Regulation as a Platform

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We’ve seen Tim O’Reilly’s idea of “government as a platform” makes it way into government and become a reality. Initiatives like the US Digital Service and GOV.UK are changing the way governments think about building digital services, and teaching them that all services should be designed with their digital implementation in mind. But what of services that aren’t provided directly by government, but are regulated by it?

Governments regulate nearly all commerce, and set strict rules for many industries. These rules create markets and define competition. Examples range from restaurants to dentists, plumbers to taxis. New industries spun from the collaborative power of the web have pushed the limits of, and often broken, these regulations. AirBnb has challenged hotel and tourism regulation, food trucks in many cities break food codes, and perhaps most dramatically, Uber is breaking taxi laws around the world.

Governments can be slow, are rarely innovative, and are usually reactionary. But unlike private enterprise, they have a responsibility to their citizens to enforce the laws decided through the process of collective decision making. When faced with the kind of fundamental shift in society that the internet has created, the question is not whether government should regulate, but how, and for whom. Healthy regulation creates the foundation on top of which future innovation is built. The fight for Net Neutrality in the United States is a powerful example of how smart regulation can be fundamental to building the platform of future innovation.

The fundamental challenge in a world with the internet is to figure how to set the rules that allows disruptive entrepreneurs to experiment and profit from their ideas, while maintaining the ability to decide when an innovation is not worth its cost to society. Since much of the innovation we see today is built on the internet, governments should not ignore the digital implementation of their regulatory decisions. The next question then becomes: should the government itself be building digital platforms alongside their regulatory decisions?

To explore this question, let’s take a look at France’s response to Uber.

The French government has put up one of the most forceful responses to Uber in the world, aggressively policing its cheap, amateur service UberPop (known as UberX in the United States), and indicting two top Uber executives in France on charges of running an illegal taxi service. Its regulatory response to Uber has been different than other countries in two important respects: it has strongly enforced its judgement of illegality, and it has funded the creation of a geolocation and hailing API to be used by taxi services across the country.

The API, in a clever use of a new top-level domain, is named le.TAXI. Authorized by what is known as the Loi Thévenoud (link in French), the API is an intriguing example of government marrying regulation of a market with a digital platform to enable competition. A clear response to Uber and other cab-hailing apps, le.TAXI will allow app developers to build interfaces that can show the location of nearby taxis and hail them. Most major taxi operators in France have signed up for the service.

While its success depends on its technical stability and adoption by taxi drivers, app developers, and customers, le.TAXI is an interesting example of how governments can think about how to implement regulation digitally. In this case, the French government is in a strong position to provide the platform: it does not need to make money on the service, nor is its interest to eventually compete or remove taxi drivers from service entirely (unlike Uber, which plans to replace drivers with self-driving cars ASAP). In this way, it is a trustworthy party to the taxi companies. It’s greatest challenge will be to keep the service sustainable. But by focusing on being a platform–in this case, a simple RESTful API–instead of a consumer facing app, le.TAXI is positioning itself to be the plumbing on top of which the private sector can build its interfaces and integrations.

Data standards and open APIs have proven themselves particularly successful in helping consumers interface with transportation systems. Arguably the most successful open government data standard–GTFS–has made hundreds of transit systems more usable and accessible by shifting their digital strategy to being a platform rather than building consumer facing applications themselves. le.TAXI should be applauded in making an attempt to bring that kind of platform to the particularly intransigent industry of taxis.

The tension between the libertarianism of the internet and the caution of government is a defining conflict of our age. But arguing that government should not touch the internet is neither realistic, nor desirable. Instead, governments can provide value by setting clear, simple rules and building open digital platforms that empower the private sector to innovate on top of them. Projects like le.TAXI are a positive step in that direction.