Robotics - the Ethics of Digital Disruptions

The Ethics of Digital Disruptions

Mehul Chaudhary

TDI4M1

Mr. Toffoli

December 23rd 2016

Recently, Amazon, the e-commerce giant, announced that they had completed their very first drone-based commercial delivery in Cambridgeshire, England (Wingfield and Scott, 2016). Despite all the skepticism that is associated with drones, it is evident that it’s only a matter of time before drone delivery becomes the status quo, as Amazon continues to solidify itself as the top online retailer in the world. However, it is important to acknowledge that the social and ethical implications of drone delivery have yet to be answered. Will the company need to cut back on its logistical operations and rely less on the use of other delivery companies such as DHL or UPS? Will it result in a loss of parcel business? What are the environmental repercussions that drones will have?

        According to Allister Cameron (2015), many Silicon Valley companies, such as Amazon, have a ‘toxic’ mentality where the visionary founder/CEO aims to get from point A to point B, no matter how many casualties result or what companies they have to step over. He quotes the philosopher Ayn Rand, citing that the approach in Silicon Valley is that the “winners deserve to be winners because they’re winners”. Thus, the reason Amazon hasn’t provided any clear answers to the previously mentioned concerns is that, as a disruptor, they are entering a new market space and creating a new standard for other companies to live up to. This is where the government’s involvement becomes apparent, as it plays a significant role in limiting the damage these companies cause along with reaping the financial benefits that they provide to the economy. In Amazon’s case, due to the lack of drone regulations in the States, the American government has not allowed for the testing of autonomous commercial quad copters, resulting in Amazon testing the drones in the UK. In essence, it is the responsibility of both the government and the disruptive companies to be held accountable for the social and ethical implications that they cause, along with diplomatically working with each other to anticipate the rules and regulations needed for such change.

         But what is a “disruptor” and what are “disruptive innovations”? The ‘disruptive’ notion refers to effect that the technology appears to have on markets affected by technology-based innovation and the frequent downturn of major firms when they fail to adopt the new technology in a timely way (Katz and Paap, 2004, p.14). In some cases, the downturn is inevitable, as with the much popular home movie rental store, Blockbuster.

In this circumstance, Netflix, the streaming platform, is often held responsible for eliminating Blockbuster, Consistent with what McGrath (2013) writes, the first step to creating a disruptive innovation is to target a market niche, usually one that is being neglected. The next step for many disruptive innovators is to find an entrepreneur investor who in turn help them execute an ‘end run’, to eliminate an entry barrier created by the incumbents. The downfall for the incumbent usually is an adoption barrier that forms, which catches many incumbents off guard. Many times, in order to adopt, a duplication of an existing investment is required and this slowly leads to their demise, financially.

For example, with Netflix, the niche that they targeted was the home entertainment industry and the inconvenience of repeatedly driving to Blockbuster to pick up Saturday night movies. This of course was followed by digging through the stacks of movies to find the one that was just right. The entry barrier for Netflix was Blockbuster’s massive store network, which at one point had up to 80 000 stores (Knott, 2013). Netflix knew that they couldn’t possibly beat Blockbuster on that front compete with that, as there would be too much competition, and this would not look appealing to any entrepreneurial firm. Thus, Netflix created an end run around Blockbuster’s barrier and formed an online sales/mail distribution system (Knott, 2013). Eventually, this action became an adaptation barrier for Blockbuster. They made a last ditch attempt to duplicate Netflix’s mail order system, but the returns to their investment were negative, as they were essentially cannibalizing their own sales by competing against their storefront distribution chain. Thus, if the innovation results in the use of significant new technologies negative returns, it is a disruptive innovation.

Netflix leading to Blockbuster’s demise caused significant financial implications for the involved companies, but social and ethical implications can arise from such situations too. One of the primary examples of this is Uber’s disruption of the taxi industry. Barro (2014) from the New York Times writes, “The average price of an individual New York City taxi medallion fell to $872,000 in October, down 17 percent from a peak reached in the spring of 2013, according to an analysis of sales data.” Historically, since 1937, the city of New York has used a medallion system to limit the amount of taxi-cabs on the road (Barro, 2014). However, with the emergence of Uber, not only are taxi drivers losing business, many of them are unable to sell their existing medallions. As a result, many taxi drivers are becoming bankrupt, yet the municipal governments, many of them pro-Uber, are doing nothing to come to their aid.

As such, cab drivers feel the very betrayed by their city council in Toronto, Ontario. Since 1998, with the introduction of the Ambassador license, the city of Toronto has attempted to rule out the taxi brokerages (middle men) and create an owner-operator model industry where taxi drivers can directly own their taxi vehicle with the purchase of a Toronto Taxi License (Park, 2016). However, with the social popularity and ‘trendiness’ of Uber, city council overturned their pledge of allegiance to the cab drivers and created a new ‘private vehicle-for-hire driver’ license, to even the field between Uber and City cabs. It scrapped the Toronto Taxi License, converted the Ambassador license to standard license, and overturned many regulations and by-laws. This created nothing short of a mess, leaving taxi drivers confused and very angry. Many drivers, often immigrants, are now left on their own to make ends meet as Uber drivers enjoy the financial success. Is it ethically correct for municipalities across North America to leave many first generation families stranded by supporting Uber, the epitome of disruptive companies?