Digital technologies have also reduced barriers to entry for traditional and non-traditional organisations, often undermining long-standing sources of product differentiation. For example, online service providers tap markets without having to build distribution networks of offices and local agents.
This changing landscape presents real challenges for regulators. Not only is the number of services and products they regulate growing, but so is the number of suppliers and consumers, increasing the complexity of the environment they govern in.
3. Globalised Networks
We live in an increasingly interconnected world. Just as it is no longer sufficient to look at policy and regulation within siloed sectors, one can no longer create policy frameworks without taking global and trans-regional developments into account. While policy will continue to be mostly created at the national level (for the near-term future, at least), globalised networks require regulators to take into account a broader and more complex scope of geographical dimensions.
One example of this phenomenon is the convergence of global supply and demand. Digital technologies know no borders, and the customer's demand for a unified experience is raising pressure on global companies to standardise offerings. Consumers and businesses have come to expect payment systems that work across borders, global distribution, indiscriminate access and rights, and a uniform customer experience. Harmonised regulation across regions can greatly accelerate innovation and leverage existing technologies to realise these goals, while heterogeneous approaches risk stinting development.
Several ongoing regulatory changes are impacting world trade - for example, Safe Harbor, Google versus the EU Commission, and the Federal Aviation Administration and unmanned aerial vehicles (drones) - and are creating challenges to national boundaries, unfair competition and consumer protection.
4. New Business Models
It is widely recognised that digital technology is an enabler of fundamental innovation and disruption, for business and society. One of these sources of disruption is a multitude of new business models (e.g. on-demand model, access-over-ownership model). Whether it's adaptations of existing market models or completely new models, the current regulation is still not in a position to respond to these disruptions in a timely manner.
While many of these models are sources of new value creation, income opportunities, or employment, there are also inherent risks to society. For example, who is responsible for the public health and safety of a passenger who chose a rideshare in the case of an accident? The sharing economy is just one recent example of technologies disrupting traditional business models, and there may be more disruptions ahead as entrepreneurs find new ways of meeting consumers' needs.
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