When states start letting companies write rules that can keep competitors out, everyone loses.
An FKD Feature exclusive

Sometimes, it’s hard to tell if a new regulation is put in place to ensure safety or to make it difficult for competitors to compete in the same market. In the case of Michigan’s unprecedented rules on self-driving vehicles, General Motors’ involvement is not making it any easier.

As the world gears up for driverless vehicles, automakers, tech companies and regulators are all fighting to make sure nothing curbs innovation, safety or their influence over the market.

GM is shaking things up, but not in the best way

According to the Associated Press, “The bills set a blueprint for the introduction of fully self-driving cars that are part of on-demand, ride-sharing fleets, but they must be owned by an automaker.” General Motors (GM) has helped author legislation in Michigan that can be read ambiguously enough to where a state can exclude competitors such as Uber and Waymo from letting their autonomous cars get on the road. These rules have also been introduced in five other states: Georgia, Illinois, Maryland, Massachusetts and Tennessee.

Competitors supplying the driverless technology fear this may create a barrier to their entry onto public roads.

Self-driving cars are progressing rapidly. Waymo, an independent autonomous vehicle company under Google’s “Alphabet” umbrella and GM’s “Cruise” seem to be leading the way. According to recent “disengagement reports” from California’s DMV, Waymo has clocked in around 636,000 miles with just 124 disengagements, or times that a human had to take the wheel from the computer. This is a 19 percent drop from the year prior. Cruise has logged 9,800 miles with 414 disengagements.

Which is it? Safety or crony?

The National Highway Traffic Safety Administration, or NHTSA, should be applauded for its open-arms approach in welcoming self-driving technology on the roads. Clearly, they see the huge gains to public safety that come from automated vehicles. By streamlining conflicting state regulations and clarifying how existing federal auto safety rules apply, it allows companies to innovate, test and improve at a much faster pace.

According to Harry Lightsey, a GM lobbyist, GM favors restricting access to just automakers because “public acceptance of the technology is going to be very critical” and “if somebody is allowed to put technology on the roads and highways that proves to be unsafe, that could have very harmful repercussions.” Essentially, if people see driverless cars on the road, they’d feel more comfortable if it comes from a household automaker that has surely gone through the rigorous safety standards that have been set in the industry for ages. To the competitors, this smells like cronyism.

In addition to smelling like government-granted privilege, GM’s lobbying of state governments, particularly in states that have a GM plant and receive hefty campaign contributions, can slow down the speed at which this technology can finally make the roads safer. Companies are incentivized to engage in crony-like behavior, as opposed to focusing on improving the quality of their product, when states begin to adopt these ambiguous rules.

Takeaway

There is a tension between letting states do their own thing and having the federal government supersede the states with one-size-fits all regulations. In letting the states do their own thing, mini natural experiments can happen where we all can learn from the successes and failures. But, if states are inconsistent or have rules that block the competition like in the self-driving arena, this can slow down progress of this life-saving technology.

Regulation, especially ones that leave room to interpretation, can deter businesses from engaging in productive behavior because of the worry that they may be penalized in the future. More importantly, we — millennial consumers — are penalized as well.

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Header image: Getty

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Posted 03.03.2017 - 03:30 pm EST