How does the new type of interest group affect the government’s regulatory process?: Case study on Uber in global major cities

The purpose of this study is to examine how a platform business that does not hold a solid interest group can affect the government’s path-dependent regulatory policy preference through analyzing Uber cases in global major cities. The rise of what is referred to as the platform business disrupts the existing business, which causes conflict with the established interest groups. Here, the newly emerged platform business encounters the government’s path-dependent policy tendency formed by the long-term influence of the solid interest group of the existing market leaders. Accordingly, this study aims to find out which variables not only influenced the government's initial regulatory policy direction but also further make the government withhold its policy decisions. As one of the representatives of the platform business, Uber has undergone quite drastic conflicts with established taxi interest groups around the world when they unveiled their innovative service named UberPop – the cheapest service of Uber that connects passengers with unprofessional drivers. For Uber, the major conflict with the taxi drivers mainly emerged from the fact that it changed the range of service providers from licensed taxi drivers to unlicensed prosumers. As the unlicensed prosumers not only could threaten passengers but also with the strong push from the taxi drivers interest groups, most of the city governments responded to the initial situation by presenting regulatory possibilities for UberPop service. Despite the organizational weaknesses to influence government regulations, however, Uber was able to overcome the challenges in some cities by forming a new type of interest group based on its prosumer and consumers. This study names this new type of interest group as the Invisible Interest Group(IIG) and argues it could affect the government’s regulatory decisions due to its unique characteristics. The IIG is the voluntarily assembled public – prosumers and consumers who used to be considered as the latent group(Olson, 1967)–, forming an ad-hoc interest group without any central organization nor closed membership. Since it is formed and performs its activities mainly online, the government can no longer preemptively acknowledge the IIG’s needs and level of political influence, but rather be forced to make the regulatory move first and respond to the IIG’s level of reaction towards it. Further, since the IIG tries to stop the government from forming a policy that they do not have a clear knowledge of its impact yet to prevent its potential expected loss, the emergence and the political influence of the IIG cannot be explained by the existing policy feedback theory(Schattschneider 1935, Pierson 1993, Lowi 1995) as well. There still is, however, a question of when does the IIG success against both the established interest groups and path-dependent government? This study insists that the barometer for its success highly relies on its level of organizational power without an organization. More specifically, after the announcement of the policy direction, the government would measure IIG’s potential political influence through the IIG’s responsiveness – the number of voluntary participants and response time – to decide how to react to the situation.