Google Corporate Strategy Analysis

                 Corporate Strategy Analysis of Google

                                                  Introduction:

Google (Parent company: Alphabet; NASDAQ: GOOGL) is a leading name in the world of Information technology. Starting from a search engine to doodles, Chrome browser and webstore, several of its matchless online products have turned it into a household name. Apart from a user friendly search engine and browser, Google’s large empire touches users’ lives on several ends. Google is not even 25 years old, but has seen immense success in this short period. The web world continues to expand, adding more and more users each month, Google’s advertising empire has grown very large. Taking its previous five years’ financial performance into account, the brand has beaten all challenges and forecasts. Advertising is at the core of Google’s business empire on which its success rests. The profitability of its entire business model rests upon advertising. However, in the meantime Google’s business has expanded into newer areas as well.

        Alphabet, the parent company of Google has expanded its business into areas unrelated to its core internet based business as well. While Google has altered the way we accessed information, it has also been successful at creating new benchmarks in several more areas. It has been appreciated widely for its HR management and criticised for trying to be a predator in the internet industry. However, Google’s situation continues to grow stronger despite the large number of challenges facing the technology world apart from increased regulation. Rather than using predatory business techniques, it focused on technological innovation to gain market share fast. An efficient search engine and a faster web browser are the results of its focus on innovation. Its popularity is mainly based on the efficiency of its web based products. Google (Alphabet) has also diversified into new business areas in technology including cellphones. It is also working on automated driving in partnership with several auto brands.  However, the future is full of challenges and apart from user data related regulations and competition, there are other challenges that can be an obstacle to faster growth. The tech world is evolving faster. It will continue to change, but the role Google has played in changing the web world and making it easy and convenient to  access information and other resources online is undeniably big.

                            Company History:-

          The foundation of Google was laid in the dorm rooms of Stanford. Larry Page and Sergey Brin created a search engine called Backrub that used links to determine the importance of individual webpages. Soon they renamed it Google which was a play on Googol, the mathematical expression for 1 followed by a hundred zeros. By 1998, apart from the academic community, investors had also grown interested in this search engine. Google Inc was born officially in 1998 after Sun co-founder Andy Bechtolsheim handed over a check worth $100,000 (💰) to Larry and Sergey. The Google team made its way from dorms to a garage in suburban Menlo Park, California which was their first office. Alphabet, the parent company which owns other businesses too apart from Google was formed in 2015. The driving force in the history of Google has been the motivation to do unconventional things. The two founders had written in the original founders’ letter that Google was not a conventional company and never intended to become one. From Google search to Google maps, Android, Chrome and Adwords, everything Google did was unconventional. That’s how it built an online empire which extends to every corner of the world. 

          Today, Google products are serving billions on the planet. From its search engine to YouTube, Gmail, Google Chrome, Google Play and Android, all of these have more than a billon monthly users. Since its foundation, Google’s focus has remained on the bigger things that affect millions of lives throughout the world. However, these accomplishments have not reduced Google’s focus. It is still eager for more and the amount of energy and creativity at Google does not seem to reduce with time. It wants to address the larger problems affecting the planet using its creativity, resources and technology. Alphabet’s formation has not taken the focus away from Google which still remains at the centre of the picture. Instead it brought tremendous focus to those extraordinary opportunities Google could exploit.  Its search engine has improved a lot over time and instead of just providing search results now offers quick and more precise answers to larger number of queries. Voice enabled search makes searching even easier. So many things have changed inside the company. However, it is still guided by its mission to “Organize the world’s information and make it universally accessible and useful.” Larry Page is the CEO of Alphabet and Sergey Brin, the President. Sundar Pichai is  heading Google as its CEO. 

Since its foundation, Google is known for its firm focus on innovation. Today, it has thousands of patents. It is investing billions every year in research and innovation. It will help the brand grow its market but more than that achieve more valuable and meaningful things for the humanity. Google has created some major products and experiences and rather than staying exclusively focused on just one market segment and industry it is always trying and testing new ideas. These ideas will help bring more convenience to the human world and also create new opportunities which could benefit millions.

                                                      A Brief Timeline 🕐

Googleplex (HQ)

                                                            Operations     ♳

Google’s headquarters are located at Mountain View California. Alphabet, the parent company of Google also operates Research and development sites around the world in North America, South America, Asia and Europe. Its data centres are located in U.S., Europe, South America, and Asia. The role of the two founders is critical to the management of Alphabet whereas CEO Sundar Pichai oversees the management of Google’s operations. Its mission is to “Organize the world’s information and make it universally accessible and useful“. Simultaneously, it is working on maximizing profits and strengthening its revenue model. Advertising is central to its profitable operations.  Google’s market cap is around 700 Billion (NASDAQ). However, Google does not expect to pay its shareholders any cash dividend in the foreseeable future. While it generates enough cash, it does not pay its shareholders through cash dividends but instead reinvests the profits into business operations.

Googleplex

Googleplex.

In October 2016, Alphabet directors approved a repurchase of up to $7,019,340,976.83 of the company’s Class C capital stock.  Again in Jan. 2018, they authorized a repurchase of upto $8,589,869,056 of its Class C capital stock. “Aphabet’s Class B common stock has 10 votes per share. Its Class A common stock has one vote per share, and Class C capital stock has no voting rights. As of December 31, 2017, Larry, Sergey, and Eric E. Schmidt beneficially owned approximately 92.7% of Alphabet’s outstanding Class B common stock representing approximately 56.7% of the voting power of its outstanding capital stock. So, Larry, Sergey, and Eric have significant influence over management and affairs, and over all matters requiring stockholder approval (including the directors’ elections and significant corporate transactions, like a merger or other sale of Alphabet or its assets) for the foreseeable future” (Annual report, 2017).

Alphabet has every ability to pay dividends to its shareholders. It has a market capitalization of around 700 Billion, revenues at around 110 Billions, operating cashflow of around 37 Billion and  around 100 Billion cash in hand.  This  used to be the trend in the technology industry years ago in the times of Steve Jobs. However, Apple and Microsoft started paying cash dividends but Google has instead relied on buybacks. Restructuring of Google and creation of Alphabet gave the original owners some exclusive rights that they could use to manage investor pressure. Investors are not complaining either and trends show long term stakeholders do not hold any grudge (Martin Tillier, NASDAQ, 2017).

Google reinvests the money into its operations and as long as it profits keep climbing, it will not cause any dissatisfaction among investors. It is true that Google’s moonshot projects are costly but it is expanding into new areas and that can be even profitable for the brand in the long term. Several businesses use cash dividends and buybacks to reward their shareholders and also reinvest a large proportion of the income into operations. However, Google reinvests it entirely for faster growth.

Google is a global brand with operations around the globe and offices in several countries. Throughout the world, Google and its employees focus upon the core values. Ethics and accountability are a  central focus at Google. The recent years have seen a lot of mess in the internet world related to data privacy & security. Google has also faced some criticism and government action. However, its image has remained strong and its business flourishing because of the focus on ethics and responsibility since its foundation. A culture of creativity, collaboration and innovation is the pride of Google. It has been known to be employee focused as well as customer centric. Its focus on transparency and integrity are the strongest pillars of its culture. More than 80,000 employees around the world are working to achieve Google’s objectives. Its employees are its assets and the brand takes every care of its employees to offer them a fulfilling career experience.

                                                   Market Segment :-

Google is Alphabet’s main business and the only reportable segment. It is so because none of the other segments currently generates as significant revenue to qualify as reportable. The brand reports these smaller segments as one segment called “Other Bets”. The Google segment includes Ads, Android, Chrome, Commerce, Google Cloud, Google Maps, Google Play, Hardware, Search, and YouTube.  It also includes Alphabet’s technical infrastructure and fresher products related to virtual reality. Advertising is the main source of revenue for Google. Other sources include sales of apps, in-app purchases, digital content products, and hardware; and licensing and service fees, including fees for Google Cloud offerings. There are several factors including changing user trends, competition and the evolution of online advertising, all of which can affect the ad income of the brand. The Google properties revenues are the largest source of income for the company and include advertising revenues generated primarily on its search properties as well as Google owned and operated properties like Gmail, Google Maps, Google Play, and YouTube. Google revenues from Google properties have significantly jumped the last year due to rising activity on mobile platforms and YouTube. There has been a significant increase in the number of mobile users in recent years. Focus of Google on its mobile platforms has also risen which are increasingly driving revenue growth.  

Another major source of income for Google includes advertising revenue that comes from the ads placed on Google Network properties through its AdMob, Adsense and Double Click Ad Exchange.

admob

There are some other sources of revenue for Google as well which include its cloud platforms, Hardware, apps, in app purchases as well as the digital content in the Google Play Store. United States is the largest source of revenue for the brand accounting for 46% to 47% of its entire revenue during the recent years. With the evolution of the digital economy has continued to shift businesses and customers online. Apart from users, the level of advertising in the internet world has also increased adding to Google’s revenues. It is now a multi device world and users are accessing information from several devices. Its revenues from developing world have increased as a result of larger number of users shifting online there. Other revenues of Google that come from non-advertising businesses including hardware and in app purchases have also increased over time. Alphabet’s revenue from Google segment was 109.7 Billion dollars and that from other bets was $1.2 Billion. while revenue from Google segment jumped by 23%, that from Other bets rose 49% (Annual Report, 2017). Google’s advertising revenue has continued to strengthen and solution of digital economy has proved profitable for it. In the coming years too as the population of online users continues to grow, and new technologies drive the growth of online platforms, Google’s revenue and net income are expected to continue rising. Google’s investment in technology like Artificial Intelligence and Virtual reality will have significant effect on its revenue.

YouTube CEO

Google’s acquisition of YouTube has not just opened a new channel of revenue for it but also grown its user base and provided it access to a large customer base made up of businesses and video marketers.                     Susan Wojcicki is the CEO of YouTube. Its number of monthly active users has soared past 1.9 billion in the recent months. A large number of businesses and institutions from around the globe use this video sharing platform to promote their products and brands to a very large customer base. From food to fashion and technology businesses, all of them are using YouTube for branding and marketing. Apart from advertisements, YouTube also earns from movies. YouTube has proved a significant addition to Google’s product range. It has helped the company fill an important gap. The level of growth it has enjoyed in the  recent months and the significant rise in its user base prove it the most competent rival of Facebook. Google has made several acquisitions in its history which looked insignificant but proved critical to its growth and expansion. Now, Google’s ad empire is stronger and it is able to focus more on making its advertising more effective.

Google’s (Alphabet) focus on R&D has helped it crack into newer market segments. Its Waymo project is helping fast forward automated driving with its partners. In this area too, there is competition from ride sharing brands like LYFT and other auto brands that have their own automated driving platforms. However, it has connected Google with a new segment of users and extend its empire into transportation.

Human resources ; Management team, Board of Directors, The Employees:-

Human resources is a central focus at Google because the brand believes that you can achieve all if your employees believe in you. So that they can perform at their best, you must provide them with an appropriate work environment and value them and their contribution. Google acknowledges the role its employees have played in making it  a technology leader. It is why it ensures that everyone has a rewarding experience while working for their favourite company.

                                                          The Management Team:

Google CEO

The senior management team is responsible for successful management of Alphabet. The founders Larry Page and Sergey Brin play a major role in the overall management of Alphabet and its subsidiaries.                                               Google CEO Sundar Pichai (😊on the left) and founders play the most critical role in strategy formulation, decision making and technology development. Apart from setting the strategic direction of the organization, they have a central role in sustaining the unique Google culture.

                                                            The Board of Directors:

Alphabet Board of Directors (2018) includes the following names:

  1. Larry Page
  2. Sergey Brin
  3. John L. Hennessy
  4. L. John Doerr
  5. Roger W. Ferguson, Jr.
  6. Diane B. Greene
  7. Ann Mather
  8. Alan R. Mulally
  9. Sundar Pichai
  10. Eric E. Schmidt
  11. K. Ram Shriram 

The board of directors holds some significant rights which it can use to influence significant matters and decisions inside the company. As of December 31, 2017, Larry, Sergey, and Eric E. Schmidt owned approximately 92.7% of Alphabet’s outstanding class B common stock representing around 56.7% of the voting power of the company’s outstanding stock. As a result these people have significant influence over several corporate matters requiring stockholder approval including directors’ elections and significant transactions like merger or sale of assets. This level of control allows the directors to make critical decisions without any fear of stockholder dissent and with considerable freedom.

                                                                   The Employees:

The number of employees working for Google in 2017 was 80,100. Culture and employees are the strengths of Google. Apart from open communication and employee empowerment, other critical focuses at Google are transparency, integrity, creativity and collaboration. The company acknowledges the role of employees’ contribution in its success. Despite the high level success, it has enjoyed in a very short period of time, the company culture has not changed much. Employees are seen as among the most critical assets and the company sees every chance to empower them as a significant opportunity in itself.  It has implemented several training, education and reward programs aimed at employee motivation, job satisfaction and employee retention.

The work environment at Google is challenging, full of opportunities and lots of energy. It encourages creativity and collaboration so employees can deliver best performance without any stress and obstacles. Company leadership and the flatter organisational structure have always catalysed great performance without inhibition. There is very high level of competition in the technology industry. Google focuses on hiring and retaining the best talent through well designed hiring programs. At last, it’s not just about performance but about performance with a purpose. Google has been successful at keeping its employees happy and it was made possible through a genuinely employee centred approach.  It has also won several accolades and recognitions throughout these years. Great salaries, great benefits as well as a good work environment keep these employees motivated and focused.

                           Information Technology Industry:-

Information Technology industry is full of both remarkable challenges and opportunities. While the size of the IT industry has grown very fast in the recent years, new challenges have emerged making the situation difficult for the U.S. IT industry. The rapid growth of cloud industry and fast rise in demand for cloud based services presents an attractive opportunity for key players. It is government regulation that is a bigger pain for IT brands than the size of competition or any other obstacle. Google is the leading brand in the Internet industry. Despite stiff competition in the IT industry, Google’s focus on research and innovation has helped it create extra space for faster growth.

A larger number of businesses around the globe have increased their spending on Information technology. Investing in IT is not just for the purpose of achieving higher productivity and faster growth but also to gain a lasting competitive advantage. Growth in the number of e-commerce players and digital transactions show how fast IT and digital economy have changed our world. Technologies affecting the biggest changes include cloud technology, AI, Virtual Reality, Augmented Reality and Blockchain. Growth of new technologies and the IT industry overall have cerated very high level of demand for skilled IT professionals. The largest players in the IT and computing industry are always looking for the best. Apart from the fattest salaries in the industry, they are using other attractive privileges like stocks and other financial and non financial incentives to attract them in largest numbers.

Waymo
Waymo: Autonomous Driving Fast Forward

IT is a game changer in several industries including fashion, food and even automobiles. It is not just the vehicle brands but the IT brands are also eagerly investing in autonomous driving to make the dream a reality at the soonest possible. Google’s Waymo is  a platform for experimenting with autonomous driving. The company has been experimenting with autonomous driving right since 2009. It has clocked more than 300,000 miles on road. The auto brands that have partnered with Waymo include FCA (Fiat Chrysler Automobiles) and JLR (Jaguar Land  Rover). While Waymo has achieved several critical milestones, other auto brands are also investing in their own autonomous driving platforms. IT is fast changing the future of mobility and how people used to access transportation. Excitement is not limited to just these things but IoT and machine learning are also hot areas.

                               Information technology industry trends:-

While regulatory pressures have made the situation difficult for technology players, market has responded favourably. Several factors are driving faster growth of the Internet and IT industry including an explosion of new technologies with the potential to reduce costs and drive profits higher.  Another important factor that  is driving the growth of IT industry is its ability to drive innovation and bring agility into business processes. Cloud based services can improve the customer experience multiple times. Companies like Google, Amazon, Microsoft, Salesforce and oracle are taking the lead. Smaller businesses too do not need to make large investments into complex technologies but can leverage the power of cloud services these companies offer. They can access a large range of cloud enabled AI and IoT services easily and at cheaper costs.

United States is currently the largest tech market and home to some of the world’s finest emerging technologies. It also constitutes a third of the entire global IT industry. The global IT industry in 2017 was estimated to be worth $4.5 trillion. US tech industry was worth $1.5 trillion dollars. Growth rate of the IT industry is expected to remain at around 5%. While predictions vary, most of them have forecast a growth rate lying between 4.5 and 6%. Leading research consultancy Forrester has projected a growth rate of 5.8% for the US IT industry whereas IDC and Gartner project a growth rate of 5.3% and 4.5% respectively for the global IT industry (Comptia). US is the largest tech market but it is not the only significant one. Japan, China, India, UK, Canada and other nations too have a significant tech infrastructure. The share of the entire Asia Pacific region in the global IT industry is also around 33%.  In case of India, it is undergoing a fast digital transformation. The contribution of IT to India’s GDP is expected to have grown to 60% by 2021 (Microsoftnews).

The contribution of IT to overall employment level has also increased several times. In 2017, employment in the US tech industry grew by roughly 2% over the previous year to 6.1 millions. In 2018, it is expected to sustain this growth rate. However, this represents the total number of workers employed in the technology industry. The number of tech professionals was at 5.4 millions in the entire US economy. Software and Application developers constitute the largest category of tech professionals in US. Worldwide as the tech industry has evolved, it has created new jobs. Companies that adopt modern technologies also need skilled employees to operate them. The level of competition in the tech industry for skilled IT professionals has also grown very high. These professionals are paid attractive salaries. Median salaries for tech professionals have increased at a rate of 2% over the past three years. Average salary for the mid level IT professionals has reached 87K dollars. The entry level IT and cybersecurity professionals have also enjoyed fair growth in financial income over the past three years (Comptia).

IT industry will continue to enjoy fair growth around the globe. US as well as Asia Pacific and some parts of Europe are leading this change. India is undergoing a major transformation and the digital industry will become a larger part of its economy. Several research sources including IDC research sponsored by Microsoft predict its faster growth in India. Businesses around the world are adopting new technologies to achieve competitive edge and achieve faster growth. The demand for IT professionals will also grow since companies need skilled professionals to manage their IT infrastructure. There is still a large skill gap and companies are partnering with educational institutions for effective hiring and training of employees. IT industry will remain the driver of growth in several industries. The core technology businesses spend highly on IT and the other businesses too including food, fashion, entertainment, automotive and education industry are also investing in IT for faster growth and better results. AI, Virtual Reality and Mixed Reality and Blockchain are the leading technologies that are generating the highest excitement.

                                         Key Players in IT & Cloud industry:-

Alphabet:

Alphabet is the largest player in the internet industry with a heavy global ‘presence. Its revenue and sales have increased at a very fast rate with the evolution of the digital economy. The brand has gained  major edge in several technological areas owing to its focus on research and innovation. Main source of revenue for Alphabet is advertising and it is the leading brand in the entire internet industry. However, the parent company of Google has also accomplished major successes in the form of what it calls Moonshot projects. Google believes in risk taking and continuous change. It invests heavily in research and innovation for the purpose of creating better online experiences. The fastest browser Chrome, Gmail, Google Maps and several other apps that today people use for free are results of continuous focus on technological innovation. In 2017, it invested around 15% of its entire revenue in research and innovation. Total R&D expenses touched 16.6 Billion dollars when Alphabet’s revenue reached 110.9 Billion dollars.

Amazon:

Amazon is another major player in the IT industry. It is the largest e-commerce player globally and also a leading cloud provider. Amazon Web Services provides a large range of cloud based services. At 17.5 Million dollars, Amazon’s revenue from its cloud based services was around 10% of its entire revenue. Amazon also invests a large sum in research and innovation every year to grow its service and for an improved customer experience.

IBM:

IBM is also a major cloud player and is among the top five in the cloud industry. A sizeable part of its revenue comes from cloud based services. IBM is also enjoying fast growth in revenue from its cloud business. Its revenue from cloud offerings is close to that of Amazon. In 2017, it earned 17 millions from clouds and that was 24% growth over the previous year.

Microsoft: 

Microsoft is a leading player in the entire technology industry. Apart from its MS Windows, MS Office and hardware products, the brand provides a large range of cloud based services called Microsoft Azure. Intelligent cloud revenue of Microsoft has grown past 32.2 Billion dollars which is an increase of around 4.8 Billions over the previous year. Apart from Linked In and MS Office, Microsoft’s Intelligent cloud is the one  business segment that has enjoyed the highest growth. The tech giant also makes a sizeable investment each year into R&D to grow its product/service range.

Apple:

Apple is also  a leading technology player with a major presence in the computing industry. However, it also offers  a large range of services that Apple users access online. It is the first computing brand to have crossed the $1 Trillion mark in market cap. The market cap of Apple has slipped but the brand still remains in  a leading position in the computing industry and has a strong competitive advantage coming from its Mac OS and iOS mainly. In the recent years, its product range has grown and the brand has also managed its pricing strategy better leading to expansion of user base and growth in revenue.

Facebook:

Facebook is the largest social media network and a major IT player. While it is facing the toughest challenges related to user privacy, the brand has seen fast growth in user base and revenue in the recent years. Its popularity in the Western nations is still strong. However, data scandals have given a strong blow to its image. Ad revenue is its largest source of its income like Alphabet.

Oracle:-

Oracle is another major cloud player that offers a large range of cloud based services in all the three categories including SaaS, PaaS and Iaas. Its 2018 revenue reached 39.8 Billion dollars. Apart from its cloud and license business, Oracle also has hardware and services business.

The internet and cloud industry has more significant players including SAP, Salesforce, Workday, VMware and several more. As the demand for cloud based services has grown, many more brands have seen their customer base and revenues increasing. This also signifies the level of competition in the internet and cloud industry.

Industry Regulation:-

Tech experts and industry leaders argue that higher regulation strangulates financial growth and becomes an obstacle to employment growth. The current situation in US is that of government versus the tech industry. The US government tried to cripple the freedom internet industry was enjoying by repealing net neutrality. Some states and industry leaders are fighting back. However, the tech industry continues to remain under immense pressure. The fast evolution of the tech industry has created some confusion leaving regulators worried about their approach to the regulation of the new business models. The way regulators in some countries have reacted including US and UK is being criticised widely. In US specifically, the repeal of net neutrality is being seen as blind and mindless action creating heavier uncertainty and a situation of panic. US tech industry is in a  strong position and it has reacted with strong dissent. However, such a situation is neither good for the industry nor for the economy. In the US history, it is for the first time that government seems to be acting against the nation’s socio-economic interests. European Union has also taken an unfriendly approach.

Sources quote several reasons behind the way government’s around the world have reacted. Deloitte Report on regulation of the industry cites the emerging gaps created by the rise of new technologies and the government’s lack of understanding of these issues as the primary cause. Disruptive innovation sometimes results in utter confusion and the government may find it difficult to design solutions fast. The result is that its reactions may vary from comic to tragic. Trump government’s repeal of net neutrality was seen as both and some states are still fighting to retain their freedom. Larry Downes criticises the government’s actions heavily in his HBR article titled ” How more regulation for US Tech could backfire”. He argues that speculations are just speculations and they are not showing the government or the industry and the society any light. Companies look like indulging in anticompetitive behavior must not be quoted as a reason to break well formed large internet companies. This argument is about Google and how both EU and US government have tried to stymie its growth by making it look a predator. If disruptive innovation is a problem then trying to break an organisation just because it gave rise to speculations is reckless.

Emergence of new business models based on disruptive technologies led to the emergence of an all ew category of challenges. The rise of the sharing economy has brought similar major challenges. Uber has faced regulatory action in several of the markets where it is operating. There is no single agreement on any of these issues globally and governments around the world are taking different positions. EU’s action reflects both fear and confusion. DATA security and user’s privacy are real issues but governments have to work to control panic and not to grow the fear. On the contrary EU reacted in a manner which showed that it was not ready for such changes. EU’s unwillingness to follow a collaborative approach is evident. If a government does not act with patience, the result is higher desperation and frustration. This approach is problematic since it allows the government to use law as a whip. Regulating technology requires a flexible approach. EU tries to apply a full stop where it must use ‘traffic lights’ to guide both users and companies. The current level of regulation in all the major Western countries can stifle growth. Even the leading tech companies are feeling like held inside a box. Apple, IBM, Amazon, Microsoft, Google and Facebook, all of them have faced this pressure. Years long fight against an old regulatory model has distracted several of them and caused loss of momentum (Downes, HBR). Microsoft could not enter several new product areas and is still battling to improve its pace of innovation. Google and Amazon proved somewhat astuter in these areas. It is also why Google’s response on these issues has been better than others. At some points, it has engaged the governments better than other players.

Eggers, Turley and Kishnani have suggested the sandbox approach. Sandboxes and accelerators can help test and design new approaches. This approach is being used in some areas in US. The role of regulators has changed a lot. They do not have to just regulate but also moderate. There are some critical points governments must focus upon to find the best approach.

  • Current state of regulation in an area.
  • Right time for regulation.
  • The right approach.
  • What changes previous regulations have achieved?

Eggers, Turley and Kishnani also offers five principles for the future of regulation in the tech industry.

  • Adaptive Regulation – A responsive, iterative approach, not the same regulate and leave approach.
  • Regulatory sandboxes – Prepare before you play, Use of sandboxes and accelerators for prototyping and testing new approaches.
  • Outcome based regulation – Regulate with a focus on the outcomes.
  • Risk weighted regulation – Weigh the risks, take a data drive approach.
  • Collaborative regulation- Keep all players in mind to bring higher alignment. (Deloitte, 2018)

The fear of technology is not a solution. Neither is technology ever going to control humans and nor are any other such fear mongering theories ever going to come true. All the doomsday theories around technology and disruptive innovation are nothing but a pack of lies. If technology is a problem then law and regulation are not its solutions but instead more technology and innovation will only address these challenges. If governments can ever find a middle ground and try to address the emerging issues patiently through  the sandbox approach, it will allow both tech companies and users as well as the government itself more time and space to understand these shifts and adapt faster. In US, UK as well as Canada and other major Western Nations there is a need for governments to act more collaboratively with tech companies so that  they can together find a  better approach and create better solutions for the society. The biggest regulations affecting tech industry are related to privacy and cybersecurity. However, they are not the only regulations. From taxes to labour and other areas, there are several regulations that affect the tech industry like the other businesses. Regulations can be catalysts or they can create hindrances. Overregulation, however is not a solution at all but a weakness governments need to avoid.

Sources:-

Abhijeet Pratap

I have studied Marketing and English Literature and like to write on topics in Business management, Marketing, literature, latest technologies and other areas. I also like to spend my time learning coding.