How Government Meddling and Regulation is Impacting the API Economy

An example of this is the Australian government (Digital Service Standard), an initiative currently in beta that is described as “the criteria that Australian Government digital services must meet to ensure our services are simpler, faster and easier to use." Services that adhere to the standards, which will almost certainly include APIs, should follow a series of design guides to meet the directives. However, it is unclear what the implications are for existing providers who already provide services that qualify as “digital." Moreover, if the standards are backed by a suite of legislation enforcing standardization, the initial consumer impact may be negative as providers refactor to comply. Of course, given the fact the standards are in beta, the nature of the impact remains to be seen.


Clearly there are areas of industry where regulation already plays a key role and standards are widely used and healthcare is one of these. In the United States the Obama administration has place a huge amount of focus on healthcare through in an attempt to force an open data agenda. forms part of the Open Government Initiative and is an effort to break down data silos and promote open data within healthcare with the introduction of electronic health records (EHR). The key feature of an EHR is described as being that “it can be created, managed, and consulted by authorized providers and staff across more than one healthcare organization.” Obviously such a move would provide a number of benefits for both patients and healthcare providers:

  • Increase the accuracy and availability of patient records;
  • Introduce greater efficiencies in record keeping and retrieval;
  • Encourage innovation in the healthcare industry as providers attempt to utilize increased access to patient records to both save money and bring better products to market. 

These benefits will help foster a data sharing ecosystem within healthcare, where patient records can be shared for consumption by third party tools and applications with appropriate security and privacy controls. The experience of patients such as famed television newscaster John Stossel who wrote a candid assessment of the current failings in the system, piques the need for such improvement and innovation: John describes the issue with the system as a whole as being that there is “practically no free market. Markets work when buyer and seller deal directly with each other. That doesn't happen in hospitals.” Open data through EHRs will help stimulate a market where none currently exists.

As opposed to regulation, the efforts in open healthcare data have taken the form of a collaboration between government and industry, and included the creation of the Health IT API task force in the US that ProgrammableWeb not only recently covered, but also participated in when its editor-in-chief David Berlind testified to the Office of the National Coordinator for Health Information Technology. The current dialogue between the administration and industry does not go as far as demanding the implementation of APIs and the task force is one small part of the overall effort. But if it moves from one of cooperation to one of regulation using APIs as a vehicle for open data, it would appear to be a natural choice. However, without such regulation, there are concerns that there will be insufficient controls for safeguarding patient data. One reason the American healthcare industry remains wary of the US government’s push for more openness and interoperability is because of how fearful it is that such efforts could run them afoul of existing federal privacy regulations such as the  Health Insurance Portability and Accountability Act (HIPAA). 

Obviously the findings of this task force and other regulations are going to cause disruption to existing API providers who may fall under their mandates, regardless of whether they explicitly apply to APIs. However, in an area like healthcare, one could conclude that the implications of APIs not being regulated could directly affect real human beings and thus regulations and standards should be of paramount importance to any governing agency across the world.

Whereas the US federal government has so far fallen shy of creating or enforcing compliance with standard APIs in the name of accuracy and reduced friction in the US healthcare system, another similar effort under the direction of the US Department of Energy -- The Green Button Initiative ---  has not only gone much further to define such standards of interoperation, but is evidence of how government and a highly regulated industry can collaborate to effect both agreement on technology and positive outcome. 

Similar to many of the objectives falling under the Obama Administration’s Open Government Initiative, the Green Button initiative’s remit is to empower retail customers of the nation’s electricity providers with not just their own consumption data, but the right to make that data available to third parties on an as needed basis. 

For example, if a homeowner is contemplating the long-term financial benefits of installing solar panels, that homeowner should have an easy way of sharing his or her historical consumption data with multiple solar consultancies in a way that those consultancies can respond with accurate advice or bids on installation. But such data workflows can be incredibly complex in that the retail customer needs the ability to not only authorize third-party access to his or her data, but must also have the power to govern which of that data is available to which third parties. Given these and other complexities, the Department of Energy elicited the help of the US National Institute of Standards and Technology to collaborate with the American energy sector in a way that not only produced whatever new standard specifications were needed to enable the necessary interoperability, but also to leverage as many of the industry and technology standards that already existed. This effort helped to mitigate the potential negative impact of having to throw-out all existing standards in favor of some new ones. 

Final Thoughts

It's clear that regulations and standards will play a key role in shaping how the API economy continues to evolve over the next few years. In many ways they will prove a curate's egg, having many benefits for API providers in terms of setting clear objectives for API design and delivery in regulated industries, but with the risk of making innovation more difficult due to the boundaries of compliance and disrupting incumbents in unregulated sectors of the API economy. API consumers, on the other hand are likely to benefit from increased standardization in industries forced to provide APIs by regulation, where previously, there were none. However, in industries that become regulated where there is already an large existing footprint of APIs, the effect could be negative as the APIs that consumers rely on are forced to comply with standards imposed on them. It remains to be seen whether the impacts will be negative or positive. But for industries such as banking that are crying out for APIs to help unlock the market, one can only conclude that regulations and standards will help the API economy grow.

Be sure to read the next Healthcare article: Daily API RoundUp: FCC, Pretio, Backstitch, EasySendy


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