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This is a personal blog. Although the authors are affiliated with Coda Payments, the views expressed here are their own.


Driverless cars and the pace of regulatory change

The following piece of news caught my eye this week:

The California state legislature just [approved] a bill paving the way for driverless cars to be allowed on Golden State freeways.

The bill, authored by State Senator Alex Padilla (D-Van Nuys), was passed by the state Assembly on Wednesday and then given the overwhelming thumbs up by the state Senate the following day.

If signed by Governor Jerry Brown, Padilla's bill would legally allow autonomous vehicles on the road and charge the state's Department of Motor Vehicles with determining the standards for self-driving cars, rules which current do not exist under the present vehicle code.

Pause for a moment and consider how remarkable this is. Driverless cars, like their human-operated forerunners, will, from time to time, almost certainly be lethal. Even the cleverest algorithm cannot bend the laws of physics to, for example, stop a car more quick than its brakes are capable of doing when a pedestrian unexpectedly steps into traffic.

On the other hand, not even the most implacable foe of allowing non-banks to offer payment services would charge that mobile money kills people. And yet, between the time that Google started working on driverless cars and the time that it secured regulatory approval for them, the global campaign to open up payments to nonbanks has proceeded agonizingly slowly.

So how did this come to be?

Bay Area tech giant Google has been leading the way in self-driving cars. The team behind the project asserts that the technology is largely already there and their self-driving cars are ready to hit the road right now.

Earlier this year, Google took a number of state legislators on a test non-drive of their driverless cars.

"I had the pleasure of going out for a drive on the autonomous vehicle," California state Senator Alan Lowenthal told Reuters. "I have to say that there are some still issues with it, but it's a better driver than I am.”

Google got its way on driverless cars not through the famous skill of its software engineers, but rather the old-fashioned way: lobbying. It organized a concerted campaign to persuade lawmakers of the proposition that driverless cars are likely to be more, not less, safe than human-operated ones, because they will eliminate accidents caused by human error. And because the regulator in question (the Department of Motor Vehicles) was unwilling or unable because of the limits of its mandate to act independently, Google made its case directly to lawmakers.

Do mobile operators, other nonbanks interested in payments, and the financial inclusion community have anything to learn from Google's victory, I wonder?

Update: Here is a story about how Google did it.

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Reader Comments (2)

NIce piece! Something to add about Google's lobbying efforts is that they did not have a formidable foe on the opposite side of the fence. Operators and non-banks have formidable opponents in the banks themselves. Most times, the regulator they are lobbying is also related to banks, the politicians get considerable support from banks, etc. All of these issues continue to hinder an unbiased review of the status quo.

September 8, 2012 | Unregistered CommenterAli Ndiwalana

Perhaps there weren't enough taxi drivers in California to kick up much of a fuss. In New York, meanwhile, another new technology with the potential to disrupt the status quo is being more effectively fought by the taxi lobby:

September 8, 2012 | Registered CommenterNeil Davidson

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