Tuesday, April 14, 2015

Amazon & Drones: Role of "Regulation" in technology disruption

A number of news outlets reported Amazon's testing of drones up here in Canada. According to the Globe & Mail:

"U.S. companies like the online shopping juggernaut Amazon are increasingly choosing Canadian airspace to test new drones after being hamstrung by restrictive laws in their own country that could take up to two years to change, experts say"

Amazon showcased its vision for using drones to deliver light packages in late 2013 (see video below). However, they have been vocal about their frustration with the US regulator to test their innovation. 

The US regulators seems to have buckled under the pressure that the e-commerce giant put on them. According to Gizmodo:

"The Federal Aviation Administration has just given Amazon clearance to begin flight-testing the drones in the United States. Again. For real this time...This is the second time in as many months that the online retail giant has received a drone testing certificate from the FAA. Last time around, however, the certificate only applied to an already-obsolete prototype. Frustrated by the Feds’ inertia, Amazon recently began testing its delivery drones at a “top secret” location in Canada, just 2,000 feet from the US border."

We could explore this from a point of view of how we actually live in corporatocracy - where corporations with millions in the bank drive governmental policy instead of the average citizen. But let's not do that. Instead let's focus on how "regulation" itself can impact technological innovation.

I don't mean regulation just in the narrow sense of the "big bad government" passing this law or that statute. But a much broader concept of how societal conventions and how economic powerhouses in the Capitalist society actually determine the course of technological development.

Take for example the rise of the iPhone in the corporate environment. What allowed consumerization to take place (i.e. allowing users to connect their favourite smartphone devices to the network instead of the corporate devices) was that Microsoft took an open approach to licensing it Exchange Active Sync. They could have created a walled garden that allowed Windows Phone only to connect to their email server, however, they paved the way for iPhone and  Android to connect their devices to the corporate email server. Microsoft as the "regulator" of which mobile device can connect to its mail server - if you will - essentially enabled the iPhone and Android to displace our beloved BlackBerries from the corporate environment (for more on this see this post). Had Microsoft saw more profit in walling off the market for its own devices the ability for Apple iDevice to disrupt corporate IT would have been stifled if not suffocated.

Think this is an isolated incident? Unfortunately, that's what the hype wants you to believe

For example, David Sarnoff of RCA squashed FM radio in order to protect his AM Radio technology and pave the way for television. The inventor, Edwin Armstrong, who initially was Sarnoff's friend, had foolishly shared his technological innovations with him only to be betrayed by him. FM Radio technology had the potential to share data, such as faxes - back in the 1930s. Can you imagine the state of the wireless technology had this technology been allowed to flourish? Well that's the point. Sarnoff - as a regulator of radio technology - saw fit to erase it out of existence.

AT&T is another case in point. It ironically attempted to slay the then maverick David Sarnoff's  nascent radio technology. However, Sarnoff was able to work with the FCC and others to defend his fledgling start up, RCA, and beat the odds (unlike his "friend" Armstrong who ended up taking his life unable to achieve the same victory against Sarnoff). In 1934 AT&T blocked the answering machine for fear that it would undermine their business because "ability to record voice would cause business people to shun the telephone for fear of having their conversations recorded". So although much good came out of AT&T's Bell labs, the point is that it was effectively the one acting as which innovation saw the light of day and which did not.

What this illustrates is that the mythical innovator whose technological rises to the top through some kind meritocratic process is just that - a myth. Rather innovation is much more about how society appoints through or market mechanisms those that will ultimately sanction technology or kill it. We have the Internet because the inventors were part of a governmental DARPA project. If Bell labs had invented the TCP/IP protocol would they have taken the same route or would have it gone the way 1934 AT&T answering machine? To answer that would be pure speculation, but it is entire possible I wouldn't be writing this blog post if some "regulator" had decided otherwise.  

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