Banning Airbnb and Uber isn't sustainable in a global sharing economy - RSA

Banning Airbnb and Uber isn't sustainable in a global sharing economy

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  • Picture of Brhmie Balaram
    Brhmie Balaram
    Associate Director, Economy, Enterprise and Manufacturing (family leave)
  • Economics and Finance
  • Enterprise

This week marks the second ever Global Sharing Week, a celebration of the sharing economy worldwide.

Global Sharing Week has evolved since 2012, beginning with a single day and stretching to a week as the movement itself has grown. One of its founders in the UK, Benita Matofska, recently wrote about Global Sharing Week for the RSA, noting that community sharing enterprises are at the heart of the celebration. While companies like Airbnb and Uber have helped popularise the sharing economy, over the past year we’ve also witnessed a backlash against the movement as more people are questioning whether the inherent social value of sharing is being diminished by the dominance of global platforms. However, banning these platforms isn’t a solution progressives should be embracing.

1. Bans only scratch the surface of a deeper problem with the system

Recently, at OuiShare Fest, an international, collaborative conference in Paris exploring the sharing economy, I held an interactive workshop on the history of monopoly power in the US. The aim was to contextualise the sharing economy within the wider economy, focusing on how attempts at regulating big business has failed over successive decades because of the gradual weakening of anti-trust law and a lack of political will.

Monopoly power in the US can be traced back to the Granger Movement in 1866 when a coalition of American farmers from the Midwest fought back against price gauging for the transport of crops. While it eventually led to the first anti-trust law (also known as the Sherman Law) in 1890, years of reforms, particularly under Ronald Reagan’s administration, have undermined the law’s usefulness. For example, Reagan’s administration produced new guidelines enabling companies to more easily make the case for mergers based on greater efficiencies for consumers. If we fast forward to 2015, a record year in US for mergers and acquisitions (deals totalled over $3.8 trillion in value), we find that anti-trust law has done little to prevent the increasing concentration of American industry. For platforms to compete at the level that venture capitalists and their shareholders expect, they are encouraged to corner the market, not only in the US, but increasingly internationally.

Bans are thus a reactive, superficial response to a legal, political and financial system that perversely enables and incentivises sharing platforms to become ‘networked monopolies’ in a global economy.

2. Governments enforce bans on behalf of corporates, not communities

Governments in France, Germany and Spain are among those in the EU leading the crackdown on big sharing platforms such as Airbnb and Uber. However, it’s often incumbents of traditional industry that are pressuring governments to ban these platforms on the grounds of unfair competition. Lobbyists of traditional industry argue that the playing field is no longer level because platforms are able to evade the set of rules that hotels or taxis, for example, must adhere to. Yet, this argument fails to take into consideration the way in which some platforms are innovating and are thus able to self-regulate to a higher degree than traditional industry; for instance, rating and review systems help address safety and security in new ways.

Moreover, some citizens are genuinely benefiting from hosting or driving (or more generally, working) for these platforms. While their position shouldn’t necessarily be privileged over those who are opposed to these platforms, there is something to be said for the promise that the sharing economy holds in terms of its social and environmental value in addition to its economic potential.

Even when courts cite consequences for the community as part of their rationale for rulings against these platforms, such as in the ruling upheld this week against short-term subletting in Berlin, there is little to suggest that a ban will address the root of the problem. In this case, the judge justified his decision on the basis that the availability of affordable housing is severely threatened in Berlin. While that may be true, without further evidence of access to affordable housing being enabled in other ways, the restrictions can appear to be a token gesture.

The question governments must ask is who really benefits from bans – corporate incumbents or communities?

3. Bans are temporary measures, not long-term solutions, in a global sharing economy

This brings me to my final point which is that bans and other similarly restrictive measures (such as the subletting requirements in Berlin) are not strong long-term regulatory solutions in a global sharing economy. The European Commission published guidelines last week for its member states in the hopes of harmonising responses to sharing platforms, actively discouraging the use of bans as a means of regulating. While the Commission may have presented few regulatory alternatives, it was right to suggest that bans are usually not appropriate, especially if Europe is ultimately keen to support the growth of the sharing economy.

A more sustainable way forward would be to rethink regulation entirely. The RSA’s proposed approach of ‘shared regulation’ reframes regulation as an enabler rather than as merely an inhibitor. It encourages governments to involve the public, including users of platforms, the platforms themselves and other interested parties including investors, designers, civil society representatives and legal experts in a dialogue about how to regulate the sharing economy. This dialogue would ideally move beyond a polarised debate about whether to ban platforms or allow them free rein, taking into account how we can develop the right legal and political infrastructure to enable a diverse sharing economy to thrive. Banning the big sharing companies alone won’t protect the smaller community enterprises we are celebrating during Global Sharing Week; we need to take on the system.

Find out more about the RSA's work on the sharing economy

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  • I'm not suggesting that an enabling approach won't ultimately inhibit platforms like Uber, but that an inhibiting approach (specifically bans) from the onset isn't really working, nor is it sustainable considering the patchy responses globally and the EU's own guidance advising against countries to avoid using bans. Bans are a smokescreen anyway, however, giving the public the impression that governments are confronting problems in the market while the root causes go unaddressed. One of those root causes is the way in which platforms are funded - government needs to encourage alternatives to VC and private equity funding, for example.

  • A genuine question, how do you see an 'enabling' approach to regulation supporting the development of small, possibly community based, sharing enterprises, without inhibiting the large, predatory and well funded monopolistic faux sharing organisations such as Uber?

  • The idea that Uber will collaborate to pay their workers (for that is what they are) pensions, recognise unions, comply with the same disability access, or level of emissions that regulated taxis have to abide with is laughable - avoiding this is how they make money.  Insisting on compliance (not banning) benefits communities not the encumbent.  Uber and the like can quite easily develop a shared economy with regulations, they don't want to.