Finding the right balance between regulation and innovation
4 minute read
Innovation is everywhere we look and the rate at which technology is being adopted is constantly accelerating, but managing the risks and rewards of emerging technologies is a tricky balancing act. Too many rules can stifle creativity, while too few can potentially lead to tragedy.
So, how can we maximize the upsides of innovation while trying to minimize the potential downsides?
When a new technology emerges, there’s always unexpected consequences and it always has the potential to be used in unanticipated ways. Some of them could be good and some could be harmful, which is where regulators step in. Most key technologies, like cars, aviation, healthcare and finance are heavily regulated, but the difficulty lies in the fact that technology moves at a much faster pace than regulators do and finding the right way to regulate a technology becomes very difficult.
This is nowhere clearer than in the progress of one particular technology: autonomous cars. Several tech companies are racing to develop autonomous vehicles and Google’s sister company Waymo is one of the leaders in the field. The company has been running a fleet of fully driverless cars on public roads since October 2020, when it launched its first commercial product in Arizona.
Waymo chose Arizona because its state regulations allowed greater freedoms for testing, thus incentivizing the state to become the center of innovation for autonomous vehicles. There, companies have worked hand in hand with regulators to help shape and inform the current atmosphere.
However, these regulations came into the spotlight when a cyclist lost her life after being hit by a self-driving Uber vehicle. Following the accident, people began to wander if the whole situation could have been prevented had there been a stricter regime surrounding this technology. Since then, it has become clearer that for both companies and policymakers, the biggest challenge yet might not be safety, but public opinion.
On the other side of the coin, too much regulation can hinder progress and become bad for business. This is the case for drones. The risk of having drones in the air, where they might crash or collision with other flying vehicles, makes the need for rules imperative. In America, the body responsible for these regulations is the Federal Aviation Administration.
The problem is that the FAA’s entire history and structure has been focused on protecting people on board an aircraft by creating very high standards for both the pilot as well as for the aircraft. This did not translate well when applied to drones. Many felt that the FAA was imposing the rules for the old technology on the new, and while the regulations were updated in 2016, many argue that they are still lagging behind and stopping drones from fulfilling their full potential.
The next frontier is what’s called beyond visual line of sight, and US company Wing is already doing this, but not in its base in California, but rather, in Australia. Wing chose Australia because the regulator there has very high safety standards and was willing to work with companies to ensure careful reviews and safe operations, something that the FAA is not. Some even claim that the regulator has driven these innovations overseas by failing to deliver up-to-date rules that will permit further exploration of fully unlimited autonomous distance flying. The obvious answer would be to replace the current no risk tolerance policy by working into integrate this technology into society.
Innovation and regulation don’t necessarily have to be opposites. In fact, they could go hand in hand to create the right kind of regulation that’s smart and that applies to the risks presented by each individual advancement. A great example of this has happened in the financial service industry in London with so-called sandbox regulations.
Keeping innovation in a controlled environment is sensible in the fast-moving financial sector and it is now being adopted by another emerging technology that’s on the move: electric passenger flight, known as eVTOL. eVTOL aircrafts are similar to drones powered by motors that run on batteries, but big enough to carry passengers.
Vertical Aerospace in Bristol has already flown a prototype in a regulatory sandbox working with the Civil Aviation Authority, helping showcase the importance of collaboration. Working like this, ensures that there is an ecosystem ready to accept an eVTOL aircraft when it goes into full-scale production.
If companies and regulators engage at an early design stage of a conceptual stage, then they can collaborate in building something that can actually be regulated.
If you would like to get a more in depth look at how should the challenges caused by rapid urbanization be handled in the world ahead, please check out the companion film by The Economist and learn more about the world ahead.