Indian regulation needs to accommodate information aggregators to help create smart citizens.
Recently cab aggregator ZipGo suspended its operations in Bangalore after facing trouble with the the Karnataka State Transport Department. One of the major reason for the tension between the start-up and the state is the the Karnataka Motor Vehicle Rules of 1989. As per the Rules, there is no provision for ZipGo to operate services that directly compete with the state-run city bus service under. This is just one of the many examples where the information aggregating services in India have faced trouble while dealing with Indian regulation.
Information aggregators are entities that collect information from a wide range of web sources and other sources, with or without prior arrangements, and add value by providing post-aggregation services. Common example being Uber, a cab aggregation service that helps the demand for cab services meet the supply. By reducing the information symmetry between the customer and cab driver, Uber reduces the search time spent by both the parties. The ease in looking for the customers helps in increasing the number of rides the cab drivers can provide in a day.
Uber is just one of the examples of the varied aggregating services provided across sectors. For instance, Buildkar and Swiggy provide the same service for building construction and food deliveries respectively. As we look forward to using Information and Communication Technology to make cities smarter, it is vital that enough platforms are provided for the citizens to be able to utilise the resources around them in the best possible form. One of the ways to utilise the resources better can be by reducing the transaction cost faced by the citizens.
Transaction cost refers to the cost other than the money price incurred during an economic exchange. For instance, standing in a queue to get movie tickets is a transaction cost. However, this cost is reduced by online ticket bookings. The time saved provides more leisure time for the citizens and helps them in being more productive and efficient.
In his paper, Jiangxia Hu has listed six benefits of an aggregator: increased diversity of information, broader service availability, reduced searching cost, comparison between alternative choices, better customised to user wants and needs, and reduced transaction time. For instance, Uber the cab aggregator app does not only provide the information about availability of the cabs but also about the driver once the cab is booked. It also provides a wide range of option to choose between the type of vehicle the customer wants to choose. These features of a aggregator makes them more efficient and better equipped to serve the citizens in the technology age.
Keeping in mind the benefits and the increasing reliance on the aggregating services, it is important that Indian regulation accommodates these new platforms. Being the regulator, it is imperative that the government looks at the safety and basic quality standards of these aggregating services. That said, keeping regulations to the minimum will help these services to grow organically though network effect. Blocking or constraining the growth of such services will either harm the market or lead to the growth of illegal platforms providing similar services.
Devika Kher is a policy analyst at Takshashila Institution. Her twitter handle is @DevikaKher.
Image source: Sebastiaan ter Burg, Flickr