The two faces of the government in the digital domain

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5 May, 2015

Internet start-ups. It starts with a clever and innovative idea and a small team of professionals who bring this to life. The Dutch government embraces start-ups and wants the Netherlands to develop as Europe’s start-up delta. As regulator, the government holds the key to this in its hands.

The success stories often conceal the struggles endured by many of these start-up companies. If the start-up can attract sufficient capital and the right people to grow and has a first group of customers who believe in the idea, there often follows a new obstacle. The obstacle of the established order.

Start-ups are innovative as they capitalize on something that does not exist yet – and yet, only few realize its added value – and because they make an existing matter smarter. Of course, currently the best-known example is Uber, being a platform that connects drivers and passengers in a smarter way and at a lower rate than the taxi industry.

As soon as new services have impact, government and politics are starting to follow these developments. Digital is hot, hip & happening and because of that, side effects also get similar – and often negative – attention. And what on paper might be compliant to the rules may as well explode in the public debate. Leading to reputational damage, churn of customers and often a call for legislation.

Dutch bank ING experienced this consternation at first-hand last year when the company wanted to offer their customers benefits by analyzing their payment data. The customer had to give prior consent and the bank would not share data with third parties. However, the public debate exploded on this idea and within a day it was put in cold storage.

Where government and politics stimulate Internet start-ups, they often do not know what they should expect from digital technology and struggle to understand new business models. Once a new service or technology turns out to have much impact or an incident has occurred, this quickly creates the call for regulation. Many Internet entrepreneurs have racked their brains over the ineffective and burdensome cookie rules. And in Europe, Commissioner Oettinger recently called for a European authority supervising on Internet services.

It is up to the government to resist the call for regulation and identify what existing rules should be changed to accelerate innovation. Only then the Netherlands can truly become a start-up delta.


Bart Pegge

Director Public Affairs Practice

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