of the protesters. In France, Uber has been declared illegal and its offices were raided in March this year despite on-going legal challenges. The government has now called for a crackdown on Uber drivers, including the seizure of cars.

But is this all missing the point? The technology disruptors are, if nothing else, putting buying power and choice back into the hands of consumers. It is surely the job of the service providers to recognise the consumer trends and react accordingly. Clearly consumers are voting with their phones and virtual wallets and as the old maxim goes, the customer is always right?

Dotcommunism

The term ‘dotcommunism’ has been used in the past to refer to the levelled playing field disruptive sites create. It’s a misleading term, although in the case of CoContest there are certainly benefits to smaller architects and design companies, in theory enabling them to compete for projects that would traditionally have not fallen within their scope.

Schiano di Pepe says there are over 140,000 designers in Italy, which makes up one third of all designers in Europe and ten per cent globally. Domestically the demand for their services is lower than one per cent so there is a pressing need for this industry to look outside its own borders. This is where crowdsource service sites such CoContest can help, he says:

“We are bringing new, fresh customers from all over the world, to create new, equal opportunities for all designers. We are very determined to succeed in the pursuit of our goal to redistribute the demands and offers worldwide, giving everyone access to the interior designer service and democratising the industry. Also, we want to help all skilled designers build up successful professional lives.”

It’s a noble sentiment but is there the same feeling across all the digital disruptors? The sharing economy sites such as Uber and AirBnB are slightly different cases but all would say they are helping to create jobs; Uber in fact has pledged 50,000 new jobs for Europe. So with jobs in mind, are these businesses right to challenge the status quo and threaten people’s livelihoods?

“Where you have disruptive technology companies coming through, if they are not annoying a few people then they are not really disruptive, are they?” says Dyson at Ashfords, claiming that regulators are following the sharing economy and crowdsource sites closely to ensure laws can keep pace with change.

“Regulation generally is reactive,” adds Dyson. “Each country will have its own rules. There is no wider European stance or regulatory recommendation on these things.”

If you can’t beat them…

Dyson, like other industry watchers, is intrigued though to see how this will pan out. Uber in particular is coming under a lot of attack. While arguments around licensing to ensure safety and uphold consumer service rights carry some sway, it is the ruling in California that Uber drivers are employees and not contractors that could have the biggest impact on the company. With that will come rising costs as the business will have to factor in all the usual employee benefits and financial responsibilities.

So should protestors just accept the inevitable and fight back through other means? Should cab drivers back other services such as Hailo, for example, that work with the drivers to promote them to consumers, offering the convenience but not undermining the income?

There is a feeling here that change is inevitable. How long before Uber takes it a step further and stops using drivers and goes driverless, therefore avoiding the California issue of employment rules?

Interestingly, Hailo recently projected pictures of London ‘cabbies’, as drivers are known, onto buildings to promote the personality of the Black Cab driver against the potential for further disruption by robots.

Hailo CMO Gary Bramall said at the time:

“People don’t want robots; they need to know that their driver will get them from A to B safely and securely. Nothing can replace the relationship a passenger builds with their driver and we need to stand up for drivers. Cabbies have been a part of this city for hundreds of years and the move towards driverless cars is killing not only an entire profession, but a huge part of Britain’s heritage.”

Ah, heritage. What role has heritage played in reining in progress? And how many protests against innovation and change have really worked? As Henry Ford once said; “If I asked my customers what they wanted they would have said a faster horse.”

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Marc Ambasna-Jones

Marc Ambasna-Jones is a UK-based freelance writer and media consultant and has been writing about business and technology since 1989.

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